Knowledge that Transforms

Reviews the book "Financial Policy Decisions," by Harold Bierman.

Reviews the book "Topics in Managerial Accounting," by L.S. Rosen.

The article focuses on job satisfaction of academic accountants. The work attributes and job satisfaction of many professional groups have been studied by behavioralists at an increasing rate in the last two decades. One group of professionals, however, that has been virtually ignored in these research efforts is the professional accountant employed throughout the country in education, government, public accounting, and industry. The article compares the satisfactions obtained by accounting educators teaching in the many and varied institutions offering programs in accounting. The job satisfaction of academic accountants and that of practitioners in the field of public accounting has been compared. A search of the literature reveals that a precise definition of motivation is somewhat elusive. In lieu of adding to the seemingly endless list of new and old interpretations of the term, for purposes of investigation, motivation has been defined as an awareness on the part of the individual of tension within him which stirs him to action intended to relieve that tension.

Reviews the book "Computer Simulation of Competitive Market Response by Arnold E. Amstutz.

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.

Presents the author's comments on the program at the annual meeting of the American Accounting Association to be held at the University of Kentucky, Lexington, Kentucky. Discussion on the changes in the program; Sponsorship of four professorial development seminars; Analysis and recommendations that may want to be considered by the members for use at their respective institutions.

Reviews the book "Accounting: Its Nature and Uses," by Joseph K. Hampton and Laura L. Karadbil.

The article focuses on evidence regarding the influence of annual reports on the market actions of common stockholders. The impact of data presented in annual accounting reports on changes in investors' price expectations has been evaluated. In Part I, which appeared in the April 1971 issue of the journal The Accounting Review, the motivation for the estimation models used and some details of these models have been considered. In this part, sample selection, estimation results, and related issues have been dealt with. The impact of data presented in annual accounting reports on changes in investors' price expectations has been evaluated. The regression models introduced in Part I were applied to data from a random sample of eighty firms. The sample firms were selected from the set of all December fiscal-year firms for which the data available for the period 1947-1966 has been given. The data includes net income, common equity, current assets, long term debt, current liabilities and others. The above items were used to form ratios that were used as regressors in the tests for the impact of accounting data on changes in investors' price-expectations.

Reviews the book "Finney and Miller's Principles of Accounting: Introductory," 7th ed., by Glenn L. Johnson and James A. Gentry.

The article focuses on arbitrary allocations in accounting. Allocation may be unsuitable for general purposes yet highly useful for some specific purpose. Although this does not alter the financial accounting conclusions of Studies in Accounting Research (SAR #3), it is evident that the existence of useful arbitrary allocations has implications for managerial accounting. The concept of the range of ambiguity of an allocation was applied briefly in SAR #3 to situations in which various allocation methods are available and no conclusive reasons for choosing any individual possibility can be demonstrated. An accounting allocation divides a monetary magnitude among recipients to the firm, accounting periods, and so forth. The range of ambiguity of an allocation with respect to an individual input is the extent to which the amounts attributed to that recipient may vary by virtue of choice of allocation methods. SAR #3 discusses allocations such as depreciation in which the costs of nonmonetary inputs are written off. It points out that financial accounting theory requires that two kinds of allocations be performed in the amortization of nonmonetary inputs.