This article presents several considerations which suggest the need for more emphasis on the qualitative factor in grading examinations: (1) The speed and accuracy with which students work vary over a wide range. A large group of students, for example, was required to foot, crossfoot, and prove several columns of figures. One man finished in nine minutes while about one fourth of the group was unable to complete the work correctly in two hours. In the face of such variation there is no such thing as an "hour test." (2) The nervous tension, or in a few cases panic, with which students approach formal examinations, particularly in accounting, impairs the validity of the results. These tensions are due largely to the knowledge that a prescribed task must be completed within rigid time limits and that a small error in arithmetic or interpretation can be disastrous. (3) It is better for the morale of both teacher and student to have part of an examination well done than to have the whole examination poorly done even though accumulated point values are the same. (4) A student who knows he does not know the answer to a question deserves more credit than one who thinks he knows but does not.

Although a revised statement of concepts and standards was published in 1948, a Committee on Accounting Concepts and Standards was appointed early in 1949. The appointment of a new committee so soon after the publication of a revision did not indicate an intention either to rewrite the 1948 statement immediately or to adopt a policy of introducing new models each year. The purpose clearly was to institute a continuous program of study and research, which it was felt might be more effective than the more or less spasmodic efforts of the past. The members of this committee favor such a program. Methods by which it can be made effective, however, have not yet been fully worked out. The committee has faced and still faces a dilemma arising out of the fact that it is not expected either to publish a revised statement in 1949 or to continue as a committee with the same membership until a revised statement is published. During the two-day meetings of this Committee, the discussion ranged over the whole field of accounting and revealed surprisingly broad areas of agreement, although the usual difficulties were met in phrasing statements, which would secure unanimous approval.

In the current controversy over the use of the LIFO and the FIFO plans in inventory valuation, it has apparently not been generally recognized that each of these plans, as well as the "base-stock" plan, is based on a different set of expectations as to the life of the inventory and as to the future course of prices. Examination of the set of expectations implicit in each plan may help to determine which method should be used in a given situation. At least such an examination will help to clarify the economic issues involved in the debate. It will be helpful to consider first a method of inventory accounting not now much involved in the income controversy, although closely related to one of the disputed methods. This is the "base-stock" plan. Under this scheme there is assumed to be a minimum working stock which the firm must maintain at all times in order to continue doing business. Since this basestock cannot be sold without immediate replacement, the firm cannot convert the inventory into more liquid form by selling any or all of it when the market price rises, nor need it acquire more liquid resources to cover a loss when market price declines.