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Consider the proposition that the doctrine of consistency may be overused, misunderstood, misapplied, ill-defined, and not conducive to the development of accounting research. The special committee on Cooperations with Stock Exchanges of the American Institute of Accountants and the Committee on Stock List of the New York Stock Exchange concluded that effective accounting reports required consistency in the application of the methods of accounting from year to year. Possibly the best way to examine the doctrine of consistency is to ask why an entity should apply an accounting method on a consistent basis. Broadly, there appear to be two approaches to the objective of reducing the role of the doctrine of consistency in accounting practice. First the objective may be approached by applying the scientific method in developing and selecting criteria to be used in guiding the use of accounting methods. The second approach toward the objective of reducing the role of the doctrine of consistency in accounting practice would be to insert multiple measures in accounting reports leaving to readers the task of selecting the measure appropriate for his needs.

In this article, the emphasis will be on the pioneers of the recent past and of the future rather than on the great names of previous centuries whose contributions to accounting methods and thought have been so well covered in English. The article also points to three ways-not new ways, but ways not yet fully accepted-in which the business world can be helped to see more clearly its position and its responsibilities. First, business executives and the public should be disabused of the idea that the money values in a balance sheet are a measure of productive capacity. Second, the article suggests that we must search for and devise within our own field ways of convincing the business world that the money profit figure is not in itself a measure of successful operation. We have seen recently a great development resulting from the combined efforts of engineers and accountants in the field of cost accounting. It is suggested that as careful thought applied to the field of human engineering would bring as great a development, and charged that this is a field in which we may not wait for the demand to arise before we try to give the service.

It is now generally accepted that double-entry bookkeeping is by no means the invention of one man nor the product of a single generation, but that it is the result of a long evolution. Even today, it progresses under the spur of actual needs, and its development is the result of a persistent effort to adapt the accounting methods to the growing requirements of business enterprise. Its evolution in the past has been dominated by the same commanding necessity of adaptation. There is, however, still one dark spot in the history of accounting. Although it can be perceived fairly well how the double-entry system developed, once the basic principle of duality and equilibrium was laid down, it is hard to understand how it came into being. As a matter of fact, the specialists of the history of bookkeeping have all tried to solve the problem and to offer some satisfactory explanation. Owing to a lack of source material, these solutions, however, are based mainly on conjectural reasoning rather than on factual evidence. Three factors seem to have contributed to the development of accounting: credit, partnership, and agency.

The significance of security of information systems in organizations' accounting process is discussed.

When I received the AAA Lifetime Contribution to Management Accounting Award, I was asked to talk for a few minutes. This paper contains those remarks plus some additions. Former articles [...]

ABSTRACT Descriptions of activity-based-costing (ABC) systems have become a standard part of managerial accounting texts. While ABC implementation issues are the focus of a number of articles, these issues are [...]

ABSTRACT Zar, Inc., a high-tech company, has recently experienced turnover in its CEO and CFO positions. Zar, like other firms in its industry, is undergoing a down year due to [...]

ABSTRACT This case will help you explore the impact of authoritative revenue recognition literature in the context of e-commerce. In addition to better understanding e-commerce companies, you will have the [...]

In their consolidated statements chapters, most advanced accounting texts include a presentation of the 'full' or 'complete' equity method from the standpoint of the parent company. Under this method, the [...]

Since accounting is the method and means of recording, measuring and interpreting business and economic events, it is evident that accounting like statistics, is a technique and tool of social science, applicable particularly to business enterprises and other accounting entities. The accounting procedure must be used in a scientific manner in order to obtain results, which present true and impartial pictures of economic and business facts. In other words, if accounting is really to fill the role assigned to it as a means of economic control, it must grow out of its traditional, rule of thumb procedures and assume the stature of an objective, impersonal social science. There is considerable evidence today of a growing recognition among accountants that such a development is not only possible but also very necessary and that the time has now come when the practice of accounting ought to be placed on a genuinely objective basis, so that the special desires and interests of individual accountants and business managers will not unduly influence findings of accountants.

