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Accounting theory by Mind Map: Accounting theory
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Accounting theory

System approach to accounting


Throughput (method process)


Financial statements (disclosures)

Capital Maintenance

Amount of dollars that can be distributed as income without impairing capital

2 major issues


Net Asset = C + RE

Impact on changing prices

What does CM Rule do?



Nominal Dollars

Constant Dollars

Accounting models




Summary of CM & NAV

CM determines the adj factor for items which differ in timing

CM necessary & sufficient for calculating lifetime income

But CM not sufficient for calculating periodic income

Valuation of paid-in capital depends on CM rule

NAV rule determines amt and timing of HG/L

CM Concept determines extent to which these HG & HL avail for distribution

RE affected by both CM and NAV rules

GDP Topics

Accounting theories

Agency theory


Economic Consequences

Net Asset Valuation


What does NAV Rule do?

Current Entry Values

Edwards & Bell Model

Current Exit Values & Realizable Income

Exit value income

CoCoA model (Chambers)

Current Cost Accounting

Additional concepts used in CCA model

General requirements of CCA


Dismissal of CCA