CONCEPTS OF INCOME.

The article refers to misleading inferences in financial statements and focuses on two accounting theories that apply to reporting corporate income in the United States. There are four aspects of corporate income--accounting, tax, legal, and economic--which are considered when developing financial statements. The issue is whether to use an all-inclusive theory for a fair representation of earnings or the exclusion concept, which does not include the effect of changing conditions on revenue. Topics include changes in accounting methods during the 1920s, the Committee on Accounting Procedure of the American Institute of Accountants, the American Accounting Association's support of the all-inclusive theory, tax reform, and the use of LIFO calculations for inventory. INSET: AUTHOR'S NOTE.