Knowledge that Transforms

The article presents the text of the 1972-73 report of the American Accounting Association Committee on international accounting. An issue in international accounting is whether performance evaluation in multinational enterprises is sufficiently different from performance evaluation in domestic companies as to require different evaluation systems and techniques. The very fact of extensive operations in more than one nation introduces elements which impact on performance evaluation. These elements can be divided into two categories--those pertaining to differences between the environments of countries, and those pertaining to the conduct of operations across national boundaries. The key concepts in considering differences in the environments of the various nations where operations are conducted are that these differences are likely to be much greater between countries than within any one country and that these greater differences destroy to a significant degree the comparability of operating results and financial status between entities in different countries.

The article presents the text of a report issued by the American Accounting Association executive committee in 1974 which identified the potential criteria for choosing among alternative internal accounting information systems. Several approaches have been used and proposed for choosing among alternative internal accounting information systems. Some have stressed alternative measurement methods, some the different information needs of users, and others a more formal evaluation of alternative systems. The historical communication approach parallels the traditional approach to financial accounting theory. It begins with the development of a theoretical structure or framework, which is then translated into a set of rules for data collection and information display. The user decision model approach, focuses on the decision models of different users and the fact that different models use different information. The information evaluation approach is an application of information economics. It stresses a method of analysis--rather than rules--which explicitly treats accounting as a process of choice under uncertainty.

Reviews the book "Accounting Principles: A Multimedia Program," by Dudley W. Curry and Robert J. Frame.

This article presents a study on the regulation, implied revenue requirements, and methods of depreciation in accounting in the U.S. The choice between flow-through and normalization accounting procedures, assuming accelerated depreciation is used for taxes, is not clear. The theory of accounting, if it is assumed that straight line depreciation is correct, points to increasing the early depreciation expense with the use of accelerated depreciation for taxes compared with the amount of expense if straight-line depreciation is used for taxes. However, in practice the issue is complicated by the fact that straight-line depreciation may not be correct, thus, the adjustment may actually be causing more errors.

Presents news briefs on several universities and colleges in the United States as of January 1974. Election of Doris Cook to the National Council of Β Α Ψ; Retirement of Professor A.B. Carson from the University of California, Los Angeles; Promotion of Gene McClung and Robert J. West at the University of South Florida; Staff members at the Georgia State University that have joined the Department of Accounting.

This article reports that any set of business accounting statements implies a redundant set of linear equations that specifies the interactions in that business. That is, from a set of accounting statements, one can construct a system of linear equations. In order to understand the underlying business, it appears useful to construct that linear system to specify relations that make the system one of full rank, and to solve it. Management can be expected to learn about the number of degrees of freedom it has in setting goals or parameters for its business, or financial statements, the relations between various possible sets of independent decisions, and the effects of possible future actions. Economists have prepared a series of interactive computer programs that will facilitate the kind of analysis about to be described. These flows show the Gross National Product for the U.S. economy for 1972. These data have been condensed from more detailed national income accounts. Implied by the data underlying these statements are a flow of funds and a system of equations.

Reviews the book "Third International Conference on Accounting Education."

Reviews the book "Self-Instructional Guide to Federal Income Taxation," by Albert J. Schneider.

Reports on an experimental program on accounting conducted by the authors at West Virginia University in Morgantown during the 1972 fall semester. Comments concerning the course; List of outside resource people who participated in the course; Outline of the course.

This article presents comments on an article written by M.E. Francis, published in the April 1973 issue of the journal "The Accounting Review," which contends that accountants are ill-equipped to contribute in a constructive way either to improve the methods of assessing the state of society and social programs or to the application of evaluative procedures in the allocation of resources to the efforts to improve social well-being. The article provides a useful service to the profession by cautioning accountants against jumping upon the social accounting bandwagon without knowing its ultimate destination or their own ability to steer it in an appropriate direction. The argument of Francis against a potential role for accountants is three-fold: accountants lack the expertise to attest to sampling methods and statistical series derived from samples; accountants do not have the knowledge or experience to determine the relevant statistical information to be collected, analyzed, and reported; and accountants lack the statistical training to improve the accuracy of economic data. The accountant, as a member of a team which is likely to include specialists from other disciplines, independently appraises program results and reports his findings to the policy makers. Contrary to the implications of Francis, accountants seldom, if ever, work with numbers that are finitely accurate.