Abstract The accounting concept of income as the residual of the matching of costs and revenue is one, which appears on the surface to be rather innocuous. Its application, however, is known to be a difficult but also a delusive task. The accountant not only must decide which basis of revenue recognition is appropriate for a given situation and which costs have expired and are to be matched with this batch of revenue, but he must express this matching process in terms of money. Today accountants need only turn to their daily newspapers for a constant reminder that the dollar as a measuring device is not a stable unit. It is the purpose of this article to demonstrate that this limitation of the accountant's measurement of income adds to the confusion that persists in the measurement and administration of income. The almost daily statements in the press to the effect that the matching of historical costs against current revenue does not provide for the replacement of assets are indeed a truism. Certainly the accountant's measurement of income and management's use of the funds provided by revenue are truly independent activities.
Rufus Wixon (Fri,) studied this question.