Introduction, 604. — I. Hypothetical contract of the cost-plus-incentive-fee type, 604. — II. The maximization model, 606. — III. Consideration of the firms entire operations, 612. — IV. Long-run profitability, 614. — V. Conclusion, 615.

PROFESSOR THEIL [5] recently gave the derivation of the best linear (B. L.) index number formulae for price and quantity. In an application of the formulae to Dutch import and export data, Kloek and DeWit [3] found that there is some slight, though persistent, bias to the effect that the index vectors yield larger current values than the individual data do. As this feature is related conceptually to the factor reversal test, they considered it desirable to devise a method which would control this bias on the average and worked out what may be called the best linear average unbiased (B. L. A. U.) index number. The aim of the present note is to indicate what relationship the B. L. and the B. L. A. U. indexes bear to the factorial indexes, that is, to those obtained through the factorial approach [1, 2, 4]. We conclude that the factorial indexes2 appear to compare well with the B. L. A. U. indexes. Incidentally, it is also pointed out that it might be possible to obtain a closer algebraic approximation to the B. L. index number formulae.

T HE theory of the demand for financial assets has come in for a good deal of discussion in the last few years. Undoubtedly the discussion has been fruitful and has given us many new insights into the nature of financial processes. But it cannot be said that there is any generally agreed upon view as to the way in which those processes work. It would be appropriate at a conference of this kind to review the different hypotheses and give a systematic summary of the present state of knowledge. Unfortunately, though I have read the literature assiduously I have found it rather indigestible. I do not feel prepared to give a fair summary of other people's views. I must fall back therefore on giving my own. In this paper I shall deal with the demand for liquid assets and money by households and corporations. Those two groups hold over twothirds of all liquid assets, and the same general approach though not the details can probably be applied to the demands of unincorporated businesses, farmers, state and local governments. In dealing with the demand for liquid assets we must at least implicitly deal with the demand for other types of assets, but I shall not, except incidentally, say anything in detail about the demand for stocks, bonds, or physical assets. I shall confine myself to the demand for currency, demand deposits, commercial bank time deposits, mutual savings bank deposits, savings and loan shares, savings bonds, and short-term federal securities. There are, of course, other liquid assets, but I shall have little to say about them. I have occasionally used the term money in the sense of demand deposits and currency but have usually referred to those assets specifically to avoid any confusion with other definitions of money. But though I am happy to try to avoid the semantic confusion involved in arguments about whether any particular asset should be included under the heading money, I do cling to the view that commercial bank time deposits are significantly different from demand deposits. For that matter, so is currency, and so perhaps we ought to dispense with the term money in theoretical discussions and say clearly what we mean. In the first section of the paper I have discussed very briefly the conditions under which liquid assets are supplied. There follow in section 2 a discussion of corporate motives for holding liquid assets and money and a review of some empirical evidence on the relative importance of various factors influencing corporate decisions. In section 3, this theory of household demand for liquid assets and money is discussed together with some empirical evidence.

Abstract The Revenue Act of 1962 provides for an "investment credit" which is generally seven per cent of the qualified investment in depreciable property acquired after December 31, 1961. The "investment credit" may be deducted directly from the amount of federal income tax otherwise payable for the year in which the asset was acquired. For any asset on which the credit is given, the basis of the asset is reduced by the amount of the allowed investment credit for the purpose of determining the amount that may be written off as depreciation over the life of the asset. The investment credit, to the extent that it is fully utilized, should be regarded as a reduction in the tax expenses. This statement is based on the fact that the credit is allowed because of provisions of the revenue act and because it can be of benefit to a company only if there is tax, resulting from taxable revenue, from which the credit can be deducted. The net result of the suggested method and its variations is that a company can take advantage of the income tax law related to the investment credit and still present financial statements which are not unduly affected by the amount or the timing of these tax benefits.

Abstract This article focuses on controversies regarding the construction of financial statements. One of the primary areas of controversy revolves around a misunderstanding as to who should be expected to use financial statements or, stated differently, to whom the statements should be directed. Many people, both accountants and others, seem to be concerned with the notion that financial statements frequently are not clear and comprehensible to the "man on the street" or the uninformed layman. On the other hand, accountants certainly should strive to improve the usefulness of their statements to informed, qualified users. Such techniques as the use of charts and graphs to supplement conventional statements, the use of comparative statements, and the constant search for more meaningful accounting terminology serve as examples of this type of worthwhile endeavor. Equally clearly, the accounting profession has a concurrent duty to educate the public in the proper use of financial statements.

Abstract At the May, 1961 meeting of the South-eastern Section of the American Accounting Association, it was the author's privilege to participate in a panel presentation entitled "Teaching Current Accounting Theory at the Undergraduate Level." The discussion centered around the inclusion in accounting curricula of topics receiving current attention in accounting literature, such as accounting for long-term leases, "direct" costing, and "deferred" income tax liability. This paper represents a distillation of some of the more important ideas presented and discussed at that session. There was general agreement as to the propriety of including current topics in college and university accounting programs. The study of current accounting topics certainly has a place in college and university accounting curricula. Treatment of these topics in a separate course is feasible only in institutions with broad, diversified accounting programs. Even in such schools, the desirability of such a course is open to question. The approach to teaching current accounting topics depends in large part on the basic objectives of the accounting program in each college and university.

Abstract This article focuses on the accounting curriculum of the School of Business at the University of Colorado, Boulder, Colarado. The faculty of the School began to take a long, hard look at the curriculum which it was offering. Undoubtedily this has been done almost universally by the faculties of schools of business across the U.S. since the publication of these two studies. After long and careful study by the faculty of the School of Business at the University of Colorado, several basic changes have been instituted in the course of study. In order to appreciate the changes which have been made, it will first be necessary to explain the program as it stood originally. The School of Business is a two-year, upper-division school with students being required to take 60 semester hours of work outside of the School, and another 60 semester hours of work within the School in order to fulfill the requirements for graduation.