Abstract This article applies some elementary principles of mathematics and statistics to a discussion of depreciation, and in the process casts light on several problem areas. New formulas are suggested for sum of the year's digits and double declining balance methods of depreciation. Finally, the assignment of cost to depreciation is examined using the tools developed in the first part of the article. This discourse seeks to supplement the presentation of depreciation for students who have some quantitative background, since most students appreciate finding applications of mathematical concepts, which by them may seem esoteric or irrelevant. A depreciation density twice lion is a real-valued, non-negative, continuous function. Depreciation depends on a multitude of factors. Since consistent methods of depreciation depend only on the fraction of total life exhausted and not on the total lifetime of an asset, it is possible to compare different methods of depreciation on one graph. The analogy between depreciation and a probability distribution was exploited in the article. It was shown how some problem areas were illuminated using the tools developed. But in a discussion of accounting that makes use of any concepts of mathematics or statistics, it should be remembered that mathematical niceties or rigor can never be substituted for what is economically relevant.

Abstract Reviews the book "Principles of Engineering Economy," 5th ed., by Eugene L. Grant and W. Grant Ireson.

Abstract The article outlines a statistical approach in cost measurement and control which can be easily implemented in practice. This approach will allow accountants to convert certain types of costs currently treated as overhead costs into traceable direct costs. The detailed cost measurements on individual inventory items provide "more information" than knowledge of only the total inventory cost. Cost accounting systems, often very elaborate cost accounting systems, are designed to detect and measure resource flows for both product and responsibility center costing. In general, however, detection and measurement costs increase as more detailed information on resource flows is desired. Accounting systems for this reason resort to collecting aggregated information. The aggregation itself may be over various types of activities, time intervals, or products. If one desires to study marginal costs, an examination of costs allocated to idle time will prove helpful. In summary, statistical cost finding is no panacea for accounting problems, it is rather a useful tool for developing information not usually found in the books.