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New Light on Accrual, Aggregation and Allocation, Using an Axiomatic Analysis of Accounting Numbers' Fundamental and Statistical Character


Gibbins, M and Willett, RJ, New Light on Accrual, Aggregation and Allocation, Using an Axiomatic Analysis of Accounting Numbers' Fundamental and Statistical Character, Abacus: A Journal of Accounting, Finance and Business Studies, 33, (2) pp. 137-167. ISSN 0001-3072 (1997) [Refereed Article]

Copyright Statement

Copyright 1997 John Wiley and Sons

DOI: doi:10.1111/1467-6281.00009


he general nature of basic accounting measurement procedures is analysed from the perspective of their representational faithfulness rather than, as is normally nowadays done, from the perspective of relevance to user decision models. The character of accounting numbers is examined using an axiomatic framework based in statistical theory to demonstrate that statistical properties of the numbers are created by the process of preparing, constructing, the numbers. These properties, deriving from the process of constructing the numbers, are there regardless of the uses to which the numbers may be put, and therefore knowledge of them informs not only preparers of the numbers but also those who decide whether and how to disclose them to others, and those who make use of them for any purpose. The article argues, with axiomatic analysis and examples, that accounting numbers are statistics having properties such as distribution and variance that affect their usefulness in general and that may be examined separately from any use. Such an examination is helpful partly because it then avoids confounding the understanding of accounting measures' technical nature with issues of disclosure choice and use. The necessary axiomatic framework is presented briefly to establish its perspective on measurement questions, then the value of the framework for examining vexing accounting issues is illustrated with examinations of accrual accounting and matching, cross-sectional and time-series allocation, and accounting-relevant market values.

Item Details

Item Type:Refereed Article
Research Division:Commerce, Management, Tourism and Services
Research Group:Accounting, auditing and accountability
Research Field:Accounting theory and standards
Objective Division:Economic Framework
Objective Group:Measurement standards and calibration services
Objective Field:Service industries standards and calibrations
UTAS Author:Willett, RJ (Professor Roger Willett)
ID Code:100544
Year Published:1997
Deposited By:TSBE
Deposited On:2015-05-19
Last Modified:2015-06-09

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