Views on the Desirability of Stabilizing Income Reporting by the Design of GAAP

Having set the stage, we go on to the first set of Chapters considering issues in financial reporting, those underlying financial reporting.

As discussed in Chapter 2, stability of income reporting is the fundamental goal of traditional financial reporting. Stabilizing income reporting by selecting principles deliberately to reduce what would otherwise be reported changes from period to period in net income pervades the design of current GAAP, also as discussed in Chapter 2 and throughout this book. Its desirability is therefore of vital concern in considering issues in financial reporting.