ABSTRACT
The admission that the rates of return reported in published accounts are liable to be misleading, and that anyone who ‘draws inferences from their magnitudes as to the relative profitability of investments in different uses or countries, does so at his own peril’ (Harcourt, 1965: 325) is a source of considerable embarrassment to those engaged in the theory and practice of financial reporting. After all, a firm’s published accounts are supposed to give ‘a true and fair view’ of its financial performance. ‘Financial accounts are intended to report the economic performance of the firm to the individual shareholder or proprietor’ (Whittington, 1983: 89, 90).
