Theoretical Inquiry into Recognition and Measurement in Accounting and Possibility of Extending Accounting Concept of "Transaction"

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Developments by business enterprises of off-balance sheet financing has needed extending the scope of recognition and measurement in financial statements. Taking the conventional accounting as given, we seek practical way of extension of the scope.Cognitive and measuring operations in the conventional accounting can be characterized by (1) its transaction-approach, (2) its orientation toward nominal monetary value, and (3) bordering accountants' latitude as a result of (1) and (2) .In double entry bookkeeping system, these operations are executed as process of recording, calculating, classifying and regrouping cash flows, while causal events of cash flows are used as criteria of classifying cash flows, as a crucial step of determine income in a period.To recognize off-balance sheet financing in financial statements, it would be necessary and indispensable to recognize future events concerned. Despite prevailing belief, the conventional accounting recognizes some kind of future events in its way, e.g.depreciation of fixed assets. But future events to be recognized must have determined prices at the time of their recording in double entry bookkeeping system.We could extend scope of recognition and measurement in financial statements through enlarging accounting concept of cash and cash equivalent, which would inevitably weaken objectivity and reliability of recognition and measurement in the conventional accounting.