Belkaoui AccountingTheory 2009

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Ahmed Riahi-Belkaoui
Fifth Edition
University of Illinois at Chicago Illinois, USA
ACCOUNTING THEORY
Australia Canada Mexico Singapore Spain United Kingdom United States
ACCOUNTING THEORY
Copyright 2009 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
To Dimitra
Ahmed Riahi-Belkaoui
Fifth Edition
University of Illinois at Chicago Illinois, USA
ACCOUNTING THEORY
Australia Canada Mexico Singapore Spain United Kingdom United States
Accounting Theory: Fifth Edition
The text of this publication, or any

part thereof, may not be reproduced or transmitted in any form or by any means,
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A catalogue record for this book is available from the British Library
ISBN 1-84480-029-6
Typeset by Saxon Graphics Ltd, Derby
Printed in Great Britain by TJ International, Padstow, Cornwall
Contents
Preface
The history and development of accounting

1.1
Introduction
1.2
Evolution of double-entry bookkeeping
1.3
The development of accounting principles in the USA
1.4
Accounting and capitalism
1.5
Relevance of accounting history
1.6
International accounting issues
1.7
Conclusions
Appendix 1.A: Major studies of the accounting profession from 1972
through 1995
Notes
References
The nature and uses of accounting

2.1
Definitions and role of accounting
2.2
Measurement in accounting
2.3
The rationale behind double-entry accounting
2.4
Generally accepted accounting principles (GAAP)
2.5
Accounting policy and changes
2.6
Designed accounting
2.7
Technical and ideological proletarianization of accountants
2.8
The manufactured consciousness of users
2.9
Ethical perspective in accounting
2.10 Conclusions
Notes
References
The elements and structure of an accounting theory

3.1
Notions of a theory
3.2
Notions of concepts
3.3
The handling of hypotheses
3.4
Context of discovery
3.5
Conclusion
Notes
References
ix
1
1
2
6
12
13
14
19
19
31
34
37
38
42
45
46
53
54
65
67
68
71
71
76
79
79
84
86
92
93
93
95
v

CONTENTS
vi
The traditional approaches to the formulation of an

accounting theory
4.1
The nature of accounting: various images
4.2
Theory construction and verification
4.3
The nature of an accounting theory
4.4
Methodologies for the formulation of an accounting theory
4.5
Approaches to the formulation of an accounting theory
4.6
The eclectic approach to the formulation of an accounting theory
4.7
Conclusions
Notes
References
98
107
108
109
110
116
116
116
120
The regulatory approach to the formulation of an

accounting theory
5.1
The nature of accounting standards
5.2
Goals of standard-setting
5.3
Entities concerned with accounting standards
5.4
Who should set accounting standards?
5.5
Legitimacy of the standard-setting process
5.6
Accounting standards overload
5.7
Accounting choice
5.8
Standard-setting strategies for the developing countries
5.9
Conclusions
Appendix 5.A: Members of International Accounting Standards Board
Notes
References
123
A conceptual framework for financial accounting and reporting

Classification and conflicts of interests
Toward a formulation of the objectives of financial statements
Toward a conceptual framework
The other reports
Taxonomy of normative characteristics that accounting
pronouncements should reflect
6.6
Discussion and conclusions
Notes
References
163
164
165
173
190
197
The structure of accounting theory

The nature of the structure of an accounting theory
The nature of the accounting postulates, theoretical concepts and
principles
7.3
The accounting postulates
7.4
The theoretical concepts of accounting
7.5
The accounting principles
7.6
Truth in accounting
7.7
Conclusions
Appendix 7.A: The basic postulates of accounting (ARS 1)
Appendix 7.B: A tentative set of broad accounting principles for business
enterprises (ARS 3)
209
210
211
6.1
6.2
6.3
6.4
6.5
97
7.1
7.2
124
125
127
135
144
146
149
150
153
153
155
158
197
202
205
212
215
217
230
236
237
238

vii
241
245
Fairness, disclosure and future trends in accounting
249
249
250
253
261
285
285
291
8.1
Introduction
8.2
Fairness in accounting
8.3
Fairness in distribution
8.4
Fairness in disclosure
8.5
Conclusion
Notes
References
Research perspectives in accounting

Introduction
Perspectives on accounting researchers
Perspectives on accounting methodologies: ideography versus
nomothesis
9.4
Perspectives on accounting knowledge
9.5
Perspectives on accounting research
9.6
Intellectual foundations in accounting
9.7
Conclusions
Notes
References
299
299
300
304
Accounting: a multiple paradigm science

Introduction
The concept of a paradigm
The anthropological/inductive paradigm
The true-income/deductive paradigm
The decision-usefulness/decision-model paradigm
The decision-usefulness/decision-maker/aggregate-market-behavior
paradigm
10.7 The decision-usefulness/decision-maker/individual-user paradigm
10.8 The information/economics paradigm
10.9 The science of accounting
10.10 Deconstruction
10.11 Academic accountants: a flawed universal class
10.12 Conclusions
Notes
References
329
330
331
337
339
341
343
The events and behavioral approaches
363
364
367
372
383
383
384
390
9.1
9.2
9.3
10
10.1
10.2
10.3
10.4
10.5
10.6
11
11.1 The events approach

11.2 The behavioral approach
11.3 The human information processing approach
11.4 Evaluation of the behavioral approach
11.5 Conclusions
Notes
References
308
314
319
322
322
326
345
346
348
350
351
352
354
360
CONTENTS
Notes
References

CONTENTS
viii
12
The predictive approach

12.1 The nature of the predictive approach
12.2 Prediction of an economic event
12.3 Prediction of market reaction: market-based research in accounting
12.4 Conclusions
Notes
References
13
14
The positive approach, income smoothing and earnings

management
13.1 The positive approach
13.2 Income smoothing hypothesis
13.3 Earnings management
13.4 The paradigmatic status of accounting
13.5 Conclusions
Notes
References
441
Current-value accounting
477
478
480
482
483
484
505
505
508
14.1 The relevance of the income concept

14.2 The traditional accounting concept of income
14.3 The nature of the economic concept of income
14.4 Concepts of capital maintenance
14.5 Concepts of current value
14.6 Conclusions
Notes
References
15
General price-level accounting

15.1 General price-level restatement of historical-cost financial statements
15.2 Adjusting specific items for general price-level changes
15.3 The monetarynonmonetary distinction
15.4 Price-level indices
15.5 A simplified illustration of general price-level indexing
15.6 Evaluation of general price-level accounting
15.7 Conclusions
Notes
References
16
Alternative asset-valuation and income-determination models

The nature of the differences
Basis for comparison and evaluation
Illustration of the different accounting models
Toward a solution to the problem of financial reporting and
changing prices
16.5 Conclusions
Notes
References
16.1
16.2
16.3
16.4
Index
397
398
398
408
433
433
439
441
449
456
463
465
465
472
511
512
513
517
520
522
524
529
529
530
533
534
535
537
547
552
553
553
555
Preface
A single generally accepted accounting theory does not exist at this time. Several attempts
have been made to formulate such a theory. Starting with different assumptions and using
different methodologies, the various attempts have resulted in different frameworks for
financial reporting standards.
The construction of an accounting theory requires the justification or refutation of
existing accounting practices. Under the traditional approach, construction and verification
of a theory were considered virtually synonymous. In the past ten years, however, a new
approach that employs a distinct verification process has emerged. The underlying
objective of both approaches is the same: to develop a conceptual framework for what
accountants do or are expected to be doing. A coherent system of objectives and assumptions is necessary for the promulgation of consistent standards that define the nature,
function, and scope of financial statements and the techniques for producing them. In other
words, the standard-setting process must be guided by a generally accepted accounting
theory.
Constructing and verifying an accounting theory consists of defining and selecting the
objectives of accounting and financial statements and delineating the elements of financial
statements, the attributes of these elements, and the appropriate unit of measure to be used.
Given the diversity of assumptions within the accounting environment, writers, researchers,
and practitioners have tackled the task of theory construction in various ways. The result
has been a state of continual crisis or revolution within accounting, in which (1) various
accounting paradigms, or models, have competed for primacy, (2) vested interests groups
have argued for the domination of their particular paradigms and resultant theories, and (3)
a gradual politicization of the standard-setting process has taken place.
Accounting Theory, Fifth Edition is intended for junior, senior, and graduate courses in
financial accounting, financial accounting theory, seminars in asset valuation and income
determination, and contemporary issues in accounting. The textbook should be helpful to
those who wish to study for professional accounting examinations and to those who wish to
keep up to date with current accounting research and education.
Accounting Theory, Fifth Edition consist of 16 chapters. Chapter 1 describes the history
and development of accounting. Chapter 2 covers the nature and uses of accounting.
Chapter 3 covers the elements and structure of a theory. Chapter 4 describes the traditional
approaches to the formulation of an accounting theory. Chapter 5 elaborates on the regulatory approaches to accounting theory. Chapter 6 discusses the development of a
conceptual framework for financial accounting. Chapter 7 identifies and explains the theoretical structure of accounting. Chapter 8 covers the issues of fairness, disclosure and future
trends in accounting. Chapter 9 looks at the research perspective in accounting. Chapter 10
presents a philosophical and scientific view of accounting as a multiparadigmatic science.
Chapter 11 presents the event and behavioral approaches to the formulation of an
accounting theory. Chapter 12 examines the predictive approaches to the formulation of an
ix

PREFACE
accounting theory. Chapter 13 presents the positive approach to the formulation of an

accounting theory and covers the issues of income smoothing and earnings management.
Chapter 14 commences the examination of the asset valuation/income determination issue
by focusing on current-value accounting. Chapter 15 presents general price-level
accounting as an alternative accounting approach. Finally, Chapter 16 offers a synthesis of
the asset valuation and income determination models; a clear differentiation is made
between the attributes to be measured and the unit of measurement used.
Acknowledgments
I wish to express appreciation to the offices of the American Institute of Certified Public
Accountant (AICPA), the Financial Accounting Standard Board (FASB), the American
Accounting Association and the Editor of Accounting, Organizations and Society for their
kind permission to reprint some of their material.
FASB Statement No. 5, Recognition and Measurement in Financial Statements
of Business Enterprises, is copyrighted by the Financial Accounting Standard Board,
401 Merritt 7, P.O. Box 5116, Norwalk, Connecticut 068565116, USA. Portions are
reprinted with permission. Complete copies of this document are available from the FASB.
I am indebted to numerous people for their help in reviewing the manuscript for the fifth
edition. Literally scores of changes have been made in the fifth edition as a result of
comments and suggestions received from anonymous reviewers of the manuscript at
various stages.
I wish to thank Vijay Kamdar and Maninder Bhuller of the University of Illinois at
Chicago for their cheerful and intelligent assistance. I also thank them for their continuous
and intelligent support. Finally, Fiona Freel and Annette Abel of International are
to be congratulated for a professional job.
Index
a priori research 330

a priorist, response to data 105
AAA see American Accounting Association
(AAA)
Abdel-Khalik, A.R. 407
absolute idealism 311
absoluteness, organicism 311
absorption costing method 222, 223
abstract accounts 4
abstract empiricism 31617
abstract individual, processing sensory input
377
Abstract Scientist (AS) 3023
abstraction level, structure of a theory 81
academic accountants 252, 3512, 432
academics
schism with practice community 401
selective financial misrepresentation
hypothesis 55
technical analysis 411
see also accounting research; American
Accounting Association (AAA)
accelerated depreciation 2267, 453
account-based screening models 406
accountability
as descriptive theory of accounting 337
entity theory 216
fairness 253, 254
historical costs 3378
level of turnover 67
objective of financial reporting 194, 195
social investors interest in 277
virtue of accounting practices 41
accountants
academic 252, 3512, 432
accounting standards overload 147
alienation 67
assurance services 389
female 67
financial statements 1645
growth in numbers 656
as historian 320
materiality principle 227
neutrality 231, 234, 2501

objectivity and hardness 2334
proletarianization of 657
role performance 689
Accountants International Study Group 2278
accounting
academic status of 83, 330
as an ideology 989
art or science 401, 87, 109, 201, 236, 331,
34850
attainment of optimal system 1445
capitalism 1213, 99, 318
as a commodity 101
communicative character of 41
concept of information 38, 98
creativity in 5760
as current economic reality 1001
definitions of 3840, 98
as distortion 1056
ethical perspectives 6871
as experimentation 1045
fields in which useful 38, 98
as financial map-making 104, 125
forces impacting on 3940
as historical record 100
as imagery 1034
as information system 101
intellectual foundations 31922
lack of glamour 667
as a language 99100, 36970
major studies of profession (19721995)
1930
as mythology 989, 1023
nature of 98106
need for regulation 136
paradigmatic status of 4635
as rationale 103
as ritual 989, 1023
role of 2345
schism between practice and academy 401
as a science 87, 201, 236, 331, 34850
slighted in literature 124
as a social science 38, 40, 71, 236
555

