An important application for financial accounting theory is in accounting standards, for which clarity of conceptual foundation can be viewed as essential in addressing the practical complexities of determining financial position and financial performance. Viewed from this perspective, the...

This paper makes two contributions. First, it demonstrates that income and expenses are incorrectly defined in the Framework, and it proposes alternative definitions. Second, the paper identifies that, in part as a consequence of these incorrect definitions, and in part because there are two,...