Knowledge that Transforms

In the article, the author presents a response to a commentary by Robert E. Jensen about accounting reporting, published in this issue of the journal "The Accounting Review." The original paper, presented by the author, was intended to stimulate some thought and action with respect to the direction in which the accounting profession is being drawn by the vicissitudes of legal and other forces relating to the communication of financial affairs. Some of the points on accounting reporting which Jensen has taken issue with include, the apparent relationship of the author's six or seven item "standard report" to psychologist George A. Miller's "channel capacity" observations; the assumption that accountancy ought to attempt to provide decision-related information directly to the user who may not choose to seek interpretation by a specialist; the use of the word "hypothesis"; and some semantics with respect to the statement related to rational investment action. According to the author, the needs of the investment analyst for information are much greater than the needs of the ordinary investor because of his training, analytical frame of reference, and familiarity with problem areas.

Reviews the book "Management Information Systems for the Smaller Business."

Reviews the book "Readings in Contemporary Financial Management," by Keith B. Johnson and Donald E. Fischer.

In summary, there are three basic observations: 1. If an input has a variable effect on the objective equation values and if it is fully consumed, then the basis will not change as long as its cost does not increase by an amount greater than the input's shadow price. The lower limit on the cost of such an input is-∞. If an input has the variable effect mentioned in #1 but is not fully consumed, then the limits of the change in its cost is given by the limits of the change allowed in the objective equation value of its corresponding slack variable. Thus, it may be desirable to include a known non-bottleneck resource in the model to determine the sensitivity of its cost. 3. In the set of all fully consumed inputs, simultaneous changes within the respective ranges will not cause the sensitivity analysis to be invalid.

Reviews the book "Tax Guide for Incorporating a Closely Held Business: Tax Study No. 1," by Harry Z. Garian.

Reviews the book "Cost Accounting: Accounting Data for Management's Decisions," by Nicholas Dopuch and Jacob G. Birnberg.

The article applies mathematical control theory to the analysis of a simple model of an accounting and budgeting problem. The objective is not only to make the model operational for practical applications but also to use the framework and results of mathematical control theory in order to get new insights into accounting and budgeting problems. The article shall be primarily concerned with the process of the operations of the firm looked at from an accounting standpoint. In accounting, a firm is represented by a set of quantities that indicate the stocks of assets of various types that are under the control of the firm and the firm's activities are indicated by the changes in these quantities. Using mathematical notation one can say that the firm at time t has a vector x(t) whose components indicate the physical amounts of each asset the firm has at time t. The results of the activities of the firm between t1 and t2 are measured by the vector difference x(t2)-x(t1). It is found that firm's activities at time t are indicated by &xdot;(t), which in turn affects x(t).

Reviews the book "Federal Taxation of Capital Assets," by Robert S. Holzman.

The 1968-69 committee on the Role of the Computer in Accounting Education investigated the role of the computer in accounting education. In its deliberations the committee considered instruction about the computer, the blending of computer instruction into regular accounting courses, the use of the computer as an aid to instruction, and research related to computers and accounting. The report contains a short section on each of these topics. The committee also assembled some materials relating to these topics which have been included in an appendix. The field is moving too rapidly for this report to be the last word on the computer in accounting education. It is one of series of continuing efforts which are needed in order to make and keep accounting instruction relevant to a processing environment that is becoming computerized at a very rapid rate.

Reviews the book "Program Budgeting: Program Analysis and the Federal Budget," by David Novick.