THE MEASUREMENT OF PROFIT IN FINANCIAL ACCOUNTING AND MANAGEMENT'S PERFORMANCE ASSESSMENT

It is financial accounting information that enables decision-makers to ascertain the financial position and profitability resulting from the course of action actually undertaken in light of the then existing circumstances. While financial reporting has evolved with organizational/institutional changes in society, it is now deemed to be out of touch with economic reality. In an effort to introduce economic reality, information useful for users' decision-making has replaced information about the consequences of the firm's decisions as the center of financial reporting.