An Activity Concepts of the Business Enterprise and Its Implications in Accounting Theory.

Abstract The article focuses on an activity concept of the business enterprise and its implications in accounting theory. Two schools of thought exist as to the nature of the accounting entity, each of which is intended to serve as an integrated framework for accounting theory and each of which has been subject to many criticisms. It is a hypothesis of this dissertation that both concepts are based on assumptions with respect to the structure and behavior of a business organization that are not in accord with facts. The first objective of the study is to examine the validity of the above hypothesis; the second is to develop a realistic concept of the business enterprise. As a substitute for traditional concepts, an activity concept of a business enterprise has been developed, which is based on the idea that a business organization is a complex system of formal and informal coordinated activities for the purpose of creation or transformation and distribution of utilities. The activity concept makes it possible to join together the view that the business enterprise is a productive economic entity and the view that it is a method of doing business for participants.