ABSTRACT
The problem of value measurement in business as in political economy, rests upon a clear understanding of the concept of income and of criteria for timing its occurrence. It is the latter phase of the problem which causes greatest difficulty among business men and among the accountants who prepare balance sheets and statements of profit and loss. Most disagreements among accountants in the valuation of assets or the determination of income arise out of differences of opinion as to the time when income transactions have occurred or will occur. Consequently, this paper will deal primarily with the time element in business valuation, with only passing mention of the nature of the income on which the business values rest. It is true, of course, that much of the disagreement over the concept of income is centered around the ideal point in time at which value is to be recognized as acquired. So even the nature of income can be said to depend upon the “time element.” The point to be stressed is that the application of any accepted criterion of income presents difficulties which must be faced in business, even though they may appear to be insurmountable. The difficulties of scientifically defensible value measurement in business have tended to keep the problem in the background. Economists have dismissed it as irrelevant to a general theory of political economy, as something to be dealt with in footnotes. Accountants have thrust it aside as troublesome and pointless, preferring to substitute practical rules-of-thumb for an analysis of the problem.
