In the October 1964, issue of the journal "The Accounting Review," professor Neil Churchill presented four applications of matrix algebra in cost allocation situations. Where functional relationships between allocation sources and destinations are determinable and stable, linear algebra is shown to be a convenient tool for getting the cost allocation job done. Churchill presents a technique that is finding increasing use as accountants become more experienced with formulative methods. However, the artful economy of wording and symbolism that makes his presentation compact is also a source of frustration for one who bootstraps his way to an understanding of such matters. As long as the allocating relationships and proportions remain stable, Churchill's foreshortened approach works very well. The same matrix approach can be expanded to allocations of larger dimension, and of more than one layer. While the problem appears frightening when viewed in its entirety, a step-by-step venture through it will lead eventually to placement of all costs in the service using departments. The utility of such allocations, from a cost-control viewpoint, can be questioned, but that is an entirely different question with which researchers do not propose to engage here.

The article emphasizes the need for revision of the introductory collegiate course in accounting. Among the needed reforms is the deletion of most bookkeeping and special procedural matters, and this should, of course, be accompanied by the elimination of these subjects from textbooks and other instructional materials. For all truly basic and fundamental purposes, as perhaps many textbook writers will acknowledge, double-entry accounting requires just two kinds of records, each of which performs a distinct and readily explainable function. These are the general journal and the general ledger. It is essential that the student master the use of these two devices at the very beginning of his studies, but he will need no additional knowledge of accounting mechanics for any theoretical purposes. the ledger technique which is adopted depends upon the underlying method of keeping track of the inventory. While such underlying procedures may often receive too much emphasis in textbooks, it is with the ledger practices that the article is concerned.

In this article, the author deals with the problem of computing the present value short cuts of a series of estimated future inflows at a given rate of discount. The concept of present value has permeated most areas of business decision-making. However, when considering this factor, the businessman is faced with the problem of numerous mathematical computations. Granted that they are mechanical in nature, nevertheless, until these computations are completed, the influence of the present value concept cannot be determined and related decisions cannot be made. The services of a modern computer are particularly desirable when the calculations are extremely numerous and highly complex, and when extreme accuracy is required. However, this offers little comfort to the business executive at his desk, the investor in his home, or the professor or student in the classroom who, for one reason or another, does not have access to a computer and who may require only reasonable accuracy in solving problems of valuation.

The combining of business enterprises has probably gone on almost as long as business entities have existed. In the United States, one can distinguish three distinct merger movements since the emergence of the modern corporation. The first movement occurred around the beginning of this century, highlighted by the formation of the first billion-dollar American enterprise, the United States Steel Corporation, in 1901. Unusual economic growth and the lack of substantial antitrust restrictions permitted the creation of huge companies during this early period. The second wave of mergers came in the 1920's; however, these combinations affected the business community to a lesser degree than those earlier in the twentieth century. The third period of mergers began after World War II and has continued up to the present. This merger momentum has been sustained by the desires of management to obtain the benefits of diversification, the tax-free status of certain mergers, and the apparent economies of large-scale operation. The best method of handling business combinations would be, (1) to treat all combination transactions as purchases, except mergers between companies of like size. (2) To write off goodwill against retained earnings immediately. (3) To show revenue and expense as though the purchase were made at the beginning of the year. The preacquisition earnings of the purchased company should be deducted at the bottom of the consolidated income statement.

We have given formulas to aid in the computation of real rates of return and present values if price-level changes have occurred or are anticipated, in order to better evaluate the performance of various assets or the feasibility of acquiring an asset. It has been demonstrated that price-level changes can seriously distort the rate of return realized on an investment. Finally, it has been argued that one should consider price-level changes, actual or anticipated, before appraising the performance of an asset or purchasing one.

Reviews the book "Effective Use of Statistics in Accounting and Business," by John B. O'Hara and Richard C. Clelland

Reviews the book "Acquisitions and Mergers," by George D. McCarthy.

The article discusses the distinction between the conventional and some of the suggested methods of reporting fixed assets as they affect business income. This is done by presenting an article by professors R.L. Dickens and J.O. Blackburn published in the April 1964 issue of the journal The Accounting Review. These published accounts aid stockholders and other outsiders to project the future earnings and financial condition of the corporation and to assist with the evaluation of the performance of management. According to the author, as the individual requirements of different users of published accounts are unlikely to be cognate, one set of accounts will scarcely fulfill the needs of all stockholders and other outsiders, no matter how "objectively" the asset values contained therein are determined. He suggests that replacement cost, "realizable value," "historic cost," and "historic cost adjusted for price level changes," can provide a basis upon which stockholders and other interested external parties can project the earnings and financial condition of the enterprise according to their own requirements.

Reviews the book "Business and Professional Income Under the Personal Income Tax," by C. Harry Kahn.