Reviews the book "Accounting History From the Renaissance to the Present: A Remembrance of Luca Pacioli," edited by T.A. Lee, A. Bishop and R.H. Parker.
Understanding of the significance of the distinction between the definition and measurement of income may be improved by an awareness of the structure of the process by means of which one moves from the abstract region of theoretical constructs to the reality associated with operational definitions. Once this structure is perceived, alternative empirical pro positions which are considered relevant to the income concept-specificially those found in the technical literature of accounting and economics-may be attached to this skeletal framework for purposes of experimentation and evaluation. In this manner, one would expect important empirical issues to be more clearly identified, and direction thereafter to be given to research aimed at explicating the apparent consequences and relative weights of these issues. Not unexpectedly, problems beset this rather unique approach to the analysis of income metatheory at both stages. In the absence of rigorous quantitative expressions of initial, intermediate, and final states of reasoning by the individual theoretician or practitioner, the structure of this theory cannot be directly induced from explicit formulations. Perforce this leads us back one step to the formulator himself-about whom current research into the nature and simulation of human thought processes has provided some interesting insights and hypotheses for our problem. With the additional aid of several observations concerning research methodology, measurement processes, and purposive behavior, a tentative structure was outlined. In the second stage of our overall approach, the principal problem is one of dimension. Even delimiting the area of our attention to accounting and economics, the number of empirical propositions is untenably large.
Education is presently set in an environment that is curiously paradoxical in nature. Curricula which give appropriate emphasis to the multivariate character of business problems should not be circumscribed unduly, yet, an overexposure to the myriad of complex influences which compound the difficulty of problem solution may well create for the average student a greater measure of confusion than resolution. Educators have long recognized this phenomenon and have increasingly sought to provide the student with an atmosphere of business and to develop in him an appreciation of the relevance of his field of special interest. This belief in the importance of relating the various business stimuli and the collateral disciplines in a climate which focuses attention on the practical problems of decision-making has resulted in a number of significant educational innovations. In general, they are all essentially variants of two basic concepts namely interim work experience programs and scale simulation, in the classroom, of the interaction of the various business influences.
The article informs that much of the accounting data used in management control and administrative decision making is a product of antecedent processes of cost allocation and expense distribution. Both of these operations assume the validity of cost divisibility and recombination. Existing practices of accountants in allocating costs and expenses to relevant production orders, products, processes and/or departments would appear to confirm the general acceptability of such an assumption. Effective cost control depends upon an identification of costs with responsibility centers, and the calculation of unit costs is especially important in measuring product or process profitability. In the analysis of costs, an important first problem which confronts the accountant is the measurement of benefits to be derived from the cost or expense elements which are not dearly identifiable with specific departments or cost centers. The reliability of successive allocations necessarily rests upon this first, basic determination. Once the interdepartmental relationships, or associations, are established quantitatively, there remains a second problem of arithmetically distributing costs in the previously established allocation ratios.