ABSTRACT
I n current popular usage, profits is treated as an accounting concept re ferring to the difference between receipts and contractual costs, as in corporate profits. Its functional counterpart depends on the accidental financial structure of the enterprise. For example, consider two otherwise identical corporations, one of which has obtained much of its capital by issuing fixed-interest securities, the other, all of its capital by issuing com mon stock. Let all other receipts and expenditures be identical for the two concerns. The same sum w i l l then appear on the books of the first corpora tion as partly "interest paid" and partly "profits"; on the books of the second, as all "profits." Again, let the first rent the land i t uses, the second own i t . The sum entered on the first corporation's books as rent would be entered on the second as profits.
