In order to operate an enterprise well, management needs to plan future operations and maintain close control over materials and activities. One of the most useful techniques of planning is forward budgeting. Its figures are based on known intentions decided by high-level authority and on knowledge of the results of prior activities that grew out of prior planning. This necessary knowledge de- rives from detailed records (i.e. accounting) periodically compacted into summary reports. Of the many techniques of managerial control, several that are essential include to set up an operating organization and carefully provide for subdivided duties. It may be helpful if production standards are established as a guide to workers and supervisors. Secondly, provide trained personnel, plus suitable supervision, frequent inspection, etc. Although, present day accountants may justly take pride in the intricate techniques and the professional status of our independent auditors. Yet they can well afford now and then to acknowledge a large intellectual debt to generation after generation of unknown contributors to this art.

Efforts to induce accountants to give recognition to the distorting effect of inflation in the financial statements and reports that they prepare have met with little or no successs. Proponents of the inclusion of such information in financial reports might advance their cause more effectively if they joined in the advocacy of steps that do not digress very far from established and conventional practice. It is suggested that such a first step might be the inclusion in financial reports of a com- paratively non-technical, brief explanation of the extent to which inflation has distorted conventionally-calculated net income. Such an explanation might include mention of any loss from the depreciation of net working capital, and any gain from the liquidation of noncurrent liabilities. The source and application of funds statement (if properly amended) will serve to provide many of the figures that need to be adjusted in order to estimate the magnitude of the inflationary-caused distortions of reported operating results. A revision of the statement to exclude inventories and current prepayments from the definition of funds (net working capital is recommended. The results of the computations of the type suggested cannot be regarded as mote than reasonable estimates. Their credibility is less likely to be challenged if they are reported (in round amounts) are no more than this. Accountants who profess to pay allegiance to the principle of full disclosure can do, at least this much.

The article focuses on accounting and price level. During the last decade accountants have become increasingly aware of the effects produced on accounting statements by the substantial change that has occurred in price levels. It is reasonable to expect that they should also show some interest in proposals aimed at adoption of a policy of stabilization of the price level, even though implementation of such a policy would call for action primarily in the somewhat alien field of monetary and fiscal affairs. Advocates of this policy maintain that the objective of Federal spending, taxing, borrowing, lending, and monetary operations should normally be maintenance of the purchasing power of the dollar in real goods. One of the fundamental arguments used to support such a program is the effect its announced adoption and actual carrying out would have upon businessmen's expectations and particularly upon their ability to plan future operations without the ever-threatening prospect of being overwhelmed in a sea of deflation or of being buffeted by the storms of violent inflation of their prices and costs.

The article focuses on accounting research. The first of four stated purposes of the American Accounting Association is to promote research in accounting. Although much has been done to further this objective, a great deal more must be done if the Association is to be counted among the leading contributors to effective research. Currently, research is being carried on under the auspices of the Association by economist Ralph C. Jones and his associates, who are working on the Price Level Project. Research by the Committee on Concepts and Standards in its continuing search for effective statements of concepts and standards in the area of financial accounting. Another is the research by the Committee on Cost Accounting Concepts and Standards and by the several task committees on education. The tremendous research potential represented by the thousands of college and university teachers and graduate students of accounting needs to be tapped if the research program is to be enlarged to keep up with the growing needs for the application of the scientific method to the problems facing accountancy.

The article presents answer to the question how the accounting officer can best contribute to effective management. The controller's department is the pivotal point, to which is forwarded the significant and vital information of business activity. It is his responsibility to analyze and interpret the performance of other branches of business activities and submit his conclusions through the medium of financial reports and statements It is in this area that the controller can make his greatest contribution to effective business management. Management should be supplied with continuing reports that spell out the cost of distribution by product, territory, mode of transportation and dollar value of order. The credit and collection phase of business, which in many instances is a function of the controller's department, must be assiduously watched. In the area of budgeting, accountants can and must make a vital contribution in the planning and control function of business management. The preparation and interpretation of budgets, which in essence are a set of management plans assembled in terms of transactions to be effected and aims to be accomplished, constitute one of the most significant contributions that dynamic accounting can make to effective business administration.

Robert M. Solow, Paul A. Samuelson, Dynamic Growth under Diminishing Returns to Scale, and Balanced Growth under Constant Returns to Scale: A Brief Comment, Econometrica, Vol. 22, No. 4 (Oct., 1954), p. 504