INDEX
556
truth in 2306
virtues and role of 412
see also measurement
accounting changes 534
conditioning phenomena 371
free-market approach 137
impact on investors 426, 427, 428, 429
accounting choice 53, 62, 14950, 257, 4478,
454
accounting concepts
accounting theory 21011, 21517
defined 211
entity theory 7, 21516
environmental factors 17, 153
establishment of 163
frame of reference 163
fund theory 21617
international list 16
proprietary theory 7, 215, 216
Trueblood Committee 20
see also conceptual framework
accounting discourse 41
accounting earnings, timeliness 22930
The Accounting Establishment 1012, 21
accounting harmonization 1719
defined 17
different from standardization 17
limits of 1819
merits of 17
nature of 1718
accounting history
defined 1314
relevance of 1314
Accounting Horizons 197, 198
accounting income 189
advantages of 481
classical school 477
conservatism 230, 481, 482
cyclical behavior 479
defined 480, 504
description of 4801
disadvantages of 4812
economic income 48
historical-cost accounting 539
increases in stock prices 338
timeliness 22930
accounting influences, zones of 17
accounting information
accounting as mythology 1023
accounting standards 125
as an economic good 1367
behavioral effects 345, 3689
belief-revision use 443, 444
comparability 166, 169, 170, 171, 172, 185,
187, 191, 196, 225, 2289
completeness 166, 191, 231

conservatism principle 196, 2267
consistency 172, 185, 187, 196, 225, 228, 237
costbenefit considerations 185, 187
decision-making 185, 3416
defined 21314
employees as potential users of 270, 273
fairness 68, 11314, 2503, 2618
firms as preparers of 1645
free-market regulation 1368
full disclosure 196, 2256
inductive approach 93, 11213
information/economics paradigm 337, 3468,
353, 4424
interim reports 214
linguistic effects 36970
market failures 136, 1378, 344
materiality 55, 172, 185, 1878, 196, 2278,
369
monopoly control 136, 137
motivational use 443, 444
neutrality 166, 172, 187, 196, 231, 233, 234,
2501, 253
objectivity 191, 196
performance-evaluation use 443
pragmatic approach to theory 110
private-sector regulation 13841
public-sector regulation 1414
qualitative characteristics 1858
relevance 166, 169, 172, 185, 186, 190, 191,
262, 398
reliability 55, 172, 185, 1867, 190, 191,
2235, 2323
representational faithfulness 125, 126, 187,
231, 232, 233
risk-sharing use 443
roles of 2345
hypothesis 54
sociological approach to theory 114
as symbolic representation 1023
timeliness 166, 186, 191, 21921, 22930, 265
understandability 166, 172, 191
unions as potential users of 270
unit-of-measure postulate 21314, 237
usefulness of 223, 225, 250, 342, 343, 369
users expertise 68
verifiability 166, 187, 232, 233
see also disclosures; financial reporting;
financial statements
accounting knowledge
acquisition of 3001, 302
contextualism 3089, 31011, 31314
formism 30810, 31112, 313
mechanism 3089, 310, 31213, 314

557
partiality of 126
situationist strategy 150, 152
and theory 107, 1089, 110
uncertainty 103, 104
uniformity principle 229
virtues of 41
see also anthropological/inductive paradigm;
positive approach
accounting principles
accounting theory 923, 11016, 21011,
21730
attainment of optimal system 1445
basic user primacy principle 2634
broad (ARS 3) 23841
comparability principle 2289
comparative or international accounting 15, 16
consistency principle 225, 228
cost principle 21718
deductive approach to theory 923, 11112, 116
defined 211
development in the USA 612
eclectic approach to theory 116
establishment of 163
extended user primacy principle 2634
fairness 250
financial shenanigans 60
flexibility principle 2289
frame of reference 163
full disclosure principle 196, 2256
inductive approach to theory 93, 11213
litigation 146
matching principle 2213, 481
objectivity principle 2235, 227
pragmatic approach to theory 110, 111
realization principle 21920, 4802, 497
revenue principle 21821, 480
situationist strategy 150, 152
and theory 107, 1089
uniformity principle 196, 2289, 2356
universal or world accounting 14
see also accounting standards; generally
accepted accounting principles (GAAP)
Accounting Principles Board (APB)
accounting changes 54, 187
accounting policies 53
changes in accounting procedures 225
changing prices 547
characteristics of liabilities 177
cost defined 21718
demise of 130
disclosure requirements 225
establishment of 9, 127
INDEX
organicism 3089, 311, 314

Peppers world hypotheses 30811
perspectives on 30814
accounting messages 105
accounting methodologies, ideography vs.
nomothesis 3048, 315
accounting methods
choice of 53, 62, 14950, 257, 4478, 454
conservatism 173
development of 6
effect on decision-making 36970
generally accepted 46
accounting objectives
deductive approach 923, 11112
environmental factors 17
evolutionary approach 150
fairness 114, 251
formulation of 1645
prediction of economic events 398
shift in emphasis 169
accounting policies
accounting history 13, 14
changes 534
economic approach to theory 115
economic consequences 125, 126
full disclosure principle 226
political or economic goals 18
political nature 126
positive approach 446
representational faithfulness 125, 126
accounting postulates
accounting-period postulate 214
ARS 3 23841
basic (ARS 1) 2378
deductive approach 923, 11112
defined 211
economic/political environment 237
entity postulate 194, 212
fairness 250
field of accounting itself 237
going-concern postulate 21213, 214, 218
imperatives 2378
see also stable monetary postulate; unit-ofmeasure postulate
accounting practices
accounting history 13, 14
authoritarian approach to theory 110
comparative or international accounting 15
formism 31112
inductive approach 113
lack of impact of financial accounting theory
164

INDEX
558
fair presentation 226
GAAPs 46, 47, 50, 107
general price-level gains/losses 515
general purchasing power 521
interim reports 214
investment tax credit 1401
membership 131
monetarynonmonetary distinction 517, 518
opinions issued 9, 127
receivables and payables 488
and SEC 132, 133
Statement No.4 46, 50, 107, 109, 164, 1657,
177, 197, 21718
statements 1278
users of financial statements 50
accounting profession see accountants; auditors
accounting profit equation 111
accounting pronouncements, taxonomy of 197,
198
accounting propositions
deductive approach 923, 11112, 113
fairness 250
accounting regulations
market impact of 4267
need for 136
proliferation of 147
hypothesis 545
see also accounting rules; accounting
standards
Accounting and Reporting Standards for
Corporate Financial Statements (1957) 129
accounting reports
based on expediency 230
basic postulates of accounting 238
creativity 57
dissemination of 68
impact on social welfare 321
neutrality 166, 172, 187, 196, 231, 233, 234,
2501, 253
objectives of 342
political economy of accounting (PEA) 255,
321
rationalization of actions 103
see also financial reporting
accounting research 299322, 34850
a priori research 330
Burrell and Morgans framework 314, 31516
cross-cultural research 3823
cultural relativism 37981
deconstruction 350
formism 30810, 31112, 313
fragmentation of 83
functionalist view 31517
and hypotheses 88
ideography vs. nomothesis 3048, 315
intellectual foundations 31922
interpretive view 31516, 317
knowledge perspectives 30814
mechanism 3089, 310, 31213, 314
Peppers world hypotheses 30811
radical humanist view 31516, 318, 319
radical structuralist view 31516, 31819
relevance to real world accounting 41
role of 304
see also market-based research
Accounting Research Bulletins (ARBs) 127, 139
Accounting Research Committee (Canada) 502,
516
Accounting Research Division 9, 165, 526
Accounting Research Studies (ARS) 1289,
1656
basic postulates (ARS 1) 2378
broad principles (ARS 3) 23841
changing prices 547
general price-level gain or loss 515
monetarynonmonetary distinction 51718,
520
accounting researchers
classification of 3014
knowledge acquisition 3001, 302
motivation 335
Accounting Review 129
Accounting and Review Services Committee
(ARSC) 52
accounting rules
analogy to financial grammar 36970
bank failures 27
creativity 57
derivative products 29
earnings management 57
fairness 250
grammatical rules 100
little vs. big GAAP 49
in the political arena 10
see also accounting regulations; accounting
standards
Accounting Series Releases (ASRs) 8, 9, 133,
139, 142
accounting standardization, different from
harmonization 17
accounting standards
American Accounting Association (AAA)
129, 130

559
authoritarian approach to theory 110
conservatism principle 226
contextualism 313
deductive approach to theory 923, 11112, 113
defined 211
entity theory 216
fairness 250
flexibility in choice of 137
inductive approach to theory 93, 113
market-based research accounting 426
proprietary theory 215
theory of account approach 111
voluntary differences/changes in 426
see also generally accepted accounting
principles (GAAP)
accounting technologies
changes in 66
international transfer 1501
accounting terminology bulletins 99
accounting theory
and the AAA 84, 108, 110, 129
accounting concepts 21011, 21517
accounting postulates 21011, 21214
accounting principles 923, 11016, 21011,
21730
accounting techniques 923, 11016, 21011,
236
authoritarian approach 108, 11011
confirmation/refutation 88, 349
construction/verification 1078, 112, 363
deductive approach 923, 98, 108, 11112,
113, 116
defined 1089
descriptive theory of 109, 116, 337
eclectic approach 108, 116
economic approach 98, 108, 11516
elements and structure of 7993
ethical approach 68, 98, 108, 11314, 115
as frame of reference for accounting
techniques 163
general versus middle-range 834, 108
inductive approach 93, 98, 108, 11213, 116
international list 16
lack of impact of financial accounting theory
164
methodologies for formulation 10910
nature of 1089
nature of the structure of 21011
non-theoretical approaches 98, 108, 11011
normative theory of 109, 116, 339, 446, 4489
INDEX
American Institute of Certified Public

Accountants (AICPA) 1279, 147, 148
Committee on Accounting Procedures (CAP)
127, 138
conceptual issues 1934
critical-interpretative approach 126
developing countries 1503
economic consequences 125, 126
entities concerned with 12735
fairness 250
Financial Accounting Standards Board (FASB)
1302, 13841, 1456, 147, 1489
free-market regulation 1368
goals of 1257
harmonization of 1719
individual/public accounting firms 127
international standards 150, 1512
legitimacy of standard-setting process 1446
managements attitude 3389
nature of 1245
new basis accounting method (BAM) 149
optimistic prognosis 1456
pessimistic prognosis 1445
politicization of 1012
private-sector regulation 13841
problems faced by standard-setters 193, 263
professional organizations 133, 1535
public-sector regulation 1414
reasons to establish 125
regulatory failures 141
regulatory lag 141
regulatory trap 141
representational faithfulness 125, 126
and SEC 1323, 139, 1412, 143, 147
setting of 13544
social welfare 125, 126, 1979
standards overload issue 1469
tar-baby effect 141
theories of regulation 13544
Wheat Committee 19, 130, 167
zero-cost phenomenon 141
see also accounting regulations; accounting
rules; conceptual framework
Accounting Standards Executive Committee
(AcSEC) 127, 147
Accounting Standards Steering Committee
(UK) 516
accounting techniques
accounting theory 923, 11016, 21011, 236
accounting theory as frame of reference 163
anthropological/inductive paradigm 339, 4412

