Excerpt from The Financial Policy of Corporations, Vol. 3 of 5
The basis of business policy is the science of accountancy, 3; Accountancy based on a correspondence between economic and money values, 4; Balance sheet and income account contrasted, 5; Net profits deduced by two separate sets of adjustments, 7.
As soon as a business has been established, the financial problems, so important in themselves at the beginning, become resolved largely into accounting problems directly pertaining to the administrative policy of an active and continuing business. This is because all values of a going business must be computed indirectly. At the time of promotion there may have been a correspondence between the economic value and the cost of the property acquired by the new corporation, but no sooner is the business under way than changes in the value of its property necessarily occur. Accountancy is the science having to do with the statement and interpretation of these changes in economic value in terms of money value. It is the science of fact underlying all questions of the financial policy of the actual operation of the corporation.
The science of accountancy is primarily a system of logic. It rests on one absolutely fundamental presupposition and three postulates arising directly out of this. The fundamental presupposition of accountancy is that all economic values can be compared with each other in terms of a common unit. This unit is money.
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