Reviews the book "Decision Models for Inventory Management," by Robert B. Feiter and Winston C. Dalleck.

In an examination of the 1959 published corporate financial reports of 600 companies in 1960' it was found that 421 or more than 70% referred to an employee stock option plan. It has been asserted in fact that well over 50% of the companies whose stock is listed on the New York Stock Exchange have adopted some form of stock distribution plan for their employees. The courts have permitted stock option plans to be upset by litigation on the part of minority stockholders. One particularly sensitive matter involves developing, recommending, and adopting of stock option plans by parties directly benefiting even if later ratified by the stockholders. Stockholders have some basis at least to judge the adequacy of the consideration given by executives to the corporation. Certainly accountants can do no less than clearly indicate the total consideration given by the corporation and its relative significance. According to the author, no real effort is made to inform the stockholders fully as to the real cost of their managerial services.

This article presents information about the developments related to the field of accounting. South-Western Publishing Co. has announced a $500 annual contribution to the American Accounting Association (AAA) Fellowship Fund. The only stipulation made by South-Western respecting the annual contribution is that grants to individuals from the Fellowship Fund shall not in any way be identified as coming from South-Western Publishing Company. Mr. Eric L. Kohier, former President of the AAA, has been presented a certificate of appreciation and a life membership in the Federal Government Accountants Association. The Small Business Administration has prepared a listing of Management Research Summaries available free on request. The summaries cover a wide variety of subjects in the broad areas of managing, financing, and operating small business enterprises. The National Association of Accountants has announced special recognition awards offered for research essays written on the topic "Choosing Accounting Practices For Reporting To Management."

The discount system of capital expenditure evaluation, as the measure of a project's inherent desirability, provides rates of return which can be compared with those of other projects and with another measure, representative of the outside community's charge for the use of savings, called the cost of capital. The author classifies projects into two classes, independent and dependent, in order to discuss the effect of the two capital evaluation methods on each of the two classes of projects. By reviewing the capital expenditures evaluation problem in a number of areas, he finds that the method of direct discounting always provides superior results to those of the rate of return system. Direct discounting more quickly evaluates single-answer independent projects. It solves single-answer dependent projects without analysis of difference projects and without providing misleadingly higher answers on inferior projects. This research paper thus shows that it is simpler and more useful to discount all projects at the cost of capital than to solve for rates of return.

When treasury shares are acquired, the transaction results in the reduction of contributed capital, legal capital remains the same, and the restriction of retained earnings. If legal aspects are to be demphasized, it appears that the "direct adjustment to capital stock" is the best solution. But even though legal requirements are not ranked first in importance, they should not be forgotten. In this case, perhaps the "indirect adjustment to capital stock" is a better alternative. Accounting recognition must also include balance sheet classification as to Stockholders' equity. Differences in state laws would require a different arrangement. However, in both cases total invested capital remains the same. If a temporary restriction of retained earnings is needed, it can be shown in a footnote or as an appropriation of retained earnings. In a state which requires a permanent reduction of retained earnings, the nature of the transaction is a dividend rather than a "retirement." And so it must be recorded as a dividend. The nature of the transaction must be given first priority in recording treasury stock. Then, any legal aspects may also be satisfied in statement presentation.

Reviews the book "The Variable Annuity, its Impact on the Savings-Investment Market," by Cedric V.Fricke.

American Accounting Association and its predecessor organization, The American Association of University Instructors in Accounting, have had as a primary objective the encouragement and promotion of research in accounting. On December 28, 1935, the regular business meeting of the twentieth annual convention of the American Association of University Instructors in Accounting was adjourned and the assembled members immediately reconvened in a business meeting and the members were shifted from the old organization to the new. The only changes that had been effected were the change of name and the adoption of a new set of By-Laws. The chief activities of the new Association were listed in the By-Laws as "publications and research." The first of the stated objectives of the Association was phrased thus: "To encourage and sponsor research in accounting and to publish or aid in the publication of the results of research."The means by which the American Accounting Association expected to encourage intensive research on accounting subjects was never fully faced. The Executive Committee did suggest a substantial, but very general, list of topics on which it was felt study was needed. It is quite evident that the master's and doctoral programs in accounting were looked upon as a source of research talent and effort which was readily available in quantity.

Although social implications may exist, businesses are formed primarily in response to ownership conviction that profits can be obtained from operation. In order to measure operating results, to gauge the effectiveness of management and to estimate the vitality of the owners' investment, detailed knowledge of past performance is essential. Subsequent investors and creditors need to know past performance to estimate profit making potential. Accountants in public practice may well be facilitating the administration of economic activity by making themselves available for management services. Someone however, ought to be able to compute profitability for the owners and to tell them what net return for a given period of time has been enjoyed on their investment. Economists follow the principle that costs should be related to revenues on the same price level basis and that the income in one period should be compared with the income in another period on the same price-level basis. Determination of net income is certainly one of the important functions of the accountants.

Reviews the book "Principles of Accounting-Advanced," 5th ed., by H.A. Finney and Herbert E. Miller.

Reviews the book "Preparing for the CPA Examination," by Robert J. Smith.