Abstract The article focuses on how managerial concepts and views are reflected in the accounting principles, quasi-principles, and conventions which are implicit in the term, current accounting standards. The responsibility of accounting to management is a primary one, and in fact is considered by most accounting authorities to be paramount. The objectives of management are, first, to conserve the capital of the enterprise and second, to add to such capital by earning income. These two objectives govern the data with which accounting deals. Accounting is fundamentally concerned with the distinctions between capital and income, as these elements are expressed in the balance sheet and the income statement as accounting end-products. The distinction between capital and income is preserved even in accounting for that which is basically capital. Accounting has recognized the significance of earnings as the second primary managerial objective. In striving to attain the dual objectives of preserving capital and maximizing earnings, management makes use of certain assumptions and modes of thinking which profoundly affect the accounting.
Joseph A. Mauriello (Sun,) studied this question.