Abstract ABSTRACT: Two graphs are constructed to show (1) the effects of sales level changes on absorption costing income (at any specified production volume) and, (2) the effects of production volume changes on absorption costing income (at any specified sales level). Each construction is based on a graph of direct costing income with the result that a useful picture of the relationship between direct and absorption costing income is obtained.
Abstract ABSTRACT: Few of the reported studies of innovative techniques for accounting education have found significant improvements in students' performance and attitude. This paper reports on an experimental study in an elementary managerial accounting class using an innovative teaching methodology, The Personalized System of Instruction (PSI). The PSI teaching method was selected for testing because studies in other academic disciplines had found that PSI classes performed better and had better attitudes than traditional lecture/discussion classes. The present study found significantly better performance and attitudes in PSI taught sections of an elementary managerial accounting class. The study also found a higher course drop-out rate for the PSI taught sections.
Abstract ABSTRACT: Most accounting curricula do not provide students with practical reinforcement of EDP audit/retrieval system concepts. This paper reports on a computer program package that has been designed to fill this educational void. The MARS package consists of five different routines that enable students to gain hands-on experience similar to many features of larger commercial audit/retrieval systems. Student testing of the package and related case studies has proven them to be effective and efficient pedagogical tools.
Abstract Reviews the book "Phantasmagoric Accounting: Research and Analysis of Economic, Social and Environmental Impact of Corporate Business: Studies in Accounting Research No. 14," by Robert E. Jensen.
Abstract Presents a reply to criticisms on an article about the need for priori research in accounting. Analogy between a move from a pure priorism to empiricism; Evidence that accounting literature is replete with evaluations of the alternative systems.
Abstract The article presents comments of the author on the article "Theory Versus Practice in Risk Analysis: An Empirical Study," by Willis R. Greer. In his Greer, claimed to show a conflict between utility theory and actual decisions made by representatives of twenty-seven Fortune 500 firms. Although the article provided an interesting analysis of firms' decisions, it seems misleading in two important respects. First, the hypothesis tested by Greer is quite different than the hypothesis that he suggested he was testing. Second in contrast to his claim of a substantial conflict between the decision processes used by actual decision makers and existing utility theory, the data give fairly good support to the counterclaim that the decision makers in his study tend to be expected utility maximizers. The latter point already has been discussed by scholar C.G. Hoskins and Greer and scholar Ted D. Skekel. More is said about this later in this comment. The interpretative problems with Greer's original article appear to arise from the author's conception of "existing utility theory." This conception is tied to a mean-standard deviation trade off model.
Abstract The article presents a simple graphical illustration for the maximum tax on earned income. Internal Revenue Code, section 1348 stipulates that the maximum rate of taxation of "earned income" shall be 50 percent. In spite of the relative simplicity of this concept, students often experience difficulty understanding computations required to accomplish the objectives of the section. Standards texts, though yielding descriptions which are clear and accurate, are not particularly helpful to the student attempting to conceptualize the procedures. A simple graphical presentation, can make obvious the logic underlying computations. Of course, the contribution of this graphical approach is that the significance of the third step in computations just described becomes apparent. Only in this manner is it possible to easily compute the tax on the "unearned" portion of taxable income, since it is desired to tax this income at the same marginal rates which would have been applied had section 1348 not been invoked.
Abstract The notion of a revolution in accounting is taken from Thomas S. Kuhn's "The Structure of Scientific Revolutions. His thesis is that science does not progress through accumulation. Rather, a series of tradition shattering revolutions occur in which one time-honored scientific theory is rejected in favor of another incompatible with it. The new theory, or set of ideas, is unique in that it is not derived from the previously accepted dogma. It is seldom or never just an increment to what is already known and in the process of moving from the old set of ideas to the new, the community of scientists Follows a number of identifiable steps namely, recognition of anomalies, a period of insecurity, development of alternative sets of ideas, identification of schools of thought, domination of the new practices or ideas. The first step is a precursor to the whole process, it initiates the period of crisis which follows. During that period, scientists become increasingly dissatisfied with the existing theoretical framework and a search for alternatives begins. Therefore, the second and third steps are mutually interactive. As dissatisfaction grows, the search for alternatives gains impetus, as alternatives are discerned and discussed, the dissatisfaction is heightened. Schools of thought emerge and one set of ideas gradually gains ascendency over alternatives.
Abstract This article presents comments of the author on the paper "Theory Versus Practice in Risk Analysis: An Empirical Study," by W.R. Greer that was published in the July 1974 of the periodical "The Accounting Review." In his paper, Greer concluded that there appears to be a substantial conflict between the decision processes used by actual decision makers and existing utility theory. The conflict seems to center around the inability of classical utility theory to deal effectively with situations where one or more of the contingent outcomes for a project are lower than some critical amount. The form of utility function employed by Greer was the utility of an investment opportunity is an increasing function of the expected value of that opportunity and a decreasing function of the risk of the opportunity. Greer employed the standard deviation of payoffs as the measure of risk. This comment contends that the actual decisions of the firms in Greer's study are not inconsistent with a utility function of the form described if instead semi-variance is used as the measure of risk.