Aggregate profits growth has been flattered by the performance of Wall Street firms and distorted by one-off changes in the accounting treatment of inventory profits and depreciation.

Introduces the conditions of concrete application of accounting cautiousness principle in inventory pricing, fixed asset depreciation, business of bad debt loss and asset decrement.

Some other balance sheet and income statement items are supposed to be a fixed proportion of sales, such as COCS, SG&A expense, cash, inventory, depreciation, interest, tax and so on.