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The Conceptual Framework Project (CFP) represents an attempt by the FASB to develop concepts useful in guiding the Board in establishing standards and in providing a frame of reference for resolving accounting issues. Chapter 1 summarized the development of accounting from its early stages until the present. This review revealed that accounting practices were initially developed in response to changing economic conditions, and no attempts were made to establish a “theory of accounting” prior to the twentieth century. Subsequently, individual writers and authoritative bodies undertook efforts to explain the goals of accounting. Most of the initial approaches were more descriptive of existing practice than normative in nature. Later efforts have attempted to develop and build on a normative theory of accounting.

The Early Theorists

Although debates about issues such as the existence of a science of accounting and the need to develop a theoretical framework began to appear in the early 1900s,1 the first attempts to develop accounting theory in the United States have been attributed to William A. Paton and John B. Canning.2 Paton's work, based on his doctoral dissertation, was among the first to express the view that all changes in the value of assets and liabilities should be reflected in the financial statements, and that such changes should be measured on a current value basis. ...

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