Factors affecting the Choice of Prevailing Income Measuring Concepts among Manufacturing Companies

¹ADEMOLA EMMANUEL AKINYELE, ²ALADELUSI KEHINDE BANJO AND ³TAIWO AKEEM AYINDE

¹Department of Accountancy, Federal Polytechnic Ilaro, Ogun State

²Department of Banking and Finance, Federal Polytechnic Ilaro, Ogun State

³Department of Business Administration, Federal Polytechnic Ilaro, Ogun State

E-mail: demoladelord2003@yahoo.com ; Taiwoakeem2002@gmail.com

ABSTRACT

The significant of income to any business entity cannot be overemphasized. Income is the residue that is available for distribution to the shareholders which ensures the maintenance of the capital (Glautier A, 2011,). Income is a basic and important item of financial statement that has various uses in various contexts. It is generally perceived as a basis for taxation and redistribution of wealth, a determination of dividend payment policies and investment and decision making guide and element of prediction (Riahi-Belkaoui 2002).The choice of income measurement concepts which has a direct bearing on the operating performance reporting of an organisation is informed by some factors which this paper sought out to examined. To achieve the objective of this study, opinion of selected staff of Fidson Nigeria Plc and Nestle Nigeria Plc Lagos State were sought through the use of questionnaire and besides relevant theories and concepts were reviewed The questionnaire were analysed with the use of SPSS 17 .The evidence shows that the choice of accounting concepts as the  prevailing income measurement concept is premised on historical cost accounting given its unconditional and long standing acceptance of this version of income by the accounting profession and the business world. The paper finally recommends that the use of other income measurement such as the economic view should be preferred due to some militating factors against the use of accounting income which is historical in nature.