Readers of current accounting literature may have noticed of late the reappearance of a malady which seems to spring up every so often. Past experience indicates that it is contagious and may develop into an epidemic. For want of a better name it will be called "Value-ITIS" because it causes its victims to become enthralled with the importance of objective proof of subjective values. For example, it causes an investor to pay an unwarranted price for a share of stock because others with the same disease have purchased enough of the same stock to force the market price up. In the accountant, and particularly the academic theorist, this condition seems to be brought on by overexposure, malnutrition and neglect, exposure to economic theory, malnutrition from a diet lacking in economic realities, and neglect of the lessons taught by history. It seems to be most virulent among the relatively young, but will also attack the oldsters who have lost the immunity they developed in the early 1930's.

The article focuses on direct costing and the uses of cost data. Cost accounting is utilitarian. Stated another way, cost accounting is not an end in itself, but a means to an end, which is why the uses to be made of cost data are so important. Just how good the cost accounting is, is determined, not by reference to a stated body of principles or to established concepts, but in terms of how well the accounting does in fact meet the needs which it is intended to serve. Cost data are used for a variety of purposes. No one method will supply data which will serve all purposes equally well. This means that the cost accountant has the alternative either of selecting the method best suited to the use which is considered primary and using the costs developed by this method for all other purposes, or of developing costs specifically for each intended use. More and more companies are adopting the second alternative and instructing cost departments not to honor requests for cost data until the use to be made of the data is stated and the costs developed with the stated use in mind.

This article focuses on the sources of capital surplus. Capital surplus may be defined as an excess of contributed capital over legal capital. American courts have developed many theories, among them the "trust fund," "the fraud," and the "holding-out" doctrines, to support the established rule that the legal capital of a corporation may not be reduced except through formal amendment of the corporate charter or as a result of operating losses in excess of accumulated surplus. In the eyes of the law any net worth in excess of legal capital is surplus, and in the absence of statutory provisions to the contrary, may be used by the board of directors for any desired purpose. These concepts of contributed capital and legal capital are of fundamental importance to the accountant. It seems hardly necessary to emphasize before a group of accountants the importance of distinguishing between contributed capital and earned capital. But to the lawyer and the courts, legal capital is the important fact, and no matter how much the accountant disapproves of certain legal definitions of capital he must recognize that the force of law makes them facts, and that these facts should be shown on his financial statements.

The article presents matters related to accounting for students of accounting. The students of today will be the practitioners of tomorrow. One of these is the trend toward a constantly increasing proportion of fixed to total costs. The article presents theory cases for undergraduate courses. After some examination, the writers have found a means of achieving, in part, some of these goals. In a two-hour undergraduate course called "Current Accounting Topics," an effort is made to give students something other than conventional text-book material and to encourage the discussion of matters of theory in a framework that differs from the usual problem-solving approach. The article also presents a simplified three variance technique. The basic concepts involved in calculating the three components that make up the difference between manufacturing expenses incurred and the amount that is charged to production under a standard cost system are difficult matters for most students of cost accounting. The article describes about helping accounting students to learn how to analyze a business transaction.