INDEX
560
pragmatic approach 108, 11011
primary objective 108, 111
regulatory approach 12353
social welfare 11415, 116
sociological approach 98, 108, 11415
structure of 20941
theoretical approaches 98, 108, 110, 11116
theory of accounts approach 111
traditional approaches 978, 11016
see also behavioral approach; events
approach; human information
processing approach; paradigms;
positive approach; predictive approach
Accounting Trends and Techniques 47
accretion
broad principles of accounting (ARS 3) 238
revenue principle 221
accrual accounting 40, 17980, 200
cash flow accounting 27980
information/economics paradigm 347
matching principle 221
accrual management, earnings management as
4567
accruals
defined 179
development of double-entry model 5
Italian method 3
mispricing of discretionary accruals 460
accruals models 45760
De Angelo model 457, 458
discretionary accrual models 45760
Healy model 4578
Industry Model 459
Jones model 458
Kang and Sivaramakrishnan model 45960
modified Jones model 458
total accrual models 457
accumulated post-retirement benefit obligation
(APBO) 58
achievement, effects of task characteristics on 374
acquisition, spirit of 12
acquisition costs 21718
accounting concept of income 481
depreciable operating assets 222
human assets 283
see also historical costs
acquisition of holdings, Nozicks theory of
justice 2579
acquisitions 130, 405
act consequentialism 6970
actions
deontology 70
fittingness 701
Gerwiths theory of justice 25960
rationalization of 103
utilitarianism 6970
activation level 282
adaptation value 420
adequate disclosure 2256, 369
adjusted discounted-future-wages method 284
adjusted present value model 424
adjustment, probabilistic judgment model 375
administration costs 223
Adorno, T.W. 377
adverse selection 445
agency conservatism 136
agency costs 53, 149, 447
agency theory 136
analytical/agency model 339, 4446, 447
agent see principalagent paradigm
aggregate consumption 116
aggregate market paradigm 337, 3435
aggregate production 116
Agrawal, Surendra P. 201
Ahmed, A.S. 455
AIA see American Institute of Accountants (AIA)
AICPA see American Institute of Certified
Public Accountants (AICPA)
AIMR 29
Alexander, Sidney S. 112, 339, 340, 487
algebra 2
alienation 67, 318, 321
allocation
defined 179
allocation problems, standard-setting 193, 263
Allport, Gordon W. 304, 307
AlNajjar, Fouad 423
Althusser, L. 319
Altman, E.I. 400
ambiguity, intolerance of 377, 382
Amenkhienan, F.E. 16, 152
American Accounting Association (AAA)
accounting paradigms 3301, 337
accounting standards 129, 130
accounting theory 84, 108, 110, 129
behavioral science 368
current entry prices 489
definition of net income 219
definition of realization 220
development of accounting principles 9
entity postulate 212
events approach 364
fragmentation of 352
nonarticulated view 175
operation of FASB 130

561
analytic propositions 86, 231
analytic theories 309, 310
analytical/agency paradigm 339, 4446, 447
anchoring, probabilistic judgment model 375
Anderson Committee 234
Anderson, J. 65
annual-earnings series 399
annuity depreciation method 223
Ansari, Shahid 235
answer machines 103, 104
antecedent-consequent technique 370
anthropological/inductive paradigm 331, 353,
4412, 464
exemplars 3379
image of the subject matter 339
methods 339
theories 339
anthropology 3067, 381
anti-democratic propaganda 377
anticipatory income smoothing 4545
antipositivism
interpretive view 317
nature of social science 304, 315
antitrust regulation 462
applied-information-economics approach 346,
442
Appolonius 2
appraisals 489
Arabian merchants 3
Arabic numerals 2
arbitrage pricing theory (APT) 344, 41213
Archimedes 92
ARIMA model 423
Aristotle 309
arithmetic 2
Arrington, C. Edward 350
Arrow, K.J. 144, 145, 445
ARSC 52
Arthur Andersen & Co. 250
articulation 1745, 189
artificial smoothing 56, 4523
ASB 22, 147
Askren, Barbara J. 270
aspect, as dimension of a transaction 45
assessment of enterprise performance 550
assessment of erosion of general purchasing
power 552
assessment of future cash flows 550
assessment of operating capability 5502
asset pricing, accounting choice 149
asset-valuation
conceptual framework 200
INDEX
revenue and income recognition 220

Statement on Accounting Theory and Theory
Acceptance (SOATATA) 110, 3301,
337, 463
stockholders valuation model 4789
Treadway Commission 25
American Institute of Accountants (AIA)
approval of broad principles 7
development of accounting principles 6, 7
interest costs 7
American Institute of Certified Public
Accountants (AICPA)
Accounting Research Studies (ARS) 1289
accounting standards 1279, 147, 148
Anderson Committee 234
auditing standards report 20, 48
Big 7 recommendations 24
changing prices 547
Cohen Commission 212
definition of accounting 38, 98
designed accounting 55
fairness 251
FASB and professionals 131
GAAPs 46, 47, 513
GAO Report on public companies (1989) 26
general price-level accounting 5267
general work categories 66
increased tax basis of accounting 48
Jenkins Committee 30, 2645
little GAAP Committee 512
objectives of financial statements 263
Oliphant Committee 22
policy statement on financial reporting (1993)
289
professional assistance 49
savings and loans (S&Ls) sector 26
SEC report on auditor independence (1994)
29
Task Force on risks and uncertainties 24
Trueblood Committee 1920, 16773
see also Accounting Principles Board (APB)
ammunition machines 103, 104
amortization
defined 179
going-concern postulate 213
human-resource accounting 283
analogy 81
analysis of variance (ANOVA) model 373
analytic decision-makers 377

INDEX
562
present-value concept 320
proprietary theory 215, 216
true-income/deductive paradigm 341
asset-valuation base 137, 194, 533
asset-valuation models 53353
comparison/evaluation 5357
differences 5345
illustration of 53746
assets
accrual accounting 179
attributes of 180, 190, 194, 4858, 533,
5345, 536
backlog depreciation 4902
broad principles of accounting (ARS 3)
23840, 241
capitalized value 4858, 5345, 536
combination-of-values 5024
corporate valuation models 424
cost principle 218
current entry price 484, 48896, 500, 533
current exit price 485, 496500, 534
current-cost accounting (CCA) 501
defined 1767, 188, 189
depreciable operating 2223
earnings statements 174, 1756
entity theory 21516
essential vs. nonessential 5001
exchangeability 176, 177
fund theory 216
historical costs 190, 194, 533, 5345, 536
Italian method 3
measurement of 101, 2389
multilayered reporting model 265
net realizable value 190, 194, 5345, 536
nondepreciable 223
productive-capacity maintenance 484
replacement/reproduction costs 4889
SEC replacement cost proposal 502
value in use 549
see also current-value accounting; fixed
assets; general price-level accounting;
human assets; net assets
Association for Management and Research
(AIMR) 29
assurance services 389
Assyrian civilization 2
AT&T 58
Aubert, V. 64
audit decisions, probability elicitation 375
audit failure 23, 24, 60, 645, 147
audit quality 21, 256, 64, 65
audit risk 64, 65
auditing standards 124
AICPA report 20, 48
fairness 114, 251
Auditing Standards Board (ASB) 22, 147
Auditing Standards Executive Committee
(AudSEC) 22, 127
auditor independence 29, 30, 41, 127
auditors
client harmony 55
Cohen Commission 212
financial reporting 134
qualifications 1819
hypothesis 55
AudSEC 22, 127
Australian Accounting Standards Committee
500
Australian Institute of Chartered Accountants
500
Australian Society of Accountants 500
authoritarianism 377
autoregressive, integrated, moving average
(ARIMA) model 423
autoregressive process 399
availability, probabilistic judgment model 375
average cost methods 115
average expected rate of discount 486
axiomatic method 112
Backer, Morton 406
backlog depreciation 4902
Baginski, S.P. 423
Baiman, Stanley 445
Baker, Richard H. 143
balance sheet approach, total accruals model
457
balance sheet distortions, consistency principle
225
balance sheet equation 111, 512, 513
balance sheet view, measurement of earnings
174, 1756
balance sheets
conventional reporting 268
economic reality 1001
events approach 365
Italian audit method 3

563
Beidleman, Carl R. 450, 451, 453
beliefs 231
Belkaoui, Ahmed 114, 370, 403, 405, 454
Bell, D. 65
Bell, P.W. 110, 112
business income concept 504
reproduction costs 488
subjective profit 486
two kinds of gains 494
benefit theory 213
benefits, utilitarianism 6970
Benke, Jr., R.L. 67
Benston, George J. 136
benzene molecule 92
BERAB 414
Bergson, Henri 310
Berkeley, George 310
Berle, Adolph A. 6
Bernstein, L.A. 228
Berry, Michael A. 413
beta estimation models 345, 415
bias
financial statement information forecasts
4067, 408
from cognitive psychology 430
see also fairness; neutrality; objectivity
biasing 105, 106
bibliographies 14, 15
Bieri, J. 377
big bath accounting 579, 173
biography 14, 15
biological species, punctuated equilibrium
paradigm 331, 332, 333
Birnberg, Jacob G. 100, 106
Black, Fisher 175, 410, 413
Black, Howard A. 128
Bloomfield, Robert J. 432
Bok, Sissela 235
Boland, L.A. 104
Bologna, Jack 60
bond premiums, prediction of 4013
bond ratings, prediction of 4013
bonded rationality 322
bondholders, conflict of interest with
stockholders 447
Bonford, M.D. 404
bonus plan hypothesis 447
book equity 175
bookkeeping, critique of 4
Bosanquet, Bernard 311
Bourdieu, Pierre 351
Bowers, D.G. 2823, 285
Box-Jenkins models 399, 406
Bradley, F.H. 69, 311
INDEX
stewardship function 100

value approach 365
balance-sheet-oriented position 111
Ball, R. 229, 425, 429
bank financial distress 26, 27, 406
Bank Insurance Fund 27
bank investment decisions 406
bank lending decisions 406
bank loan officers, as users of financial
statements 50
banking regulations 462
banking sector
GAAPs 48
GAO letter (1988) 25
GAO report on audit committees (1991) 28
GAO report on bank failures (1989) 26
GAO report on bank failures (1991) 27
bankruptcy costs 447
bankruptcy-prediction models 4001
Bannister, James W. 272
Bao, Ben-Hsien 271, 272
Bao, Da-Hsien 271, 272
Barberis, N. 430
Barden, Horace G. 128
Bariff, M.L. 106
Barnes, A. 452
Barnes, Paul 371, 405
Barth, Mary E. 267
base year 512
base-weighted indices 522
basic user primacy principle 2634
Basu, S. 230
Bayes Theorem 3745
Bayesian approach 374
Bayesian random coefficient model (BERAB) 414
Bayesian revision analysis 347, 348, 443
Beams, Floyd A. 114
Beaver, W.H. 314, 342, 344, 398, 400, 408, 409
Bedford, Norton M. 115, 232, 2612
behavior-of-the-markets paradigm 464
behavioral accounting 82, 101, 313, 368
behavioral accounting research 312, 345
behavioral approach 364, 36772
effects of accounting information 345, 3689
evaluation of 383
functional/data fixation 137, 345, 3701, 426
information inductance 372
nature of 3678
behavioral finance 4301
behavioral models 4301
behavioral psychology 81
behavioral science, objective of 368
Behling, Orlando 305

