Knowledge that Transforms

Reviews the book "Fundamentals of Operations Research," by Russel L. Ackoff and Maurice W. Sasient.

Abstract The article discusses the significance of introducing important tax provisions into advanced accounting. Many accounting courses could be improved significantly by the brief introduction of related tax considerations, preferably in a non-technical fashion. This is particularly true in the case of advanced accounting courses wherein consolidated financial reporting for multi-entity organizations is usually given considerable attention. Decisions regarding the form of corporate and tax reporting for multi-entity organizations are highly tax-influenced. Tax planning is the art of determining in advance what tax liability will result and then conducting transactions with a view toward reducing the income tax burden. In the area of multiple corporations' a group has a choice of accomplishing the same results by more than one method-one of which may result in a lower tax liability. In order to minimize the tax burden, however, management must understand the interrelationship between business operations and the tax liability. A chart was first developed as a testing device for an advanced accounting course. Since students performed so poorly on the question it was later utilized successfully as a teaching aid-originally in an advanced course and subsequently in a tax course.

Abstract Executory contract data may be relevant financial information to users of published financial reports and thus the recent literature contains numerous proposals for capitalization of such contracts. In light of these proposals it is especially appropriate to consider how currently accepted asset and liability concepts accommodate leases and other executory contracts. It has been concluded that the exchange of promises and rights by independent parties upon entering into a contract constitutes an accounting transaction. This expanded notion of an accounting transaction coupled with the service potential concept of assets, yields a theoretical framework which accommodates executory contracts. Using this framework, executory contracts qualify theoretically as assets and liabilities which should be recorded in the accounts if objectively measurable.

Reviews the book, "Management Systems," by Thomas B. Glans, Burton Grad, David Holstein, William E. Meyers and Richard N. Schmidt.

Abstract The article reports on Accrued expense tax reform. The accounting profession was not ready in 1954 to govern its own conduct and had no effective means to re strain its clients, especially with regard to estimated expenses. Consequently, the opportunity to conform tax accounting more closely with general accounting was missed. Taxpayers and accountants over the years have kept the accrued expense and deferred income issues alive. There have been frequent court cases for individual items. Recently the American Institute of CPA's Committee on Federal Taxation formally revived these issues by including proposals for reenactment of Sections 432 and 462 in its recommendations to the U.S. Congress. The Statements on Responsibilities in Tax Practice, No. 4 of which was issued in October 1966, represent a very constructive program on the tax side of the picture. These, coupled with educational activities directed toward awareness of the ramifications of taxes, good rapport with the Internal Revenue Service and client education, needs to continue. Client education is certainly important because obviously practitioner accountants cannot carry the whole burden.

Reviews the book, "Development of Information Systems: What Management Needs to Know," by Donald F. Heany.

Abstract During the Summer of 1968, Hofstra University offered a five-week workshop for prospective teachers of college placement accounting. The workshop was organized as a three-credit course in the Hofstra School of Education. The workshop was organized as a three-credit course in the Hofstra School of Education. The workshop produced a tangible and entirely practicable high school course in college placement accounting. In addition, the give and take of the workshop produced a more important result-a noticeable change of the participants' orientation. The workshop began with the participants questioning whether accounting should and could be taught at the high school level as an academic subject, and concluded with their designing of a general education oriented accounting course that would do credit to many college departments of accounting. The workshop more than fulfilled its objectives, both stated and unstated, of producing instructors equipped and motivated to teach the first semester of the college placement accounting course in their respective high schools. In the future, more such workshops will be scheduled, some perhaps at other high school and college levels and hopefully in different geographical areas. As more high schools offer such courses, it will become possible to use workshops as a means of collecting and sharing experiences and techniques, as well as for the original purpose of training the instructors.