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The purpose of this chapter is to trace the evolution of the concept of measurement in financial reporting and to address the question of whether measurement in financial reporting is a process of “measurement” or whether it constitutes something else, which should not be called measurement, but rather characterized a practice which assigns numbers to elements in financial statements as opposed to the process of measuring. The chapter begins with an examination of the concepts of measurement put forth in recent years by the United States Financial Accounting Standards Board and the International Accounting Standards Board, followed by a summary of the general theory of measurement in the natural sciences, and finally a review of the arguments raised by accounting theorists such as Edwards and Bell (1961), Chambers (1966), and Sterling (1970) with respect to the measurement of business income. We agree with Sterling’s argument that business income should be “measured” by the difference between net equity (i.e., assets − liabilities) at two points in time, adjusted for investments and disinvestments by owners, and also the argument that the difference in equity should be determined by the change in exit prices of net assets at the beginning and the end of the accounting period. However, we are less convinced by his argument that the determination of exit prices constitutes a “measurement” process. This leads to the principle argument of this chapter, which is that “measurement” in financial accounting may not constitute a measurement process at all.

Accounting history has tended to ignore the accounting research enterprise, focusing instead on particular episodes or periods, such as histories of standards setting or histories of the accounting profession. In effect, methodological and theoretical differences within the accounting research discipline have so profoundly divided the discipline that researchers working in one area are relatively unable or unwilling to understand the key issues in other areas. This chapter seeks to shed some light on the greatest divide in accounting research: the divide between positive and critical accounting research. This chapter argues that both positive and critical accounting research can trace their origins to certain key figures who were doctoral students at the University of Chicago in the late 1960s and early 1970s. The chapter employs Foucault’s concept of genealogy to examine the origins of the positivist and critical paradigms in accounting research.

During the first half of the twentieth century, “accounting theory,” developed primarily by accounting scholars and academics, provided the primary basis for the practice and teaching of financial accounting in the United States. Since the creation of the Financial Accounting Standards Board (FASB) in the early 1970s, the FASB conceptual framework has provided the primary basis for accounting standards setting as well as for the practice and teaching of financial accounting. While the purpose of creating a conceptual framework has been to develop an agreed upon set of concepts and principles to guide accounting standards setting, a related goal has been to reduce diversity in accounting practice and to move toward greater uniformity. This chapter traces the influence of accounting theory on the conceptual framework and explores some of the consequences of this influence.

The development of the public accountancy profession in the last 200 years has increased the demand for the labor of professional accountants and enhanced the role and status of the professional public account. This increase in both the demand for the labor of professional accountants and for the professional services, which professional accountants provide, has resulted from the growth of capitalist enterprises, as well as institutional work on the part of members of the organized public accountancy profession. The objective of this chapter is to trace the historical development of the public accountancy professions in the United Kingdom and in France in response to contrasting institutional logics in these two countries. While legal requirements for external audits of company financial statements provided the basis for the development of the public accountancy profession as early as the end of the eighteenth century, differences in institutional logics, including differing conceptions of the relationship between individuals and the state, led to differences in the development of the public accountancy professions in the two countries. The primary argument of this chapter is that contrasting institutional logics have influenced the history of the public accountancy profession, which has evolved into one of the key regulatory structures of modern capitalism.