Reviews the book "Self-Review in Intermediate Accounting," Vol. 1, by Glenn A. Welsch.

Reviews two books on accounting. "Irwin Programmed Learning AID Series," by Roger H. Hermanson; "Self Review in Elementary Accounting," vols. 1 and 2, by William W. Pyle.

The article presents an analysis of the nature of empirical theories for the purpose of providing a relief for some current and proposed theories of accounting. The process of theory construction is imperfectly understood. Even though it is not clear how theories are constructed, however, one can note that a new theory usually arises as a result of "anomalies" in the old theory. The purpose of the new theory or the modified theory is to make the unexpected expected, to convert the anomalous occurrence into an expected and explained occurrence. Theories are expressed in a language, and therefore the study of language is pertinent to the study of theories. A theory of empirical science may be divided into two parts, first, a Formal System which is composed of abstract symbols and a set of syntactical rules for manipulating those symbols; and second, an Interpretation of the formal system which connects certain symbols to observations via semantical rules. One of the difficulties encountered in accounting theory construction and verification is that different accounting theories are often theories about different subject matters.

Reviews the book "Survey of Applicable Mathematics," edited by Karel Rektorys.

Reviews the book "APB Accounting Principles."

The notion that the going concern concept is necessary for us to account is erroneous. Vatter has pointed out, and rightly, that "we could assume noncontinuity if we wanted to." Thus, there is a free choice to be made. If one chooses to assume a going concern, then that assumption ought to be justifiable and its consequences ought to he carefully worked out. It is thought that one such consequence is historical cost valuation. That consequence is derived by either the non-liquidation or the it-doesn't-make-any-difference argument. It has been demonstrated that the non-liquidation argument is invalid and unsound, and that the it-doesn't-make-any-difference argument is true only in a stationary state. Therefore, the alleged consequence of historical cost is erroneous. It is difficult to justify the assumption of a going concern because of uncertainty about what the future holds, particularly in matters of commerce. Therefore, if the going concern concept is to be retained, it ought to he reinterpreted as a prediction. Another alternative is to purge the going concern concept insofar as it applies to the future of the firm. The change from the venture concept to a going concern concept does not necessitate that the future be predicted or assumed. Instead, it requires only that the measurement be made at a point in time because information is needed prior to a future event. One can measure the change that has occurred in a continuing process without knowledge of how that process will change in the future. Perhaps we could call this the temporal concept in contrast to the venture or event concept. This concept ought to be extended to the valuation of the components of the firm as well as to the firm, and to the valuation coefficients of assets as well as to the quantities of assets.

This article focuses on valuation of taxes to be paid by companies. There are three appraisals to be considered by the company, they range from $9.4 to $11.9 million and the $2.5 million deviation is unfortunate and sufficient cause of concern. Compare these to the possibilities for recorded cost. The company used an amortization method that resulted in a zero book value. If it had used Internal Revenue Service guidelines it would have $11.5 million book value, and if it purchases the plant as agreed it will have $1.7 million book value. The deviation of $11.5 million is about five times as large or twice as large as the appraisal deviations. Second, there is the concern over the number of different appraisals with the implication. Initial construction costs are subject to various methods of accumulation which are subject to various methods of cost collection, and so forth until one get back to the cash expended or a fair market value at some past time or some other value. Thus, the initial cost is subject to variation. Finally, there is the objective and verifiable notion. The accountant takes a set of figures which he freely admits are subjective, arranges them in an equation, and then calculates a figure that he considers to be objective.

The article analyzes the present accounting theory. The concept of service-potentialities is well established in accounting. They are thought to be the homogeneous substance and the significant elements of assets. Thus, assets may be thought of as a set, the elements of which are service-potentialities. The concept of capacity, although only relatively recently named, has been used in accounting since, at least, the advent of depreciation. Assets are thought of as bundles of services and the number of services in most assets declines over time or use. Cap is the generic term for all the various units of measure that are used in accounting. The concept of account is best described as a homogeneous collection of caps. Different accounts will contain different kinds of caps and the accounts may contain different physical representations of the caps, but each account will contain only one kind of cap. The functional relationship between the quantities of caps in an exchange may be determined by a measurement operation or by a similarity transformation.

It is a common belief that accounting for the admission of a partner is relatively simple, but that it is one of the more difficult areas to teach. According to the author this paradox appears to be a result of a lack of delineation as to what is a problem in accounting theory and what is a problem in arithmetic. The article presents problems of this nature, divided into three basic formulae. the formulae are applicable only when the goodwill or bonus is implied by the statement of the problem. The formulae provided are for bonus problems, goodwill and asset revaluation problems and allocation of goodwill, bonus or asset increment. The kernel of the bonus problem is to determine the capital credit to the incoming partner. The essence of the goodwill problem is to determine the total capital of the ex-ante partnership. The author remarks that in some problems the data are not presented in exactly the same terms as that employed in the formulae. This should present no problem if the formulae are well understood.