Knowledge that Transforms

Abstract This article proposes an approach to a second or intermediate accounting information systems course, presuming that the students have had a broadly oriented introductory course in accounting information systems plus introductory courses in quantitative analysis and statistics, managerial accounting and data processing. These prerequisites should not provide any obstacle to the currently enrolled or future senior and graduate accounting majors for whom the course is primarily designed. The major requirement of this proposed course is to design an overall integrated computer-based information system for a hypothetical business firm that is highly simplified but typical. Students are formed into teams, and each student team concentrates on a major area of the firm that it is assigned. In conclusion, a course involving the design, implementation and evaluation of a computer-based information system is a logical addition to the accounting curriculum. It will help to fit the accountant for his future role in serving the business firms in several ways: by utilizing the computer to show how accounting provides data for a total management information and decision-making system, by integrating in a practical and realistic way many of the concepts and techniques that are taught in the present-day accounting and quantitative analysis curricula, and by building up the knowledge regarding computers and information systems to the level advocated by the recent major studies of education for the accounting profession.

Abstract The article focuses on the role of the American Accounting Association (AAA) in the development of accounting principles. Early in 1970, it was proposed to the Executive Committee of the American Accounting Association that it establish a committee to study the feasibility and desirability of a commission to inquire into the formulation of accounting principles. The Executive Committee approved the establishment of such a committee in August 1970. The report of this Committee which follows was adopted unanimously by its members and in February 1971, the report was endorsed in principle unanimously by the Executive Committee of the AAA. Subsequently, David Solomons, the Chairman of the AAA Committee on Establishment of an Accounting Commission, was appointed by the American Institute of Certified Public Accountants to serve as a member of its task force to study the establishment of accounting principles. As a result of the concern regarding the formulation of accounting principles within the accounting profession and among users of accounting information, the AAA has a strong desire to cooperate and support this endeavor.

Abstract Reviews the book "Information Systems for Modern Management," by Robert O. Murdick and Joel E. Ross.

Abstract The article determines whether there are significant correlations between general wage increases and a number of financial variables at the level of the firm. Empirical research, which has attempted to assess the relevance or importance of reported external accounting information on decisions, has been largely or entirely confined to the decisions of investors or creditors. These studies are either simulation or regression models that predict the effects of behavior in circumstances where accounting categories or ratios change. The theory of wage determination in economics is based upon assumptions of demand and supply conditions in the sales and labor markets. Different assumptions about the condition of the sales market and the labor market, that is, competitive or monopolistic in the first case or competitive or monopsonistic in the latter case, determine what the equilibrium level of wages will be. A related economic approach has been to apply the bilateral monopoly analogy to wage determination by considering the labor union as a monopolist selling labor services to a single buyer of these services.

Abstract Presents a response by Trevor Gambling to a letter to the editor about his article "A Note on Input-Output Analysis: Its Uses in Macro-Economics and Micro-Economics" that was published in the January 1970 issue of "The Accounting Review."

Abstract Reviews the book "Analytical Management," by T.W. McRae.

Abstract Reviews the book "Water Utility Accounting," by Leon E. Hay and D.J. Grinnell.

Abstract Reviews two books on taxation. "Analysis of the Tax Reform Act of 1969," edited by Gilbert Simonetti, Jr. and Harry Z. Garian; "Working With the Revenue Code--1971," by Don J. Summa.

Abstract Reviews the book "The Economics of Computers," by William F. Sharpe.

Abstract This article suggests a procedure for evaluating the accuracy of forecasted information in accounting and presents the results of a limited empirical investigation of forecasting accuracy. Two aspects are important in the evaluation of forecasting accuracy: (1) differences between the forecasted amount and the actual amount for a particular year and (2) trends in differences over time. An analysis of differences arising in a particular year provides an indication of a firm's ability to meet its goals and would reveal substantial differences that would merit investigation into a management's ability to react to unanticipated events. At the outset of this project, a request to participate in research into forecasting accuracy was extended to more than 50 firms. Interest in the project was evidenced by eighteen firms. Of these, twelve firms provided usable empirical data while the other six firms limited their participation to an interview with a corporate executive. The type of data obtained were forecasts and actual results for various income statement classifications for as many years as was practicable, usually five years. Forecasted balance sheet data were excluded because executives generally stated that such data were very inaccurate or that the firm prepared a forecasted income statement only. Within this article, analysis is limited to forecasts of sales and net income because of their dominant role.