INDEX
564
Briloff, Abraham J. 10
Broadbeck, May 90
Bromwich, Michael 145, 199
Brown, P. 425
Bruns, William 345
Brunswick, E. 373
Bruyn, S.T. 277
BSV model 4301
Buckley, J.W. 834, 141
budgetary information 268, 2779
budgetary slack behavior 346, 451
Bunge, Mario 7980, 82, 88, 92, 34950
Burchell, S. 103
bureaucracy 318, 352
Burgstahler, David C. 420
Burmeister, Edwin 413
Burrell, G. 304, 314, 31516, 318
Burton, John C. 132, 1412
business computations accounting 6
business disciplines-based accounting 322
business failures 23, 26, 28, 65, 4001
Buzzell, Robert D. 87, 348
Cambridge Controversies 320
Campbell, W. 280
Canada
income smoothing 454
see also Stamp Report (Corporate Reporting)
Canadian Accounting Research Committee 502,
516
Canadian Institute of Chartered Accountants
(CICA) 273, 515, 518
Canadian Institute of Chartered Accountants
Handbook 193, 196, 528
Canning, J.B. 112, 339
CAP see Committee on Accounting Procedures
(CAP)
capital
early history of accounting 2
marginal economics 320
political economy of accounting (PEA)
3201
capital adjustment 48990
capital budgeting 488
capital claims, corporate valuation models 424
capital maintenance
asset-valuation base 533
concepts of 180, 194, 478, 4834, 547
general purchasing-power, money 483, 484, 529
general purchasing-power, productivecapacity 483, 484
measurement of earnings 174
money maintenance 483, 484, 490
productive-capacity 4834, 529

capital market research (CMR) paradigm 4312
capital market setting 322
capital markets
earnings forecasts 407
efficiency of 343, 344, 410, 427
equity of 262
external accounting 4089
integrity of 63
nexus of contracts 445, 447
capital structure, risk premiums on bonds 402
capital surplus, development of accounting
principles 7
capital transactions, cost principle 218
capital-asset pricing model (CAPM) 344, 412,
413, 431
capital-market-based research 82
capitalism 1213, 99, 318
capitalization
current-value accounting 484, 4858
capitalized value
as attribute of assets/liabilities 4858, 5345,
536
defined 534
capture theories 1356
cash accounting 214, 221, 478
cash books 4
cash discounts, revenue principle 219
cash flow accounting 268, 27981
cash flow approach, total accruals model 457
cash flows
accounting differences or changes 426
assets 176, 177
capitalization 4858
events approach 365
financial reporting 182, 183, 427
future assessment of 550
income smoothing 56
proprietary/nonproprietary information 135
value approach 365
value of 180, 190
catastrophe reserves 116
causal double-entry accounting 45
causal variables 282, 283
Cayley, Arthur 2, 45
Chaldean-Babylonian civilization 2
Chambers, R.J.
axiomatic method 112
command of goods in general (COGG) 537

565
collectivism 381
Collins, Daniel W. 457
Collins, Denton 197, 198
command of goods (COG) 537, 552
general price-level net-realizable-value
accounting 546
general price-level replacement-cost
accounting 545
net-realizable-value accounting 541
replacement-cost accounting 540
command of goods in general (COGG) 537
commerce, early history of accounting 2
commercial enterprises see corporations; firms;
small enterprises
Committee on Accounting Procedures (CAP)
fairness of presentation 114
common equity, corporate valuation models 424
common-sense knowledge 308
communicative competence 318
community assets 254
comparability, financial reporting 166, 169, 170,
171, 172, 185, 187, 191, 196, 225, 2289
comparability principle 2289
comparative accounting 14, 1516
comparative accounting studies 382
comparative theory 16, 17
compensation model 284
completeness, financial reporting 166, 191,
231
complexity, objective of financial reporting 1945
complexity theory 4312
Composite Construction-Cost Index 521
comprehensive income 188, 189, 190
concatenated theories 80
concepts
interpretation of 85
nature and importance of 845
paradox of conceptualization 84
types of 85
as units of a theory 80, 845
validity of 856
see also accounting concepts
conceptual complexity 377
conceptual framework 17390, 197202
acceptability of 199
asset-valuation 200
basic elements 1889
benefits of 1734, 202
capital maintenance 180
cost recovery 180
INDEX
decision-usefulness/decision-model paradigm
341
normative theory 110
number of odd dollars (NOOD) 536
undervaluation of net assets 404
valuation of liabilities 5001
Chaney, Paul K. 456, 463
change, objective of financial reporting 194
Chao Dynasty 2
chaos theory 4312
characters, formism 30910
Charnes, A. 366
chartists 411
Chastney, J.G. 252
Chatfield, Michael 227, 250
Chen, Nai-Fu 41213
Chen, R. 254
Chetkovich, M.N. 1423
Chinese civilization 2
choice
economic theory of 347, 348
see also rational choice behavior
CICA see Canadian Institute of Chartered
Accountants (CICA)
circumstantial variables 229
City Code on Takeovers and Mergers 278
civil relativism 17
Clarkson, G.P.E. 406
class brainwashing 68
class conflicts 320
class interests 318
classes, formism 310
classical school 477, 511
classificational double-entry accounting 45
classsificatory smoothing 452, 453
Cleverly, Graham 102
Clinard, M.B. 64
Cloze procedure 370
CMR paradigm 4312
Coase, R.J. 444
COG see command of goods (COG)
COGG 537
cognitive complexity 377
cognitive psychology 430
cognitive relativism 345, 3789
cognitive representation 376
cognitive style approach 346, 3768
Cohen, K.J. 406, 415
coherence
organicism 311
truth as 231
Colantoni, C.S. 366
collective hypnosis 68

INDEX
566
definitions 17680
development of 1801
fundamental concepts 1859
issues 17480
as a kind of constitution 200
measurement methods 180, 18990
myths about 200
nature of 1734
objectives of financial reporting by business
enterprises 1823
objectives of financial reporting by nonbusiness organizations 1845
qualitative characteristics 1858
recognition 18990
standard-setting problems 1979
view of earnings 1746
Conceptual Humanist (CH) 302, 303
conceptual relativism 126
Conceptual Theorist (CT) 302, 303
conceptual unity, evaluation of theories 83
concrete individual, processing sensory input
377, 378
concurrent validity 86
conditional value 282
conditioning hypothesis 371
conference calls 135
confirmation
evaluation of theories 83
hypotheses 83, 878, 349
conflict, value of 41
confounding effects 42930
Congress 147
conjoint measurement 373
Connor, J.E. 65
connotation, of a concept 85
consciousness, manufacturing of 68
consequentialism 6970
conservatism
accounting income 230, 481, 482
accounting methods 173
agencies 136
fairness 250
Feltham-Ohlsons model 420
probabilistic judgment model 375
consignment accounts 4
consistency
financial reporting 172, 185, 187, 196, 225,
228, 237
theory evaluation 82, 83, 107
consistency principle 225, 228
consolidations 404, 405
constant-dollar disclosures 548, 54950
construct validity 86
Consumer Price Index for All Urban Consumers

(CPI-U) 522, 528, 549
Consumer Price Index (CPI) 521, 522, 528
contemporary measures 434
content validity 86
continuity, development of double-entry model 5
continuity postulate see going-concern postulate
continuously contemporary accounting 341
contract theory 322
contracting, accounting choice 149
contracting cost theory 447
contracts, principalagent paradigm 100, 4446,
447
control group, choice of 430
control validity 86
conventional accounting 477, 529
constraining effect of 257
human resources 281, 283
manipulation of profit figures 499
weaknesses 364
see also historical-cost accounting
conventional accounting theory 214
convergent methodology 3078
convergent validity 86
convertible debt 520, 528
Cooper, David J. 1256, 319, 320, 321
Cooper, W.W. 366
cooperation, value of 41
coordinating definitions 80
Copeland, R.M. 427, 452, 453
copyright, broad principles of accounting (ARS
3) 240
core operations, corporate valuation models 424
corporate failures see business failures
corporate fraud 601
The Corporate Report 164, 165, 167, 1902,
197, 270
Corporate Reporting see Stamp Report
(Corporate Reporting)
corporate reporting practices 369
corporate restructuring behavior 4046
corporate social reporting (CSR) 2756
corporations
disclosure obligations 63
GAAPs 48
GAAPs for small and large businesses 48,
4953, 1489
growth of 5, 1213
publishing of annual financial statements 6
Wheat Committee 19
see also firms; fraud; industrial corporations;
private companies; public companies;
small enterprises

567
cultunits 383
cultural capital 3512
cultural relativism 17, 345, 37983
cultural reproduction 351
culturally synergistic studies 382
culture, concepts of 381
culture of critical discourse (CCD) 3512
current cash equivalent 496, 497
current entry price 484, 48896, 533
accounting for holding gains and losses
48992, 4945
essential assets 500
evaluation of 4946
interpretations of 4889
replacement-cost techniques applied 4924
see also combination-of-values
evaluation of 497500
interpretations of 4967
net realizable value techniques 496, 497
nonessential assets 500
see also combination-of-values
current operating performance concept 9
current operating profit 4945, 504
current rate of discount 486
current replacement costs 180, 190
current-cost disclosures 548, 54950
current-purchasing-power accounting 341
current-value accounting 4778, 484505, 511,
529
business income 5045
capitalization 484, 4858
combination of values 5024
essential vs. nonessential assets 5001
SEC replacement-cost proposal 502
specific price level 535
value to the firm 5012
currently-weighted indices 522
Cushing, Barry E. 4, 1445, 199
customers, assurance services 38
Cyert, Richard M. 165
Da Vinci, Leonardo 4
Daily, R.A. 278
Daniel, K. 431
Darwinism 331
Dascher, Paul E. 452
data
individual responses to 105
see also measurement
data fixation hypotheses 137, 345, 3701, 426
data structuring, as informational process 41
INDEX
correlation-based studies 312

correspondence
formism 310
notion of 230
truth as 126, 230
correspondence rules 80
corruption 41
cost accounting
fairness 251
interval scale 45
Italian method 3
see also historical-cost accounting;
replacement-cost accounting
Cost Accounting Standards Board 11
cost of goods sold 526
cost of living 482
cost recovery 180, 483
costbenefit considerations 185, 187
costbenefit effectiveness 196
cost-profit calculations 99
costs
contracting 447
defined 21718
expired 218, 221
income smoothing 56
reproduction 4889
utilitarianism 6970
see also acquisition costs; agency costs;
historical costs; replacement costs
counter-aspect, as dimension of a transaction 45
Craig, R. 59
Crandall, Robert H. 346, 442
credit
double-entry accounting 45, 46
Italian method 3
credit granting, fairness 250
credit lending decisions 406
creditors
entity theory 216
fairness 250
fraudulent financial reporting 61
as users of financial statements 50, 164, 169
criminaloids 64
criterion-related validity 86
critical discourse 3512
critical history 14, 15
critical theory 308, 318
critical-interpretative approach 126
cross-cultural research 3823

INDEX
568
databases 14, 15
Davidson, Andrew R. 382
Davis, T.R. 306
De Angelo model 457, 458
de-skilling 66
debit
double-entry accounting 45, 46
false input scams 612
Italian method 3
DeBondt, W. 430
debt see long-term debt
debt claims, corporate valuation models 424
debt covenants 53, 149
debt equity hypothesis 447, 448
debt losses, revenue principle 219
debt restructuring 116
decimal system 2
decision models see decision-usefulness/
decision-model paradigm
decision theory 322
decision-making
accounting as imagery 103
accounting information 185, 3416
accounting methods 36970
accounting as rationale 103, 104
cognitive styles 377
credit and bank lending 406
departures from normative behavior 375
effects of accounting procedures 369
facilitation of 398
functional fixation 137, 345, 3701, 426
historical costs 3378
income concept 4789
as informational process 41
investors 137
operational accounting 109
predictive ability 398
thinking and feeling 302
users of financial reporting 195
see also human information processing
approach
decision-process paradigm 464
decision-theory model 443
decision-usefulness approach 330
decision-usefulness/decision-maker/aggregatemarket-behavior paradigm 337, 3435,
353
exemplars 3434
methods 3445
theories 344
decision-usefulness/decision-maker/individualuser paradigm 337, 3456, 353

exemplars 345
models 346
theories 3456
337, 3413, 353
exemplars 3412
methods 343
theories 343
declarative knowledge 378
declining rate on cost depreciation method 223
deconstruction 350
deductive approach
accounting theory 923, 98, 108, 11112,
113, 116
as procedure of discovery 923
deductive-nomological explanation model 89
deductively complete theories 80
deep structure, punctuated equilibrium
paradigm 3314
default risk, bonds 402
deferral, defined 179
deferral method 115, 1401
deferrals, accounting-period postulate 214
deferred charges 176, 177
deferred credits 176, 177
deferred items, Italian method 3
deferred taxes 199, 518, 528
definitions 85
deflation 512, 526
DeFond, Mark L. 455, 460
DeGeorge, Francois 461
delimitation, as function of theory 81
demand-revelation model 443, 444
Democrites 310
demographic relativism 17
Demski, Joel S. 144, 145, 346, 347, 442, 443
denotation, of a concept 85
deontological ethics 70
depletion 222
Depository Institutions Act (1988) 25
depreciation 2223, 526
accelerated 2267, 453
backlog 4902
current exit price 499
straight-line 5, 223, 453
depreciation accounting 213, 227
defined 2223
depreciation methods, development of doubleentry model 5
deprival-value accounting 341
derivatives 2930

