The going concern or continuity assumption seems to be one of the most firmly entrenched and least controversial of the basic concepts of accounting. Most discussions of the going concern concept simply observe that the entity may be assumed to continue indefinitely and, therefore, will not be liquidated in the foreseeable future. If this is all the assumption implies, then it is a sterile postulate at best and is invalid with respect to thousands of new small businesses which are organized each year and are destined to fail within the year. There is no general agreement as to the exact implication of the going concern concept. It has been held to mean simply the absence of an imminent liquidation. It has been said to mean that the entity will survive long enough to permit completion of present problems and the orderly liquidation of assets now held. It has been extended to imply replacement of present assets with new ones to be used in completing present and future programs. Finally, it can quite logically be construed to mean continued operation at a profit. In summary, the going concern concept may be a valid description of the accounting entity, if it is justified by evidence in the particular case but not if it is offered as an untested general assumption.

Accounting is a utilitarian function in our economic society. Accounting reports are sought as sources of information to help people make decisions about the entities for which the reports were prepared. Logically, then, the principles underlying those reports should be selected so as to facilitate decision making by the users of the financial statements. The search for accounting principles should be decision oriented. It should begin with an identification of the uses to which accounting data are being put and logically might be put. Both the potentialities and the limitations of accounting should be recognized. Accountants should not balk at reporting market values if these are found to be useful for decision making and are measurable. On the other hand, accountants should not be prodded into providing forecasts and reporting them as verifiable facts. Utility is both an approach to the formulation of accounting principles and a criterion for the evaluation of principles. An attempt was made here to test the principle of historical cost against the utility criterion, and the conclusion that this principle is not useful for decision making seemed clear. Similarly, the concept of uniformity of accounting principles was examined and found to be useful. Such tests should be made and reviewed regularly. As circumstances and business practices change, it is possible that the content and format of useful accounting reports will change. The need for useful information, however, will never change. It is the continuing challenge which a dynamic profession must constantly strive to meet.

Direct costing has become one of the most prominent current issues in the continuing discussion that surrounds the evolution of accounting theory and practice. Hence, it is appropriate at this time to review some of the arguments for and against the concept and to attempt to identify the principal issues in the controversy. The purpose of the author in this article is to examine these issues critically and dispassionately. This presentation is in the nature of an interim report, with primary attention focused upon the development and present status of direct costing but with some consideration of the prospects for the future also. Author's objective is to crystallize issues. It is possible that, given the present status of the accountant's art, they are irresolvable. The discussion in this paper will be confined to the implications of direct costing in external reports. There are two reasons for this. First, as indicated, it is in external reporting that the real controversy lies today. Second, the basic criterion guiding the selection of internal reporting practices is utility to management.

In the January 1961 number of this journal, there appeared an article by Charles T. Horngren and George H. Sorter arguing in favor of the use of variable, or direct costing in financial reporting to stockholders and other interested outside parties. While the format of the present paper is in the nature of a criticism of that article, it is intended as a more general argument against the use of variable costing in the accounting income determination process. It is the present paper's contention that variable costing is a fallacious and incorrect approach to the determination of periodic net income. Absorption costing must be employed for this purpose, and the fact that the two techniques will yield the same net income figures where inventory levels remain unchanged is only coincidental. For inventory levels are not wont to remain stable; they are, in fact, typically very volatile. The invalidity of the variable costing technique for external reporting does not impair its importance and unique usefulness as a tool of analysis for management. This paper is in full agreement with the advocates of variable costing in so far as that procedure is proposed as an analytical tool in the managerial decision-making process. In view of the fairly general agreement on the value of variable costing for internal reporting, that aspect of the technique will not be treated specifically in this paper.

Reviews the book "Decision Theory and Information Systems," by William T. Greenwood.

Reviews the book "The Evolution of Direct Costing," by Charles Weber.

Reviews the book "Accounting and Economic Decisions," by Donald A. Corbin.

Reviews the book "Cost Accounting," by Kenneth S. Most and Ronald J. Lewis.

There are two main reasons why an accountant should study mathematics. First, the use of mathematics in problem solving requires a consistent logical approach. This second reason is that certain areas of mathematics have useful applications in the study and in the practice of accounting. Accountants have found, for example, practical applications of certain topics in calculus e.g., profit-volume analysis when the total revenue and total cost functions are nonlinear. The basic reasons for studying computers are parallel to those for studying mathematics. First and foremost, of course, the computer is extremely useful in the solution of many problems confronting accountants and businessmen generally. However, study of computers, and particularly computer programming, also stimulates careful analysis of problems and approaches to their solution and it fosters the habit of organized problem solving. A computer user may call upon canned programs and subroutines for standardized mathematical and statistical calculations without even having to write the programs himself.