Knowledge that Transforms

Abstract As described herein, the "cash-flow" statement is a broad analysis of the cash account. It is not a statement of cash receipts and disbursements, per se. The purpose is to describe the causes of the net change in the cash balance for the reporting period. The causes of this change in the cash balance are embodied In the business transactions which affected both cash and other accounts-balance sheet, income and expense accounts. By relating the changes, during the reporting period, in the balances of all other accounts to their effect on the cash balance, over-all (net) increase or decrease, the "flow" of cash can be described as "cash used for" or "cash received from." The difference between the totals of items making up these two classifications represents the net change in the cash balance. Although the conventional presentation describes separately the effect of the significant changes of the non-current items (assets and liabilities) on the cash balance, and only broadly the effect of all other accounts, if desired, the individual items of costs and expenses of operation could be separately delineated for emphasis to management of the importance of such items and the effect on cash flow of its past decisions as guides for future planning.

Abstract This article presents the author's rejoinder as J. W. Bennett accuses him of having made several important errors in his article on corporate profits. In fact, he has convicted him of one error only: It was the mistake of double counting retained earnings and his discussion of earnings yield therefore needs to be modified. A substantial part of Mr. Bennett's attack consists of an arithmetical demonstration of the fact that the present-value ranking of two projects may vary with the rate at which their cash flows are discounted. This fact is not in dispute. The point at issue is whether the rate at which stockholders discount future yields is more relevant to the assessment of project profitability than the earning rate of the marginal project. Mr. Bennett thinks that the stockholders' discount rate is always more relevant, whereas he considers it irrelevant when it lies below the earning rate of the marginal project. In this situation, corporation management would set itself a growth target which is consistent with an acceptable cut-off rate; and that, within the limits imposed by this constraint, it would wish to select the more profitable of the opportunities available to it.

Reviews the book "The Firm: Micro-Economic Planning and Action," by Neil W. Chamberlain.

Reviews the book "Accounting Systems for Management Control," by Francis E. Moore and Howard F. Stettler.

Abstract This article is an attempt to demonstrate that progress in accounting theory must begin with income concepts, secondly, the appropriateness of a single concept, accretion, rather than a variety of concepts, third, that the accretion concept is an all-purpose concept, relevant to taxation and other areas as well as accounting, and finally, that general acceptance of this concept would have significant effects on accounting practice as well as "theory." The accretion concept is neither complex nor difficult but has far reaching implications for accounting theory and practice. The accretion concept defines income as an increase in economic power which can be measured with reasonable objectivity. For an individual, income for a period equals the change in economic power during the period plus the value of goods and services consumed. For other entities, income is the change in economic power adjusted for capital contributions and distributions. In emphasizing objective measurability, the accretion concept differs from the economic concept of income, as usually conceived, and also from the concept implicit in conventional accounting practice.

Abstract It is very difficult as well as unsatisfying to speak on the uses of mathematics in accounting for two main reasons. Firstly, because discussions of this nature convey the somewhat false impression that the only impetus toward changes, if any progress is evident in the use of mathematics in accounting instruction and research, has originated from without rather than from within the accounting profession, and that progress has been forced upon the accounting discipline by outsiders. Secondly, because the potential uses of mathematics in accounting are so many, within the time limitations of a meeting one can at best only survey the area. The author in this article did not attempt to explore fully the reasons accountants have not taken advantage of the existing body of mathematical knowledge earlier, but, according to him, he cannot help speculating briefly on this issue. It appears to him that the demands of management for new quantitative criteria of efficiency of operations and decisions both aggregative and partial, are presenting opportunities and pressures that accounting cannot ignore. Mathematical simulation, which has grown to maturity in the last few years, has had a pronounced influence on the design of feedback-control systems.

Abstract The purpose of this article is to present a much-abbreviated summary of the types of records kept by the ancient Mesopotamian people. This purpose is accomplished by the presentation of appropriate tablet translations. Admittedly, much faith has been placed in the translating skill of archeological experts, but the author of this article has painstakingly compared hundreds of translations and only the typical, semi-standard ones are presented here. The ancient Mesopotamian record-keeping system was a very simple system based mostly upon receipts, expenditures, listings, and contracts. Receipts tablets had to be prepared whenever any money or goods were received in the temple, in the palace, or in private businesses, even if it meant going to the expense of calling in a public scribe to record a single, small transaction. Internal movements and inventories of these items had to be duly recorded, as did the final use or expenditure. The translations in this article are merely illustrative, not exhaustive.