This research paper focuses on the use of accounting data for a specific purpose of "Control". The very first question arises "What does the control process consist of?" A survey of the accounting and management literature seems to indicate the control process generally thought of in one of three ways. Sometimes it is defined as the analysis of present performance in light of some standard or goal in order to determine to what extent accomplishment measures up to the plan or standard. Sometimes it is defined as a process of securing conformity to a plan, and sometimes as an idea of information feedback i.e. data collected as part of the control process might be reported systematically and used in future planning decisions. According to the author the second concept of control (without feedback) is probably the most widely accepted concept and much improvement in the control process can be made by giving greater emphasis to the feedback idea. Hence the author examines several different accounting control techniques with a view toward implementing the concept of information feedback and attempts to show some areas of possible improvement that can be made in order to use accounting data more effectively in the control and planning process.

Reviews the book "Cost Justification," by Herbert F. Taggart.

The reliability of accounting measurements was defined as the degree of objectivity plus a bias factor. This relationship shows that the degree of objectivity can be measured without regard for the use of the measure but reliability cannot because the bias depends on the alleged value which in turn is related to the particular use of the measure. This conceptual relationship, which depends on the variance of measurement observations from their mean and the distance of this mean from the alleged value, gives valuable insights into some of the possible steps which can be taken by the members of the accounting profession to improve the reliability of accounting measurements. First, accountants ought to cooperate to the fullest possible extent with the users of accounting data to search for and define those factors or quantities which will be useful in decision processes. These factors were designated as y's. Accountants must then undertake to develop measurements which will produce accounting measurements (x's) that will give good predictions of these decision variables (y's). Both of these research efforts should help to reduce the bias, B. Accountants should also at- tempt to educate the users of the accounting data as well as be educated in the manner described above. If users of accounting data can be more effectively educated, they might change their function for relating x and y and this change can also result in decreasing the bias and improving reliability. Hence, reliability is definitely a two-way street. It may be that the reliability of a measurement can be improved by changing the measurement system; on the other hand, the reliability of the system may also be improved by changing the manner in which the output from the system is used. Another way to improve the degree of reliability may be to sacrifice objectivity, if the bias can be made much smaller as a result of sacrificing the objectivity.

Cost-volume-profit (C-V-P) analysis is frequently used by management as a basis for choosing among alternatives such decisions as, the sales volume required to attain a given level of profits, and the most profitable combination of products to produce and sell are examples of decision problems where C-V-P analysis is useful. However, the fact that traditional C-V-P analysis does not include adjustments for risk and uncertainty may, in any given instance, severely limit its usefulness. In many cases, the choice among alternatives is facilitated greatly by C-V-P analysis. However, traditional C-V-P analysis does not take account of the relative risk of various alternatives. The interaction of costs, selling prices and volume are important in summarizing the effect of various alternatives on the profits of the firm. The techniques discussed in this paper preserve the traditional analysis but also add another dimension, that is, risk is brought in as another important decision factor. The statement of probabilities with respect to various levels of profits and losses for each alternative should aid the decision maker once his attitude toward risk has been defined.

The article presents the comments of authors on the article "Accelerated Depreciation and the Allocation of Income Taxes," by Sidney Davidson, a professor of accountancy published in the April 1958 issue of the journal "The Accounting Review." Davidson analyzed the income tax problem and presented a strong case against allocation. Davidson argues against allocation primarily on the grounds that a firm that is static or growing will never have to repay the liability. So long as the firm follows a regular investment policy, it will receive a gift of having its income tax payments permanently reduced. This approach to income measurement could result in a "cash flow" type of income statement. On grounds that a policy of regular investment in assets subject to depreciation maintained, all expenditures for plant could be charged against current operations. It seems doubtful if such a practice would ever be accepted by either businessmen or accountants. Yet, the firm may never have to repay the permanent trade credit and it seems that this situation is the income tax problem.

In economics, the word interest refers to the cost of using capital. The definition of interest in financial accounting differs from its economics definition in two fundamental respects. First, in financial accounting, interest refers only to the charge for using debt capital; accountants do not record a charge for the use of equity capital. Second, in financial accounting, interest is not ordinarily treated as an element of cost in the sense that labour and material are so treated; rather, interest on debt capital is regarded as an expense that is deducted in full from the revenues of the period in which the interest is incurred.

Cost allocation, Direct costs, Full costs , FIFO

This article focuses on the financial reporting of purchase contracts used to guarantee large investments. long-term contracts have become an important basis for the acquisition of production factors. Purchased power, capital equipment, and raw materials are examples of production factors which are now being contracted for on a long-term basis. Accounting principles underlying financial reporting to investors have, for the most part, been developed without regard for these sorts of contractual arrangements. A contract transaction, such as a long-term purchase contract or a lease, is usually not recorded in the accounts or reported in the body of the financial statements. Transactions must usually be accompanied by an "exchange" such as a payment of cash or transfer of other assets between the contracting parties before they are reflected in the financial statements. Hence, a rental payment or a payment on receipt of inventory is recorded and shown in the statements, but the fact that contract exists is not. The contract is usually reported only in footnotes to the statements.