Knowledge that Transforms

Reviews the book "A Primer on Replacement Cost Accounting," by William J. Bruns Jr. and Richard F. Vancil.

The article presents a review of the document "Statement on Accounting Theory and Theory Acceptance," published in the 1977 issue of the journal "The Accounting Review." Beginning with the 1930's, the American Accounting Association (AAA) has endeavored to publish at least one comprehensive statement in the area of accounting theory each decade. Logistically, this enterprise has been carried out by a series of committees drawn from the Association's more prominent members. During this same period, the Committee on Accounting Procedure, the Accounting Principles Board, and the Financial Accounting Standards Board, in turn, have formally represented the much larger practicing arm of the profession in its self-regulatory determination of standards governing accounting practice. It is clearly not that membership in academia and/or the AAA has precluded one from an active role in accounting rule making, professors of accounting have regularly been called on to serve in this capacity. A more likely reason is that the AAA, through its collective membership, is, from the inside at least, viewed as being in a unique position to give advice on practical accounting theory, whether that advice is solicited or not.'

The article comments on the paper "The Contingency Theory of Managerial Accounting," by David C. Hayes. The intent and implications of Hayes's research were to provide a sufficiently rich description of organizational subunit performance so as to permit a delineation of the factors which cause certain costs to occur. Once the causal factors of cost have been determined, controllability can be more clearly defined and responsibility for the causal factors can be assigned to individuals within the organization who have control over them. The major contingencies associated with departmental effectiveness in Hayes's assessment model are: organizational subunit interdependence, subunit environmental relationships, and factors internal to the subunit of interest. In describing these model dimensions, Hayes states that the nature of departmental interdependence varies with organizational complexity and may be classified as either stable pooled, sequential, or reciprocal. Unfortunately, the nature of the contingency dimensions is ignored by Hayes in stating his propositions and in conducting and analyzing his empirical research.

Reviews the book "The Private Shareholder and the Corporate Report," by T.A. Lee and D.P. Tweedie.

Enough of this "glory," as Humpty Dumpty might call it. Eckel has served for years on the Canadian analogue to the APB. This makes it all the more gratifying that, despite our differences, we agree the main points: Financial accounting's allocation theory is a wretched mess, and things won't improve until we accountants radically revise our notion of income. A reading of [Kuhn, 1970, pp. 12-22, 47-48, 84, 162-65, 178-79] suggests that such a mess is just what one should expect of a pre-paradigmic19 discipline like financial accounting. If enough accountants of Eckel's professional eminence come to share his recognition of our intellectual crisis, our discipline may someday begin to prosper in the way the physical sciences have. Let's hope that these accountants do, for, as [Thomas, 1974, pp. 156-57] pointed out, this mess is also an ethical one. Meanwhile, to paraphrase the movie ad of a few years back, we can only continue to pray for Pacioli's Baby.

Business tax incentives are an integral part of the tax policy of the United States. An important consideration that is often overlooked in designing business tax incentives is the selection of the "form" for the tax incentive. This paper examines the alternative forms of business tax incentives and analyzes their effect on the investment in capital goods. The alternative forms are classified as tax credits, accelerated deductions, additional deductions, exclusions, exemptions, reduced tax rates, and specially taxed organizations. Also, a model useful in comparing the alternative forms is developed. It is concluded that business tax incentives in forms treated as permanent differences by accounting principles have a more favorable effect on the investment in capital goods. Thus, these forms (the reduced tax rate, additional deduction, exclusion, or exemption) are the preferred forms for business tax incentives.

Reviews the book "Accounting Fundamentals: A Self-Instructional Approach," by Stephen A. Moscove.

Reviews the book "Financial Accounting: An Introductory Study," by J. Leslie Livingstone and Harry D. Kerrigan.

Numerous court cases indicate that individuals traveling abroad are not cognizant of the federal income tax implications. As a result, deductions are lost for trips inadequately planned by uninformed taxpayers. Recent legislation contained in the 1976 Tax Reform Act further complicates this problem. This article examines federal income tax legislation and pertinent court cases relating to foreign travel. The objective is to enable the professor and his family to guard against loss of significant tax deductions when traveling abroad. The knowledgeable professor who carefully plans a trip, with attention to the details, improves his chances of obtaining and defending deductions claimed on the income tax return.

Reviews the book "Internal Audit of the Budget Process," by Richard S. Savich.