This paper reviews the circumstances attending five major turning points in the process by which accounting principles have been established in the United States. Particular attention is directed to the apparent reasons why the new approaches or reforms were undertaken. The review, which covers a 56-year period, concludes that generalizations about the factors that were influential in the shaping of the decision-making process, especially over so long a period, are difficult to make. Nonetheless, a motivating force seems to have been the accounting profession's fear of government involvement. The American Accounting Association is seen to have played a role at several of the junctures.

* Professor, Cornell University; t Professor, Rice University. We wish to thank our colleagues and particularly Professors William H. Beaver and Joel Demski, both of Stanford University, and Robert J. Swieringa, Cornell University, for their careful reading of this long manuscript and the substantive improvements they suggested. The limitations and omissions remain our responsibility. 1 Given at the 1970 Annual Meeting of the American Accounting Association, the poem, if such is a valid description, was composed by the first editor of JAR, David Green, and published in JAR [1970] with appropriate disclaimers.

This article describes the successful attempt of the Swedish Government and Uddeholm to circumvent the normal accounting treatment for a government loan to a major company that found itself perilously close to defaulting on its long-term loans. While the transaction between the Government and the company was represented as being a loan, the Swedish Parliament enacted legislation requiring that it be accounted for as if it were a subsidy, hence improving the company's balance-sheet "solidity." The events described here illustrate how the economic consequences of a transaction can dictate its accounting treatment, as well as how the accounting profession can eventually persuade political decision makers not to interfere in accounting determinations.