Knowledge that Transforms

Abstract Reviews the book "Evaluating Governmental Performance: Changes and Challenges for GAO."

Abstract ABSTRACT: The gain or loss on net monetary assets is a central and controversial feature of general price-level-adjusted financial statements. Highly levered companies will show large purchasing power gains on their debt during inflationary periods even when the inflation is correctly anticipated. In this paper, a model is developed, based on the Fisher effect for the adjustment of interest rates to expected inflation, to show that much of the apparent purchasing power gain on debt is due not to real purchasing power gains but, rather, to the gain associated with the reduction in the market value of debt because of unanticipated inflation. When changes in the market value of outstanding debt are explicitly recognized, a significant part of the GPLA purchasing power gain on debt can be viewed as an offset to nominal interest expense to arrive at the real interest expense for outstanding debt.

Abstract Presents a letter to the editor in response to the article "Newly Emerging Standards of Auditor Responsibility," previously published in the January 1976 issue of "The Accounting Review."

Abstract Common dollar financial statements add a second time dimension to financial reporing that beginning students of accounting mag find difficult to grasp. The authors find that students' difficulty in understanding the roll-forward adjustment and the distinction between monetary and nonmonetary items is alleviated when common dollar statements are introduced with a two-dimensional display. The two-dimensional display accommodates the money time dimension as distinguished from statement time, the monetary/nonmonetary distinction, the computation of income and the reconciliation of equity accounts as between statements based on common dollar magnitudes.

Abstract Reviews the book "Tax Research Techniques," by Ray M. Sommerfeld and G. Fred Streuling.

Abstract This article presents the text of a report by the American Accounting Association (AAA) on its examination of the editorial policy of the accounting review and its plans to add publication outlets in the U.S. as of October 2, 1977. When the American Association of University Instructors in Accounting was formed in 1916, its principal concern was to advance "accounting instruction." This emphasis on education as contrasted with research continued until the reorganization in 1936 and the change of name to the American Accounting Association. The 1936 bylaws of the AAA reflected the drive for reform that led to the reorganization and renaming. The AR has a department entitled Education Research which has provided an outlet for publication of educational research, teaching, and instructional systems. In addition, there is an Educational Research Series that is under the direction of the Director of Education. All of these activities are consistent with the objectives of our Association. The criticisms concerning the use of mathematical symbols in articles are based upon a correct observation, namely, that the "intensity" of such articles has increased since the early 1960's.

Abstract Reviews the book "Auditing," by Jack C. Robertson.

Abstract Reviews the book "Income and Value Measurement: Theory and Practice," by T.A. Lee.

Abstract ABSTRACT: This paper presents the results of a behavioral experiment which examined two proposals about middle-management decision-making behavior that are incorporated implicitly into Anthony's description of the management control process [Anthony, 1965]. The first of these proposals is concerned with how middle-level managers are motivated and predicts that their management control decisions are influenced strongly by the organizational goals emphasized by their senior managers. The second proposal involves how well middle-level managers can use multiple criteria to make decisions and involves the proposition that they accurately can incorporate a specified importance of organizational goals into their management control decisions. The results of the experiment suggests that Anthony's conceptual framework may be appropriately applied in nonprofit, public sector organizations such as the large military organization where the experiment was performed.

Abstract This article presents the text of a report by the Committee on International Accounting Operations and Education of the American Accounting Association (AAA) for 1975 to 1976. The 1974-75 Committee on International Accounting made an in-depth survey of corporate financial reporting by selected foreign companies in six foreign countries. The Report of that Committee suggested the continuation of this form of comparative study and the use of such material as a benchmark for measuring changes in financial reporting. The 1973-1975 Committee on Accounting in Developing Countries, in its Report, directed attention to the accounting education needs of developing countries and the Report proposed initiatives to be taken by the AAA for serving those needs. The study of comparative accounting systems is lagging behind the developments in other areas of the social sciences. The research which has been done to this point in time is simply descriptive of accounting practices in different countries. But there is now an impetus for more rigorous work in the area of comparative accounting.