Knowledge that Transforms

Reviews the book "An Inquiry Into the Nature of Accounting," by Louis Goldberg.

The article reviews the book "Accounting and the Law: A Collection of Essays," by Sidney I. Simon.

The article focuses on various aspects related to accounting. It says that challenges facing the accounting discipline excite the imagination proffering an opportunity to re-examine the pivotal perspective underlying accountancy. To begin with, one is struck by the critical surveys of accounting literature of the past several decades that reveal all too clearly that accountancy has reached an apparent cul de sac in its theoretical development. A number of distinguished members' of the accounting academia have at various times directed attention to this situation. Undoubtedly, there are many reasons for the impediment of the theoretical development of accountancy, although one basic obstacle appears to stand out more prominently than others. This is the accountant's general concept of theory. In spite of well-established and progressive concepts of theory existing in the physical and social sciences, the vast majority of accounting writers regard theorizing as an activity that should follow rather than precede practice. Latest theories, however, is now working on economy of thought, guide for the selection and study of crucial problems and guide for systematic and cumulative research.

Contemporary textbooks used for intermediate level accounting courses generally describe the results yielded through the application of the conventional retail inventory method as, essentially or approximately the same as the results yielded by application of the lower of cost or market rule. This assertion is supported by the argument that conventional retail results are always less than cost and always less than market. This argument could just as well support the claim that the use of the conventional retail method results in the most conservative inventory valuation. Undoubtedly the retail method has practical application in the retail trade, but pragmatic considerations should not serve as a basis for students' drawing unwarranted conclusions about application of the rule of cost or market or the retail inventory method. The author contends that conventional retail is not the same as lower of cost or market. If the basic assumptions underlying the conventional retail method are valid, then an analysis of the composition of the ending inventory will support this contention. The purpose of this discussion is to present such an analysis.

Realization is a controlling concept in the measurement and reporting of enterprise income. In its broad meaning, it includes all of the possible points in the activity of the enterprise at which revenue may be viewed as having emerged or been realized. However, the broad meaning cannot he applied to specific situations. A specific point of realization must be selected from all of the possible points. This article suggests that there are several important points of realization that produce several different, significant and useful measure of income and that the selection of any single set of tests in the hope of producing the appropriate income measure unnecessarily restricts accounting to serving only those purposes which that single measure tends to accommodate. Realization should not be viewed as a restraint that requires an either point of recognition. It should be regarded as a useful device that permits accountants to observe, measure, and report on the enterprise from several points of interest.

The article presents updates on the research projects of the American Accounting Association as of October 1966. The members of the committee of each project are listed. They are expected to suggest ideas and offer comments on the scope of the research project, the research methodology, and the researcher's findings. They are not empowered to block publication, nor may they insert dissents in the final report; they are to be advisory only. The titles of the research projects are also stated in this article.

The difficulty many students experience in applying ceiling and floor limitations in the pricing of inventory items at the lower of cost or market has been the subject of discussion at a conference "Teachers' Clinic" at the Auburn University, Auburn, Alabama in July 1964. Students should not experience any difficulty in computing the ceiling and floor in the typical exercise in which the estimated selling price, costs of completion and disposal, and normal profit margin are given. But the selection of the appropriate inventory value from four possible choices; cost, market, ceiling, and floor; can be a confusing number game to students. If these four items are arranged with their values in descending numerical order, the third value will be the correct answer under most circumstances. This rule stems from a logical analysis of the selection process involving the relationship of values and limitations imposed by the ceiling and the floor. The article discusses this rule in dealing with cost accounting for inventories.

Reviews the book "Auditing With the Computer," by Wayne S. Boutell.

The article presents a survey to obtain information relative to accounting courses offered by accredited junior and community colleges in the U.S. An effort is made to secure data as to the particular courses offered, credit hours allowed therefore, whether for terminal credit only or for transfer, selective data as to their content, and finally, certain facts relative to the academic training and teaching experience of the faculty personnel teaching these courses. To accomplish this, a questionnaire was mailed to the 207 junior and community colleges listed in the 6th edition of American Junior Colleges that offer courses in accounting. Five of the colleges contacted replied that they had either become four-year institutions or were no longer offering courses in accounting, thus reducing the population to only 202 and of these, 143 completed and returned the questionnaires. The results of this survey are offered without comment, and with the hope that they will generate some interest and discussion throughout the accounting profession relative to the accounting curriculums being offered at junior and community colleges.