A theoretically correct measure of income does not exist in
“A theoretically correct measure of income does not exist in the real world in which accountants must operate.”

Required
a. What is meant by the phrase “a theoretically correct measure of income”?
b. Why does a theoretically correct measure of income not exist in the real world?
c. Outline the different tradeoffs between relevance and reliability under historical cost accounting and current value accounting. Consider both situations where reason-ably well- working market values exist (see definition of well- working markets in Section 1.2) and do not exist.

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