William J. Vatter’s Theory of Account Classification

ABSTRACT William J. Vatter (1905–1990) is recognized as the father of fund theory, introduced in his seminal book, The Fund Theory of Accounting and Its Implications for Financial Reports (1947). His second major monograph, Accounting Measurements for Financial Reports (1971), however, has received little scholarly attention. Although Vatter’s approach to using funds in accounting theory is widely recognized, his views on accounting measurement and financial reporting remain insufficiently examined. This study reassesses Vatter’s lesser-known works, including his overlooked articles, to clarify the distinctive features of his accounting theory. It demonstrates that his approach to accounting measurement was grounded in the historical cost principle and that he did not explicitly aim to construct an asset-centered theory. Addressing these aspects provides a fuller view of Vatter’s thought and highlights the continuing relevance of historical accounting theory for present-day debates on accounting measurement and the conceptual framework.