569
Gaas user primacy 2634
human resource accounting 268, 2815
Jenkins Committee findings 2645
Levs equitable/efficient policy 2623
management commitment 138
purposes of 2668
recognition 266
Securities and Exchange Commission (SEC)
63, 135, 142, 225, 261, 427
social accounting 268, 2747
value added reporting 260, 26872
see also full disclosure principle
discourse 3512
discovery, context of 923
discretionary accrual models 45760
discretionary accruals 455, 460
discriminant analysis 373
discriminant bond-rating models 4023
discriminant validity 86
dispersion measurement values 232, 233, 234
dispersive theories 309, 31011
displacement measurement values 233
disposition concepts 85
distress prediction 4001, 406
distributable income 495
divestitures 404, 405
dividend discount model 424
dividend irrelevancy theorem 322
dividend per share, proprietary theory 215
dividends
entity theory 216
firms ability to pay 479
relation to income 478
as smoothing instrument 453
Dodd, S.C. 82
dogmatism 377
domination 678
political economy of accounting (PEA) 321
radical structuralist view 31819
Dopuch, N. 199, 200, 330, 3434, 4278
double-declining balance depreciation method
223
double-entry accounting, rationale behind 456
double-entry bookkeeping
capitalism 1213, 99
causal 456
development of 46
evolution of 26
Luca Paciolis contribution 34
rationalization of 111
INDEX
Derrida, J. 350
Descartes, Ren 310
description, as function of theory 81
descriptive accounting 109, 116, 337
designation process, concepts 85
creative accounting 5960
hypothesis 545
see also fraud; income smoothing
designed smoothing 56
determinateness, organicism 311
determinism
developing countries
evolutionary approach to standard-setting 150
international accounting standards 150,
1512
situationist approach to standard-setting 150,
1523
transfer of technology approach to standardsetting 1501
development-stage companies 116
Devine, C.T. 163, 250, 367
Dewey, John 308, 310
DHS model 431
Diamond, D.W. 138
Dichev, Ilia A. 420
dichotomous probability function model 402
Dietrich, J.R. 406
difference principle, Rawls theory of justice
2567
differential disclosure 51, 134, 148, 261
differentiation, processing sensory input 377
Dilthey, Wilhelm 308
direct costing method 222, 223
direct financial leases 1478
disclosures
adequacy of 2256, 369
APB opinions 225
Bedfords proposals 2612
calls for expanded 2618
differential 51, 134, 148, 261
employee reporting 268, 2704
expanded accounting 2668
fairness in 2256, 227, 26185
FASB 225, 266, 548, 54950

INDEX
570
Downs, A. 449
dreams 92
dual labor economics 322
dubitanda 308
Dukes, R.E. 408
Dun & Bradstreet, Inc. 406
Dunker, K. 371
Durkheim, Emile 63
Dyckman, T.R. 368
earned surplus
earning power, financial statements 169, 170, 171
earnings
components of earnings 179
defined 1789
difference from comprehensive income 189,
190
future predictions 399400
information content of 4212
measurement of 1746
models of relation with returns 422
time-series properties of 399
see also income smoothing
earnings components 179, 399400
earnings cycle 1701
earnings fluctuations see income smoothing
earnings forecasts 1712, 212, 2779, 4068
earnings management 567, 45663
as accrual management 4567
accruals models 45760
asymmetric information 461
corporate strategies 461
firm valuation 4623
implicit compensation contracts 4612
informational perspective 57
issues in 4603
mispricing of discretionary accruals 460
negative earnings surprises 463
quarterly earnings reports 461
regulations 462
reporting and contractual sets 461
short-term price performance 4601
thresholds 461
true income perspective 57
earnings management hypotheses 339
earnings management research 339
earnings per share 6
alternative accounting 130
big bath accounting 57
FASB 48, 52
as object of smoothing 452
earnings persistence 423
earnings targets, big bath accounting 57

earnings variability, risk premiums on bonds 402
East India Company 5
Eckel, N. 56
econometric models 406
economic consequences
accounting theory 11516
managerial choice of accounting methods 62
economic entities 191
economic events
bond premiums and bond ratings 4013
credit and bank lending decisions 406
342, 343
event-study methodology 41518
forecasting financial statement information
4068
predictive approach 88, 349, 398408
predictive-ability criterion 342
time-series analysis 399400
see also events approach
economic growth 13, 151
economic income 22930, 4823, 4856, 487
economic rationality 99
economic reality 1001, 11516
selective financial misrepresentation 55
standard-setting 194
Economic Recovery Act (1981) 48
economic relativism 17
economic theory of regulation 1356
economic welfare 11516
economic-event paradigm 464
Edey, H.C. 124
EDGAR 135
education, transmission of culture 351
educational institutions, detection of fraud 623
Edwards, E.O.
combination-of-values approach 504
deductive theory 112
normative theory 110
reproductions costs 488
two kinds of gains 494
Edwards, W. 430
EEC see European Economic Community (EEC)
efficiency
accountings concern with 253
income as measure of 480
efficient accounting 2623

571
equilibrium theory of option pricing 344, 413
equipment, measurement of 547
equitable accounting 2623
equity
defined 188, 189
entity theory 21516
ethical approach to theory 68, 113
equity accounting 110
equity evaluation models 312
Equity Funding collapse (1973) 20
equity value 175, 4201
errors, accounting changes 54
essential assets 5001
estimates, broad principles of accounting (ARS
3) 239
ethical investors 277
ethnic science 381
ethnocentric studies 382
ethnography 3067
ethos 70
Eureka 92
European Economic Community (EEC)
qualifications of auditors 1819
true and fair doctrine 2523
Euske, K.J. 235
evaluation
financial statements 169, 170, 171
theories 823
see also performance evaluation
evaluation process, measurement scales 445
event, defined 365
event prediction studies 312
event-study methodology 345, 41518
events approach 3637
evaluation of 367
information systems 3667
nature of 3645
normative 3656
see also economic events
Evered, R. 305, 306
evolution, punctuated equilibrium paradigm 3314
Ewert, D.C. 406
ex-ante income 485, 487
ex-post income 485, 487
exceptions, utilitarian ethics 69
exchange prices
exchangeability 213, 237
of assets 176, 177
executive compensation agreements 149
existential statements 87, 88, 349
exit-value accounting 128
INDEX
efficient contracting perspective 149

efficient market hypothesis 344, 41112, 426,
4278, 431, 432
efficient market model 344, 40911
ego involvement 371
Egyptian civilization 2, 3
Eilifsen, A. 463
Eldredge, Niles 331
electric utility bonds 402
Electronics Data Gathering and Retrieval
(EDGAR) 135
Elgers, P.T. 455
Elliot, R.K. 141
embezzlement 61
Emby, C. 379
empathy 87, 349
empirical interpretability, evaluation of theories
83
empirical regularities see mechanism;
organicism
empirical tests 86, 8991
empirical theory, measurement 44
empirical uniformities 310
employee benefit plan audits, GAO report
(1992) 28
employment contracts 136, 446
encoding 109
end-result variables 283
Engels, F. 351
enterprise earning power, financial statements
169, 170, 171
enterprise performance, assessment of 550
enterprises see corporations; firms; small
enterprises
Enthoven, Adolf 1501
entities, basic postulates of accounting 237
entity postulate 194, 212
entity sets 366
entity theory 7, 21516
entity-relationship models 3667
environment, middle range accounting theories
84, 108
environmental complexity 377, 378
environmental factors 17, 1523
environmental risk 2767
epistemic correlations 80
epistemological differences, research
methodologies 306
epistemological objectivity 126, 127
epistemological subjectivity 126, 127
epistemology, nature of social science 304, 315
Epstein, Marc 2767
equilibrium periods, punctuated equilibrium
paradigm 3314

INDEX
572
expanded disclosures see disclosures
expectation, unscientific prediction 92
expectations
theory verification 1078, 112
see also rational expectations
expected exit value 496
expected utility hypothesis 347, 443
expected value 232
expected-return model 409
expenditure, as basis for taxation 478
expenses
broad principles of accounting (ARS 3) 238,
240, 241
defined 178, 188, 189
earnings statements 174, 1756, 178, 179
entity theory 216
general price-level accounting 526, 527
experiences
learning from 378
negative role of 371
experimentation 300, 306, 346
accounting as 1045
expired costs 218, 221
explanation
criteria for judging 91
as function of theory 80, 81, 108
middle-range theories 84
nature of 8991
explanatory relevance 89
explicit market failure 137
explicit transactions 480
exploitation, political economy of accounting
(PEA) 321
extant accounting practices 337
extended functional fixation hypotheses 426
extended user primacy principle 2634
extension, of a concept 85
external accounting
capital markets 4089
external consistency, evaluation of theories 83
external parties, accounting choice 149, 150
external reality 1267, 223
external rewards 41
external transactions 480
externalities 254
extraordinary gains and losses 479, 501
extrospection, structure of a theory 82
FAF see Financial Accounting Foundation (FAF)
fair-game model 409

fairness 24985
accountability 253, 254
accounting information 68, 11314, 2503,
2618
accounting objectives 114, 251
auditing standards 114, 251
concern with distribution questions 2535
in disclosure 2256, 227, 26185
in distribution 25361
ethical approach to theory 68, 11314, 115,
116, 250, 254
expanded disclosures 2618
explicit concern with 2534
full disclosure 226
Gerwiths theory of justice 2601, 276
human resource accounting 268, 2815
as a moral concept of justice 253, 25561
Nozicks theory of justice 2589, 276
Rawls theory of justice 257, 276
false consciousness 68, 98, 318
falsification
evaluation of theories 83, 112, 353
hypotheses 87, 349
Fama, E.F. 409, 410, 411, 445, 447
FASAC see Financial Accounting Standards
Advisory Council (FASAC)
FASB see Financial Accounting Standards
Board (FASB)
Federal Bureau of Investigation 601
Federal Deposit Insurance Corporation 406
federal regulation, Moss Subcommittee 20
Federal Trade Commission (FTC)
full-cost accounting 200
interest costs 7
feeling, reaching of decisions 302
Fekrat, Ali 271
Feldman, Martha 102
Felix, W.L. 378
Feltham, Gerald A.
equity evaluation models 312
FelthamOhlsons model 312, 41921
information-evaluation-decision-maker
model 443
information/economics paradigm 346, 347, 442

573
market impact of accounting regulations 426
materiality principle 227, 228
membership 1301, 139
monetary/nonmonetary distinction 518, 520
objectives of financial reporting 147, 164,
173, 1825, 480, 5034
participant influences on 1312
politicization of accounting 6, 10
price-level indices 522, 528
and SEC 132, 133, 139, 143
structure of 130
successful-efforts accounting 200
Trueblood Committee 20
see also conceptual framework
financial activities statement, financial
statements 171
Financial Analysts Federation 130, 167
financial analysts/advisers
financial statements 50, 51, 135, 164
financial capital 180, 483, 490
financial distress 4001
see also bank financial distress
financial engineering 6
Financial Executive Institute 25, 130
financial forecasts 1712, 212, 2779, 4068
financial ratios 406
financial reporting
AICPA policy statement (1993) 289
by non-business organizations 1845
cash flows 182, 183, 427
choice among alternatives 1445
comparability 166, 169, 170, 171, 172, 185,
187, 191, 196, 225, 2289
completeness 166, 191, 231
complexity 1945
consistency 172, 185, 187, 196, 225, 228, 237
constituencies in 134
The Corporate Report 164, 165, 167, 1902, 197
economic consequences 116
events approach 365
fairness 136, 2503, 2618
flexibility 196, 2289
fraudulent 60, 613, 68
full disclosure 196, 2256
information spectrum 41, 42
as instrument of social change 126
management 134, 136, 138, 183
market-based research 4279
materiality 55, 172, 185, 1878, 196, 2278,
369
INDEX
femininity 381, 382

