Accounting and economic concept of income

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JEL classification

• Accounting
• General Economics: General

Keywords

Accounting theory, capital maintenance, economic theory, expenses/costs, income

Abstract

The paper outlines basic features of accounting and economic concept of income. Several substantial differences exist between both concepts. The paper tries to reveal possible ways for the narrowing a gap between accounting and economic income. Ongoing worldwide economic globalisation elicits a demand for high-quality accounting information. As a consequence of changes in a real economy, financial reporting has been abandoning the traditional accounting paradigm based on the prudence principle and historical costs measurement. The new concept of accounting income has been approaching to the concept of income as defined by economic theory. The paper analyses fundamental features of income in economics and accounting and outlines the ways of its possible integration in both disciplines.