Knowledge that Transforms

Information evaluation, Information systems, Group decision making, Group performance

Since the 1939 Revenue Act requires a firm using LIFO for taxes to use LIFO for financial reporting, a firm wishing to minimize its tax payments by the use of LIFO must use LIFO as a reporting method. The tax savings to the firm adopting LIFO equals the difference between FIFO cost of goods sold (CGS) and LIFO CGS times the firm's marginal tax rate. Biddle [1980] presents evidence suggesting that the cash flow consequences of adopting LIFO are different for LIFO and FIFO firms. In this study, Biddle's work was replicated using a different method of estimating cash flow consequences.

Auditing, Extrapolation, Time-series, Cost variance

In a previous study reported here Moriarity and Barron [1976] used conjoint measurement to model the materiality judgment process of audit partners. They did so following the approach suggested by Krantz and Tversky [1971] in which axiomatic conjoint measurement (ACM) is used to identify the functional form of the decision maker's judgment model, and then numerical conjoint measurement (NCM) is applied to find the best-fitting scale values (part-worth functions).' Shortly thereafter, the American Accounting Association's Committee on Human Information Processing (AAA [1978]) suggested that conjoint measurement would be useful in the study of certain aspects of human information processing in accounting research, particularly for testing alternative composition rules which uses only ordinal properties of the data [1978, p. 32]. Composition rules refer to the functional forms (e.g., additive, multiplicative, etc.) of decision makers' judgment models.2 In a later paper, Moriarity and Barron [1979] examined the preaudit materiality judgments of audit partners, in which they assumed an additive model and used a holistic orthogonal parameter estimation procedure (Barron and Person, [1979]). Swieringa [1979] criticized this

Auditing, Auditor judgement, Intercorrelated data sources, Statistical inferences

Oil and Gas industry, Financial reporting, Successful efforts method, Full cost method

Paul Danos, John W. Eichenseher, Audit Industry Dynamics: Factors Affecting Changes in Client-Industry Market Shares, Journal of Accounting Research, Vol. 20, No. 2, Part II (Autumn, 1982), pp. 604-616

Auditing, Modelling, Economic agents

Joel S. Demski, David M. Kreps, Models in Managerial Accounting, Journal of Accounting Research, Vol. 20, Supplement: Studies on Current Research Methodologies in Accounting: A Critical Evaluation (1982), pp. 117-148

William H. Beaver, Mark A. Wolfson, Foreign Currency Translation and Changing Prices in Perfect and Complete Markets, Journal of Accounting Research, Vol. 20, No. 2, Part II (Autumn, 1982), pp. 528-550