Knowledge that Transforms

Confidence interval financial statements have been suggested as a means to convey the uncertainty surrounding the items on the financial statements. Albrecht [1976] provided a conceptual framework within which the uncertainty of income statement items can be computed and then illustrated the degree of uncertainty that existed in one firm's earnings computations. This article further develops Albrecht's conceptual framework by discussing types of accounting error, the methods of quantifying accounting error, the period(s) used to derive the distribution on accounting error and the level of aggregation at which accounting error is quantified.

Reviews the book "Accounting Theory," 3rd ed., by Eldon S. Hendriksen.

In this article the authors comment on the manuscript "Sampling for Integrated Audit Objectives--A Comment," written by Edward Blocher, published in the July 1978 issue of the journal "The Accounting Review." The three methods discussed in Blocher's paper are reasonable, but there are many other possible approaches, as discussed in the literature in psychology, statistics and measurements. The question of which is better can be settled only through actual experiments. Some of the extensions and refinements discussed in the paper may be useful and improve the overall effectiveness of auditors' sampling, provided that they do not cause serious difficulties in estimating a far greater set of parameters than that required under our original formulation. Needless to say, there is a trade-off between the complexity of a model and the ease of implementation in an actual situation. The issue stated in the fifth paragraph is of minor importance, but the authors wonder how much practicing auditors would agree with the author's statement, many auditors in practice may not make corrections if the aggregate effect of the errors is not material.

Reviews the book "European Financial Reporting 2: France," by J.H. Beeny.

Reviews the book "Computer Simulation and Modeling: An Introduction," by Richard S. Lehman.

Reviews the book "Handbook for the Analysis of Capital Investments," by Henri L. Beenhaker.

Reviews several books. "A Manual on Continuously Contemporary Accounting," by Allen Craswell; "A Manual on Current Purchasing Power Accounting," by David Emanuel; "A Manual on Current Cost Accounting," by Alan Hume; "Work Manual: Continuously Contemporary Accounting and "Work Manual: A Manual on Current Cost Accounting," by C.J. Warrell.

Reviews the book "Replacement Cost Accounting: Readings on Concepts, Uses & Methods," edited by Richard F. Vancil and Roman L. Weil.

Reviews the book "Computers and Accounting," by T.W. McRae.

ABSTRACT: This article provides a rigorous development of a contract (or commitment) basis of accounting as an alternative to the exchange basis in present use. Specifically, the analysis deals with the valuation of executory contracts including purchase commitments, forward contracts in foreign exchange, employee stock options, and leases. Notwithstanding the severity of assumptions, the analysis provides a coherent, logical, and widely applicable model of valuation in accounting.