Publication Date


Document Type


First Advisor

Cheng, Philip C., 1925-||McClary, Ray H.

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Accountancy


Financial statements


The determination of business income has long been regarded as the central core of financial accounting. A fair method of income determination is needed to measure economic progress of individuals and business entities. Having made references to the term 'income' in their legal relations with one another for various purposes, individuals and business entities also find it necessary to measure income in order to determine and enforce their respective rights and obligations. For these reasons the determination of business income has been referred to as the crux of the accounting problem, the central issue around which all other considerations revolve. In spite of its significance there has never been any real agreement as to exactly what constitutes business income, or how it should be measured. There is a variety of income concepts in the field of accounting, and in recent years the usefulness of the present financial income reporting has also been increasingly questioned. This thesis deals with two main areas of contention: the use of historical cost and the single valuation concept in financial statements. It examines the possibilities of a multi-valuation financial statement. Such statements would present, in addition to historical cost data, price level adjusted cost and current cost information. Present day financial statements are based on a historical cost income concept. Under this concept of income valuation occurs at the event of exchange, and the magnitude of the valuation is determined by the cash exchanged. It is found that such valuation method ignores general and specific price changes, and would provide valid measurements only if price changes occurred at the point of realization. Present day financial statements also provide only one valuation basis. Once a value is recorded/ all other values are automatically excluded. This brings about some serious limitations in financial statements: the recipients of the statements include users whose purposes differ widely, and where purposes differ# there are probably differences in the kinds of valuation basis which can best serve the purposes. To overcome these limitations, a concept of multi-valuation financial statements has been proposed. This thesis examines the issues related to such statements. A multi-valuation financial statement is developed in this study# and it is concluded that such statement would provide additional useful information, and adhere more rigidly to the standards of relevance# verifiability, freedom from bias, and quantifiabi1ity.


Includes bibliographical references.


vii, 124 pages




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