I. Empirical observation and hypothesis, 564. — Quantitative analysis, 574. — III. Findings and implications, 579.

Abstract The article identifies the conditions for classifying accounting as a measurement discipline. A typical definition of measurement is "the assignment of numerals to objects or events according to rules." Defining measurement in this manner overcomes the objections mentioned above and insures that measures obtained via the various scales will be informative and consistent. A more satisfactory definition of measurement is the assignment of numerals to represent elements or a property of elements in a specified system on the basis of isomorphism or homomorphism existing between one or more empirical relational systems and one or more numerical relational systems. For example, if purchasing power, which is defined as the ability of an object to command other objects and services in exchanges, is shown to satisfy the conditions above, more precise definitions of accounting concepts could be formulated. Similarly, in choosing a depreciation method for a particular asset, the accountants would choose the method which is believed to parallel more closely the decline in the purchasing power of the asset. If accountants are not willing to choose an economic property for accounting measurement, which approximates extensiveness, and to assume that the property is extensive, they must abandon their attempts to improve and to explain accounting via measurement theory.

Reviews the book "Business Planning: Key to Profit Growth," by Patrick H. Irwin.

Abstract The various aspects of cost provide the conceptual core of management accounting. Incremental cost and opportunity cost are particularly important concepts, since they provide the foundations for the accountant's contribution to decision-making. The article sets out to test the validity of the two concepts. It says that there seem to be some confusion as to the precise meaning of the terms incremental and opportunity cost. The confusion exists in the literature of management accounting, managerial economics, and pure economics. The article suggests that a definition, using systems terminology, can help to clarify the meaning of the two terms. It defines incremental cost as the sum of the opportunity costs of the inputs to a system, each input being used independently of other inputs. Opportunity cost is defined as the revenue sacrificed by not implementing the next best alternative output from the resources making up a system. It is seen that incremental cost provides a floor to opportunity cost. The task of measuring opportunity cost is synonymous with the task of maximizing the profit from the use of the resources under a firm's control. The accountant cannot be expected to tackle this problem alone.

[Two stage least squares methods are used to estimate a postwar quarterly model of U.S. labor demand, supply, and wage adjustment. Analytical techniques are used to derive the long-run equilibrium properties of the estimated model. Short run properties are obtained by approximating the model in the form of two simultaneous difference equations. Simulation methods show the response of the model to an increase in the size of the armed forces.]