The Accounting Historians Journal Vol. 8, No. 2 Fall 1981
Vassilios P. Filios
UNIVERSITY OF BIRMINGHAM
FOUR SCHOOLS OF EUROPEAN ACCOUNTING
Abstract: A feature of the history of accounting thought is the existence of con-tending theories of accounts in continental Europe. Four schools of accounting thought developed and are here briefly examined.
At the end of the 19th century, two theories of accounts gradually appeared in American textbooks and treatises on accounting—the proprietary and the entity theories. A third and later development is the enterprise theory, espoused by many modern writers. Ac-cording to the proprietary theory of accounts, capital is the amount of assets to which owners possess a claim after indebtedness to third parties has been recognized. Income, from this viewpoint, is the change in net assets. According to the entity theory of accounts, capital encompasses both debt and equity, income being the change in total capital. The enterprise theory of accounts emerged after the Great Crash of 1929 and takes a broader view of the busi-ness firm, emphasizing the economic effects of business operations on all of its participants and consequently, upon society as a whole. According to the enterprise theory of accounts, capital also en-compasses all items on the right side of the balance sheet but in this theory net income is deemphasized and asset flows to partici-pants are accentuated.1 The enterprise theory of accounts is the first social theory of accounting in Anglo-Saxon countries.
Along parallel, but not very similar lines, four other categories of theories of accounts have been developed in the French and German speaking world—the personification, legal, materialist, and economic theories of accounts. The origins of these European ac-
I am deeply grateful to Professor Constantinos Triposkiadis of the Athens Grad-uate School of Economics and Business Sciences and Professor Kenneth S. Most of Florida International University for their invaluable help in matters of syntax and expression. I would like also to thank the anonymous referees of the Accounting Historians Journal for their helpful comments.