Title: How the balance sheet misrepresents shareholder claims and undermines the entity perspective

Authors: Carol M. Graham; Todd L. Sayre

Addresses: Department of Accounting, The University of San Francisco, 2130 Fulton Street, San Francisco, CA 94117, USA ' Department of Accounting, The University of San Francisco, 2130 Fulton Street, San Francisco, CA 94117, USA

Abstract: While the revised conceptual framework issued by the FASB and the IASB states that an entity perspective is appropriate for financial reporting, the framework nevertheless still contains elements that are inconsistent with this perspective. This paper aims to contribute to the discourse around financial reporting perspective by examining the shareholder-centric focus inherent in the traditional balance sheet. We argue that the current balance sheet configuration presents a potentially misleading characterisation of shareholder claims. We suggest that shareholders do not own the corporation, its undistributed profit or the underlying assets.

Keywords: shareholder claims; balance sheet; legal ownership; critical accounting.

DOI: 10.1504/IJCA.2018.093060

International Journal of Critical Accounting, 2018 Vol.10 No.3/4, pp.193 - 205

Received: 12 Oct 2017
Accepted: 05 Mar 2018

Published online: 05 Jul 2018 *

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