Presents a reply to a comments made on the article "A Problem in Discounted Cash Flow," published in an earlier issue of the journal "The Accounting Review." Problem of the precision required in the tables one uses to expedite his calculations; Improbability of the instances predicting losses in some periods, to secure the alternating signs that signal the possibility of multiple interest rates; Statement that using one year as a period length is arbitrary.

Teachers of accounting, finance, or engineering economy may wish to devise problems that will lead their students to explore one of the pitfalls of internal rate of return or discounted cash flows. It is often suggested that alternative investment opportunities be listed in the descending order of their rates of return. This involves estimating the magnitudes and dates of expected cash receipts and disbursements, and calculating the compound discount rate which would make the net present worth of such future flows equal to the initial outlay. For example, the internal rate of return required to make this a break-even project is based on certain given details. These details include an initial cash outlay at T 0 $100,000. It also includes a net cash receipts at the end of one year at T 1 of $360,000. The method described in the article is applicable to whatever discount rates and however many discount rates, one may find interesting. It is expected that executives will use it to solve real capital investment problems. But it does represent a potential pitfall for some analytic approaches to real problems.

The author of this article is of the views that he has tested his teaching by teaching students what "incremental costing" really means. Several people have asked him why the assumptions of his article on "Transfer Prices: An Exercise in Relevancy and Goal Congruence" included an assumption that none of the computer jobs involved cost-plus or renegotiable contracts. It has come to his attention that many university computer centers perform some government work on a cost-plus basis, mixed with much university sponsored research work. And he has found that their managerial accounting is wrong and wrong in a way that harms the university, the government, and the computer company from which the computer is rented. So this seems reason enough to him to pursue the topic of incremental costs through an elaboration of his previous analysis to include the cost-plus assumption. The author proposes to test the effect of a cost-plus contract in the resulting purified abstract analysis. To simplify the arithmetic a trifle, he will alter his assumptions as to hours and costs a trifle.

This article focuses on a study which proved the use of incremental costs as transfer prices to congruence of goals in a company. In the recent past, accountants and especially cost accountants have often behaved as if relevancy were irrelevant and the criterion of objective verifiability alone had any significance. Certainly, all those sunk costs have little relevancy to managerial problems. The result has necessarily been an ever increasing reliance by managers on engineering cost estimates, and a strong tendency for both managers and engineers to ignore the irrelevant, fully-allocated, original, historical cost data reported by cost accountants. It is alleged that, if an external market price exists, arrived at by competitive, arm's-length bargaining between independent buyers and sellers, such a market price is a valid transfer price. Such a transfer price tends to be irrelevant, and tends to lead to lack of goal congruence.

Presents views of the author on the future of teaching in accountancy. Criticism of clamor for recognition of accounting as a profession; Lack of sophistication in teaching of accountancy; Development of a design of annual report to encourage co-operation to build a favorable company image with the widest possible audience; Determination of range of information and level of details desired by each class of participants in business; Suggestion that relations with customers can be improved by including additional information in the customers' section of the annual report.

This article focuses on the use of computer-assisted instruction for the computation of debit and credit accounting. As financial transactions occur, documents are prepared and filed in the usual way. Each transaction is analyzed into one or more pairs of equal debits and credits. Each such pair is entered in a magnetic tape as four numbers: a file number, the number of the account debited, the number of the account credited, and the dollar amount. The tape is fed into the computer, which is programmed to ignore the file number, to choose the table row headed by the debited account's number and the column headed by the credited account's number, and to add the dollar amount to the total in the cell thus designated. National income accounting was created on the enterprise accounting model. It was vigorously developed by economists and statisticians, who converted the double-entry accounts and trial balances into input-output tables of the national economy.

Reviews the book "Mathematics of Finance," Fourth Edition, by Robert Cissell and Helen Cissel.