Reviewed by Janet Kimbrell Oklahoma State University
For the individual prepared to read a collection of essays concerned with Paton’s viewpoint of accounting theory, this book may be a disappointment. The exception to this is Stephen Zeff’s historical account of Paton’s writings from 1916 to 1955 on the effects of changing prices. The reader interested in following the evolution of Paton’s thoughts on accounting for changing prices will find this article to be worthwhile reading.
Another worthwhile contribution of the book is the extensive bib-liography of Paton’s works. The comprehensive listing contains most books, articles, and book reviews written by Paton. It also in-cludes submissions to the federal government.
The remainder of the book is an eclectic assortment of essays on accounting topics. The purpose of Carl T. Devine’s essay on “Ob-servations on Internal Control” is to suggest that investigations of internal control fail to consider the deterrent effect of the arrangements made to prevent violations, particularly collusion. Without the knowledge of this deterrent effect, it is difficult to make assessments of internal control.
David Solomons discusses the dangers of the politicization of ac-counting, in that it is not the function of the Financial Accounting Standards Board to influence preselected economic behavior to achieve national goals, or promote some mode of behavior. His view is that the function of accounting is purely for measurement purposes and that neutrality should be a major goal in setting account-ing rules.
Harold Bierman argues the feasibility and desirability of setting standards. A general set of operating guidelines should be defined before the accounting profession attempts to define specific problems. This general framework can be used to analyze those specific problems. In addition, Bierman contends that difficulty encountered in the measurement of accounting values should not stop the profession from attempting to make that measurement.
In “Accounting for Investments in Debt Securities,” Maurice Moonitz first compares debt and equity securities and then analyzes the behavior of an investment in debt as the market rate of interest changes. The major argument presented in this essay is that realized profits should not be combined with unrealized profits in the calculation of net income, as this practice may lead to misuse and confusion.
R. J. Chambers defines “The Hard Core of Accounting” as money and money’s worth (money equivalent of assets). It is Chambers’ contention that a balance sheet representing assets and equities in terms of their money equivalents will best answer the accountant’s asset measurement problem. This is yet another argument for CoCoA (continuously contemporary accounting) and adds little to a previous paper on the topic written by Chambers.
In “Relationships Among Income Measurements,” Norton Bedford examines five income measurement models: historical cost, pricelevel adjusted historical cost, current exit value, current replacement cost, and present value of expected cash flows. Using the concepts of psychic, real and money income as a framework, Bedford attempts to analyze the relations among the five income measurements.
Gordon Shillinglaw develops a conceptual framework to be applied in the field of product costing. His suggestion for a framework includes basic concepts of costing, constraints of the system, criteria for system choices, and measurement principles. The discus-sion includes the problems encountered in applying these principles, as well as a rationale for including them as principles. This particular essay would be a useful guide to the beginning cost ac-counting student in that it discusses these problems and, in addition, some basic relationships in cost accounting.
The last essay in the book is “Social Performance Accounting” by R. Lee Brummet. After giving credit to a limited number of accountants who have been concerned with the social responsibilities of the accounting profession, he then charges that the profession, in general, has been reluctant to assume its role in the measurement of social performance. It is his belief that accountants have a responsibility not only to report upon the financial measurement of an organization, but also to report upon the measurement of social welfare efforts and impacts.
For the accounting historian, this book probably contains only one item of interest—Stephen Zeff’s essay on Paton and the effects of price changes. The other eight essays, while interesting, add little to the history of accounting thought. However, this does not imply that these would not be of value to a reader interested in accounting theory.
