Knowledge that Transforms

Reviews the book "Tax Report Compendium."

Reviews the book "Basic Business Law," by David S. Craig and Rate A. Howell.

The article presents the reply of the author to the comments by Mark Stephan, professor at Princeton University, published in the January 1960, issue of the journal "The Accounting review on his article "A Simplified Statistical Technique for Use in Verifying Accounts Receivable," which appeared in the October 1959 issue of the same journal. Stephan's main objection is that statistical correction factor used to reduce the sample size because the population is finite, or limited, should be incorporated into the original formula rather than solved separately. By not incorporating the factor with the basic part of the formula presented, the accountant could temporarily obtain a sample size larger than the total number of accounts, and this possibility was pointed out in several places in the original article. After completely solving the formula, the accountant must decide how he is to proceed to verify the selected accounts. The accountant's judgment as to the number actually reviewed is little more than conjecture.

Reviews the book "Trade Balances during Business Cycles," by Ilse Mintz.

Reviews the book "Auditing Principles," by W.B. Jencks.

The purpose of the paper is to draw attention to one of the sharpest expressions of the cleavage of attitudes between economists and businessmen, and to advance some tentative suggestions for improvements in both analysis and application. This relates to the use by business of a method of cost-volume-profit analysis, and of pricing and volume adjustments, which is referred to as break-even analysis and which, prima fade, ignores the economists' generalized theorems of cost and revenue behavior. The arguments which the paper has developed, however, set a program of research and development by the cost accountant, and suggest that economists now give their attention to examining the shape and stability of aggregate revenue and cost functions over time and over output ranges, applying their resources of statistical analysis to the reconstruction of empirical microfunctions and variables. For the financial manager in industry, the lesson of the analysis is that he cannot rely with the same degree of confidence on the more naive forms of his break-even charts.

The paper examines some methods of inquiry and suggests certain types of investigation that seem to be appropriate for the study of accounting. More specifically, a tentative framework is set forth to indicate some possible levels of abstraction at which research in accounting could be undertaken. Such a framework, to be complete, would need to cover an area that ranges from the simplest aspects of fact collection to the philosophical boundaries of concept formation. Various broad areas are explained that are related to accounting investigation. These areas include logical structure and deductive systems, measurement and induction, behavioral relations and welfare and normative responsibilities. Measurement and induction deals in an elementary way with some non-deductive problems of scientific method and in passing with its application to research in accounting. The accounting research may not be related to problems concerned with the efficient measurement of transaction flows unless efficiency itself is defined in terms of the accomplishment of socially worthy objectives.

Reviews the book "Advanced Accounting," 4th ed., by E. Bryan Smyth.

Reviews the book "Automatic Data Processing Systems: Principles and Procedures," by Robert H. Gregory and Richard L. Van Horn.

The article focuses on the organization of an accounting program in the U.S. According to the author, the accountant of the future, because of his specialty in quantitative controls, will be expected to have a more thorough grounding in numerical analysis, mathematical statistics, and courses involving operations-research, than perhaps any of the other specialties in the management group. He must have an educational background which is as broad as the background of prospective manager. Any steps which have the effect of pulling accounting education away from the business framework in which it has its origin, are steps in the wrong direction. the "ideal" educational program for professional accountants, would consist of an undergraduate program in the liberal arts, a two-year program in business, followed by whatever professional accounting work might be considered appropriate for the university to offer. Additional work in accounting at the professional level is a long-run problem which should be the joint responsibility of university accounting faculties and professional development programs.