ABSTRACT
The questions and issues that arise in thinking about the role played by accounting in business history are complex. While accounting policies and practices have economic consequences, they also are a product of decisions made by individuals and organizations in their own self-interest. Cause and effect relationships in accounting are, therefore, difficult to identify.
Paradoxically, business and economic historians have not paid much attention to the details of accounting which is often seen as a technical craft. While it is not customary to regard accounting data as information in the sense that data can be translated into estimates of parameters of interest, a formal error concept is a useful one because it makes the case against viewing accounting as neutral and mechanistic quite compelling. Even if accounting is neutral and accounting choices do not reflect self-interest, accounting errors can influence behavior.
The purpose of this paper is to reflect on the nature of error in accounting by using standard statistical concepts as a frame of reference. A statistical framework is a useful starting point for thinking about the meaning of ‘accounting error’ and how errors might affect behavior.
