Knowledge that Transforms

Abstract This article focuses on the difficulty in understanding the concept of consolidation eliminations by the students. Consolidation eliminations are necessary when a company's bonds are held by an affiliated company, even though the same students have little trouble with entries necessary to eliminate profits on intercompany inventory sales and fixed asset constructions. Because of this seemingly inevitable difficulty, for the past several years writers have expanded on the usual textual treatment in order to explain certain underlying relationships. This expansion results in much less confusion and a better basic understanding of why a given elimination entry is necessary. Students usually have no trouble understanding the 1/10th eliminations against bonds payable and discount on bonds payable and the need to eliminate the corresponding investment account. The consolidated entity must recognize an otherwise unrecognized loss on bond reacquisition. That is the nature of the charge or credit to retained earnings.

Abstract The article analyzes the present accounting theory. The concept of service-potentialities is well established in accounting. They are thought to be the homogeneous substance and the significant elements of assets. Thus, assets may be thought of as a set, the elements of which are service-potentialities. The concept of capacity, although only relatively recently named, has been used in accounting since, at least, the advent of depreciation. Assets are thought of as bundles of services and the number of services in most assets declines over time or use. Cap is the generic term for all the various units of measure that are used in accounting. The concept of account is best described as a homogeneous collection of caps. Different accounts will contain different kinds of caps and the accounts may contain different physical representations of the caps, but each account will contain only one kind of cap. The functional relationship between the quantities of caps in an exchange may be determined by a measurement operation or by a similarity transformation.

Reviews the book "Advanced Accounting," by Walter B. Meigs, Charles E. Johnson and Thomas Keller.

Abstract This article focuses on the objective of corporate financial reporting and statistical information. Corporate financial and statistical information are communicated to interested users through a wide variety of mediums. However, the published corporate annual report is undoubtedly the most widely distributed comprehensive source of corporate financial data. Two comparatively recent documents suggest some important guidelines and considerations for the formation of a statement of objective for corporate accounting. The American Accounting Association's committee report on the entity concept. In short, the committee advocates a user-oriented approach in defining the entity. They feel this approach to defining the entity places the concept at the very foundation of accounting theory. While the entity concept standing alone may provide only limited guidance in solving such problems, it does provide the theoretical justification for a framework which should prove helpful in solving such problems.

Reviews the book "Statistical Inference," by Clifford H. Springer, Robert E. Herlihy, Robert T. Mall and Robert I. Beggs.

Reviews the book "C.P.A. Law Review," 3rd ed., by Joseph L. Frascona.

Reviews the book "The Capital Budgeting Decision," 2nd ed., by Harold Bierman and Seymour Smidt.

Abstract The article presents surveys that have been conducted in the past to find out what texts were used in the U.S. business schools for accounting. One survey seemed to evoke considerable interest among faculty members as evidenced by requests for copies of results, so the information was made available to all who asked for it and the results were summarized and published in the July 1963 issue of the journal "The Accounting Review." A similar survey was made in 1964 issue, but was omitted in 1963 and 1966. This year, another questionnaire was mailed to the chairman or head of the accounting department of all AACSB member schools. The 1966-67 Directory of Members of the AACSB lists 120 schools as members. Questionnaires were returned from 105 of the 120 schools, or 87.5%. Information received from the questionnaire is presented in the following summaries. Texts used in five or more AACSB schools in each curriculum area are identified. If the number of schools using a particular text was less than five, they are included under the "various" category.

Abstract This article focuses on the product-costing aspects of process costing. First-in, first-out (Fifo) process costing has been overemphasized in cost accounting texts and in the Certified Public Accountants examination; it should be pruned from major consideration in courses and examinations. Fifo process costing is unnecessarily complex, is not used in practice, and is theoretically weak. Before examining the reasons for this position, it should be noted that this article concentrates on the product-costing aspects of process costing. It is concerned only incidentally with planning and control. By definition, process costing is a type of product costing that deals with the mass production of like units which usually move in continuous fashion through a series of manufacturing steps called operations or processes. The complexities and conflicts between weighted-average and Fifo costing methods are eliminated by using standard costs.

Abstract This article focuses on a study which analyzed the role of programmed instruction in accounting instruction. Higher education is the poorer for not requiring basic teacher-training and/or educational psychology as prerequisites for academic appointments. The assumption that the post-baccalaureate process per se produces "good" teachers may not be a valid one. For many accounting instructors who wish to experiment with these new methods for communicating accounting verbal and manual skills it means starting at the elementary level of learning theory. Knowledge of the over-all learning process is essential not only as an aid to introducing and testing programs, but also as a means for selecting from among competing programs the program that is best suited pedagogically to the specific learning experience. Educational psychology contains a wealth of concepts and theories relating to the learning process, e.g., learning efficiency, task-orientation, identification, concept recognition, concept association and transfer, motivational or readiness factors.