Knowledge that Transforms

Reviews the book "Accounting for Goodwill," by George R. Catlett and Norman O. Olson.

Reviews the book "Contemporary Accounting and Its Environment," edited by John W. Buckley.

Reviews the book "Management Information Systems--A Framework for Planning and Development," by Sherman C. Blumenthal.

The article presents the set of rules for determining transfer prices that can serve as a feasible and efficient instrument for the decentralized administration of a socialist economy. The problems of bureaucracy in the management of a socialist economy are if anything more acute than the problems of a large firm in a capitalist economy. The classical solution to the decentralized administration of a socialist economy was stated most clearly by O. Lange. Lange proposed a socialist economy in which firm managers exploited their monopoly power to influence prices might be more or less efficient than a centralized economy. The article examines the so-called accounting and economic theories on the relation between cost and production and establishes the role each plays in the administration of a firm. It presents a model of cost behavior which results is the foundation for the transfer price system. It finally describes how cost, price and production are determined under the system and examines the consequences of the system for the allocation and utilization of resources.

The article deals with the application of some of the elements of measurement theory to the problem of reporting the financial effects of price-level changes. Among other matters, measurement theory concerns itself with different "scales" of measurement and their interrelationship. There is a major concern related to the notorious shift in the exchange-value of money, country by country, decade after decade. In price-level accounting where one is trying to measure the change in the "exchange-value of money," the change in the unit employed in accounting to measure the power of money to command goods and services in the market. The means most frequently used to measure this change is an index of the level of prices in general. One further feature of scales of measurement is pertinent to the price-level problem in accounting. Furthermore, one should not underestimate the extent of the change required in the thinking habits of businessmen before one can expect enthusiastic acceptance of "price-level accounting."

There are two main reasons why an accountant should study mathematics. First, the use of mathematics in problem solving requires a consistent logical approach. This second reason is that certain areas of mathematics have useful applications in the study and in the practice of accounting. Accountants have found, for example, practical applications of certain topics in calculus e.g., profit-volume analysis when the total revenue and total cost functions are nonlinear. The basic reasons for studying computers are parallel to those for studying mathematics. First and foremost, of course, the computer is extremely useful in the solution of many problems confronting accountants and businessmen generally. However, study of computers, and particularly computer programming, also stimulates careful analysis of problems and approaches to their solution and it fosters the habit of organized problem solving. A computer user may call upon canned programs and subroutines for standardized mathematical and statistical calculations without even having to write the programs himself.

Reviews the book "Analysis of Decisions Under Uncertainty," by Robert Schlaifer.

Reviews the book "An Introduction to Risk and Return From Common Stocks," by Richard A. Brealey.

Reviews the book "The Personal Exemptions in the Income Tax," by Lawrence H. Seltzer.

Reviews the book "Decision Theory and Information Systems," by William T. Greenwood.