In recent years economists have become increasingly interested in the activities of business-men as reflected in accounting records, and accountants have looked up from their work to take notice of the economist and his abstractions. Numerous articles have appeared in technical journals attempting to explain the accountant to the economist, at least one full-length, book has been written on the subject, and at Chicago last December a joint session of accountants and economists was devoted to a discussion of concepts of capital and income. Dr. Stanley E. Howard in introducing this joint discussion remarked: “Accountants can most effectively serve both their private clients and the public interest, if they can develop accounting principles that have a secure foundation in sound economic theory. Economists can better explain a profit-seeking economy if they clearly understand the principles by which the business records of the profit seekers are made.”

There are two barriers to a mutual understanding of the kind desired. The first was indicated by Professor F. A. Fetter (who spoke for the economists at this joint discussion) when he said, “If and when accountants and economists are talking about the same things … they should talk the same language …”. Unfortunately the present position is that the two not only talk different languages but each one of them in his own language uses the same word at different times to denote different things. It is perhaps unreasonable to expect that in two quite separate techniques the same term should hold an identical concept and undesirable to attempt to force it to do so. But obviously it is essential that in each technique consistent use should be made of the same term if a master of the one technique is to be able to make any use of the other without himself becoming a master of that other technique also. The second barrier is the circumstance that accounting is not a science but an art; it has traditions and conventions but not principles; its development has been determined by the practices of business-men, and its categories are derived from a particular legal system. The nature of these barriers suggests that the most useful approach would be by way of an enquiry into the procedures and concepts of the accountant, since these are properly more flexible than those of the economist.