SYNOPSIS: Global harmonization of accounting is a challenging and controversial issue currently confronting accounting standard setters and market regulators internationally. To date, Australia is further along in its international harmonization program than any other country with an established standard-setting regime. While no country's national standard-setting arrangements are likely to be subject to political pressures identical to those recently exerted in Australia, there are lessons to be learned from the Australian events. Given the political nature of standard setting, it is not surprising that the Australian experience indicates that pushes for harmonization are not necessarily what they seem. This paper describes the Australian experience and identifies some of the political drivers of recent standard-setting reform initiatives. It demonstrates how the rhetoric of harmonization can divert attention from politically motivated changes to the fundamental basis of standard setting. Using the harmonization banner to garner support in principle, parties with vested interests can push regulatory agendas that potentially subrogate user needs. [ABSTRACT FROM AUTHOR]

This article discusses the potential and actual relevance of academic research to the accounting standard setting process. In accounting standard setting, the instances of interest and the matters at issue are proposed accounting rules that specify either recognition practices or disclosure practices or both, along with a set of measurement rules or guidelines. The idea of bringing evidence to bear implies that policy-relevant research will tell the standard setter something about a proposed standard which will shift his beliefs about that proposal. Standard setters ultimately must answer a normative question: should a given item be disclosed; if the answer is yes, then should the item be recognized or placed in the notes. In either case, the standard setter must also specify when in an ongoing economic process disclosure or recognition should occur and he must provide measurement rules or at least measurement guidelines. The descriptive or explanatory nature of much academic accounting research means that a person wishing to use such research to settle a normative issue must supply a normative criterion, since the research in general does not.

The property of the Garstka-Ohlson method of evaluating the bounds based on the information in a dollar-unit sample is investigated in this paper. The study indicates that the use of their method should be much more limited than claimed. Specifically, their lower bounds tend to be too conservative and their upper bounds too tight when there is a concentration of low taintings. Since this distribution is common in auditing, this property of the Garstka-Ohlson method severely restricts its application. [ABSTRACT FROM AUTHOR]

ABSTRACT: This article recognizes that some accounting standard setters seek to solve specific accounting problems by reducing the number of permissible accounting treatments for some components of accounting in isolation from the procedures adopted for others. Standards generated in this way are labeled partial standards in this article which explores some of the conditions under which such an approach generates an optimal information system for an individual. The main concern is to determine a set of conditions required of an individual's utility function if a partial standards approach is to be successful in the above sense. These conditions are fairly restrictive and suggest that accounting authorities need to consider simultaneously standards which display any significant element of interdependence. This inquiry leads to a consideration of the implications of separable utility functions for accounting. The article also considers the promise that separable utility functions offers for the amelioration of the problem of the non-comparability of information structures. [ABSTRACT FROM AUTHOR]

The article presents the author's views on the concepts of information value, in reference to an article written by Theodore J. Mock for the October 1971 issue of the periodical "The Accounting Review." The author says that Mock attempted to extend the theoretical work of information economics from a decision value focus into model and feedback information value. The author adds that Mock's definitions of information value add nothing new to the theoretical work of information economics. Furthermore, the measure of information value that has been previously developed in information economics subsumes the measures of Mock.

Changes in the economy have prompted changes in the information needs in all areas of accounting. New cause and effect relationships develop and new concepts emerge which must be given accounting expression. The accounting profession is therefore faced with a need for accounting data which must be accommodated. The magnitude of the challenge reveals the magnitude of the opportunity. There is every reason to believe that socio-economic accounting will provide the thrust necessary to tremendously expand the world of accounting. In this connection, there is an old Hindu saying which seems appropriate here, that "There is no door, but only a small window, that leads to a great new world." However, the saying requires a bit of paraphrasing for, actually, in this case, there is no window. Nevertheless, accounttants do have access to, perhaps, a key hole. The light provided by this small key- hole reveals that there are numerous answers to the challenges posed by socio- economic accounting and they all focus on research. [ABSTRACT FROM AUTHOR]

In this article the author investigates the mathematical propriety of accounting measurement and calculations. The author has seen that the ratio scale and mathematical fields govern the mathematical propriety of accounting measurement and calculation, respectively. Given that p is the property to be measured and F the set of items a, b, c, ... possessing property p, one can quantify the content of property p in each item of F. A substantial portion of the problem of accounting measurement was then reduced to determining p and m(F).

