Contemporary Theories of Corporate Profits Recording.

Abstract The article discusses contemporary theories of corporate profit recording. Every substantial rise in prices brings with it many problems and many suggestions of economic reform. After World War I there was a strong movement for the stabilization of the dollar. The fluctuating dollar was the culprit, and legislation was proposed to stabilize prices by varying the gold content of the dollar. Since World War II accounting seems to be the chief culprit, and many stimulating articles have been written to this effect. Accounting is said to contribute to price inflation in two ways: (1) by providing misleading information upon which wage demands are based, and (2) by creating false optimism on the part of business men. One of the most recent criticisms of conventional accounting methods that has come to this writer's attention is that of Roy A. Foulke in his pamphlet, A Study of the Corporate Theory of Profits.' Mr. Foulke believes that accounting should account for economic values and for real profits. MacNeal recognizes that the term economic value is synonymous with market value when he states:".. . the economic value of a thing is its market price and that alone." At the other extreme is the only adequate method yet suggested for reporting real income, that presented by Sweeney in his book Stabilized Accounting.