Conflicting Concepts of Income for Managerial and Federal Income Tax Purposes.

Abstract As American business grew from small, localized proprietorships to a great number of large corporate enterprises, the role of accounting also changed. Accounting reports no longer could be designed to serve owners only, but had to meet the needs of management, owners, other investors, labor, regulatory bodies, federal and state agencies and, in many instances, society itself. The need for "generally accepted principles of accounting" became more apparent. This need has often been demonstrated and need not be repeated here. It is sufficient to note that in meeting this need the development of basic concepts has been a steady process. Although concepts or principles of accounting are expressed in different ways, it is generally true that when differences in terminology are reconciled sound body of accounting logic may be established. Unfortunately, the term, "generally accepted principle" is more often used to describe procedures than underlying concepts. Undoubtedly, there are many in the profession who speak glibly of "generally accepted principles" without the faintest idea of what the basic concepts are or what purpose they serve.