Although accounting has long served business, there still remain a number of challenges to its healthy survival. These include the monumental task of accumulating and using pertinent data with respect to all scales and complexities of business activity. Such marshaling of quantitative data is not only a problem of managing the flow of information to assure its reliability but also one of timing the flow to insure its useful freshness. For one thing, the accumulation of adequate needful information is costly. This is especially true since most systems of data flow are predicated on the assumption that complete recording is necessary. This thinking generates systems involving much detail. Frequently such accounting is sufficient to swamp the group of personnel which economically can be assigned to the processing of quantitative information for use in business. Any process of balancing cost of data with the benefits derived from them necessarily involves the problem of providing quantitative data sufficiently reliable to be useful in business.

The article reviews the economic concept of net income and the accounting procedure in a number of specific business situations, and then suggests a principle, which is compatible with economic theory and at the same time coordinates most current accounting practice. The matching of cost and revenue has grown during the past fifteen or twenty years into a cardinal principle of accounting. Economic theorists since the days of Adam Smith have spoken of land, labor, and capital as the three factors of production. Compensation to these factors has been known as rent, wages, and interest. Under a perfectly functioning system, these three factors receive all the income. Any residual that remains in an actual case is due to the imperfections of the system in the individual case at the particular moment of time. Later economists acknowledged a fourth factor of production: entrepreneurship. Its compensation is known as profit. Profit is the reward for bearing risk; the risk of enterprise, the risk of venturing in business, the risk of owning something in hope of selling it later.

Most of the everyday problems which plague practicing accountants in the realm of inventory accounting are somewhat divorced from the theory of inventory valuation and its inevitable relationship to income determination. Any accountant worth his salt has learned long ago to shy away from the word "value." The "value" of something implies its worth, and one doesn't have to be a timid soul to shudder at the insuperable problems which surround an attempt to determine the worth of anything. Value theory tells that such inventories must be worth the present discounted amount of the net receipts which will ultimately flow into the business as a result of their sale. The barrier which stands between value theory and the accounting treatment of inventories is essentially the realization convention. When a sale takes place, or where production under a fixed contract occurs, or where production of goods which sell on an organized market at given prices is completed in all these cases the accountant is willing to grant that the evidence is satisfactory.

Accounting has been defined as "the act of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof." Accounting is an art, not a science. It has two major functions: to record and classify events and transactions which are, in part at least, of a financial character, and to summarize, analyze, and interpret the records. A more significant definition would be of inestimable value to students and laymen alike--perhaps to accountants themselves. Unfortunately, it is not possible to reduce a complex subject to simple terms. Accountants use many common words, such as profit, loss, income, expense, and capital, with a variety of meanings, and with meanings that frequently differ from those of every-day life. The accountant's attempt to give common words a chosen meaning--neither more nor less--is not always successful, and it is therefore important to take heed. But accounting is nevertheless an act, and its terms, no matter how common, have meaning with reference to accounting operations.

Public accounting is in its infancy as compared with the older professions of medicine, law, and engineering, as of January 1946. The rapid strides made by this young profession within a relatively short time are enough to account for its chronic educational and training problems. Indeed, it is true that many beginners who in the early 1920s were considered well qualified to enter the public accounting field would be judged inadequate by the criteria used today. In the early 1920s, public accounting firms were primarily interested in the bookkeeping ability, business experience, personal attributes, and potentialities of applicants. Although a college background was desirable it was not a requisite. Accounting technique was then considered as something to be learned over the years as an adjunct to experience gained while working on engagements under the direction of competent accountants. This method of entering professional work was not uncommon in the early days of several professions.

