This article presents news related to the study and teaching of accounting in the U.S. as of October 1, 1975. According to a snippet, Naval Postgraduate School was host for the tenth annual Western Regional Meeting of AAA on May 2 and 3. James M. Fremgen was in charge of arrangements and presided at the plenary session. David C. Burns and John A. Caspari assisted with arrangements and moderated technical sessions on auditing and Cost Accounting Standards, respectively. Two hundred and seven members registered. Fremgen was invited to attend the Symposium on Management Accounting and Control sponsored by the Robert Beyer Professorship at the University of Wisconsin. Another snippet reports that Bipin Ajinkya, a Ph.D. candidate from the University of Minnesota, joined the staff as an Assistant Professor in March, 1975. Douglas Snowball, who recently received his Ph.D. from the University of Washington, also joined the staff as an Assistant Professor in March, 1975. Charles L. McDonald, who was a Visiting Assistant Professor from the University of Illinois during the 1974-75 academic year, joined the permanent staff as an Assistant Professor.

The article highlights that at present time a disparity exists within accounting literature in quantifying the idle-capacity variance. The divergent methods used to calculate the variance indicate that, as yet, accountants have failed to agree on its meaning. The theory of overhead absorption has experienced significant improvements in a relatively few years, but it still is not fully developed. This article explores some deficiencies believed still to exist and some possible causal factors related to idle-capacity variance. Primary among the misconceptions covering the idle-capacity variance is an assumption that it measures the dollar loss due to the presence of idle plant facilities. This concept has resulted in a computational stagnation. The results of the stagnation have been a continuance of the idle capacity from predetermined actual rate to standard rates. As a consequence there is a theoretical deficiency in the analysis of standard-cost overhead variance. The article says that there are vast majority of current accounting texts and certified accountant program exam solutions are, it is believed, pursuing a definition under standard costing which is not preferable.

The article presents information about the unit cost denominator in process costing. It informs that equivalent production is generally defined as the number of units that would have been produced had all of the dollars and effort that were expended during the current period been used in producing whole, good units. The understanding of process cost problems is facilitated when the solution is approached through a periodic inventory approach. First, the dollars to be accounted for are determined; then, the dollars remaining in the final inventory are traced, and the balance of dollars are associated with the transferred out units. The problem is to determine the unit cost of the goods remaining in the final inventory. Basing a solution upon a periodic approach does not imply that the dollars of transferred out units cannot be reconciled. With numerous cost concepts demanded of the students, the difficulties are minimized when all impacts are visualized through the costing of the final inventory.

Budgeting, Budget pressure, Leadership

The article discusses the use of a numerical problem calling for comparative income statements and the teaching of the conceptual difference between direct and absorption costing models. It is often difficult to find a parsimonious way to introduce the student to the conceptual differences between direct and absorption costing. This is particularly true when the student is introduced first to absorption costing where the fixed overhead rate and the variable overhead rate are subsumed in the total overhead rate. Where the students have been accustomed to thinking symbolically, it is much easier to introduce these two models simultaneously. Mathematically the two components in the volume variance are not independent, and the fact that the dollar measure of the volume variance is meaningless without further analysis is clearly highlighted. This approach has been useful where the students have had a minimal introduction to algebraic logic. Its sole purpose is to clarify two relatively simple models and their impacts upon income.

The article discusses the historical perspectives of "Funds Statement." The American Institute of Certified Public Accountants completed a research study on the subject of "funds" statements in 1961 and issued an Opinion of the Accounting Principles Board in 1963. The official pronouncement was the first on "funds" statements by a major accounting body and has had the effect of increasing the use of "funds" statements in corporate annual reports. The basic theme of this article is that needless confusion in preparing and interpreting "funds" statements in corporate annual reports still exists after a century of discussion and practice. The "funds" statement is being required to report all items of financial information and perspectives not disclosed by the income statement, balance sheet and statement of retained earnings. This means that the "funds" statement must report changes in some definition of liquidity, reveal all important "inter-entity" transactions, somehow reconcile the cash and accrual bases of accounting, be flexible, report different perspectives and readily communicate with laymen.

Reviews the book "Planning and Control With PERT/CPM," by Richard I. Levin and Charles A. Kirkpatrick.

The article focuses on the application of multiple correlation analysis in multiple product costing. The allocation of costs assumes that the products should receive costs relative to the benefits that the products received from the production process. The authors conclude that multiple correlation analysis frees the accountant from making the assumption that marginal costs per product are always too difficult to unearth. For products that have an output proportion that is variable, multiple correlation allocates costs in a method valuable for decision-making.

This article examines selected personality characteristics of certified public accountants (CPA). The literature provides evidence that accountants are negatively stereotyped as cold, aloof, nonsociable, submissive, shallow, weak, passive and lacking sensitivity. There are conflicting data regarding the appropriateness of the stereotype since some studies give segmented support while others deny its existence. Comparisons of personality characteristics, as measured by the California Psychological Inventory, were made between eight different occupational groups and an accounting sample of fifty-six CPA firm employees to test the appropriateness of the stereotype. The comparisons revealed that CPA firm employees possessed higher personality profiles when compared to samples of salesmen, bank managers, business executives, city school superintendents, architects and military officers--partially denying the validity of the accountant's stereotype as dull, wary, cold, and aloof. When contrasted with practicing dentists and research scientists, the accountants generally scored lower on the test scales. The more extensive education of these two groups account for the difference. The negative attributes of poor interpersonal relations and socialization simply did not surface. Since the CPA firm employees significantly higher than several comparison groups on the sociability, self-acceptance, socialization, self-control, good impression, psychological-mindedness and flexibility scales. The accountant's stereotype may not only be unwarranted, it may also be inappropriate.