Introduction, 604. — I. Hypothetical contract of the cost-plus-incentive-fee type, 604. — II. The maximization model, 606. — III. Consideration of the firms entire operations, 612. — IV. Long-run profitability, 614. — V. Conclusion, 615.

PROFESSOR THEIL [5] recently gave the derivation of the best linear (B. L.) index number formulae for price and quantity. In an application of the formulae to Dutch import and export data, Kloek and DeWit [3] found that there is some slight, though persistent, bias to the effect that the index vectors yield larger current values than the individual data do. As this feature is related conceptually to the factor reversal test, they considered it desirable to devise a method which would control this bias on the average and worked out what may be called the best linear average unbiased (B. L. A. U.) index number. The aim of the present note is to indicate what relationship the B. L. and the B. L. A. U. indexes bear to the factorial indexes, that is, to those obtained through the factorial approach [1, 2, 4]. We conclude that the factorial indexes2 appear to compare well with the B. L. A. U. indexes. Incidentally, it is also pointed out that it might be possible to obtain a closer algebraic approximation to the B. L. index number formulae.

This article focuses on the accounting curriculum of the School of Business at the University of Colorado, Boulder, Colarado. The faculty of the School began to take a long, hard look at the curriculum which it was offering. Undoubtedily this has been done almost universally by the faculties of schools of business across the U.S. since the publication of these two studies. After long and careful study by the faculty of the School of Business at the University of Colorado, several basic changes have been instituted in the course of study. In order to appreciate the changes which have been made, it will first be necessary to explain the program as it stood originally. The School of Business is a two-year, upper-division school with students being required to take 60 semester hours of work outside of the School, and another 60 semester hours of work within the School in order to fulfill the requirements for graduation.

It is very difficult as well as unsatisfying to speak on the uses of mathematics in accounting for two main reasons. Firstly, because discussions of this nature convey the somewhat false impression that the only impetus toward changes, if any progress is evident in the use of mathematics in accounting instruction and research, has originated from without rather than from within the accounting profession, and that progress has been forced upon the accounting discipline by outsiders. Secondly, because the potential uses of mathematics in accounting are so many, within the time limitations of a meeting one can at best only survey the area. The author in this article did not attempt to explore fully the reasons accountants have not taken advantage of the existing body of mathematical knowledge earlier, but, according to him, he cannot help speculating briefly on this issue. It appears to him that the demands of management for new quantitative criteria of efficiency of operations and decisions both aggregative and partial, are presenting opportunities and pressures that accounting cannot ignore. Mathematical simulation, which has grown to maturity in the last few years, has had a pronounced influence on the design of feedback-control systems.

This article focuses on controversies regarding the construction of financial statements. One of the primary areas of controversy revolves around a misunderstanding as to who should be expected to use financial statements or, stated differently, to whom the statements should be directed. Many people, both accountants and others, seem to be concerned with the notion that financial statements frequently are not clear and comprehensible to the "man on the street" or the uninformed layman. On the other hand, accountants certainly should strive to improve the usefulness of their statements to informed, qualified users. Such techniques as the use of charts and graphs to supplement conventional statements, the use of comparative statements, and the constant search for more meaningful accounting terminology serve as examples of this type of worthwhile endeavor. Equally clearly, the accounting profession has a concurrent duty to educate the public in the proper use of financial statements.

At the May, 1961 meeting of the South-eastern Section of the American Accounting Association, it was the author's privilege to participate in a panel presentation entitled "Teaching Current Accounting Theory at the Undergraduate Level." The discussion centered around the inclusion in accounting curricula of topics receiving current attention in accounting literature, such as accounting for long-term leases, "direct" costing, and "deferred" income tax liability. This paper represents a distillation of some of the more important ideas presented and discussed at that session. There was general agreement as to the propriety of including current topics in college and university accounting programs. The study of current accounting topics certainly has a place in college and university accounting curricula. Treatment of these topics in a separate course is feasible only in institutions with broad, diversified accounting programs. Even in such schools, the desirability of such a course is open to question. The approach to teaching current accounting topics depends in large part on the basic objectives of the accounting program in each college and university.

In relation to the comments concerning the laws of learning and their application to accounting instruction, attention will be focused upon some of the learning methods with which accounting teachers are all generally familiar. These methods are commonly labeled teaching methods by many of the people but, for a more proper designation, should be expressed in terms of learning. Too many instructors in their enthusiasm for subject matter either forget or tend to subordinate the role of the student in the learning process. All too frequently one need to be reminded that one is not just teaching subject matter but rather that one is teaching students. It is readily recognized that there is no effective teaching-taking place if leaning does not result. Accounting is a diverse field and covers a wide range of materials, from basic bookkeeping processes to abstract theoretical concepts. This permits and necessitates an equally wide range in educational methodology. To determine the best learning-teaching method to employ is indeed a complex question. The author believes there is no one best way. A variety of methods is no doubt essential within a given course and even a combination of several methods proves most useful within a single class period.