The Motivational Assumption for Accounting Theory

The article informs that profit motive has frequently been described as the "driving force" of capitalistic society, and some of the more ardent supporters of this belief hold the profit motive in the same high esteem as their most sacred beliefs. The profit motive is assumed to be the implicit expression of society's goal for the firm. Further more, the profit motive is ascribed as being the objective of enterprise management, and this objective is assumed to be explicitly stated by the stockholders for the corporate management. The changes in the socio-economic environment, since the concept of a profit motive was first advanced, do not mean, analogously, that the profit motive is no longer a reasonable assumption regarding corporate management's goal. This paper re-examines the "profit motive" in modem society and relates the "modified profit motive" assumption to accounting practice. Thus, the paper consists of two parts. The first part describes, compares, and contrasts three viewpoints on how the motivational assumption for accounting theory can be re-interpreted in the current socioeconomic environment. The second part suggests specific extensions, from the foregoing analysis, to accounting practice.