This article presents information on evaluating alternative methods of accounting for long-term nonsubsidiary holdings of common stock. Long-term investments by one corporation (investor) in the common stock of another corporation (investee) can be classified in one of two basic categories according to the percentage of the common stock of the investee corporation held by the investor corporation. Holdings of more than 50 percent are classified as subsidiary holdings while holdings of 50 percent or less are classified as nonsubsidiary holdings. Under the cost method, "periodic investor income" consists of dividends received by the investor which are distributed from the investor's proportionate share of undistributed investee earnings accumulated since the acquisition of the investment. The book value of the investment on the investor's books, hereafter referred to as "investment carrying value," is periodically reduced by any dividends received in which distributions in excess of investee earnings since acquisition of the investment. Such dividends are referred to in this paper as "excess dividends." Finally, Opinion 18 states that a senes of operating losses of an investee or other factors may indicate that a decrease in value of the investment has occurred which is other than temporary and should accordingly be recognized.

Reviews the book "Foundations of Accounting Theory," edited by Williard E. Stone.

The purpose of this paper is to clarify and sharpen the distinction between monetary and non-monetary assets and liabilities for general price-level accounting. This is done in several steps. First, the conceptual basis of general price-level accounting is examined and the distinction between general price-level accounting and conventional accounting is discussed. Second, an example is introduced to illustrate the nature of general price-level gains and losses and how these gains and losses differ from gains and losses now reported in general price level-accounting. Third, the definition used by several authorities for distinguishing between monetary and non-monetary items are examined and evaluated critically in the light of the theoretical concepts developed earlier. The paper concludes with proposed new criteria for distinguishing between monetary and non monetary items in general price-level accounting. If financial statements are to be of maximum benefit in providing a starting point for predicting future profits and losses, gains and losses due to one causal force should be reported separately from those due to other forces.

Reviews the book "Proceedings Second International Conference on Accounting Education," by E.F. Castle.

The article reports that the evaluation of the cost control procedures applied to a process is facilitated by viewing the control objective as minimizing a whole set of costs including the efficiency cost incurred in the operation of the process and all of the control procedure costs. Thus, proposed changes in control procedures can be evaluated by determining their net effect on the total of this set of costs. Two approaches to controlling efficiency cost were discussed along with some indication of the types of procedures required by each. The first approach, that of preventive controls, has its primary effect on efficiency cost through the frequency of occurrence of operating problems. The second approach, that of detection-correction controls, has its effect on efficiency cost by influencing the length of time operating problems are allowed to exist in the process. It can be argued that budget performance reporting, a major contribution of the accountant to process cost control, serves both control approaches.

Reviews the book "How's That Again?," by Roger M. D'Aprix.

The article discusses assessing prior distributions for applying Bayesian statistics in auditing. The results of this study suggest that auditors are willing to specify information from which prior distributions can be constructed. The prior distributions which were obtained, had most of the probability concentrated on small amounts of error, but there was considerable variability among them. It was found that there were substantial inconsistencies in the way some auditors specified information about the prior distributions. These inconsistencies and the variability among the prior distributions indicate that at least some of these distributions do not accurately reflect the auditors' beliefs about audit populations. Therefore, it is concluded that auditors should proceed with caution in relying on their prior distributions. To apply Bayesian techniques, the auditor subjectively evaluates the non-sampling evidence and expresses his belief about the audit population as a prior probability distribution. A likelihood function is then obtained by statistically evaluating the sample result.

The article discusses a university accountant trainee program. There are three major aspects in the development of a person as an accountant--education, training and experience. For classroom work is designed to provide the first of these three. Many colleges and universities have looked for alternatives to the internship program since they have neither compatible academic schedules nor a sufficient number of conveniently-located intern sponsors to allow the operation of an internship program. One such alternative is a university accountant trainee program. Under such a program the university and the department of accounting of the school of business work together to select undergraduate accounting majors to work part-time in professional accounting jobs in the central business administration. Students selected for the program would typically begin their employment at the start of their junior year, having completed three accounting courses. These students would work approximately fifteen hours per week during their junior and senior years and forty hours per week during the summer between their junior and senior years.

The article discusses the additivity of net realizable values. Very little attention has been given to solving the problem of addition in current value accounting statements--adjusted historical cost, current replacement cost or net realizable value. With few exceptions, the implicit assumption has been made that as long as the items in the statement are measured in or adjusted to current terms, the addition will be valid. This assumption may be wrong at least part of the time particularly when applied to net realizable value. The realizable value of a group of assets will be computed as the maximum sum of the net realizable value of the various assets, the maximum level of aggregation before valuation being determined by the fact that a nonzero net realizable value must be derived from a verifiable market price. The objection might be raised that this computation for assets involves measurement of prices for assets or groups of assets followed by comparisons of these prices. The question of asset grouping must be answered satisfactorily before a net realizable value model can be completely developed and applied in general. The answer to this question will be provided through an examination of some general cases of asset interaction.

This article presents information related to the article "Cost-Volume-Profit Analysis Under Conditions of Uncertainty," by researchers Robert K. Jaedicke and Alexander A. Robichek. The fact that the traditional "cost-volume profit analysis" does not include adjustments for uncertainty severely limits its usefulness. Jaedicke and Robichek explain that if a firm is considering the introduction of two new products with the same expected fixed costs, the same expected selling price per unit, the same expected variable costs per unit and the same expected breakeven sales volume, one may be misled to think that the two products are equally desirable. This is not true for one good reason: determining which product is more desirable depends upon the frequency distributions of all the variables that influence profit, not just their expected values. Furthermore, it is more instructive to compare two profit distributions not only by their expected values but also in terms of their variances. Use of the Jaedicke-Robichek model enables one to compute the expected value and the standard deviation of profit for a given product. This information enables a manager to estimate the probability of achieving the breakeven point, as well as the probability of achieving any level of profit or loss.