Knowledge that Transforms

Reviews the book "Financial Accounting and Reporting: A Contemporary Emphasis," by John Dearden and John Shank.

The article presents information on the report by the American Accounting Association (AAA) 1971-72 and 1972-72. Most of their data relate to the supply aspect. The authors also have collected data which can be used to evaluate the accuracy of the functions used by the AAA committee. Those who witnessed the brisk recruiting activity at the 1975 AAA National Convention in Tucson and heard from both recruiters and those being recruited that there continues to be a strong sellers' market might conclude that even the Optimistic series projection by the AAA committee was in error. This series predicted that annual supply would exceed annual new demand by the 1976-77 academic year. An important consideration which should not be ignored is that whenever a field or discipline goes through a period of short supply, a backlog of demand (the cumulative excess of demand over supply) will build up, and this takes some time to eliminate. If one were to accept the Optimistic series projection and were to assume a zero backlog at the end of the 1971-72 academic year (which is not very realistic in view of the short supply situation of the 1960's), there would be a backlog demand of 112 by the 1975-76 academic year.

Focuses on a project by the American Accounting Association's Committees on Professional Examinations which evaluated the professional examinations for accountants. Objectives of the project; Methodology of the projects; Comparison of examinations and accounting curricula; Recommendations.

Reviews the book "Management Accounting: A Decision Emphasis," by Don DeCoster and Eldon Schafer.

Reviews the book "More Debits Than Credits: The Burnt Investor's Guide to Financial Statements," by Abraham J. Briloff.

Reviews the books "Audit Case," 8th ed., and "Illustrative Audit Papers," 8th ed., by Arthur W. Holmes and Frances E. Moore.

The original article by the author reported the effects of changing data on the predictive ability of financial ratios. Much of what Professor E.I. Altman suggests involves the comparison of alternative models using lease data. Altman implies that the research failed to extend sufficient attention to the possibility of equality of relative leases between bankrupt and non-bankrupt firms. Obviously, if bankrupt and non-bankrupt firms have the same relative amount of long-term lease commitment, the comparison of ratios with lease data to ratios without lease data will end in a draw. One of the problems in undertaking research of the type being reported was availability of data. Locating failed firms which had reported leases in their financial statements limited the size of the sample. Additionally, the necessity of using data for 5 consecutive years imposed the problem of a changing economic environment over the 5 years in question. No new ratios were invented for this research because the objective was to take a standard model specification and compare its ability to predict bankruptcy with and without the capitalized data.

Reviews the book "Topics in Managerial Accounting," 2nd ed., edited by L.S. Rosen.

This article focuses on the impact changes in accounting procedures for the cost of interest on a firm's finance, with assessing implications of these changes in accounting procedures for three firms in the timber industry: Weyerhaeuser Co., Georgia-Pacific Corp., and Boise Cascade Corp. Because adequate data on new construction financing were not available, the analysis of the three companies, considering the proposed changes in accounting procedures, was confined to the following areas: the identification and used of an interest charge for shareholders' equity; computation of changes in the value of timberland inventory over a period of about 20-25 years and the corresponding changes in common shareholders' equity; and determination of changes in net income over the same period resulting from a higher value of depletion and the use of an interest charge for plant and equipment involved in the production process. On analysis, it was noticed that the effect of the changes was substantial. The reported value of the timberland account increased by more than 80 percent for Weyerhaeuser and by approximately 50 percent for the other two companies. Retained earnings increased by 17 percent in Boise Cascade, 30 percent in Weyerhaeuser and 60 percent in Georgia Pacific. Net income for the period studied was reduced considerably for each firm, actually becoming a loss for Boise Cascade.

This paper presents special forms of the learning model relevant to production situations in which staffing levels constrain production for both the cumulative average case and the marginal average case. They are applicable to planning profits and cash flows and to the capital budgeting decision under simplifying assumptions about demand and working capital. In a later section. these forms have been modified to permit direct observation of effects of errors in learning model parameter estimates on profits, cash flows and internal rate of return.