Accounting in Perfect and Complete Markets
This note represents a preliminary step in the study of accounting. Accounting serves many purposes, and it is not easy to decide where to begin ; we begin by exploring the relationship between accounting numbers and the value of a firm and its assets. Market structure affects value, and furthermore, the relationship between value and accounting. We consider the relationship between the balance sheet and income statement, and how they keep track of the unfolding of economic events.
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