Fertig, Paul E. 114
field dependence 377
field observations 307
Field, Robert R. 128
filtering 105, 106
Financial Accounting Fairness Act (1988) 143
Financial Accounting Foundation (FAF)
review of FASB and FASAC (1989) 25
Special Review Committee of FASB (1985) 23
Structure Committee efficiency review of
FASB (1982) 23
Structure Committee review of FASB and
FASAC (1976) 21
Structure Committee review of FASB and
FASAC (1979) 22
Wheat Committee 19, 130
Financial Accounting Standards Advisory
Council (FASAC)
FAF review of (1989) 25
FAF Structure Committee review of (1976) 21
Wheat Committee recommendation 19
Financial Accounting Standards Board (FASB)
accounting standards 1302, 13841, 1456,
147, 1489
changing prices 54752
constituents input 139
definition of public company 49
definition of small business 49
disclosures 225, 266, 548, 54950
discount rates 486
due-process procedure 131, 139
earnings per share 48, 52
employee welfare benefits accounting 58
FAF review of (1989) 25
FAF Special Review Committee (1985) 23
FAF Structure Committee efficiency review
(1982) 23
financial accounting overload 1489
financial statements 501, 55, 164, 263
GAAPs 46, 47, 53
GAO report on derivatives (1994) 30
income statements 526
interest costs 67
Kirk Panel 30

INDEX
574
need for regulation 136
neutrality 166, 172, 187, 196, 231, 233, 234,
2501, 253
objectives of 1467, 164, 173, 1825, 1945,
278, 480, 5034
presuppositions of 1267
price changes 54752
relevance 166, 169, 172, 185, 186, 190, 191,
262, 398
reliability 55, 172, 185, 1867, 190, 191,
2235, 2323
representational faithfulness 125, 126, 187,
231, 232, 233
Stamp Report (Corporate Reporting) 164,
1926, 197, 273
timeliness 166, 186, 191, 21921, 22930, 265
to employees 2704
understandability 166, 172, 191
users 1823, 1946, 4289
verifiability 166, 187, 232, 233
see also conceptual framework; disclosures;
financial statements; Securities and
Exchange Commission (SEC)
financial statements
AAA framework 129
AICPA Rule 203 131
annual publishing of 6
APB Statement No.4 46, 50, 164, 1657, 197
ASR No. 4 8
assessment criteria 196
audit quality 21, 256, 64, 65
auditing 41
basic elements 1889
basic postulate of accounting 237
behavioral effects 369
Big 7 recommendations to AICPA 24
choice among alternatives 1445
Cohen Commission 22
comparability 166, 169, 170, 171, 172, 185,
187, 191, 196, 225, 2289
conflicts of interests 1645
The Corporate Report 191
creditors as users of 50, 164, 169
disclosure adequacy 2256, 369
earning power 169, 170, 171
EC Fourth Directive 2523
events approach 365
fairness 136, 2503, 2618
FASB 501, 55, 164, 263

forecasting information in 4068
foreign subsidiaries 16
fraudulent financial reporting 60, 613, 68
general objectives of 166
generally accepted accounting principles
(GAAP) 107
government requirement 143
historical-cost accounting 51213, 5224
Italian method 3
kinds of 1345
measuring-unit errors 536
objectives of 1920, 923, 111, 1634, 16572,
21011, 263, 278, 479, 480, 5034
OCBOA 489
particular objectives of 166
qualitative characteristics of 166, 1723
reliability and transparency 55, 172, 185,
1867, 190, 191, 2235, 2323
replacement costs 4956
shareholders as users 164, 169
small enterprises 503, 1467
timing errors 536
Trueblood Committee 1920, 16773, 197,
278, 479
truth 230
units of measure 535
usefulness of data 223, 225, 250, 342, 343, 369
users of 501, 1335, 1467, 1645, 169, 191
uses of 3412
see also conceptual framework; disclosures;
financial reporting; period financial
statements
Findlay, Chapman M. 480
finished goods costs 222
Finland, income smoothing 454
fire insurance 445
firms
ability to pay dividends 479
accounting policies 53
concept of 265
distress prediction 4001
dividend and retention policies 478
economic resources of 176
informational interdependencies 41, 43
informational processes 41

575
Foster, G. 430
fractal market hypothesis (FMH) 4312
framing hypothesis 371
France
licensing requirements 18
franchising industries 130
Francis, Jere R. 350
fraud 605, 130, 461
audit failure 23, 24, 60, 645
bank failures (1989) 26
corporate fraud 601
defined 60
detection of 623
fraudulent financial reporting 60, 613, 68
management 604, 65
market failures 136
thrift failures (1989) 267
white-collar crime 60, 634
free cash-flow model 424
free riders 137, 344, 428
freedom, Gerwiths theory of justice 25960, 261
Fremgen, James M. 111, 213
Friedman, Milton 448
Frishkoff, P. 227
FTC see Federal Trade Commission (FTC)
full disclosure principle 196, 2256
full-cost accounting 200
functional explanation model 901
functional fixation hypotheses 137, 345, 3701,
426
functional imperatives 316
functional prerequisites 316
functionalism 381
fund, defined 21617
fund theory 21617
fundamental factor model 413
Fundenberg, K. 454
funds statements 6, 171
future expenses 54
Gaa, James C. 264
GAAP see generally accepted accounting
principles (GAAP)
Gadamer, Hans-Georg 308
gains
239, 240, 241
defined 1789, 188, 189
earnings statements 1789
extraordinary 479, 501
fraudulent reporting practices 62
INDEX
as legal fictions 445, 447

as legal person 320
links to its environment 41, 43
as a nexus of contracts 4445, 447
obligations of 177
see also private companies; public companies
first in, first out (FIFO) 115, 175, 216
Fisher formula 521
Fisher index 521
Fisher, Irving 482, 483
Fisher, L. 402
Fitch Investors Service 402
fittingness, notion of 701
five-year summary data 548
fixed assets
current entry price 488
fund theory 217
going-concern postulates 213
Sandilands Report 501
SEC replacement-cost proposal 502
fixed claims 517
fixed costs 222
fixed percentage on declining base depreciation
method 223
fixed-weighted formula 521
fixed-weighted index 521
fixity 518
Flamholtz, E. 282
Flavin, M. 423
Flegm, E.H. 251
flexibility
financial reporting 196, 2289
utilitarianism 69
flexibility principle 2289
flows, dimensions of 45
flows to equity model 424
focusing 105, 106
Foley, B.I. 274
forecasting see financial forecasts
Foreign Corrupt Practices Act 146
foreign currency, as monetary or nonmonetary
items 51820
foreign currency fluctuations 116
foreign subsidiaries accounting 14, 16
foreign-currency items 528
formal concepts 85
formal language 80, 370
formal measurement theory 322
formality levels, structure of a theory 82
formational characteristics 197, 198
formism 30810, 31112, 313

INDEX
576
general price-level 51316, 527
see also holding gains/losses
Galbraith, J.R. 106
Galileo 310
Gambling, Trevor 102
gaming 105, 106
GAO
congressional hearing (1986) 24
letter on banking affairs (1988) 25
letter on internal controls (1991) 27
report on bank audit committees (1991) 28
report on bank failures (1989) 26
report on bank failures (1991) 27
report on derivatives (1994) 2930
report on employee benefit plan audits (1992)
28
report on financial irregularities 27
report on savings and loans (S&Ls) sector 256
report on thrift failures (1989) 267
reporting of public companies (1989) 26
gas company accounting 142, 200, 426
Geertz, Clifford 381
Gellein, Oscar S. 129
General Electric Co. 58
general price level 535
general price-level accounting 477, 51129,
534, 535, 5424, 552
adjusting specific items 51319
evaluation of 5248
historical-cost financial statements 51213,
5224, 5434
illustration of index 5224
inflation 511, 526, 527
monetarynonmonetary distinction 51720
treatment of monetary items 51316, 528
treatment of nonmonetary items/
stockholders equity 51617, 527, 528
general price-level gains 51316, 527
general price-level indices 512, 5202, 528
simplified illustration 5224
general price-level losses 51316, 527
accounting 534, 535, 5456, 552
general price-level net-realizable-value income
545
general price-level present-value accounting
534, 535, 552
general price-level replacement-cost accounting
534, 535, 540, 5445, 552
general price-level-adjusted current-value
accounting 478
general price-level-adjusted historical-cost

income 5434
general price-level-adjusted replacement-cost
income 544
general purchasing power 512, 5212
alternative accounting models 534, 535, 536,
5426
assessment of erosion of 552
general purchasing-power, money maintenance
483, 484, 529
general purchasing-power, productive-capacity
maintenance 483, 484
general-obligation municipal bonds 402
generalized least-squares approach 414
generally accepted accounting principles
(GAAP) 4653
accounting standards overload 1467, 1489
AICPA 46, 47, 513
APB Statements 46, 47, 50, 107
changes in 107
changing perceptions 489
consistency principle 225
conventional accounting 529
differential measurement alternatives 1489
fairness of presentation 114, 251
FASB 46, 47, 53
little GAAP vs. big GAAP 4953
meaning of 468
modified opinion on omissions 147
new basis accounting method (BAM) 149
OCBOA 489
small enterprises 48, 4953, 1489
special GAAP 489
generation, as function of theory 81
genetic explanation model 91
Gersick, Connie J.G. 332, 333
Gerwith, A. 257, 25961, 276
Gibbins, M. 368, 379, 380
Gigler, F. 462
Gilman, S. 113, 337
Gilmore, T.C. 406
GNP (Gross National Product) Implicit Price
Deflator (IPI) 522, 528
Goethe, Johann Wolfgang 2
going private transactions 404, 405
going-concern postulate 21213, 214, 218
Gonedes, N.J. 330, 3434, 408, 4278
Goodenough, Ward H. 381
goods accounts, development of double-entry
model 45
goodwill

577
Habermas, J. 308, 318

Hagstrom, W.O. 335
Haines, Jr., G.J. 102
Haken, H. 332, 333
The Handbook of Accounting 38, 98
hardness, objectivity 2334
harmonization see accounting harmonization
Hartung, F.E. 64
Harvard, John 81
Harvey, O.J. 377
Hatfield, Henry Rand 113, 124, 337, 348
Hawawini, G. 415
Hawes, L.C. 99
Hawkins, D. 280
Hayes, S.L., III, 404
health care benefits 58
Healy model 4578
Healy, Paul 57, 67, 462
Hegel, G.W.F. 311, 330, 351
Heidegger, Martin 70, 308
Heilbroner, R.L. 99
Hekimian, J.S. 283
Hempel, Carl 87, 89, 91, 92, 349
Hendriksen, E.S. 1089, 218, 517, 521

Hermanson, R.H. 284
hermeneutics 317
heuristic decision-makers 377
heuristic power, evaluation of theories 83
heuristics, probabilistic judgment model 375
Heyworth, S.R. 449, 450
Hicks, Ernest L. 128
Hicks, J.R. 482, 483
hierarchical models 366
hierarchical theories 80
Hieshleifer, D. 431
historic event, contextualism 31011, 313
historical costs
accountability 3378
accounting income 480, 4812
anthropological/inductive paradigm 3378
assets-valuation base 192, 194
as attribute of assets/liabilities 190, 194, 533,
5345, 536
Corporate Report 192
decision-making 3378
defined 534
general price-level accounting 51213,
5224, 5434
historical principles, Nozicks theory of justice
258
historical rate of discount 486
alternative accounting models 534, 535,
5379, 552
command of goods (COG) 539
financial statements 51213, 5224
general price level 512, 539
general purchasing 512, 539
human assets 283
income measurement 526
see also general price-level accounting
historical-cost income 539
historical-cost principle, conventional
accounting 529
historicist explanation model 91
historiography 14, 15
history 14, 15
Hobbes, Thomas 310
Hofstede, Geert 381
holding gains/losses 48992, 4945
business income 5045
INDEX

goodwill problem 194
Gordon, Gerald 301
Gordon, M.J. 338, 44950
Gort, Michael 404
Gosman, M.L. 406
Gould, Stephen 331, 332, 333
Gouldner, A. 351, 352
government
economic management 321
financial reports requirement 143
formulation of laws 276
government agencies
fund theory 216, 217
GAAPs 48
as users of financial statements 164
Grady, Paul 109, 128
grammatical rules 99, 100
Gramsci, A. 318
grand theory, punctuated equilibrium paradigm
331, 332, 333
Gray, R. 2756
Greek civilization 2
Green, T.H. 311
Griffiths, I. 59
group value determinants 2823
groups, punctuated equilibrium paradigm 331,
332, 333
Groves, T. 444
guesses, unscientific prediction 92

