The fundamental problem of accounting

Robert Cairns

Canadian Journal of Economics, 2013, vol. 46, issue 2, 634-655

Abstract: The fundamental problem of economic accounting is to determine a forwardlooking schedule of rentals, user costs or quasirents to provide for the recovery of irreversible investments. The method derived herein relaxes some restrictive assumptions that are common in capital theory. There can be multiple forms of comprehensive capital. Accounting for all forms of capital, including tangible and intangible capital, is symmetrical. The analytical focus becomes one of fixities and frictions and not optimality. Rentals obey inequalities as opposed to marginal conditions. If discounted profit is positive, rentals, depreciation, and capital value are not unique.

JEL-codes: D24 M41 (search for similar items in EconPapers)
Date: 2013
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