Knowledge that Transforms

Reviews the book "Analysis for Purchase or Sale of a Business."

In this article the author comments on the work on accounting, evaluation and economic behavior by R.J. Chambers. The author states that many reviewers have suggested that accountants will often disagree with Chambers' postulates and definitions and will prefer alternatives that will result in entirely different conclusions to those reached by Chambers. Here the author further points out the possible inadequacies and inconsistencies within Chambers' system that have not been mentioned in the literature to date and suggests ways of overcoming them. Chambers defines financial positions as the capacity of an entity at a point of time to engage in indirect exchanges, it is represented by the relationship between the monetary properties of the means in possession and the monetary properties of the obligations of an entity. Thus Chambers acknowledges that action is not instantaneous and in respect of assets considers capacity to engage in indirect exchanges is measured by market resale prices in the short-run.

Reviews the book "Horizons for a Profession," by Robert H. Roy and James H. MacNeil.

Reviews the book "Dividend Policy and Enterprise Valuation," by James E. Walter.

Reviews the book "Divisional Performance: Measurement and Control," by David Solomons.

Opinion No. 5 of the Accounting Principles Board is of recent enough date that accounting texts have not yet included methodology of lease capitalization as part of their content. Yet the author has found in both auditing and theory courses that discussion of methodology through development of a brief example greatly aids students in visualizing the impact of the capitalization decision on financial statements, and thereby enhances their ability to perceive and discuss underlying theoretical issues. In the article the author has developed an example as an aid to classroom discussion. Most students grasp concepts involved in the example very quickly. As the example is developed, parallels can be drawn between capitalized lease accounting and conventional methods of accounting for purchases of assets through debt financing. With these data before the student, it is a relatively easy matter to guide the class into a discussion of underlying theoretical questions and issues relating to lease financing and its impact on accounting technique.

Reviews the book "Data Processing in Management."

Reviews the book "Accelerated Depreciation in the United States, 1954-60" by Norman B. Ture.

To respond to the challenge to produce business school graduates who are intelligent users of computer power requires a significant commitment. Yet it is a challenge that must be met. At the Amos Tuck School access to time-shared computer power has given us the hardware characteristics necessary to provide computer accessibility to all our students on a demand basis. Through a formal computer course at the start of the two-year curriculum the student gains the familiarity and technical skill necessary to permit him to make intelligent use of the computer in his other courses at Tuck. As this formal instruction is reinforced in his other courses the student builds his confidence and skill in applying computer power to a wide variety of problems and situations. Many of these applications are formally structured into the curriculum; others are developed by the student simply because he saw a situation where the computer would help him perform more efficiently. Computer education of this sort produces at least two challenges to the faculty. Because readily available computational power can allow the student to learn more and understand better, the faculty is challenged to continue to look for areas within their courses where computer usage might reap these benefits. The second challenge is one of software design to make the computer more useful to the student in studying and solving business problems. The LAFFF language is the first major attempt at business-oriented software design, but certainly not the last. Responding to these challenges is beneficial to the teacher both in his teaching and research activities. More importantly, we feel it is beneficial to our students. These efforts, coupled with the impressive capabilities of time-shared computer facilities, produce an educational environment of unusual potential. Our efforts related here represent only a small start towards realization of the full potential.

In this article the author comments on the critical review of one of his articles by George J. Staubus. He states that he has been at some pains to point out that more than one kind of information is necessary to every choice, and that monetary magnitudes of quite different types are necessary. According to him there are the monetary magnitudes of the assets and equities a firm has at any time. Then there are the monetary magnitudes obtained by discounting the expected cash inflows and outflows from proceeding in the same way as up to the point of choice, and from every alternative course which seems to be feasible at the point of choice. There is no problem of dealing in money and goods in a deliberate and informed manner for which both types of magnitudes are not necessary. Among the things an investor might expect to know are the rates of return earned by the two companies, their liquidities or degrees of solvency, and their leverages. The author concludes that for any choice between holding an asset and acquiring another, whether by managers or investors, current cash equivalents of the assets held enter into the statement of conditions for informed choice.