Obviously it is impossible to approach every economist and ask him if he knows enough about accounting to use accounting material. Only about 20% of the economics departments of universities granting degrees in economics have any semester hour requirement in accounting. These requirements affected only 15% of the philosophy of doctorate graduated in the period. Where course hours in accounting are required, the work usually need not be of graduate character. The group that has had such training has probably not had enough to make full use of the available accounting data. While less than twenty per cent of the economics department members above the rank of instructor are prepared to teach accounting at the college level, about sixty per cent of heads of these departments feel that teachers of accounting should be so trained that they may be able to teach economics at college level. The distinction between accounting and economics is more apparent than real and forces are at work to bridge the gap between the two disciplines.

This article is concerned less with what actually constitutes common accounting practice than with the soundness of the accounting basis upon which such practice rests. Undoubtedly there are those who would prefer the plural-bases in the belief that no one basis can ever explain the whole of accounting practice. Such reasoning, however, appears to place the cart before the horse, as it is tantamount to making current practice though admittedly contradictory and heterogeneous, the acid test of any accounting basis which may be advanced. Furthermore, there is grave danger that a multi basis approach is but a twist of logic by which individual judgments, based on circumstances wholly foreign to pure accountancy, are substituted for accounting control. Actually, it appears literally impossible that multi basis accountancy can ever establish effective control over business reporting in opposition to contradictory non-accounting judgments based on apparently urgent financial expediency, legal prudence, or business policy. This is all the more apparent when it is realized that many of the individual bases within the multi basis of accounting practice were dictated by circumstances from without rather than by controls from within accountancy itself.

According to the author of this article, it is not his purpose to deal at length with the materials or subject matter with which accounting research might concern it. While some mention will be made of these materials, he is more concerned to develop certain points of view, which he thinks should animate the research worker in accounting. A common assertion by research workers is that a given generally accepted principle ought to be re-examined, or that indeed all of them ought to be re-examined. This is a proposition, which in itself can receive general consent. But it often happens that the statement "that generally accepted principles of accounting should be re-examined" is frequently made by those who already have rather definite ideas for converting those generally accepted principles into something entirely different from what they are, or were ever intended to be. Those accountants who pretend to anything at all along the lines of accounting research cannot ignore the idea which bobs up from time to time, that accountants should try to devise a presentation of their data in entirely new forms.

The article presents the broad front of accounting activity in several sectors where accounting work is moving forward. These sectors may be referred to as the professional field, the field of private finance and industry, the field of public finance, and the educational field. The article discusses the matters common to the whole of accounting work, in fulfilling the purpose of accounting, that is, to exhibit the financial position of a particular unit of activity, and to exhibit the financial results of the particular unit over a length of time. All other purposes may be fairly subsumed under one or the other of these two and considered as auxiliary matters of varying importance according to the time, and place. Accounting provides refined classifications, use of averages, ratios, per unit figures, and cost and budgetary control, as aids to management and other special groups. Diverse as are the phenomena with which accounting deals, its two major objectives predominate and give the entire field a definite unity. In reaching these objectives use is made of a medium of expression, a body of working principles, and a technique.

ABSTRACT In an exploratory study, we report how 140 auditors rate the relative importance of 25 risk factors (red flags) identified in SAS No. 82. The Analytic Hierarchy Process (AHP) [...]

ABSTRACT This study explores how national culture affects employees' reaction to different modes of implementing high-stretch performance standards. An experiment was performed using Chinese and U.S. nationals to represent cultures [...]

ABSTRACT This study investigates the auditor characteristics that are related to generation of evidence and documentation review notes by reviewers of audit working papers. To address this question, an analysis [...]

Abstract: Bargaining costs have been identified as a key determinant of the organization of economic activity, and accounting information plays a significant role in contracts created through bargaining. Properties of [...]

Abstract: Management accounting information plays an important role in motivating individuals to improve performance (cf., Atkinson, Banker, Kaplan, and Young 1997). This role tends to be operationalized by linking compensation [...]

Abstract: This paper examines the relationship between organization size, product lifecycle stage, market position, balanced scorecard (BSC) usage and organizational performance. Using financial and nonfinancial measures, the BSC appraises four [...]