Journal of Finance and Accounting

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Edwards & Bell’s Concept of Profit: An Empirical Analysis on the Basis of Historical Cost and Current Costing

Received: 16 May 2014    Accepted: 03 June 2014    Published: 10 June 2014
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Abstract

The measurement of income occupies a central position in accounting. Income measurement is probably the most important objective and function of accounting, accounting concepts, principles and procedures used by a business enterprise. In general, income represents increase in wealth and success of business; the higher the income, the greater will be the success of a business. The theory of business income as developed by Edgar O. Edwards and Philip W. Bell is a classic treatise. It has attained a reputation as a major contribution to the accounting literature. In the book “The theory and measurement of business income” the authors made to classify the methodological approach in developing the theory of business income, knowledge of how a particular work fits within the array improves our understanding of the evaluation of accounting theory. They have suggested that the central objectives toward which accountants should point in formulating measures of a business income. The general theory of profit maximization by the individual firm provides a simplified picture of the decision-making process under conditions of uncertainty, the process which must be evaluated with the aid of accounting data. They have reconciled economic income and accounting income with considering price level adjustments. An attempt has been taken in this study to clarify these concepts of profit on the basis of historical cost and current costing.

DOI 10.11648/j.jfa.20140203.16
Published in Journal of Finance and Accounting (Volume 2, Issue 3, May 2014)
Page(s) 72-80
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Profit, Historical Costing, Current Costing, Business Profit, Accounting Profit

References
[1] Connor & Moira, (1976). "Developments in Methods of Estimating Manufacturers' Stock Changes", CSO-Economic Trends.
[2] Cowley, A. H., (1974). "Accounting for Inflation", Central Statistical Office-Economic Trends, August.
[3] Edwards, Edgar O. and Bell, Philip W., (1961). The Theory and measurement of business income. University of California Press, Berkeley, Los Angeles, London. 7th edition.
[4] Edey, H. C.,(1970). "The Nature of Profit", Accounting and Business Research, winter.
[5] Glautier M. W. E. and Underdown, B., (1994). Accounting Theory and Practice, Pitman, Fourth Edition.
[6] Gilman, S. (1939). Accounting Concepts of Profit, New York: The Rolland Press Co.
[7] Hendriksen, Eldon S. (1983). Accounting Theory, Richard D. Irwin, Fourth Edition.
[8] Hicks, J. R.,(1946). Value and Capital, second edition, page 170.
[9] Jain,S.P. & Narang, K.L., (2000). Advanced Accountancy, Kalyani Publishers, 10th Edition.
[10] Jones, R.C. (1935). “Financial Statements and the Uncertain Dollar”, The Journal of Accountancy 40, 171-197.
[11] Porwal, L. S. ,(1994). Accounting Theory, an Introduction, Tata Macgraw Hill Publishing Company Limited, New Delhi, Third Edition,
[12] Parker R. H. and Harcourt, G.C. (1969). Reading in the concept and Measurement of Income, Cambridge University Press, New York.
[13] Perrin, J. R., (1976)."Inflation Accounting is not Economic Valuation", Editorial to Journal of Business Finance and Accounting.
[14] Sinha, Gokol (2000). Accounting Theory and Management Accountancy, Book World, 61 Sitaram Ghosh Street, Kolkata 700001, 9th Edition, 2000.
[15] Walton, John, (1977). "Current Cost Accounting and the Concept of Cor-porate Income", The Business Economist, Volume 9, No. 1, Summer 1977, Society of Business Economists.
Author Information
  • Institute of Education, Research & Training (IERT), University of Chittagong, Bangladesh

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  • APA Style

    Golam Mohiuddin. (2014). Edwards & Bell’s Concept of Profit: An Empirical Analysis on the Basis of Historical Cost and Current Costing. Journal of Finance and Accounting, 2(3), 72-80. https://doi.org/10.11648/j.jfa.20140203.16

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    ACS Style

    Golam Mohiuddin. Edwards & Bell’s Concept of Profit: An Empirical Analysis on the Basis of Historical Cost and Current Costing. J. Finance Account. 2014, 2(3), 72-80. doi: 10.11648/j.jfa.20140203.16

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    AMA Style

    Golam Mohiuddin. Edwards & Bell’s Concept of Profit: An Empirical Analysis on the Basis of Historical Cost and Current Costing. J Finance Account. 2014;2(3):72-80. doi: 10.11648/j.jfa.20140203.16

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  • @article{10.11648/j.jfa.20140203.16,
      author = {Golam Mohiuddin},
      title = {Edwards & Bell’s Concept of Profit: An Empirical Analysis on the Basis of Historical Cost and Current Costing},
      journal = {Journal of Finance and Accounting},
      volume = {2},
      number = {3},
      pages = {72-80},
      doi = {10.11648/j.jfa.20140203.16},
      url = {https://doi.org/10.11648/j.jfa.20140203.16},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.jfa.20140203.16},
      abstract = {The measurement of income occupies a central position in accounting. Income measurement is probably the most important objective and function of accounting, accounting concepts, principles and procedures used by a business enterprise. In general, income represents increase in wealth and success of business; the higher the income, the greater will be the success of a business. The theory of business income as developed by Edgar O. Edwards and Philip W. Bell is a classic treatise. It has attained a reputation as a major contribution to the accounting literature. In the book “The theory and measurement of business income” the authors made to classify the methodological approach in developing the theory of business income, knowledge of how a particular work fits within the array improves our understanding of the evaluation of accounting theory. They have suggested that the central objectives toward which accountants should point in formulating measures of a business income. The general theory of profit maximization by the individual firm provides a simplified picture of the decision-making process under conditions of uncertainty, the process which must be evaluated with the aid of accounting data. They have reconciled economic income and accounting income with considering price level adjustments. An attempt has been taken in this study to clarify these concepts of profit on the basis of historical cost and current costing.},
     year = {2014}
    }
    

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