Presents a hypothetical situation which is helpful in teaching and establishing several basic concepts of accounting for beginning accountancy students. Concepts that can be derived from the fairy tale story; Information on relationship between assets and expenses; Suggestion that accounting entities and the owner of those entities must be clearly identified.
The article examines probability revision behavior based on data generated by single and joint information systems. The bases for measurement comparison have numbered a few less than the number of measurements themselves. Some authors consider the behavior of income in response to changes in accounting methods. Other authors appeal to underlying economic variables and suggest that some measurements more realistically reflect the economic phenomena than other measurements. The author remarks that, although this research project is germane to several accounting issues, its merit does not lie in the fact that it resolves these accounting issues, but rather that it presents a systematic set of theoretical statements for interpreting the issues and predicting behavior. Messages from an information system discriminate among the underlying set of objects on which the system operates. The ring of an alarm clock discriminates among times of day, a stop sign discriminates among possible operations of an automobile and a book cover discriminates among possible contents of the volume.
This article presents an analysis of Accounting Principles Board Statement 4. The statement attempts to provide a structure that can be used in approaching some of the vexing practical problems that have been plaguing the profession in recent years. The objectives set forth in the statement are interesting, aspire to completeness and could lead to considerable change in financial accounting in the future. And the description of present generally accepted accounting principles (GAAP) is the first description of our present situation that is both systematic and authoritative. Because of these and other features and because it is ambitious in scope theorist should find much in Statement to analyze and discuss. The developmental purpose is to pro vide a basis for guiding the future development of financial accounting. The statement has implicit purposes as well as explicit ones. It sets out a frame work that the Board wants to test in the marketplace of ideas. The statement also sets out a tentative list of objectives of financial accounting that needs testing and development in the crucible of heated discussion. Finally, the statement serves the important function of calling the Board it- self back to a more fundamental approach.
This article presents information on socio-economic accounting. Several possible dimensions of socio-economic accounting have been suggested, including national income accounting, evaluation of social programs, the role of accounting in economic development and efforts to develop an index of social progress. This paper explores yet another dimension of socio-economic accounting-the recognition and measurement of external diseconomies, or social costs and the resulting implications for the accounting profession. The most complex and controversial, link in the assessment process is the determination of the social costs-monetizing the external diseconomies. Accountants are likely to resist involvement in such efforts because of the uncertainty involved, but such resistance is not justified. Cost determination is more the forte of accountants than of engineers and economists. Assuming that actual social cost estimation will be done by public agencies at some level of government, it then seems not unlikely that the accounting profession will be called upon to attest to such estimates.
The article compares Opinion 15 with a financial reporting method for convertible debt. Corporate capital structures often include such securities as convertible debentures, convertible preferred stocks, and stock warrants. In many cases, these instruments possess a dramatic potential for suddenly creating a huge in crease in the number of outstanding common shares and a severe dilution in earnings per share (EPS). In 1969 the Accounting Principles Board of the AICPA issued its lengthy Opinion 15, which utilized the common stock equivalent concept in prescribing when and how the dilutive effects on EPS in such cases should be shown on the face of the income statement. In order to illustrate some of the implications of this controversial Opinion and to offer a solution to the complex problems of satisfactorily reporting convertible securities in the financial statements of issuers, this article focuses on convertible debentures (CVDs). CVDs are unsecured bonds that may be exchanged for common stock of the issuer at the option of the holder at a certain ratio and during a specified period.