Knowledge that Transforms

Reviews the book "Elementary Accounting," 2nd ed., by Isaac N. Reynolds, Albert Slavin and Allen B. Sanders.

This paper reviews auditing research on the process by which auditors form their opinions on financial statements. A structure for this research is provided to organize the review and to provide insights into areas where research is needed. This structure is obtained by cross-classifying steps in theory development and steps in the opinion formulating process. While several important lines of research have begun, the primary conclusion is that a great deal of potentially important research has not been performed.

Reviews the book "EDP Auditing: Conceptual Foundations and Practice," by Ron Weber.

This paper compares students who studied accounting in high school (Group I) to those students who did not (Group II). Two questions were addressed. First, do Group I students outperform Group II students in the first college-level accounting course? Second, what impact does prior accounting education have on dropout behavior from the first college-level course? Data were compiled for 498 students enrolled in elementary financial accounting. The first question was addressed by performing an analysis of covariance with repeated measures on examination scores. Vocabulary and quantitative skills scores were used as the covariates. The second question was evaluated by analysis of total drop-outs and drop-out patterns. Overall, Group I students performed no differently on examinations than those in Group II. While they scored higher on early examinations, they scored less well later. There was no difference in drop-out rate, although Group I students tended to drop later in the semester.

Reviews the book "Bankruptcy and Insolvency Accounting," 2nd ed., by Grant W. Newton.

This paper extends the Baker and Taylor approach to the reciprocal service cost problem by allowing for the existence of nonvariable costs. A sample problem is developed to show how a mixed integer programming approach can be used to account for nonvariable costs in make-or-buy decisions. Also, in order to better calculate the opportunity costs of not meeting demand because of service department bottlenecks, the Baker and Taylor model is converted into a profit maximization model and combined with the mixed integer approach.

Reviews the book "Intermediate Accounting," 5th ed., by A.N. Mosich and E. John Larsen.

Reviews the book "Financial Reporting by Segments," by Malcolm C. Miller and Mark R. Scott.

Reviews the book "Handbook of Accounting and Auditing," edited by John C. Burton, Russell E. Palmer and Robert S. Kay.

Presents an obituary for Carman George Blough, chief accountant of the U.S. authority Security and Exchange Commission, who died on March 9, 1981.