A RECONCILIATION OF SOME DEFINITIONS OF NET INCOME

The Financial Accounting Standards Board distinguished an asset/ liability approach to income measurement from a revenue/expense approach. It identified the revenue/expense approach with the notion of matching. Accrual accounting was contrasted with cash accounting and claimed to be consistent with either approach. The Hicksian definition of income was treated as a fundamental and completely general definition. This article argues that there are three approaches to income mea-surement, not two. These are the asset/liability, the rovcnuo/expenso, and the matching approach. In other words, the revenue/oxponso appiroach should not be identified with the notion of matching. Tlie Hicksian def-inition is shown to lean towards the asset/liability appro.icli and in tliat sense not to be completely general. An alternative definition due to Irving Fisher is revived and demonstrated to be more closely rt.Oated to the revenue/expense approach. The Fisherian revenue/expense view is shown to be more closely re