Prior to a comprehensive attempt to resolve many financial accounting controversies existing in United States,' more about interaction of accounting data with decisions made by known users of that data is needed. An attempt to acquire additional would be in line with implied decision-making criterion in American Accounting Association's statement that accounting is the process of identifying, measuring and communicating economic to permit informed judgments and decisions by users of information (emphasis supplied).2 In past few years, a number of accounting researchers have used behavioral field experiments as a means of investigating relationship between changes in methods used to gather and present financial accounting data and decisions made by specific users of that data.3 These researchers have generally concluded that decisions made by

Net realizable value as a basis for inventory valuation has been advocated and adopted in practice under the following circumstances: 1. When estimates of cost are arbitrary and a ready market exists for the goods, as is typically the case in the extractive industries; 2. When joint products are prevalent, as in the meat packing industry, and 3. When the expected proceeds from the sale of the inventory items are below historical costs because of price changes, damage, or obsolescence. These circumstances represent cases in which valuation on a historical cost basis breaks down either because of the infeasibility of determining meaningful cost estimates or because historical cost overstates expected value. However, beginning with Canning,1 many have advocated using net realizable value for inventory valuation on its own merits and not just because of the shortcomings of the historical cost basis. When future cash flows could be estimated or approximated, Canning favored direct valuation of inventories, his terminology for net realizable value. According to Canning:

Forecasting, Firm performance

The Institute's Accounting Principles Board has just added a third Opinion to its output for this year. The first Opinion dealt with reporting net income of commercial banks, the second with accounting for convertible debt and debt issued with stock purchase warrants, and the third with computing earnings per share. Although there were some delays in getting each of these Opinions out, as compared to original time schedules, the fact that they were finalized is cause for satisfaction, because each of the opinions faced strong opposition from various groups. This is not new or surprising, for every subject tackled by the Board is controversial and strong opposition may be expected from some quarter for any position taken. While some financiers and business conglomerators complain about what the Board is doing, many observers are commenting favorably about its work. One syndicated columnist recently wrote an article about the APB entitled, They Act as Management's Conscience. In it he said:

Depreciation, Accelerated Depreciation, Tax allocation, Deferral Method

Book review, Accounting theory

Firms which elect to use accelerated depreciation for tax purposes while using straight-line for reporting purposes have only one approved method for recording the difference between book tax expense and the tax liability.' This method relies on a deferred credit account in which the difference between the tax expense (calculated using straight-line depreciation) and the actual tax paid is recorded. The reported net income resulting from this procedure is the same as it would have been if straight-line depreciation were taken for tax purposes. Tax allocation is considered an extension of accrual accounting to include` taxes. The logical grounds for such inclusion are laid in the classification of taxes as expense items.

In recent years there has been a growing interest in the application of behavioral science procedures to managerial accounting procedures. However, it is becoming increasingly apparent that the usefulness of the managerial accounting procedures in planning and controlling business operations depends to a great extent upon effective human relations. There have, been several studies emphasizing the psychological effect of various phases of budgeting which provide background for the research reported in this paper.' Since the control phase of managerial accounting necessarily points out individual efficiency and inefficiency, the psychological impact on the individual is profound. Becker and Green stated that feedback of performance results is essential for good morale; it is imperative for each participant to know whether he should feel success or failure. Communicating knowledge of results acts, in this case, as reward or punishment. It can serve either to reinforce or extinguish previous employee behaviors. 2 The empirical research reported in this paper is the first part of a two-phase study of the psychological effect of performance reports. This experiment was designed primarily to test the psychological impact of frequency of feedback. Three groups of students participated