Knowledge that Transforms

Abstract This paper has shown the importance that Soviet planners attach to the establishment of common cost categories and cost stability. A highly standardized industrial accounting system requires a common treatment of similar economic activities and thus permits planners to make cost comparisons between firms as a basis for measuring economic efficiency. The discussion of depreciation indicated the deficiencies of the depreciation rate, the inclusion of capital repairs in the depreciation rate and the desire of planners to maintain control over working capital. Large losses on the sale or retirement of fixed assets arose because of inadequate depreciation and because of over expenditures on capital repairs. The revision of the depreciation rate in order to eliminate these losses showed the concern of planners with cost stability.

Abstract The accounting theory revolution consists essentially of an attempt to overthrow the traditional emphasis on costs in accounting theory and to replace it with a logical structure centered on values. It is hoped that this will provide a basis for resolving major theory controversies and for narrowing the present diversity of accepted practice. The "pure theory" of accounting rests on a definition of resources in terms of economic power of an entity and a definition of income in terms of changes in resources. The ideal measure of resources is current exchange value. This is not the same as either liquidation value or market replacement cost, though these set lower and upper limits, respectively, and can often be used to measure value. When these limits are widely separated, value must be estimated. It is often appropriate to forecast future benefits in making these estimates. The amount expended for an asset is ordinarily a reliable measure of its value at the time of acquisition. In some cases it is impossible to get a reasonable approximation of the value of an asset, though there may be no doubt that some exchange value exists. Such assets are included in the term "goodwill," and are not recorded in the absence of an actual exchange.

Abstract This article presents a business game that was developed for use in an introductory accounting course. Most such games are much too complex for classroom use in the introductory course. This game is designed to: 1) Require the student to think about a number of significant accounting problems and economic concepts. 2) Motivate an extremely high proportion of students to lean how accounting is used in decision-making. 3) Be simple enough that it can be used in the classroom without any calculating equipment.

Reviews the book "Accounting for Corporate Income Taxes," by Thomas F. Keller.

Abstract It is possible that the student in his study of process cost accounting will acquaint himself with the techniques of cost allocations without grasping an understanding of just how these techniques fit into the accounting records. For this reason it is important that the student be required to prepare the cost transfer entries in connection with the process cost problems that he solves. An additional exercise that has been found to be most effective is the requirement that the student solve a problem that incorporates the matter of cost allocation as a segment of the overall accounting setting of a manufacturing concern. Many accounting textbooks fail to analyze completely the causes of a change in gross profit. Typically, any change is first divided into the change in sales and the change in cost of sales. Each of them in turn split into the change due to volume and the change due to unit prices or cost. It is not intended here that the traditional way is wrong from a practical analysis viewpoint. It is contended, however, that an effort should be made to show the student what the realities of the situation are, and why the practical approach is followed.

Abstract By Act No. 3329 of February 1955 the "Institute of Sworn-in-Accountants" was founded, in pursuance of Article 1 of the said Act its object is "to supervise audits of Greek financial organizations of whatever nature." More specifically than Article 37, Article 39 prescribes what persons may be appointed auditors if a request for an audit has been lodged. These persons may be prominent bank executives or government officials. They may be in active service or be superannuated. The Minister of Economic Affairs makes a choice from a list compiled by the various Ministries. The "auditors" thus appointed must be sworn. During the check they are considered to be government officials. The amount of their remunerations is also fixed by the Minister of Economic Affairs after the check. It is also important to state that at the moment when the limited liability companies officially listed at the Stock Exchange were obliged to allow audits by a member of the Institute, there were over 100 limited liability companies officially listed. After publication of the ministerial decision approximately 40 companies discontinued their quotations.

Abstract This article focuses on the U.S. federal income tax provision of loss carry forward. The operating loss carry-forward is a provision for the off-setting of a prior-year loss against current profits. This provision has created the accounting problem of how the tax reduction arising from the carry-forward should be treated on financial statements and, more particularly, on the profit and loss statement. The problem concerns the investor, the creditor, and the other readers of financial statements of companies utilizing the carry-forward. The importance of the loss carry-forward provision to a company is, of course, that it preserves valuable cash which otherwise would have to be paid out in taxes. Such funds are retained in the business and can be used for working capital and/or expansion of fixed or other non-current assets. A company which has alternate profit and loss years of about the same dimension would pay no tax at all. Consequently, this study is directed toward eliminating such confusion by finding the best method of treating the tax reduction arising from the carry-forward.

Abstract One of the most popular laws of learning is that the learner's active participation is essential. This is reflected in the growing tendency in education to downgrade the lecture method, the formal discourse in favor of some type of discussion method. In accounting classes, the discussion method usually entails the use of problems or cases as the principal materials for engendering student participation. Although most accounting teachers will maintain that they basically use the discussion method, day-to-day classroom pressures tend to dull its application. Fortunately, the teacher usually knows a great deal more about the subject matter than the student. To sum up, perhaps one should conceive of participation as being of the mind rather than of the mouth. It is somewhat like enjoying a joke. Some people will laugh uproariously at almost any story that is remotely funny. It is recognized that the brilliant, enthusiastic teacher achieves his objectives regardless of the teaching method he uses. On the other hand, the mediocre, uninspired teacher finds that no teaching method can make up for his deficiencies. Still, it seems obvious that periodic, open-minded appraisals of the potential of various teaching methods are very likely to enhance teaching skills. If nothing else, they serve as examinations of conscience.

Abstract Accounting practices are the accountant's instruments for measurement and communication. Some practices attain general acceptance because they enhance the accuracy of measurement or reduce equivocation in the information presented. Others are dictated by the structure of particular environments. All may reflect, to some extent, the demands of practicality, expediency, technical and economic necessity, compromise, and diverse other influences. This paper is concerned with the forces contributing to the development of one accounting practice, the dollar-value technique for implementing the last-in, first-out inventory method, and with its legitimacy. Many of the accounting practices in the United States reflect the monetary postulate because measurement techniques have been insufficiently refined to permit other approaches. Recent improvement in the techniques of processing data has made more sophisticated measurements possible. More meaningful accounting data can be generated. But before this can be accomplished, accountants will have to abandon or modify some of their cherished but illogical practices which often lead to inaccurate and misleading measurements.

Reviews the book "Proceedings of the Eleventh Annual Tulane Tax Institute--1962."