INDEX
578
accounting 545
accounting 544
holdings, Nozicks theory of justice 2579, 276
holon 311, 314
honesty 41
Horngren, Charles T. 10, 132, 1401, 199
Hospers, J. 231
Hoxley, J.M.B. 6
Hribar, Paul 457
Hudson, Liam 301
human action science 308
human asset measurement 2835
adjusted discounted-future-wages method
284
compensation model 284
nonmonetary measures 285
opportunity costs 283
survey of organizations model 285
human assets 262, 265, 2812
human information processing approach 88,
349, 364, 37283
cognitive relativism 345, 3789
cognitive style approach 346, 3768
components of 3723
cultural relativism 17, 345, 37983
evaluation 383
input components 3723
lens model 346, 3734, 375
output components 373
predecisional behavioral model 346, 3756
probabilistic judgment model 346, 3745
process components 373
human nature, nature of social science 304, 315
human resource accounting 212, 226, 268,
2815
defined 281
objectives of 281
usefulness of 2812
human resource value theory 2823
humanists see radical humanist view
Hume, David 310
hunches 81
Hunt, Shelby 80, 82, 88
Hurley, Edward N. 7
Hussein, M.E. 136
Husserl, Edmund 308

Huysman, J.H.B. 377
hypotheses
confirmation 83, 878, 349
descriptive function of theory 81
falsification 87, 349
formulation of 867
generative function of theory 81
handling of 8692
knowledge acquisition 300
and law 7980, 88, 349
and propositions 80, 867
purely confirmable 878, 349
purely refutable 88, 349
refutable 878, 349
and theory 7980
hypothetic-deductive explanation model 89, 317
Ibbotson, R.G. 414
IBM 58
ideal-income approach 279, 331, 340, 464
idealism, structure of a theory 81
ideography 3048, 315
defined 304
radical humanist view 318
ideological cooperation 67
ideological desensitization 67
ideological domination 678
ideological proletarianization 667
Ideologiekritik 68
ideology
accounting as 989
Ijiri, Yuji 129, 165
accounting as a language 99
accounting theory 109
anthropological/inductive paradigm 337, 339,
442
causal double-entry 456
financial forecasts 278, 279
functional fixation 371
multidimensional accounting 366
objectivity and hardness 234
objectivity principle 224
reliability 224, 233
illegal acts 61, 105, 106
implementation-cum-observation, as
informational process 41
implicit market failure 1378
implicit transactions 480
impossibility theorem 144, 145

579
research findings 4536
sectorial classifications 454
smoothing object 4512
smoothing variables 453
stockholders wealth 4556
types of 56
income smoothing research 339
income statement view, measurement of
earnings 174, 1756
income statements
conventional reporting 268, 269
entity theory 216
events approach 365
retained earnings 268, 269
value added statement 269
value approach 365
income tax
APB 11 on allocation 9
entity theory 216
laws 214
incomplete revelation hypothesis (IRH) 4323
incremental borrowing rate 486
independence
see also auditor independence
index formulas 5201
index numbers 512
individual value, determinants of 282
individual-events explanation model 91
individualism 31920, 381
individualistic constitutional calculus 1456
individuals, punctuated equilibrium paradigm
331, 332, 333
inductive approach
accounting theory 93, 98, 108, 11213, 116
as procedure of discovery 93
see also anthropological/inductive paradigm
industrial bonds 402
industrial corporations, dominance of 6
industrial cost accounting 5
industrial revolution 5
industry classification, contextualism 313
Industry Model 459
inequalities
Rawls theory of justice 255, 2567
inflation 115, 512
current-value accounting 511
general price-level accounting 511, 526, 527
inflation accounting 6, 878, 116, 226, 349
INDEX
Inca civilization 3
incentives, Rawls theory of justice 2567
income
as basis for taxation 478
comprehensive income 188, 189, 190
corporate concept of 215
defined 482
difference from earnings 189, 190
distributable income 495
dividend and retention policies 478
economic income 22930, 4823, 4856, 487
entity theory 216
as increase in wealth 482
as interest 482
as investment and decision-making guide 4789
as measure of efficiency 480
money income 482, 5045
nature of economic concept of 4823
periodic income 485, 487
as a predictive device 47980
psychic income 482
real income 482
recognition of 21921, 22930
sustainable income 495
total pure-profit income 485
traditional accounting concept of 4802
true-income/deductive paradigm 337, 33941
see also accounting income; capital
maintenance; ideal-income approach;
net income
income concept 477, 47880
income determination
income determination models 53353
comparison/evaluation 5357
differences 5345
illustration of 53746
income distortions, consistency principle 225
income problems, standard-setting 193
income smoothing 105, 106
anthropological/inductive paradigm 338, 339
country classifications 454
defined 56, 450, 479
dimensions of 4523, 47980
FASB criticism of 173
job security 4545
management 53, 56, 68, 338, 44956, 479
motivations of 4501, 479
nature of 44950
organizational characterizations 453
real vs. artificial 56, 4523

INDEX
580
informal concepts 85
information
capitalist domination of 67
definition of accounting 38, 98
management domination of 678, 136, 137
manipulation of 1056
see also accounting information; quantitative
information
information analysis 135
information content of earnings 345, 4212
information content studies 4256
information costs 447
information dissemination 41, 135, 430
management selectivity 62, 67, 68
information evaluation 347, 442
information inductance 345, 372
information intermediaries, financial reporting
134, 135
information overload 226, 262, 367, 378
information processing see human information
processing approach
information production 135
information quality 389
information symmetry 132, 136, 138, 149,
2623, 461
information system, accounting as 101
information system efficiency 410
information systems, events approach 3667
information-evaluation-decision-maker model
4434
information/economics paradigm 322, 330, 337,
339, 3468, 353, 4424, 465
demand-revelation model 443, 444
exemplars 3467, 432
information-evaluation-decision-maker
model 4434
methods 348
syndicate-theory model 443
team-theory model 348, 443, 444
theories 348
informational characteristics 197, 198
informational interdependencies 41, 43
informational processes 41
innovation, objective of financial reporting 194
insider abuse
bank failures (1989) 26
instability, research methodologies 305
Institute of Chartered Accountants in England
and Wales 164, 190
Institute of Internal Auditors 25
institutional corruption 41
institutional history 14, 15

institutional language 370
institutions
see also educational institutions; just institutions
insurance regulations 462
intangibles
amortization 213, 222
valuation of 500
integration, processing sensory input 377
integrative complexity 377
integrative function 81
integrative theories 309, 310, 311
intellectual property 265
intellectuals 318, 351, 352
intelligentsia 351
intension, of a concept 85
intension process, concepts 85
intentional smoothing 56
interactionism 316
interest
entity theory 216
income as 482
interest costs 67
interest rate risk, bonds 402
interest rates
interest-group theories 1356
interim reports 214
internal consistency, evaluation of theories 82
internal transactions 480
international accounting 1419
definitions of 1417
harmonization of 1719
licensing requirements 1819
International Accounting Standards Committee
(IASC) 1512
international transactions theory 16
internationalization 18
interpretability
accounting models 5367, 552
of concepts 85
accounting 546
accounting 545

581
user primacy principle 2634
as users of financial statements 169
see also users
Italian method 34
Jaedicke, R.K. 224, 233, 371
Jagdish, Sheth 81
Jain, Tribhowan N. 100, 36970
James, William 308, 310
Japan, income smoothing 454
Jenkins, Edmond L. 264
Jennings, Alvin R. 9
Jensen, M.C. 350, 412, 445, 446, 447, 448
job security 4545
Johansson, S.E. 463
Johnson administration 115
Johnson, O. 365
Johnson, S.B. 145
Jones, J.G. 283
Jones model 458
Journal of Accountancy 127
journals
Italian method 3
Joyce, E.J. 376
judgments, accuracy of 373, 374
Jung, C.G. 3012
just institutions, Rawls theory of justice 255, 257
justice
ethical approach to theory 68, 113, 250
fairness as a moral concept of 253, 25561
Gerwiths theory 25961, 276
Nozicks theory 2579, 276
Rawls theory 2557, 276
utilitarianism 70
Kahneman, D. 375, 430
Kalman filter model 414
Kamin, J.Y. 451, 453
Kang, Sok-Hyon 45960
Kaplan, Abraham 91
Kaplan, Robert S. 139, 140, 142, 406
Karpik, P.G. 272
kathokonda 70
Kekule, Friedrich 92
Kelly, G.A. 377
Kennedy administration 115
Kennelly, J.W. 342
Ketz, J.E. 136
Keynes, John Maynard 448
Kilman, R.H. 302, 303
Kinunem, Juha 454
Kirk Panel 30
Knight, K.E. 371
INDEX

theory evaluation 83
interpretive view 31516, 317
interval scale 44, 45
intervening variables 282
interviews 346
intolerance 377, 382
intrinsic value 409
introspection, structure of a theory 82
intuition, receiving of information 302
intuition-feeling (Ifs) personality type 302, 304
intuitionism 70
inventories
holding gains and losses 490
measurement of 547
valuation at cost 213
inventory accounts, development of doubleentry model 4
inventory valuation
invested capital, broad principles of accounting
(ARS 3) 240
investment, dividend policies 478
Investment Advisers Act (1940) 132
investment companies, GAAPs 48
Investment Company Act (1940) 132
investment tax credit
and APB 9, 115, 130, 1401
Congressional actions 115, 1401, 147
and SEC 1401
investor confidence 197
investors
benefit theory 213
deception of 62
decision-making 137
equitable accounting 2623
fixation on reported earnings 460
functional fixation 137, 345, 3701, 426
impact of accounting changes 426, 427, 428,
429
income concept 4789
knowledge of human resources 281
naive 137, 426
primacy of 227
protection of 6, 27, 63, 136
SEC role 63, 142
social information 277

INDEX
582
knowledge
cognitive relativism 3789
declarative 378
epistemological objectivity 126
procedural 378
progress of 3345
types of 3001, 302
see also accounting knowledge
knowledge structures 3789
Knutson, P.H. 198
Kohler, E.L. 481
Kolb, D.A. 300
Kormendi, R. 423
Koski-Grafer, S. 198
Kripke, Homer 138
Kuhn, Thomas S. 331, 332, 333
falsification 353
general theory of scientific revolutions 330,
3346, 352, 4634
Ladd, D.R. 11415
Lakatos, Imre 353
land development business 130
language
and accounting 99100, 36970
deconstruction 350
defined 99
formal vs. natural 80
grammatical rules 99, 100
symbols 99100
Laspeyres formula 520
Laspeyres index 5201
last in, first out (LIFO)
entity theory 216
inflation 115
market reaction to adoption of 426
nonarticulated view 175
law
and hypotheses 7980, 88, 349
and theory 7980
law formulas 80
law of iterated expectations 41011
laws
distinguished from virtues 41
state role in formulation 276
lawsuits 130
leadership imperative 40
learning
effects of task characteristics on 374
from experience 378
learning machines 103, 104
learning model 300
leases 6, 116, 130, 1478

ledger, Italian method 3
Lee, T.A. 251, 280
Leftwich, R.W. 138
legal coercion 678
legal relativism 17
lens model 346, 3734, 375
Lev, Baruch 2623, 284, 423
leverage buyouts (LBOs) 404, 405
Levi-Strauss, Claude 381
Levinson, Daniel J. 332, 333
Levitt, Arthur 54, 55, 197
Lewis, Craig M. 456, 463
Lewis, N.R. 2734
lexical characteristics 99100
liabilities
attributes of 180, 190, 5345
broad principles of accounting (ARS 3) 240, 241
capitalization 484, 4858
capitalized value 4858, 5345, 536
cost principle 218
defined 177, 188, 189, 199
earnings statements 174, 1756
entity theory 21516
fund theory 216
historical costs 190, 533, 5345, 536
Italian method 3
measurement of 101
net realizable value 190, 194, 5345, 536
productive-capacity maintenance 484
see also current-value accounting; general
price-level accounting
Libby, R. 376
liberty, Rawls theory of justice 2556
life insurance 58
Likert, R. 2823, 285
limitation 548
limited-term items 240
Lindahl, E. 482, 483
line-of-business information 426
linguistic relativism 17, 322, 345, 370
linguistics 36970
Linsmeier, T.J. 198

