Accretion Concept of Income.

Abstract This article is an attempt to demonstrate that progress in accounting theory must begin with income concepts, secondly, the appropriateness of a single concept, accretion, rather than a variety of concepts, third, that the accretion concept is an all-purpose concept, relevant to taxation and other areas as well as accounting, and finally, that general acceptance of this concept would have significant effects on accounting practice as well as "theory." The accretion concept is neither complex nor difficult but has far reaching implications for accounting theory and practice. The accretion concept defines income as an increase in economic power which can be measured with reasonable objectivity. For an individual, income for a period equals the change in economic power during the period plus the value of goods and services consumed. For other entities, income is the change in economic power adjusted for capital contributions and distributions. In emphasizing objective measurability, the accretion concept differs from the economic concept of income, as usually conceived, and also from the concept implicit in conventional accounting practice.