SINCE 1966, the Federal Reserve Board has experimented with the use of Regulation Q, the regulation which specifies the maximum interest rates banks are permitted to pay on time and savings deposits, as an active tool of monetary policy. Since September 1966, the Federal Home Loan Bank Board has been empowered to impose ceilings, on savings and loan associations and some mutual savings banks movements in these ceilings to be coordinated with movements in Regulation Q ceilings. In spite of our now-substantial experience with these ceilings, there appears to be no consensus on what purely macro-economic consequences emerge from the employment of deposit ceilings. We need answers to the following two questions: 1) Does the existence of effective deposit ceilings strengthen or weaken standard monetary policy actions? 2) Can the manipulation of deposit ceilings serve as an independent active tool of stabilization policy and, if so, what is the direction of its impact? 1 The official view of the Federal Reserve Board on question (2) appears to be that effective deposit ceilings (attention is typically focused on Q ceilings) are depressive while relaxation of those ceilings is expansionary.2 We know of no clear statement of their position on question (1). There is scant discussion of these issues in the professional literature. In the most general theoretical discussion of deposit ceilings, Tobin (1970) suggests (relying on some casual empirical evidence) that the sign of response of the level of economic activity to changes in interest rate ceilings may vary depending on whether an interest rate variable or a reserve variable is exogenous. He apparently believes that the response we are interested in (letting reserves be held constant) is typically inverse a rise in interest rate ceilings being restrictive. He does not consider question (1). Using a much more restrictive model, Warren Smith (1967) has argued that monetary policy is stronger with effective ceilings (only Q ceilings are considered) than without them. He does not consider question (2). We deal with both questions in this paper. Our analysis suggests that the Tobin and Smith conclusions (on questions (2) and (1), respectively) are incompatible. The model we employ in dealing with these questions differs from both the Smith and Tobin models.3 Our model builds on theirs by incorporating two intermediary claims (both commercial bank time deposits and nonbank intermediary claims), by including currency demand functions, and by considering the impact of incorporation of the price level in the model. Unlike Tobin, we employ the commonplace macro-economic assumption of a single marketable security.4

Reviews the book "Disclosure by Australian Companies," by Robert William Gibson.

The article comments on professor Joe J . Cramer's paper on the nature of bad debt expense. The classical treatment of bad debts as an operating expense is inconsistent with proper classification criteria for operating expired costs. This is so because no service is received in exchange for this cost expiration. It would seem reasonable for any treatment of the bad debts issue to include a careful statement of which aspect of the problem is being addressed. The Accounts Receivable adjustment is truly a transfer payment which should be treated as a correction of an error in revenue recognition. For those who believe that the matching convention has relevance in accounting theory, the selection between these methods has direct impact on the measure of performance for a time period. The implication of this assertion is that the selection between these methods has no impact on the information content of financial statement. The direct charge method is an example of no attempt to match. No assertion is made here regarding the appropriateness of the matching concept; however, if one accepts matching as an important accounting theory consideration (as Cramer apparently does), then the selection issue is of critical importance.

Reviews the book "Managerial Accounting," 2nd ed., by James H. Rossell and William W. Frasure.

The article presents the author's response to a commentary on input-output analysis for cost accounting, planning and control. The author relates that the commentary's writer talked of the cost allocation model when referring to the use of a system of linear equations to represent apportionment of costs among interacting departments. The author said that it is not clear to the commentary's writer how the term model can be applied in such case. He explains that it would seem that the linear system itself could be termed a model, independently of the use to which it is put.

The article presents the financial reports of the American Accounting Association for the year ended August 31, 1972, containing audited data presented in the format recommended by the Executive Committee.

This article presents information on a conceptual framework for linking some seemingly diverse approaches to human resource accounting. Human resource accounting has two components, human asset accounting and human capital accounting. Human asset accounting is concerned with determining the value of the human resources employed in an organization to the organization. Human capital accounting is concerned with determining the value of the human resources employed in an organization to the employees of that organization. The total value of the human resources employed in an organization is equal to the value of the organization's human assets and its employee's human capital. Under the proprietary and entity theories of the firm, accountants are primarily interested in determining the value of human assets to an organization. However, they must recognize that changes in human capital values affect human asset values. If the enterprise theory of the firm were adopted, accountants would also be directly interested in determining the total value of the human resources employed in an organization and the value of the employee's interest in these resources.

The article argues that bad debt expense does not meet the sufficient and necessary condition for membership in the class of data for measuring operating income for a firm. The main attribute of homogeneity is specified in the initial paper as an exchange (economic) transaction characterized by a reciprocal flow of consideration between the entity and another party which may assume the form of a group. Items such as taxes, financing costs, and revenues emerging from financial transactions in the case of the industrial entity, and certain extraordinary transactions likewise do not meet the prevailing tests or necessary character for inclusion in the class of data deemed relevant for measuring operating income from normal and recurring operations. The two forms of the financing arrangement should not be permitted to affect the primary revenue accounts or periodic operating income for the entity. Stated another way, the amount of operating revenue is the same irrespective of whether the entity receives cash immediately or a promise from the customer to transfer cash in the future. Finally, it is an observable fact that extant accounting treatment of bad debt "expense" includes it as an element in the measurement of operating income. Economic outputs, expressed in terms of a standard unit of money value, are not matched with financial balances (trade receivables) to measure income.

Using regression analysis we find that mental ability, education, and background factors are important determinants of earnings at several points in the individual's life cycle. Real social rates of return to education based on this analysis range from 11 percent for those with some college to about 2 percent for those with a Ph.D., while private rates are slightly higher. Rates of return to an undergraduate degree are about 8 percent. We conclude that these returns reflect, in part, the use of education as a relatively inexpensive screening device by employers, and without screening the private returns might be up to 50 percent below those mentioned above.