Knowledge that Transforms

Reviews the book, "Government Accounting in Australia," edited by W.R.C. Jay and R.L. Mathews.

The use of leases is widespread as a means of acquiring assets, and where such leases provide for payment of substantially the entire cost of an asset during the lease term, the lease has properly been viewed as a form of debt financing, not substantially different from a mortgage in its operating effects. While there has been wide acceptance of the concept of leasing as a form of debt financing, a satisfactory technique for evaluating financial leases has proved to be somewhat elusive. The problem lies in the determination of the "cost" of a lease as compared with debt. It is simple enough to compute the Implicit interest included in the lease payments, but this is insufficient since the use of a lease causes changes in the tax cash flow of the firm. In most textbooks, the analysis of financial leases has generally involved calculating the cash flow, after taxes, of the lease and of the alternative loan, and then discounting these cash flows at the cut-off rate or the cost of capital.

The article discusses the investigation of accounting records. During an investigation of business records preserved in the manuscript section of the Baker Library at Harvard University Graduate School of Business, an early 19th century accounting primer was discovered. Various bookkeeping records and accounting procedures of mercantile companies operating during that period are outlined in the text. The book proved intrinsically interesting and also afforded the writer a useful guide to record keeping methods of early merchants. The purposes of this article are to describe the contents of the primer, to comment upon certain recording procedures of the early 1800's and to gain some insight into accounting methodology in the United States during this period. The value of the primer described in this paper is two-fold. First, the book is a valuable example of accounting instruction in the United States during the early 1800's. As such, it deserves recognition and preservation as an example of the evolution of accounting education and practice in the U.S. Second; students of business history would find the primer a useful preliminary study prior to examination of records of 19th century American businesses.

Reviews the book, "The History of American Management: Selections From the Business History Review," edited by James P. Baughman.

Reviews the book "Statistics for Modern Business Decision Making," by Kyohei Sasaki.

This article focuses some new journals related to accounting. "Boletin Interamericano de Contabilidad, a journal sponsored by the Conferencia Interamericana de Contabilidad and the Facultades de Comercio Interamericanas and published quarterly by the Graduate School of Business Administration, Tulane University, New Orleans, Louisiana. The principal objective of the bulletin is to communicate information relative to new developments in the profession of accounting among different American countries, as well as Spain and Portugal. "Long Range Planning," an international quarterly devoted to the concepts and techniques involved in development of corporate strategy and the generation and management of long range planning. Coverage includes economic and operational planning for diversification though merger and through technological innovation; long range planning for marketing, finance and facilities; and the whole range of planning techniques including the use of computer and management science.

The article presents information on information economics and its implications for further development of accounting theory. In 1966 the American Accounting Association (AAA) issued, "A Statement of Basic Accounting Theory," in which it said, essentially, accounting is an information system. More precisely, it is an application of a general theory of information to the problem of efficient economic operations. It is the purpose of this paper to take the AAA Statement seriously, and to examine whether useful developments might take place in accounting theory if one forced an interaction between it and the economic theory of information. The paper begin by setting out the assumptions that will be used throughout. Many people will find that they cannot accept some or all of the assumptions used in this paper, nevertheless it seems sensible to try for lucidity in setting forth the assumptions, since it permits the reader to have his reservations consciously evoked. Otherwise, there is the danger of ending up in arguments over conclusions that are in reality arguments over premises. After these preliminaries, the study turns to an exposition of the Information Economics model and the same framework is then adapted to an examination of the accounting model as a special case. This provides the opportunity to make some brief comments about accounting systems as seen from this new vantage point.