Knowledge that Transforms

There has been a great deal of interest expressed in the development of accounting curricula for students wishing to pursue a career in management accounting, as of April 1975. At University of Texas in Austin, Texas, it was felt that practitioners in the management accounting field should be consulted to determine their perceptions of the usefulness of various management accounting topics in their work experiences. A group of faculty met to consider what topics should be included in such a survey. A list of thirty-nine topics was chosen from consulting the indexes and table of contents in several managerial and cost accounting texts, as well as from discussion with a small group of management accounting practitioners. An analysis of the results of the survey indicated there were five major rank-order groups of topics, namely, performance evaluation, responsibility accounting, internal control, tax factors in business decisions and profit planning and control. These groups were determined by searching for gaps between topics in the scale-weighted averages.

Reviews the book "Cost Estimating for Engineering and Management," by Phillip F. Ostwald.

The demonstrated and likely volatility of prices during this decade suggests a review of current value accounting is in order, as of April 1975. The literature indicates a substantial acceptance of current value accounting in accounting theory, but an impressive lack of implementation in accounting practice. What has been less widely discussed, both in the media and the professional literature, is the outlook for differential price changes, for changes in relative prices. The author says that over the next five years the principal economic and accounting challenge will come from substantial and pervasive shifts in relative prices. For example, between 1972 and 1973, while the wholesale price index in the U.S. was rising by 13.8%, the farm products and processed foods and feeds portion of it rose by 30% and the industrial commodities portion by only 7.7%, a difference in rate of increase of 22.3 percentage points. In this article the author also brings out some of the conceptual issues involved in current value accounting, then he discusses some of the valuation issues, and finally identifies some of the potential analytical uses of current value data.

Reviews the book "Essays on Cost," edited by J.M. Buchanan and G.F. Thirlby.

Presents a commentary on Cushing's paper which suggested that the reliability model is potentially useful vehicle for the auditor in the process of evaluating internal controls. Weakness of using reliability model; Nature and concepts of maintainability; Mathematical approach to maintainability.

This article presents the authors' comments on the criticism of their article by professor Raymond S. Chen related to treasury stock method and conventional method in reciprocal stockholding, which was published in an earlier issue of the journal "The Accounting Review," as of April 1975. The authors say that the confusion begins with Chen's criticism against the alternative simultaneous equations methods. These alternative simultaneous equations methods were not the focus of the authors' article published in an earlier issue of the journal, but were a means that they utilized to introduce the liquidation approach to report reciprocal holdings. In the authors' opinion, Chen properly declared that the authors demonstrated that the traditional treasury stock method in reciprocal stockholding situations misstates the minority interest and is not consistent with a true treasury stock approach. But if this is true, it is difficult to understand why Chen again attempts to prove the validity of this point to the reader when he presents support for such an approach. Chen appears to challenge the modified treasury stock method.

Reviews the book "Systems Based Independent Audits," 2nd ed., by Howard F. Stettler.

This article presents a study conducted to analyze the effects of sequencing of questions in accounting examinations on student performance. The preparation of examinations, especially in accounting, requires a great deal of care if they are truly to reflect a student's mastery of the subject. Regardless of how much effort one puts into making up an examination, some students will nevertheless complain that it did not "fairly" measure their knowledge. Unfortunately, too little is known about the sequencing of examination questions and its effects on student performance to be able to say whether this complaint is justified. When examinations consist of questions that are not of equal difficulty, sources in the education literature recommend that they be arranged in order of increasing difficulty. This is considered desirable because it avoids the possibility of weaker students getting discouraged because of their inability to respond to difficult questions early in the test. The study was designed to test this notion involving 306 elementary accounting students enrolled at the University of Delaware, in the College of Business and Economics.

Reviews the book "Introduction to Modern Accounting," 2nd ed., by Ronald J. Thacker.

Reviews the book 'An Introduction to Managerial Finance,' by Harold Bierman, Jr. and Jerome E. Hass.