Knowledge that Transforms

Reviews the book "Contemporary Thought on Federal Income Taxation," edited by Charles J. Gaa.

Abstract The article presents a simulated case for audit education. Many of the concepts and ideas that are explored in an auditing course are not comprehended as well as they might be. As a means of easing this problem authors developed an experimental project which included case material in combination with detailed accounting records and complete sets of facsimile source documents for part of a hypothetical client's operations. The case material described the client's operations and accounting system. For the order filling and billing portion of the client's system, a complete set of accounting records and source documents were produced by computer simulation. Although the simulation that was developed may initially appear similar to the traditional audit practice case, they actually differ greatly in their objectives. The narrative description and the simulated documents included only the information which was believed necessary for the interim audit of the sales account and for evaluating the effect of the results of the sales audit on year-end procedures in accounts receivable and sales.

Abstract The article demonstrates that the current procedure of estimating asset life for depreciation purposes is inadequate and advocates the use of the entire probability distribution of asset life. After reviewing certain current depreciation procedure, it discusses the probability-life approach to depreciation and its implications for the inter-temporal allocation of depreciation expense. The effect of depreciation adjustment under both the traditional mean-life and probability-life approaches is analyzed. Criteria that can be used to choose between mean-life and probability-life are then discussed. Finally, consideration is given to the application of the probability-life concept to group depreciation and also to accelerate methods. The article also says that the choice of a depreciable life for an asset requires an estimate of the length of time that the asset will provide its services to the company. Since an uncertain future is being estimated, one is faced with the problem of estimating the probability distribution of the asset life.

Reviews the book "Management Accounting: Text and Cases," 4th ed., by Robert N. Anthony.

Abstract The article presents information about accounting on several universities in the United States as of October 1970. In Stanford University, California, professor Oswald Nielsen became Professor Emeritus of Accounting in August 1970. A retirement dinner was held in June which was attended by many distinguished accountants. In Louisiana State University, Louisiana, the Accounting Department has added three new faculty members. Assistant Professors include Mitchell H. Raiborn and Jerry D. Siebel. Professor Frank W. Watkins has joined the faculty as Instructor. The Texas Tech Tax Institute held its 16th annual meeting in October 1969. In University of Washington, during the spring, 1970, the department of accounting hosted the 5th Annual Meeting of the Western Region of the American Accounting Association. In Montana State University, Montana, Curtis Graham joined the accounting faculty as Associate Professor on July 1,1970. Jack Kempner has been appointed chairman of the Department of Accounting and Finance.

Reviews the book "Financial Reporting by Diversified Companies," by R.K. Mautz.

Reviews the book "Readings in International Accounting," by Kenneth B. Berg and Gerhard G. Mueller and Lauren M. Walker.

Abstract Performance evaluation models are usually constructed and implemented without giving formal consideration to desirable adaptation of a decision during its actual implementation. Moreover, it is generally acknowledged that such adaptation may be desirable and is usually accomplished in some heuristic fashion. Since the performance evaluation model, through both information flow and behavioral effects, may affect this process, the possibility of altering the evaluation model in an advantageous manner becomes an issue. Control of the decision implementation interface is a poorly structured, little understood, problem in management science that is of direct concern to the accountant. Using a firm simulation experiment, we have examined the differing implementation effects of three alternative performance measurement models. We define an implemented decision as a specific act that an organizational decision unit attempts to achieve, such as an output of x units during some specified time period. The final result of this implemented decision is not necessarily equal to the priori-desired result; and the relationship between the implemented and ultimately achieved act we term the decision implementation interface. More important, however, the results are sufficiently intriguing to warrant replication of the experiment.

Reviews the book "APB Accounting Principles."

Reviews the book "Management Guides to Mergers and Acquisitions," by John L. Harvey and Albert Newgarden.