Auditor training, Syllabus, Scotland

turities on borrowing costs has little empirical support either. In addition, these results provide little support for the more conventional assertion that a lengthening of either contract lengths or loan-tovalue ratios is indicative of a reduction of borrowing costs to home buyers. Admittedly, the strongly negative coefficient of G in equation (3) suggests that something is wrong with my original equation.10 I find little merit, however, in Lee's contention that I used an improper measure of borrowing costs and that my estimate of the income elasticity of housing demand is substantially upward biased as a result.

In estimating a function, certain assumptions are made about the random term. This paper deals with the influence of such assumptions on estimators for the function y = x0. The case of a normally distributed random term, both in its multiplicative and additive forms, is considered here. The major part of the article is devoted to a hypothesis concerning a lognormally distributed random term, for which consistent estimators are derived. THE EXPONENTIAL function is very familiar in economic research. For instance, the relationship between consumption and income is often expressed as y=x', where y denotes consumption and x is income. Usually it is assumed that the actual observations on y are determined by the function x' and by an additional random term s. In estimating this function, the statistical properties of the estimators of a and E(y) will depend on the assumptions made about the random term.2 In this paper some alternative specifications of this random term will be given and their influence on the estimates considered.

The article presents the theory of accounts portion of the May 14, 1965, Uniform Certified Public Accountants Examination by the Board of Examiners of the American Institute of Certified Public Accountants (CPA). Answers should be submitted by well-prepared candidates writing within the time limits prescribed. They do not necessarily include all elements for which credit might be given by the Advisory Grading Service of the American Institute of CPAs or by the various state accountancy boards charged with the responsibility of issuing CPA certificates. The first problem presents a graph describing the behavior of the cost, expense, income or valuation amount that would appear on a series of annual financial statements for each of the independent situations. All policy decisions and events that caused changes in the behavior patterns of the charted amounts took place in the middle of the time span portrayed in the graphs. The vertical axes of the graphs represent the annual dollar amount of cost, expense income or valuation, as the case may be, and the horizontal axes represent the passage of time. The axes intersect at zero.

The article presents the theory of accounts portion of the Uniform Certified Public Accountants Examination held in November 1964. In one of the questions, the students had to identify and discuss defects in the given financial statements with respect to terminology, disclosure and classification. The answer of one of the students discussed the term "reserve for doubtful accounts" which is no longer regarded as desirable. The term "reserve," where used at all, should be employed in connection with appropriations of retained earnings. The student wrote that combining sales and interest income to arrive at total revenue is acceptable where the single-step form of income statement presentation has been adopted; the remainder of the statement fails to follow this form and it would therefore be preferable to set out only the major revenue source at the top of the statement. Another questions asked to discuss the theoretical justification of the allowance method as contrasted with the direct write-off method of accounting for bad debts.

This article examines realization concept in accounting and suggests rules that may clarify its meaning and its usefulness. The reporting process should be broadened to encompass any upward value changes that can be supported by objective, verifiable evidence. Value changes such as increases in specific replacement prices for inventories should be recognized but labeled as unrealized if the assets in question are still being held. The interpretation of realization is a major aspect of the clash between the critics and defenders of current accounting practice. The realization concept should be retained. The author wishes to substitute a different term to describe the concept, but realization enriches our reporting by highlighting at least two concepts of net income, by formally distinguishing between different types of events and various management accomplishments, and, perhaps least important, by gradating various degrees of objectivity. The combination of a liberal recognition test and a strict realization test is the best practical means of obtaining what advocates of economic income measures deem as a desirable evolution in financial reporting.

It is becoming increasingly difficult to discuss the concept of realization intelligibly. The Concepts and Standards Research Study Committee report does not conform to current practice. Current practice recognizes some unrealized elements and rejects other unrealized elements that can be measured with equal objectivity. In practice realization may be a rather imprecise descriptive term that is generally understood, but clearly it is not a crucial criterion in the recognition of changes in assets and liabilities. The author's own view is that in establishing criteria for the recognition of revenues the concept of realization is awkward, causing confusion rather than creating clarity. It is doubtful that the concept can be described to include all the revenues that belong in the measurement of periodic income and to exclude all others. The concept may be useful in reference to nor revenue changes in assets and liabilities, that are, in distinguishing between realized and unrealized holding gains and loss In this regard, however, perhaps an exchange transaction involving objectively measurable assets would suffice.