IDEAS home Printed from https://ideas.repec.org/a/taf/acctbr/v45y2015i4p413-441.html
   My bibliography  Save this article

Accounting for capital: the evolution of an idea

Author

Listed:
  • Christopher Nobes

Abstract

The word 'capital' has many meanings, within and beyond business. In accounting, it was originally a credit concept but has many uses related to assets. In economics and tax, it has exclusively asset meanings. This paper investigates the development of the concept of capital, focussing on accounting and related disciplines, especially in the UK. Even as a credit term, 'capital' can be as narrow as original equity or wide enough to include debt. A credit/debit confusion can be seen in Pacioli's treatise and through to recent documents by standard setters. At various dates, amounts called 'capital' have been shown on different sides of the balance sheet. Capital maintenance is central to the measurement of income for various purposes. It was thrown off course in 1889 by a legal case which seems to have been influenced by the double-account system, which also had echoes in economics. However, the conventional accountants' view was re-established in 1980 because of an EU Directive. Maintenance of capital (both credit and debit forms) was much discussed in the 1970s in a period of high inflation. The concept of equity began to become clear with the separation of provisions and reserves (in the 1940s) and when liabilities were defined (from the 1960s). However, accounting practice departs from the definition and it measures liabilities in various ways, so that there is still no clear concept of equity capital. A number of policy implications are set out in the paper.

Suggested Citation

  • Christopher Nobes, 2015. "Accounting for capital: the evolution of an idea," Accounting and Business Research, Taylor & Francis Journals, vol. 45(4), pages 413-441, June.
    • Handle: RePEc:taf:acctbr:v:45:y:2015:i:4:p:413-441
    DOI: 10.1080/00014788.2015.1033130
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00014788.2015.1033130
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00014788.2015.1033130?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mill, John Stuart, 1848. "Principles of Political Economy (II): Distribution," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 2, number mill1848-2.
    2. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    3. Scott, William Robert, 1912. "Constitution and Finance of English, Scottish and Irish Joint-Stock Companies to 1720," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number scott1912a.
    4. Scott, William Robert, 1912. "Constitution and Finance of English, Scottish and Irish Joint-Stock Companies to 1720," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 3, number scott1912c.
    5. Mill, John Stuart, 1848. "Principles of Political Economy (III): Exchange," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 3, number mill1848-3.
    6. Mill, John Stuart, 1848. "Principles of Political Economy (I): Production," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 1, number mill1848-1.
    7. Scott, William Robert, 1912. "Constitution and Finance of English, Scottish and Irish Joint-Stock Companies to 1720," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, volume 2, number scott1912b.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. C. Feger & Alexandre Rambaud, 2020. "Improving nature’s visibility in financial accounting," CIRED Working Papers hal-02976915, HAL.
    2. C. Feger & Harold Levrel & Alexandre Rambaud, 2022. "Three complementary accounting methods to put ecological issues at the heart of public affairs [Trois méthodes comptables pour mettre les problèmes écologiques au coeur de la chose publique]," Post-Print hal-03977774, HAL.
    3. Alexandre RAMBAUD, 2023. "How can accounting reformulate the debate on natural capital and help implement its ecological approach?," Working Paper 8567406c-bed0-4401-9792-a, Agence française de développement.
    4. C. Feger & Alexandre Rambaud, 2020. "Improving nature’s visibility in financial accounting," Working Papers hal-02976915, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sven-Olof Collin, 1996. "Bad Losers: An Investigation of the Morality of the Limited Liability of Shareholders in a Joint Stock Company," Journal of Economic Issues, Taylor & Francis Journals, vol. 30(1), pages 283-289, March.
    2. Jerry Kirkpatrick, 2004. "Reisman's Net Consumption, Net Investment Theory of Aggregate Profit," American Journal of Economics and Sociology, Wiley Blackwell, vol. 63(3), pages 627-646, July.
    3. Kuś Agnieszka, 2020. "The Importance of Innovation in the Development of Polish Business Gazelles," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 28(1), pages 32-51, March.
    4. Mauro Boianovsky, 2013. "Humboldt and the economists on natural resources, institutions and underdevelopment (1752 to 1859)," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 20(1), pages 58-88, February.
    5. Philippe Steiner, 1998. "The structure of Say's economic writings," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 5(2), pages 227-249.
    6. Bilge Erten, 2010. "Industrial Upgrading and Export Diversification: A Comparative Analysis of Economic Policies in Turkey and Malaysia," Working Papers id:2778, eSocialSciences.
    7. Ron Baiman, 2010. "The Infeasibility of Free Trade in Classical Theory: Ricardo's Comparative Advantage Parable has no Solution," Review of Political Economy, Taylor & Francis Journals, vol. 22(3), pages 419-437.
    8. Mary E. Edwards, 1984. "Site Value Taxation on Australia," American Journal of Economics and Sociology, Wiley Blackwell, vol. 43(4), pages 481-495, October.
    9. Charles M. A. Clark, 2020. "On the Priority of Labor Over Capital," American Journal of Economics and Sociology, Wiley Blackwell, vol. 79(4), pages 1147-1180, September.
    10. Stratford, Beth, 2020. "The Threat of Rent Extraction in a Resource-constrained Future," Ecological Economics, Elsevier, vol. 169(C).
    11. Hupfel, Simon & Missemer, Antoine, 2023. "Decommodifying wealth: Lauderdale and ecological economics beyond the Lauderdale paradox," Ecological Economics, Elsevier, vol. 207(C).
    12. Eric Hilt, 2014. "History of American Corporate Governance: Law, Institutions, and Politics," Annual Review of Financial Economics, Annual Reviews, vol. 6(1), pages 1-21, December.
    13. McCloskey Deirdre Nansen, 2018. "The Two Movements in Economic Thought, 1700–2000: Empty Economic Boxes Revisited," Man and the Economy, De Gruyter, vol. 5(2), pages 1-20, December.
    14. Eloi Laurent & Jacques Le Cacheux, 2006. "Integrity and Efficiency in the EU: The Case against the European economic constitution," Working Papers hal-00972707, HAL.
    15. Ian Keay, 2019. "Protection for maturing industries: Evidence from Canadian trade patterns and trade policy, 1870–1913," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(4), pages 1464-1496, November.
    16. Dario Stevanato, 2017. "Tassazione progressiva, equit? del prelievo e Flat Tax," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 2017(1), pages 122-147.
    17. Dan Bogart, 2016. "The East Indian Monopoly and the Transition from Limited Access in England, 1600–1813," NBER Chapters, in: Organizations, Civil Society, and the Roots of Development, pages 23-49, National Bureau of Economic Research, Inc.
    18. Melitz, Marc J., 2005. "When and how should infant industries be protected?," Journal of International Economics, Elsevier, vol. 66(1), pages 177-196, May.
    19. Martimort, David, 1996. "The multiprincipal nature of government," European Economic Review, Elsevier, vol. 40(3-5), pages 673-685, April.
    20. Jacobsen, Catrine & Piovesan, Marco, 2016. "Tax me if you can: An artifactual field experiment on dishonesty," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 7-14.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:acctbr:v:45:y:2015:i:4:p:413-441. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RABR20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.