Performance evaluation, Uncertainty, Risk-sharing, Controllability

Auditing, Audit quality, Uniform application of standards, Accounting standards

Cost information, Cost report, Timing, Expected value of information

Auditing, Auditor opinion, Informativeness, Negative confirmation

Application of choice theory to the selection of an appropriate accounting method has been dealt with in a number of recent publications.' Difficulties in pursuing this approach arise, however, when we introduce a number of users of accounting information. We cannot, in general, ascribe a group utility, or social welfare, function to a set of multiple users. As a result the notion of identifying the appropriate accounting system by maximizing some conceptually well specified objective function is often inappropriate in a multiperson setting.2 Nevertheless, there are numerous special cases which do admit to a group utility function. Obvious examples include a team and deferral to an expert (or dictator). More significant is the fact that similar results are achievable when the risks and returns of a cooperative decision are shared among the cooperating individuals in a Pareto optimal manner. For example, under suitable conditions, a partnership will admit to a group level or partnership utility function. The purpose of this paper is to demonstrate that it is possible to view the problem of accounting method choice in a partnership as a formal, welldefined optimization problem. This has the theoretical advantage of explicitly linking the accounting choice to the partnership's economic situation, as well as opening up the possibility of studying optimality existence and characterization. Moreover, it provides a juxtaposition with extant accounting prescription. In particular, I shall demonstrate that, within the framework adopted, existing concepts of partnership accounting are in-

One purpose of an accounting system, or any information system, is to provide a set of signals designed to communicate descriptions of certain past phenomena believed to be decision relevant in the future.' However, it is difficult to evaluate a given or proposed information system because of its complexity. This complexity arises in part because of the interrelated problems of which phenomena to describe and how best to describe them. Since complexity hinders information system evaluation, decomposition of the total interrelated system into a number of less complex subsystems for evaluation purposes is often desirable. Unfortunately, most decomposition will introduce errors into the analysis. But if we can predict the resultant errors, decomposition can still provide a useful surrogate evaluation method. The purpose of this paper is to explore the decomposition approach to information system evaluation, at the conceptual level, relying heavily on Feltham's recently proposed model for predicting the value of information in the single decision case.2

Performance Measurement, Direct costs, Absorption costing, Ex post optimum model

Inventory, Inventory valuation, Quantity and Price effects, Inventory write downs

Books partly or wholly devoted to giving instruction in the art of keeping accounts date from 1494 when Luca Pacioli's Summa was published in Venice. It is reasonable to suppose, however, that manuscript expositions of bookkeeping were in existence before then, for use within commercial schools, by individual instructors, or possibly for circulation among those interested in acquiring mercantile knowledge. Several early manuscripts on other aspects of mercantile practice have survived,' but only one which includes some discussion of bookkeeping is known to us, although not in its original form. Manuscripts on bookkeeping continued to be written and presumably used even after the first books on the subject had been published. It may be assumed that these were compiled by their writers for the limited purpose of instructing their own pupils, though no doubt they came to the notice of others. In this article the various manuscripts on mercantile accounts of the fifteenth and sixteenth centuries are described and discussed.2 Its scope

Double-entry bookkeeping, Accounting history