The Accounting Review Vol. 26 No. 4 1951
THE NATURE OF THE ACCOUNTING UNIT.
Abstract
In the preparation of accounting statements, the unit of summary and reporting may be an individual proprietor, a partnership, a business corporation, an association or a governmental unit. It may be the whole organization, a department or branch, or even a job or process. The accounting unit can be defined then, "as a section in a two-way stream of exchanges of goods for cash. This section contains related elements, which are insulated from outside factors by barriers, or by check points at which the outside relationships are measured. In practice, lost time reports, shrinkage and spoilage reports, summaries of expenses over and under applied, and related adjustments, are needed to make the job records cover accurately all factors in the cost of a job unit. A corporation is the most commonly cited accounting unit. It fulfills the requirements of a unit because of laws which specify records to be kept, and provisions requiring the separation of the interests of its officials as individuals from their responsibilities and returns as officers. The definition of an accounting unit also fits a nation, where the flow of trade and the balance of payments between it and other countries are measured and recorded. Thus the definition of an accounting unit fits any size or type of unit. It provides a basis for testing whether a part of an organization can properly be considered as independent for accounting and managerial purposes. It bases the definition on functional relationships rather than on legal or managerial traditions.
- DOI
- 10.2308/tar-7076483
- Volume
- 26
- Issue
- 4
- Pages
- 516-517
- Language
- en
- Sources
- crossref openalex