Acta Oeconomica Pragensia 2006, 14(1):193-209 | DOI: 10.18267/j.aop.531

Theory of measurement and its inference to accounting

David Procházka
Ing. David Procházka - doktorand; Katedra finančního účetnictví, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze; email: prochazd@vse.cz

The first part of the exposition is aimed to establish basic definitions of the theory of measurement. I consider the possibilities and limitations of measurement in natural sciences, too. The findings of this part are extended to social sciences and the emphasis is put on measurement in accounting. Measurement of assets and liabilities and income determination are the fundamental parts of the measurement process in accounting. Proper measurement of these magnitudes is necessary in order to disclose useful and relevant information, especially about financial position, performance and changes in financial position of the firm. When preparing financial statements, we should respect both the substance of the economic activities carried out by firms and also the correctness of mathematical operations performed in accounting. On this account, the introduction of current values as primary valuation basis is the crucial condition. Current costs or current realizable price (opportunity costs) are possible alternatives. I recommend presenting both type of information (as components of the multifunctional statements) in order to enhance the quality and usefulness of disclosed data.

Keywords: theory of measurement, measurement in accounting, current values, fair-value, realizable profit, business profit
JEL classification: M41

Published: March 1, 2006  Show citation

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Procházka, D. (2006). Theory of measurement and its inference to accounting. Acta Oeconomica Pragensia, 14(1), 193-209. doi: 10.18267/j.aop.531
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