Reviews the book "The Houghton Miffin C. P. A. Coaching Series," by D. Lyle Dieterle, Charles M. Hewitt, Donald F. Istvan, Robert R. Milroy, Ray M. Powell, L. Vann Seawell and Robert E. Walden.
It is becoming increasingly popular, in first-year accounting courses, to emphasize the use of accounting information for management purposes. To accomplish this in a first-year course it is necessary to eliminate or de-emphasize certain phases of accounting that traditionally have been considered an integral part of first-year accounting. There is not time to cover everything and include an introduction to managerial accounting. The new emphasis represents the first significant change in accounting since accounting became differentiated from bookkeeping. It is a healthy sign, and it means that first- year accounting will be a more dynamic and useful experience. An accountant needs to have a firm foundation in techniques as well as principles and therefore it is the duty of the teachers to provide them with basic education an accounting major requires. Deficiencies in accounting techniques can be overcome by assigning a practice set at the beginning of the study of intermediate accounting.
The task assigned the 1962 Courses and Curricula Committee of the American Accounting Association was "to develop criteria for selecting the content and quality of collegiate accounting educational materials to provide adequate instruction in the body of knowledge that is accounting." The 1961 Committee, which was kept intact for a second year, decided that this task was possible after it discarded other more limited objectives because they involved too many restrictive assumptions to produce useful conclusions. To reduce its task to manageable proportions, the Committee decided to exclude so-called "service" courses, in which accounting is taught primarily to students who are preparing for careers other than accounting careers. For example, the first course in accounting is not considered, since it is offered primarily for those students who do not plan to go on in accounting. As a result, these recommendations apply only to schools which have as one of their objectives educating college students who intend to enter the business world as accountants in industrial, governmental, or public accounting organizations.
Of the two methods of liberalized depreciation specifically authorized for income-tax purposes by the Internal Revenue Code of 1954, the declining balance method has apparently been the overwhelming choice of the many utility companies in the United States, which have adopted an accelerated method of depreciation. The reason for the general preference for this method over the sum of the years-digits method cannot be determined precisely, but it is believed that the explanation lies in the widely publicized provision, which allows the company adopting the declining balance method to change to the straight-line method at any time without prior permission of the Revenue Commissioner. When the declining balance method of depreciation is used with groups of property, as is the typical case in public utility accounting, there is no great advantage to be gained by changing to straight-line depreciation. Studies of the behavior of property groups indicate that there is little basis for assuming that a property group will live to average life and be abruptly retired. The probability of retirements from a group of property coinciding with such a predicted retirement pattern is extremely small. There is no provision in the Internal Revenue Code of 1954 or in the regulations, which permits shifting from the declining balance method of depreciation to an amortization scheme.
The shape of the ideal depreciation curve for an asset depends partly on the shape of the net receipts curve and partly on the criteria which the depreciation curve is required to meet. In the present article, the focus is on the simplest net receipts curve constant net receipts- and investigate the effect of different criteria on the shape of the depreciation curve. Two main criteria will be considered: The depreciation of the facility for each period should be proportional to its net contribution to period earnings and secondly, the net period returns from the facility should be proportional to the net investment in the facility. A choice has to be made between the two main criteria, since it is impossible to satisfy both except in the special case of the marginal investment, the earnings of which are just sufficient to cover the cost of funds. Different criteria may be appropriate for different purposes. For instance the rate-of-return criterion may have advantages where income is used as an index of managerial performance.
The theory of accounts portion of the November 1962, Uniform CPA Examination was given Friday, November 9. All questions were required to be solved by the candidates. A detailed note on all the questions and their respective answers is mentioned in the article. Suggested time allotments of all the questions were as follows: Problem 1, 25 to 30 minutes; Problem 2, 20 to 25 minutes; Problem 3, 20 to 25 minutes; Problem 4, 25 to 30 minutes; Problem 5, 25 to 35 minutes; Problem 6, 25 to 35 minutes; Problem 7, 25 to 30 minutes.
Motivating employees to work for the goals of the firm has long been one of management's most important and vexing problems. The search for methods that motivate effectively, that induce the employee to work harder for the firm's goals, led to experimentation with a wide diversity of devices. In recent years, several writers emphasized that the firm's accounting system has a direct influence on the motivation of managers. This paper (a) surveys the available findings of research done in the behavioral sciences and organization theory as they bear on motivation and (b) critically examines the accounting system and reports in the light of such findings. Decentralization contributes to effective motivation. The firm's accounting system facilitates decentralization and hence has an indirect but important impact on motivation. The direct use of accounting reports, such as budgets, for motivation can result in reduced performance, if the budget is imposed on the department manager. The accounting system facilitates decentralization, which is conducive to effective motivation. Furthermore, the careful use of accounting reports can directly contribute toward effective motivation by expressing goals and by supplying knowledge of performance.
The expression "accounting theory" which is what the title of this article might be interpreted to cover would be far too ambitious a programme on this occasion. It can be used in at least two senses which it is desirable to distinguish. The first interprets "accounting" as a gerund, that is, the words "theory of accounting" come to mean a statement or set of statements about the activity that is known as accounting, or, in other words, propositions about the accounting that is carried out by people who are called accountants. The second interpretation possible is that of regarding the word "accounting" as a substantive or noun, meaning an area of study. A theory of accounting in this sense becomes a set of statements about the things that accountants or others interested in the field observe and think about, as well as what accountants do. This field has been explored only in more recent times than the other and has, to a great extent, developed out of it. The distinction between these two interpretations is perhaps rather shadowy and subtle, and they are not altogether divorced from each other.