Reviewed by Jeanette M. Sanfilippo Maryville University
Dialogue — the exchange of ideas or opinions. In order to invoke critical dialogue among students, academician, and accounting historians, W. T. Baxter blends twelve thoughtprovoking accounting articles into a medley of theoretical prose. Readers should be advised that the title, Accounting Theory, is misleading. One should not expect a traditional “accounting theory” textbook proposing dogmatic views. Instead, the reader finds a collection of Baxter’s articles on various accounting theory topics including the meaning of wealth, asset and liability valuation, goodwill, depreciation, accounting research, and a particularly fascinating article on early accounting history, “The Tally and The CheckerBoard” reprinted from Accounting History (Oxford: Clarendon Press, eds. R. H. Parker and B. S. Yamey, 1994). The author draws upon his past experiences and influences in selecting papers to be read in a “highly critical spirit” [p. xi].
The book’s incisive introduction implies that Baxter’s traditional accounting education hindered his critical examination of the underlying accounting principles during his early years in accounting practice. Baxter writes “the brainwashing was so thorough that I later was profoundly upset when university colleagues (economists) questioned me about accounting’s principles, and put forward objections that left me abashed and tonguetied” [p. ix]. Through his revered association with colleagues Kenneth Boulding, Ronald Coase, Sir Ronald Edwards, and David Solomons from the London School of Economics, Baxter experienced an evolution in thinking about wealth and income. His book reflects the results of this evolution.
An interesting aspect of Baxter’s book is its chameleon appeal. As a textbook for undergraduate accounting students, Accounting Theory explores topics studied first in intermediate classes challenging the students to pursue a deeper understanding through critical dialogue. Baxter introduces students to his theory of deprival value, a concept inspired by the writings of Professor James Bonright from Columbia University. Deprival value is a term used to describe the true value of the firm’s assets including the value of outlay obviated by possession. Baxter presents this concept in a clear and understandable manner that appeals to students.
As a text for graduate studies, Accounting Theory serves as a research mechanism and a source for further studies into questionable areas of accounting practice and theory. Of particular interest to the graduate student, Baxter includes a section called Accounting Research—Academic Trends versus Practical Needs which examines, in part, the various aspects of the arguable nature of accounting research. As a recommended reference for accounting historians, Accounting Theory brings together various topics of interest and affords the reader an opportunity to discover, or rediscover, the controversial nature of accounting theory in general. After reading Accounting Theory, one single reader will experience moments of quiet pondering; whereas, two readers will surely engage in thoughtprovoking critical dialogue.
