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| Author: | Mourik, C. van |
| Title: | The equity theories and financial reporting: an analysis |
| Journal: | Accounting in Europe
2010 : VOL 7:1-2 p. 191-211 |
| Index terms: | accounting standards financial reporting equities incomes companies assets |
| Language: | eng |
| Abstract: | This paper reviews accounting literature in the English language proprietary and entity theory in order to understand their implications for financial accounting and reporting. The main contribution of this paper is twofold. First, it explains in operational terms why an entity perspective of the company is theoretically irreconcilable with the asset-liability approach to the determination of income. Second, it makes clear that there is always an implicit perspective to financial reporting. Inconsistency in accounting standards results if the implicit perspective is not the same as the perceived focus of decision-usefulness. |
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