ABSTRACT
This chapter examines in a general historical perspective the alternative approaches to income determination, which the Financial Accounting Standards Board, FASB discusses. The history of accounting is no other subject that has been more controversial than the determination of earnings and the related problems of valuation and matching. The great debate over what is income began in the late nineteenth century. It can be argued that for valuation approaches, the definition of assets and liabilities determine income whereas for matching, income depends on the definition of revenues and expenses. Ten Have finds that as early as the fourteenth century, the associations of Italian merchants required an interim accounting for income to effect dividend distributions before a venture was terminated. The new theories placed the investor in the center of the stage and directly considered reinvestment and growth variables. Interim income calculations were not made and the venture or voyage accounts were closed only when the entire venture was completed.
