Perceptions of External Accounting Transfers Under Entity and Proprietary Theory.

Abstract The article reports that accountants need to reach unanimity on the fundamental question of the nature of external accounting exchanges before guidelines can be completed for the valuation of the "two-way flow of goods." It is, in essence, a contention that writers will continue to be at odds on the issue of the method for attaching values to the exchanges until agreement is reached on the question of the nature of the exchanges. The writers agree that a valuation scheme is not complete unless developed for both internal exchanges, e.g., recording of depreciation, and external exchanges, e.g., recording of purchase of an automobile. However, it seems reasonable to conclude that most internal exchanges are mere reclassifications of prior external exchanges, and that it is therefore fundamentally more important to have an appropriate understanding of external exchanges. The paper covers aspects of the overall valuation problem, but it does not seek to argue for or against the hypotheses of S & F and N & P.