Abstract 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.

Abstract The article discusses the incompatibility of bad debt "expense" with contemporary accounting theory. Accounting treatment of bad debt expense is inconsistent with criteria deemed relevant for measuring operating income in accordance with contemporary accounting theory. Bad debt expense is reflected in the income statement along with other information concerning operations even in spite of the fact that it originates as non-service data. This is to say that bad debt expense is not homogeneous with other costs experienced by the entity which comprise the basic data for periodic matching with. The following analysis delineates the methodological inconsistency, and a more appropriate accounting procedure for bad debt expense is proposed. Accounting methodology prescribes the relevant set of data for approximating periodic income from operations. Elemental data constituting the set are presumed to consist of services received and services rendered by an entity for which an evaluation of operations is made.

Abstract The article discusses the overwhelming influence of legal documents on pension trust accounting and report preparation. The term pension trust is used in the conventional manner to refer to an arrangement whereby a corporation deposits contributions to pay pensions with a trustee, usually a bank or trust company. The discussion does not relate to insured pension plans because benefits under such plans are, in effect, guaranteed by the insurance company to the extent that corporation makes the agreed upon premium payments. Since the pension trust is a form of self-insurance, actuarial science should heavily influence accounting and reporting procedures applicable to the trust. The two disciplines, accounting and actuarial science, must be integrated or combined to produce reports which disclose pension trust operations for a period of time and status as of any point in time. It is reasonable to assume that in the near future pension trust accountings will evidence a long-run flavor based on general applicability of the entity concept and enterprise continuity to the trust. Only then will sufficient recognition be given the boundaries of entities, the corporation and the pension trust.

Abstract Widespread lack of uniformity in the disclosure of information concerning pension trust operations and status is well evidenced in the literature and by published corporate annual reports. But, little has been written on the subject of reporting practices of pension fund trustees. Their accountings are usually considered to be privileged information. Furthermore, trustees report to administering corporations as opposed to the general trust situation wherein accountings are rendered to beneficiaries. The importance of trustees' accountings may be inferred from their influence on disclosure of pension trust financial data in corporate reports. Indeed, the contents of pension trustees' reports may have interesting implications for promoting uniformity in corporate reporting practices. Results of a recent survey of reporting practices of pension fund trustees are presented in this paper. It has been found that the corporate annual report is designed to disclose information concerning the operations and financial condition of the corporation itself.

Abstract Reviews the book "Depreciating Assets: An Introduction," by W.T. Baxter.

Abstract The article evaluates the method of determining the depreciation rate for a group account in order to draw conclusions regarding its relevancy as an approach to self-insurance expense and depreciation accounting. In an attempt to minimize costs associated with formal insurance contracts (exchange transaction) some companies implement programs of self-insurance. In contemporary accounting practice, events to be recognized in the accounts must be characterized by exchanges of consideration. Orthodox procedure for recognizing gains or losses resulting from casualties distorts the proportionate allocation of costs over the relevant planning horizon or period for which a group of assets is expected to produce revenues as judged by management at the time the decision is made to acquire the assets. In the above discussion it has been demonstrated that the notion of self-insurance expense is incompatible with contemporary accounting practices. Recognition of this fictitious cost does not meet the criterion of exchange transaction as required by contemporary accounting practices.

Reviews the book "Principles of Accounting," by William L. Ventolo and edited by Sidney Davidson.