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THE FUNDS STATEMENT AS AN INTERNAL REPORT TO MANAGEMENT.

Hector R. Anton
The Accounting Review 1955 30(1), 71-79
This article focuses on the funds statement as an internal report to management. making financial decisions. Sixty-four per cent of the companies using the funds statement as an internal report, or 123 companies, stated that they have used funds statements of past periods as aids in making current financial decisions. Sixty-eight per cent of the companies using the funds statement as an internal report, or 131 companies, have used projected funds statements as aids to decision-making. Of these companies, 94 stated that they have used both historical and projected funds statements. The majority of the companies using the funds statement as an internal statement and tool for decision-making regard it as strictly a short-term tool. Companies using the funds statement as an internal tool of management attempted to reconcile it with the various budgets or other anticipatory statements in many cases. Seventy-five per cent of the companies that reported that they used the funds statement for making financial decisions tied the funds statements in with one or more of their budgets.

FUNDS STATEMENT PRACTICES IN THE UNITED STATES AND CANADA.

Hector R. Anton
The Accounting Review 1954 29(4), 620-627
The article focuses on fund statement practices in the context of the U.S. and Canada. Textbooks almost unanimously have adopted the concept of funds as synonymous with working capital. The funds concept has been variously conceived as encompassing cash, marketable securities, quick assets, net free cash, current assets, net working capital, or all balance sheet changes. The funds statement is the only major accounting report that is not predicated on the income approach. Conventions of permanence of the accounting entity, or of a static monetary measurement device do little harm to its basic framework. The funds statement is predicated on the funds basis with income considerations essentially alien to it. The funds basis is concerned with the availability and use of current purchasing potential by the company. Differences of opinion as to what best represents this current purchasing power have led to the use of various concepts of funds. Differences in objectives have been partially responsible for the extensive use of alternative concepts, since the funds concept used must be consistent with the objectives of reporting.

An index of growth due to depreciation*

Richard P. Brief; Hector R. Anton
Contemporary Accounting Research 1987 3(2), 394-407
While factors such as inflation, technological change and growth often have been discussed in connection with the adequacy of provisions for depreciation under a historical cost model, there is another dimension to the capital maintenance problem and it concerns the multiplier effect of depreciation. When an amount equal to depreciation is reinvested, a firm's productive capacity tends to increase. Reinvestment of depreciation also increases a firm's financial capital if book depreciation is more accelerated than economic depreciation. Based on a model developed by Ijiri (1967), this paper derives an index of this growth due to depreciation. The index estimates a bias in conventional depreciation methods that has been overlooked in the literature on the subject. This bias has implications for inflation accounting because if conventional depreciation methods have a built‐in growth bias, adjustments for inflation may be a type of double counting. A second implication mentioned concerns the bias in accounting rates of return. Résumé. Bien que des facteurs tels l'inflation, les changements technologiques et la croissance ont souvent été examinés à propos de la pertinence des provisions pour dépréciation dans le cadre du modèle au coût historique, un autre aspect du problème de préservation du capital subsiste et il concerne l'effet multiplicateur de l'amortissement. Lorsqu'un montant égal à l'amortissement est réinvesti, la capacité d'exploitation de la firme a tendance à s'accroître. Le réinvestissement de l'amortissement fait aussi augmenter le capital de la firme si l'amortissement comptable est plus accéléré que la dépréciation économique. En se basant sur un modèle élaboré par Ijiri (1967), cet article dérive un indice de cette croissance attribuable à l'amortissement. L'indice estime un biais des méthodes traditionnelles, qui a été négligé dans les recherches consacrées au sujet. Ce biais a des implications en comptabilité des effets de l'inflation, car si les méthodes d'amortissement traditionnelles comportent implicitement ce biais de croissance, les redressements relatifs à l'inflation peuvent être assimilés à un double comptage. Une deuxième conséquence est signalée, soit le biais relatif aux taux de rendement comptable.