Knowledge that Transforms

Abstract The article presents a report of the Committee on International Accounting of the American Accounting Association on the financial control and reporting problems of the companies amid the increase in foreign operations of the companies as of October 1973. The teaching approach should in most instances be directed to topics relating to conducting operations across national boundaries as well as to comparative accounting. Ultimately the entire accounting curriculum should be internationalized, a great many domestic accounting problems have international counterparts and these international dimensions should in many cases be integrated into the existing accounting courses that examine the domestic problems. With respect to taxable bases, the concept of income and revenues, the determination of what expenses are to be matched against revenues and when, and the sources of taxable income are variables which differ among nations. Evaluation of the impact of tax considerations on international operating and investment decisions and on operating procedures is required.

Abstract The article reviews the book "Corporate Financial Reporting: The Issues, the Objectives and Some New Proposals," edited by Alfred Rappaport and Lawrence Revsine.

Abstract Reviews the book "The Role of Private Placements in Corporate Finance," by Eli Shapiro and Charles R. Wolf.

Abstract The article cites the value and specific guidelines of practical work experience that the Certified General Accountants' Association of Canada considered before certification into the accounting profession is granted. One of the main problems encountered in reviewing various professional assessments of the Experience Requirement has been in understanding what different groups mean by the word "experience." None of the various associations surveyed seems to define what they are talking about and therefore they seem to be using the word "experience" to mean a variety of things. There is a discrepancy among Associations and academics as to what experience really is. The Association should try to provide the student with the tools necessary to acquire each level of competency, but this author feels that it is only at the third level of competency that the Association can try to provide specific guidelines. The increasing pressures and continual changes of everyday social and business life will confront our students when they start their first job. Three levels of experience are necessary to produce an effective accountant, they are: Accounting experience, General business experience and Broad life experience. The Association should define and provide for each of these levels of experience, but perhaps can specifically define and lay guidelines only for the Accounting Experience necessary before certification.

Abstract This article presents information on Inventory Valuation. The rule for valuing inventory by lower of cost or market is given in Statement 6 of Chapter 4 of Accounting Research Bulletin No. 43. As used in the phrase "lower of cost or market," the term "market" means current replacement cost by purchase or by reproduction, as the case may be except that, Market should not exceed the net realizable value i.e., estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and Market should not be less than net realizable value reduced by an allowance for an approximately normal profit margin.

Abstract Reviews the book "The Auditor's Reporting Obligation," by D. R. Carmichael.

Abstract The article explores the goal congruence of net realizable value (NRV). The NRV model would have various properties after the evaluation of a decision at the end of period T to hold an asset. A correct decision was made if the NRV income for period T+1 is positive. The NRV income for period T+1 will be negative if an incorrect decision was made at time T. The decision at the end of period T to hold an asset may have been correct is the NRV income for period T+1 is negative. However, if it was correct, another condition must hold.

Abstract The article reviews the book "Accounting Implications of Federal Tax Reform: A Research Study," by W. L. C. Wallace.

Abstract This article discusses the advantages of using the case method in teaching accounting course. The case method has several advantages, particularly in attracting and holding the interest of the non business major. The case method means something different to everyone claiming to use it. In this situation, it refers, in part, to the instructor's efforts to organize the class work so that a high level of student participation was encouraged. Rather than continue the question and answer technique of instructor and student, an attempt was made to develop formats for a series of discussions. Readings from a newly adopted textbook and business periodicals, such as Fortune and Forbes, were selected and organized into four modular time segments. Case studies, placed near the beginning of each module, were selected on the basis of their relevance to the main issue considered in the module, and upon the setting of the case. A considerable effort was made to use cases in which a technologically oriented company operating in the Southwest needed to make difficult decisions based in part on accounting financial data.

Abstract This article presents information on some empirical result related to tax allocation and depreciation methods. The evidence indicated that deferral earnings had the highest association with security price changes. This unexpected finding is consistent with two rather different interpretations, either the market is efficient and deferral earnings is more consistent with the underlying information set impounded in security prices, or the market is inefficient in the sense that security prices reflect only the very narrow set of reported earnings numbers. Being intolerant of ambiguity, we conducted a further analysis, which attempts to explain a result we felt to be anomalous. In fact, the ratio will be equal to the internal rate of return on the asset. The analysis reported here discards the currently prevailing views of deferred taxes as a deferred credit or deferred liability and treats tax allocation arising out of differing depreciation methods for tax and reporting purposes as a form of depreciation.