The dramatic surge of the commodity option market over the past few years may well be illustrated by the growth (before its collapse) of one leading option writer, Goldstein, Samuelson, Inc., whose sales rose from $1 million in 1971 to over $45 million by the end of 1972. The commodity option market is closely related to the commodity futures market, except that options are available only on the so-called “international” commodities.

The comment by Linke and Kim correctly observes that the assumption regarding the maintenance of constant proportional use of capital sources is not appropriate for our argument and should be deleted. As our analysis did not make use of this assumption, the two conclusions hold.1. The weighted average cost of capital calculated with the usual weights (original capital structure proportions) is not in general equal to the discount rate which equates the current value of the firm to the present value of future cash flows.2. The above conclusion holds for any weights which can be constructed from the cash flows.

This article presents comments of the author on the paper "The Auditor-Firm Conflict of Interests: Its Implications for Independence," by A. Goldman and B. Barlev that was published in the October 1974 of the periodical "The Accounting Review." In this paper, Goldman and Barlev present an interesting discussion of audit independence. Their model of independence is predicated on the assumption that an auditor's behavior when subjected to pressure from a client to produce a report that is not based solely on professional standards is a function of the relative powers of the parties to the conflict. In a conflict between the auditor and the client the authors contend that the client's power is based on management's ability to hire the auditing firm, dismiss the auditing firm, or determine the auditor's employment conditions. Basically, they are proposing that the client's power over its auditor is economic--the power to remove the auditor and thus affect the economic well being of the firm. They contend that non-routine services for the primary benefit of the client results in the least power over the auditor.

Reviews the book "Accounting & Financial Reporting: A Guide for United Ways and Not-for-Profit Human Service Organizations."

Presents a reply to Ishikawa' s commentary which proposed that the reliability model could be improved by the use of feedforward concepts and that maintainability may be applied to the study of internal control systems. Explanation of control concepts; How reliability model encompasses the feedforward concept; Dispute against Ishikawa's contention that the engineering concept of maintainability is adaptable to application in the study of internal control systems.

Presents a reply to the commentary on the study on volatility in quarterly accounting data. Difficulties which arise from the use of the dependent period concept to determine a number predictive of annual net income; Basis for dependent period concept; Causes of fourth quarter adjustments; Evidence for the existence of bath items.

In this article, the author discusses about cost accounting by providing information about one of his friends Robin Stealall, a Congressperson in context of voting on pending Bill 382636, which concerned a ban on the use of plastic in spectacle lenses as part of increased efforts in petroleum resource conservation. Stealall wanted to make a conscientious and responsible choice in this matter. His own spectacles at that time had plastic lenses, so Stealall decided to collect some facts from accounting experts concerning those particular spectacle lenses. Stealall first flew to Houston for consultation with professor Robert Sterling, whose office door, Stealall discovered, bore the letters "TRUTH" in very huge capitals. Stealall curiously approached the bearded man behind the wire cage and asked for "TRUTH" concerning the plastic spectacle lenses. According to Sterling, the truth was that, the lenses have no value to anyone and their exit price was zero. In the same context, Sterling also explained Stealall about historical costs. Sterling also added that, the word "accounting" is only used in archeology now.

B AINis (1956) analysis of the sources of barriers to new competition suggests that scale economies to the plant or firm allow sellers to elevate price somewhat above average cost without attracting new rivals. Multivariate statistical analyses of the determinants of seller concentration and profits henceforth have included measures of scale economies among their independent variables. However, direct measures, based on engineering or survey evidence, have been available to only a few investigators (Bain, 1956; Eastman and Stykolt, 1967). Others have employed various statistical proxies for the missing firsthand evidence. This paper proposes a new way to form these surrogate measures, compares its properties with those of previous approaches, and reports its performance in two recent studies of allocative efficiency in manufacturing industries.

John S. Hughes, Dennis E. Logue, Richard James Sweeney, Corporate International Diversification and Market Assigned Measures of Risk and Diversification, The Journal of Financial and Quantitative Analysis, Vol. 10, No. 4, 1975 Proceedings (Nov., 1975), pp. 627-637