The F-O modeling is one of the few attempts to pursue accounting theory. It is no
coincidence that the terminology of accounting (e.g., income) is similar to that used in
economics and finance. We could have called the difference between revenues and expenses
by another name, but we did not. The semantics of accounting was chosen because income
theory asserts that the resulting measure is an indicator of firm performance. Hence, it is
natural to focus on a theory of measures of accounting net income and their relation to
value.