The balance sheet theory forms a method for calculating industrial or commercial profit. It is inseparable from the freedom of accounting allocation, which allows the individual entrepreneur to enter the assets or values of his choice into the balance sheet. The balance sheet theory is the result of a long dispute between the tax authorities and the courts over the concept of income. The freedom of accounting allocation is too great for it can be dangerous. Reforms in this area have only made it more complex, without succeeding in encouraging the creation of businesses.