The article focuses on methodology of financial accounting. In recent years, a number of accounting theoreticians have begun to attempt to apply the methodology of theory construction and confirmation in sciences to financial accounting. The impetus for these efforts probably was the desire to develop a theory or theories of accounting, which has the explanatory, the predictive and the descriptive powers of theories of sciences. In any case, these pioneering efforts have identified an inextricable link between theory construction and confirmation and measurement theory. The purpose of the paper is to appraise the validity of the ratio-scale view. The next section of the paper contains an overview of the analysis and the third subdivision of the paper provides a detailed analysis of the logic of this viewpoint. The final section provides conclusions concerning the future development of accounting theory, which are based on the examination of the ratio-scale view. The importance of the connection between theory construction and confirmation and measurement theory implies that accountants need to explore thoroughly the relationship between the numerical assignments of extant accounting systems and requirements of measurement theory.

This paper presents special forms of the learning model relevant to production situations in which staffing levels constrain production for both the cumulative average case and the marginal average case. They are applicable to planning profits and cash flows and to the capital budgeting decision under simplifying assumptions about demand and working capital. In a later section. these forms have been modified to permit direct observation of effects of errors in learning model parameter estimates on profits, cash flows and internal rate of return.

This article focuses on the impact changes in accounting procedures for the cost of interest on a firm's finance, with assessing implications of these changes in accounting procedures for three firms in the timber industry: Weyerhaeuser Co., Georgia-Pacific Corp., and Boise Cascade Corp. Because adequate data on new construction financing were not available, the analysis of the three companies, considering the proposed changes in accounting procedures, was confined to the following areas: the identification and used of an interest charge for shareholders' equity; computation of changes in the value of timberland inventory over a period of about 20-25 years and the corresponding changes in common shareholders' equity; and determination of changes in net income over the same period resulting from a higher value of depletion and the use of an interest charge for plant and equipment involved in the production process. On analysis, it was noticed that the effect of the changes was substantial. The reported value of the timberland account increased by more than 80 percent for Weyerhaeuser and by approximately 50 percent for the other two companies. Retained earnings increased by 17 percent in Boise Cascade, 30 percent in Weyerhaeuser and 60 percent in Georgia Pacific. Net income for the period studied was reduced considerably for each firm, actually becoming a loss for Boise Cascade.

Reviews the book "Accounting Systems and Practice in Europe," by K. Michael Oldham.

This article focuses on various concepts of equity and cites a study of the discrimination in the federal income tax rate structure. Given these three conflicting views of equity in the federal income tax rate structure, the taxable incomes of the spouses were allowed to vary from $1,000 to $40,000 in $1,000 steps. Then the tax burdens for all such combinations under the 1975 tax rate schedules for single and married taxpayers were computed. Only the impact of the federal income tax rate structure was considered in this study. The primary causes of distortions between singles and married that have been ignored were the maximum standard deduction, the low income allowance, exemptions for children, and child care deductions. It was noticed that when equity was defined as having economic units with equal incomes be taxed equally, a burden on single taxpayers emerged. The tax burdens for the lower income levels have been entered on the appropriate intersection to provide some guideline for the locus of the zero tax burden curve in the obtained graph. It is concluded that the tax rate structure has very different implications for taxpayers depending on their taxable incomes.

In two recent articles in the periodical "The Accounting Review," Beaver and Dukes (B⁄D), have used market association tests to assess the relative information content of accounting earnings numbers under various tax allocation principles. This article is a brief comment on two of their measures of association, "Percent Correct" and "Composite Average Price Index (API)." Correct interpretation of these measures is important for policy makers who might rely on their results and for researchers who may want to use their research method. The reinterpretation of the ⁄D data does not change the conclusions they draw regarding the consistency of different earnings numbers with the set of information used in setting security prices. Rather, its significance lies in the added confidence a policy maker can put in these results. There seems to be no ex ante reason to expect negative composite APl's or especially that the proportion of times that positive forecast errors are associated with negative unexpected price changes should be statistically significant.

The article presents a comment on the interpretation of API. In "Interpreting the API," Ronald M. Marshall concludes that API does not always provide a proper measure of either the private value of accounting data or the association between unexpected accounting signals and unexpected market returns. In addition, Marshall concludes that an alternative formulation of API always produces measures of these attributes, which are at least as good as those obtained via API. On the basis of these conclusions, Marshall argues that API constitutes the more appropriate tool for use in accounting research. Authors do not disagree with Marshall's conclusions from a conceptual viewpoint, but they do question the desirability of using API in accounting research because of its inherent subjectivity and costliness in terms of time. Since API does not possess these defects, authors believe that it constitutes the better research technique when, conceptually speaking, it can be expected to yield results, which are equivalent to those that would be produced using API. One objective of the paper is to identify an important sufficient condition, under which the two API will produce equivalent results.

This article presents and interprets findings of a study in which several current textbooks in cost and managerial accounting were examined to determine the extent of reference to and coverage of the reporting guidelines accepted as given. It is suggested that accountants should be concerned about effectiveness of internal and external accounting reporting. In the said study, researchers have accepted as given several guidelines relating to effective internal reporting systems; these were assembled from an examination of the current literature in the fields of organizational behavior and communication. The guidelines that were identified are classified into two groups: preparation and reporting or feedback. According to preparation guidelines: objectives should reflect goal congruence; participants should help set goals and agree to selected measures of goal achievement; standards should be set with freedom for failure and changes; accountants should educate report recipients; and accountants should recognize the tendency to over- or underestimate plans. According to reporting guidelines: reports should be relevant to user needs and responsibilities; reports should be on a personal level; reports should include supportive comments; reports should be consistent; and that reports should be timely and regular.

The article focuses on the measurement and reporting of the total costs associated with an explicit warranty rebate program offered on repairable products. First, it develops the various model components which describe, as a function of time, rebate and nonrebate costs. These components then are integrated into a model to measure resulting costs of a warranty rebate program and to assign these costs to separable accounting periods. Rebate costs in general arise entirely at the discretion of the firm since they are associated with promises made to buyers at the option of the firm. Their specific amounts vary with the conditions of the warranty and the actual performance of the product. However, once issued expressed warranties give rise to manufacturers' liabilities associated with their promises that certain specified standards of product quality and/or performance shall accompany the product. Given the conditions of the warranty, including a schedule of benefits available to eligible claim holders, rebate costs are determined primarily by the quantity of product sold to consumers and by the frequency of product failures during the post-sale period.

From these results it can be inferred that self-paced instruction using audio-visual instruments is as meaningful a learning tool as the traditional lecture-discussion format. There were no significant differences between performances in the audio-visual sections and the students' performances in the traditional section. The progress of the students from the audio-visual sections in subsequent accounting courses currently is being monitored. Preliminary results, not reported here, indicate that students from these sections have performed as well in upper-level accounting courses as have students from the traditional sections. A second inference from our reported data is that the students' past performances, as measured by their GPA's, were correlated more highly to the students' performances in the audio-visual sections than they were in the traditional section. Informal discussions with individual students revealed that the better students, as measured by their GPA's, liked the freedom of getting the work done ahead of schedule, thus enabling them to concentrate on other courses. All students completing the course early were in the upper half of the overall GPA's and received grades of A or B in the course. The informal discussions also indicated that the lower GPA of the poorer students frequently was caused by a lack of motivation. Thus, the self-paced format with its stress on individual motivation may be more harmful to the poorer students than would be the traditional format.