This research was designed to evaluate the potential independence problem posed by CPAs who accept employment with ex-client firms. First, CPA firm data concerning how frequently auditors actually leave public accounting to accept employment with client firms is reported. Next, the reactions of selected users of accounting data and CPAs to a hypothetical case are studied. The case is designed to permit the impact of two variables on perceived independence to be evaluated: (1) the time lapse between auditing and working for a client firm; and (2) the rank of the ex-auditor. The results revealed that the perceived severity of the independence problem was different for the two groups, and that the time and rank variables significantly influenced the responses of both the users and the CPAs.

Discussion regarding whether to require management to make earnings forecasts public has been based, in part, on the existing evidence concerning published management earnings forecasts. This article evaluates certain attributes of forecast firms in an effort to determine whether currently produced forecasts are representative of what might be produced by all firms if forecasts were mandatory. The results of the various tests all suggest that previous research findings may not provide a sound basis for a policy decision on forecasting.

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.

The exit-price approach to financial statement valuation has been criticized for the lack of a meaningful income statement. In this article, an income statement is designed that provides information about the resource flows which result in income generation. The proposed statement is divided into an operating section and a holding section. The traditional revenue recognition assumption is maintained in the operating section. Expenses are then matched with revenues based on a concept called "instantaneous matching." In the holding section of the statement, gains and losses are based on market price changes of assets held. The income statement uses both replacement costs and exit prices and yet reconciles with exit-price balance sheets. The result is that the strengths of a replacement cost income statement are combined with an exit-price oriented balance sheet.

Reviews the book "Computerized Accounting," by Henry J. Beck and Roy James Parrish Jr.

The article focuses on the issue of communicating accounting research results. With the research into the accounting literature, it has been asked whether the findings of the research are being transmitted effectively to those who would endeavor to understand the implications of the research for the future of the discipline. It may be urged that a disservice would be done to the cause of path-breaking research if its results must be seen to be conveyed in the same widely understandable terms as might be found in the more familiar applications. Journals do not perform the same role as seminars or colloquia to which only a small circle of highly trained researchers might be invited. Authors of frontier research may communicate among themselves at such gatherings and through the circulation of working papers. Those who would seek publication in a journal are assumed to be prepared to make their research accessible to a wider audience, and it is the responsibility of a journal editor to facilitate this dissemination by encouraging authors to remove the unnecessary obstacles.

Reviews the book "Cost Accounting: A Managerial Emphasis," 4th ed., by Charles T. Horngren.

Liability valuation in an exit-price accounting system is an unsettled issue even though the subject has been extensively debated. In this article, a theoretical structure, based on Sterling's wheat trader model, is developed to show that market prices should be used. The assumptions of the wheat trader model may be restrictive, but they will be later relaxed in this paper to show that the conclusions are more widely applicable. Chambers's arguments against the use of market prices are examined to show that they do not invalidate the conclusions. This paper concludes with the suggestion that, if market price valuations of liabilities were generally adopted, a ratio of current interest cost to equity could be used as an alternative performance measure to the traditional debt to equity ratio.

The emergence of divergent terminology in the accounting literature is a recurring problem. This article provides an illustration of this problem and suggests an approach to theory presentation which can reduce some of the communication difficulties encountered by readers.

Reviews the book "A Comparative Analysis of Selected Income Measurement Theories in Financial Accounting," by James A. Anderson.