Abstract There is abundant evidence that the cost accountant's traditional approach has been strongly influenced by classical and neo-classical economic theory. With the possible exception of specific order industries the general prescription that management should concentrate on those items which yield the largest markup is based squarely on the assumption of pure competition. Clearly in pure or near pure competition with unlimited demand for the firm's products at going prices management is well advised to push- in a production sense-those items which yield the largest markup. The extension of this prescription to products to be sold in areas of imperfect competition seems to be just as dearly unwarranted. Businessmen and accountants, particularly, have often argued that production and distribution cost accounting gives the key to decisions as to which lines, products, territories, etc should be pushed through increased advertising expenditures and other sales pressure. The fact that sales effort is necessary is an indication that the products are differentiated and that the demand for each product is not completely elastic. Intelligent pricing and sales-pressure decisions must give full consideration to estimates of demand elasticities and to the probable reaction of demand schedules to changes in (and different types of) advertising and other selling methods.

Abstract During the wartime years and now during the reconversion period a number of arguments have been advanced that seem strange to accountants and to businessmen. Like the unicorn, deferred maintenance is sometimes said to exist only in the minds of highly imaginative individuals-individuals, it might be added, who are acutely motivated by a profit incentive. While the conclusion stated in this bald fashion without qualification is obviously extreme, businessmen have found themselves hard pressed to find convincing arguments. It is the purpose of this paper to examine the conditions necessary for the existence of deferred maintenance, to investigate the propriety of taking a deduction from income to cover this item in advance of the actual expenditure, and to offer criticisms of some prevailing methods of measuring such deductions. In the course of this work it is necessary to review the relationship of maintenance to methods of depreciation apportionment. From the economic viewpoint, the accountant by making periodic reductions of income for depreciation is attempting, perhaps crudely; to provide for capital consumption or utilization.

Abstract All accountants are acutely aware of the difficulties surrounding the concept of cost, but doubtless many have not had the questionable opportunity of examining the special obstacles peculiar to nonprofit institutions. Since the accountant's expenditure approach to cost is highly objectionable, it may be that the economist's concept of cost can be employed. To economists and many businessmen cost is invariably associated with sacrifice. To this group it seems unreasonable for accountants to insist that interest paid for borrowed funds is a cost while the sacrifice of earnings from funds belonging to the enterprise is not considered cost. Accountants have parried these criticisms by pointing out the need for objective criteria for making entries and by showing that special calculations can be easily prepared for the comparatively rare instances when all economic costs must be included. But with regard to institutional costs it seems, at first sight, that the economic approach has a clear-cut superiority. Unfortunately, the economic concept of sacrifice is itself little, if any, better than the accountant's less sophisticated approach.

Abstract There is something wrong with charging a long-lived asset to expense in the period of its acquisition. To follow this practice in ordinary commercial accounting is, however, no more unreasonable than various retirement proposals that would take no depreciation until the unit is retired. For the accountant the criteria for writing off assets are independent of the initial bricklayers and of the wrecking crew that removes the last debris. What then should be signals for taking depreciable assets to expense? Perhaps the most common argument is that assets should be depreciated as their services are rendered. This approach has been emphasized as an ideal toward which accountants are working and by which their practical measures may be tested, yet this ideal is based mainly on a vague feeling of justice which seems to be in need of independent support. It is the primary purpose of this article to examine once again the income concept and to suggest an alternative for the ethical approach. Many small businessmen do not think they have any profit until the original investment has been entirely recovered, although this type of thinking is contrary to the attitude accountants attempt to instill in their clients, it is sometimes not unreasonable.

Abstract For a continuing enterprise having properties, the bulk of which must be replaced at one time, there is little doubt that funds roughly equivalent in amount to the recovered funds impounded by depreciation charges may be necessary for replacement. Nevertheless, as has been emphasized many times, replacement for a concern which continues indefinitely is done piece-meal and at no time in the future will all of the recovered funds represented by depreciation reserves on diversified properties be necessary for maintaining the same volume of output. A large volume of funds are, therefore, accumulated which are not only unnecessary in the intervals between individual replacements but are, in fact, never required by the firm unless it wishes to expand its productive capacity. With regard to public utilities one of the fundamental problems is the determination of the rate base. Except for considerations of working capital one shall assume that the rate base coincides with the accountants' book values. A minimum level of working capital is necessary and generally allowable.

Abstract Reviews the book "Statistical Cost Functions of a Hosiery Mill," by Joel Dean.

Abstract Reviews the book "Accounting Concepts of Profit," by Stephen Gilman.

Abstract Reviews the book "Balance Sheet Price Level Analysis," by Othel D. Westfall.

Abstract Reviews the book "The Theory of Competitive Price," by George Stigler.

Reviews the book "Development of Accounting Thought," by Harvey T. Deinzer.