583
McCann, H. Gilman 334
McDonald, Daniel L. 100, 109, 110, 278
McElroy, Marjorie B. 413
McGinley, Les 274
machine, mechanism 310, 312
Machlup, Fritz 107
McKeown, James C. 499, 500
MacNeal, Kenneth 112, 230, 339, 340, 496
Macrae, E.W. 18
macroeconomic indicators 115
magical practices 102
Malcolm, Robert E. 452
Malinowski, Bronislaw 381
Malkiel, B. 410
Malpass, Roy S. 382
management
attitude to accounting standards 3389
benefit theory 213
causal variables 282, 283
choice of accounting methods 62, 149, 4478,
454
creative accounting 5960
disclosures 138
domination of information 678, 136, 137
earnings management 567, 4601, 462, 463
efficiency 480
employee reporting 2734
financial reporting 134, 136, 138, 183
income smoothing 53, 56, 68, 338, 44956,
479
information production/dissemination task
135
information symmetry 138, 461
job security 4545
marginal-economics-based accounting 320,
321
negative earnings surprises 463
opportunistic behavior 4478
primary goal 480
regulation of accounting 136
hypothesis 545
selective information dissemination 62, 67, 68
separation from ownership 320, 451, 453
use of accounting changes 534
see also stewardship function
management ability, financial statements
16970
INDEX
Lintner, J. 412
Lipe, R. 423
liquidation, going-concern postulate 21213
liquidity 138
dividend policies 478
fairness 250
financial statement warnings 173
non-business organizations 185
literacy 2
litigation risks 28, 65
Littleton, A.C.
accounting as a science 236
lack of precise terminology 21
public interest 11415
Liu, Jing 420
loan classification decisions 406
Locke, John 310
Loeb, M. 444
logical consistency 107, 317
logical empiricist explanation model 91
Lombards 3
long-term debt 216, 217, 424, 486, 515, 520
long-term leases 6
long-term payables 488
long-term receivables 488
Lorenson, Leonard 128
losses
banking failures 27
big bath accounting 58
239, 240, 241
defined 1789, 189
earnings statements 1789
extraordinary 479
fraudulent reporting practices 62
general price-level 51316, 527
government exposure to 27
litigation 65
see also holding gains/losses
Louis, M.R. 305, 306
lower-of-cost-or-market concept 2267
Lucretius 310
Luft, Joan L. 371
Lukacs, G. 318
Luthans, F. 306

INDEX
584
management accounting
cooperation and conflict 41
fairness 251
objectivity 251
management advisory services (MAS) 22
management estimates 489
management fraud 604, 65
management welfare-maximization (MWM) 480
Mandelbrot, B. 431
manipulation rules 109
manufactured consciousness 68
manufacturing, cost accounting 5
March, James 102
marginal-economics-based accounting 31920,
321
market efficiency
anomalous evidence 429
defined 40910
levels of 411
see also efficient market hypothesis
market exploitation 678
market failures 136, 1378, 344
market model 88, 345, 349, 41314
market paradigm 337, 3435
market price, basic postulates of accounting 237
market research 312
market value shifts 40
market-based research 40833
adequacy of methodology 42932
anomalous evidence regarding market
efficiency 429
arbitrage pricing theory (APT) 41213
beta estimation 345, 415
capital markets and external accounting 4089
capital-asset pricing model 344, 412, 413
chaos theory 4312
choice of control group 430
confounding effects 42930
differences and changes in accounting
techniques 426
4278, 431, 432
evaluation of 32
event-study methodology 345, 41518
impact of accounting regulation 4267
impact on related disciplines 42732
information content of earnings 4212
information content studies 4256

market model 88, 345, 349, 41314
models of relation between earnings and
returns 422
price-level balance sheet valuation models
345, 421
residual income valuation (RIV) 418
self-selection bias 429
timing of capital-market impact 430
market-based screening models 406
marketability risk, bonds 402
Markey, Edward J. 29
Markovitz, J. 413
Markus, M. Lynne 106
Marris, R.N. 404
Marschak, Jacob 348
Marshall, Alfred 482
martingale process 399
Marx, Karl 66, 98, 260, 308, 351
Marxism 65, 255, 31819
masculinity 381, 382
Maslow, Abraham 301
Mason, Perry 128
Massari of Genoa 3
costs of producing finished goods for sale 222
costs of selling and administration 223
depreciable operating assets 2223
non-depreciable operating assets 223
matching view, measurement of earnings 174,
1756
materialism 310
materiality
accounting practice 54
change criterion approach 228
defined 2278
2278, 369
selective financial misrepresentation thesis 55
size approach 228
Materiality in Accounting 228
materiality judgments 369
mathematical psychology 322
mathematics 322, 444
Mathews, M.R. 275
Matsumoto, Dawn A. 463
Mattessich, Richard 44, 45, 83, 112
Maunders, K.T. 274
Mautz, R.K. 40, 481
May, George O. 8, 341
May, W.W. 70
Mayer, S. 415
Mead, George Herbert 308, 310

585
middle-range theories 84, 108
Miller, Paul B. 200
misleading numbers 137
Mitroff, I.I. 301, 302, 303
modern profitability theory (MPT) 431
modified Jones model 458
monasteries 4
monetary items 512, 51316, 528
distinguished from nonmonetary items 51720
monetary-unit postulate see unit-of-measure
postulate
monetary-unit purchasing power 214, 237
money
alternative accounting models 534, 535, 536,
53741
money income concept 482, 5045
money maintenance concept 483, 484, 490, 539
Monsen, R.J. 449
Moodys Investors Service 402
Moonitz, Maurice 110, 112, 128, 339, 503
moral intuition 70
moral principles, Gerwiths theory of justice
25960
moral reasoning, process of 69
moral rules 70
moral standards 69
moral-hazard problem 445
morality, goal of 69
Morgan, G. 304, 314, 31516, 318
Moss, David 144, 146
Moss Subcommittee 20
Mossin, J. 412
motivation 321
moving average models 406
moving averages regressive process 399
moving-average process 399
Mueller, D.C. 405
Mueller, Gerhard G. 111
multidimensional accounting 366
multidimensional scaling techniques 370, 373
multinational theory 16, 17
multinationality
multiple discriminant model 402
multiple regression models 406
multiple-entry bookkeeping 45
multiplicability, evaluation of theories 83
multiplicative corroboration 308
multivariate probit analysis model 402
Murphy, Christine M. 267
Myers, John H. 128
myths 989, 1023
INDEX
Means, Gardiner C. 6
measurement 425
assets 101, 2389
by fiat 44
conceptual framework 180, 18990
direct or primary 43
dispersion values 232, 233, 234
displacement values 233
earnings 1746
FASB Statement No. 33 547
fundamental or derived 44
of human assets 2835
indirect or secondary 43
nature of 42
objectivity principle 2235
revenue 219
social performance 115, 2747
time dimension 434
of truth 2324
types of 434
types of scales 445
variance 232, 233
see also unit-of-measure postulate
measurement errors 43
measuring-unit errors 536, 552
accounting 546
accounting 545
mechanism 3089, 310, 31213, 314
Meckling, J.W.H. 445, 447
medical care benefits 58
Meehan, Eugene 91
Meeks, G. 4045
Melcher, Beatrice 129
memorandum, Italian method 3
mergers 130, 4045
Merino, Barbara D. 7
meritocracy 259
Merton, Robert K. 84, 335
metaphor 81
metascience 80
metatheory 79
Metcalf Report 1012, 21, 140
A Method of Current-Value Accounting 500
methodological simplicity, evaluation of
theories 83
methodological unity of science thesis 87, 349
methodology, nature of social science 304, 315
Michels, Robert 318
Michelson, S.E. 455

INDEX
586
Nagel, Ernest 89
naive falsification 353
naive investors 137, 426
Napolitano, G.U. 198
Naroll, R. 383
National Association of Accountants 25, 130
National Association of Credit Management 406
National Association of Securities Dealers 143
National Commission on Fraudulent Financial
Reporting 61
National Credit Office 406
nationalism 17
natural language 80
natural laws, measurement 44
natural science research model 304, 3056
natural smoothing 56
naturalism 310
Needles, Jr., Belverd 151
neoclassical school 477, 511
net assets 1889
earnings definition 174, 178
non-operating 424
undervaluation of 404
net capital 174
net cash equivalent, revenue principle 219
net income 479
APB Statement 515
defined 219
difference from earnings 189, 190
FASB Exposure Draft 515
functional fixation hypothesis 426
income smoothing 449, 452, 453
total accruals 457
net present value 192
net realizable value
5345, 536
239
The Corporate Report 192
current exit price 496, 497
defined 534
see also general price-level net-realizablevalue accounting
net wealth 340
net worth, proprietary theory 215
net-realizable-value accounting 341, 534, 535,
5378, 5401, 552
net-realizable-value net income 5401
net-realizable-value operating income 5401
network models 366

neutrality
accountants 231, 234, 2501
233, 234, 2501, 253
truth as 231, 232, 233, 234
New York Stock Exchange (NYSE), development
of accounting principles 6, 89
Newell, A. 376
Newman, G.A. 104
Newman, Maurice S. 129
Newton, Sir Isaac 92
Niebuhr, Reinhold 71
Niederhoffer, V. 412
Nixon administration 115
noise 105
noisy rational expectations models 432
nominal scale 44
nominalism
nomological validity 86
nomothesis 3048, 315, 318
defined 304
non-operating net assets, corporate valuation
models 424
non-profit organizations
fund theory 216, 217
GAAPs 48
nonaccounting information 21314
nondepreciable operating assets 223
nonessential assets 5001
nonmonetary items 512, 51617, 527, 528
distinguished from monetary items 51720
nonoperational results 479
nonproprietary information 135
normative accounting 109, 116, 339, 446, 4489
normative events approach 3656
Norris, C. 350
Nortel Networks 59
Nozick, R. 2579, 276
number of dollars (NOD) 536, 537
number of odd dollars (NOOD) 536
objective idealism 311
objectivism, structure of a theory 812
objectivity

587
human assets 284
option pricing, equilibrium theory of 344, 413
order-conflict debate 315
ordinal scale 44, 45
ordinary income 479
ordinary least-squares approach 414
organizational behavior 305, 312
organizational climate 285
organizational membership 282
organizational psychology 312
organizational role 282
organizational slack behavior 346, 451
organizational theory of the firm 322
organizations, punctuated equilibrium paradigm
331, 332, 333
Orgler, Yuie E. 406
originality, evaluation of theories 83
Osborne, M.F.M. 412
OShaughnessy, John 867
ostensive interpretation, of a concept 85
Ostman, L. 463
OSullivan, P. 141
other comprehensive bases of accounting
(OCBOA) 489
output scams 62
overhead costs 7, 222
owner distributions 188
owner investments 188
P&G 589
Paasche formula 521
Paasche index 521
Pacioli, Luca 34, 45, 111
Palepu, K. 404
Pallot, June 254
Palmrose, Zoe-Vonna 65
paradigmatic ethnography 3067
paradigms 32953, 4635
basic components of 336, 353, 464
behavior-of-the-markets 464
capital market research (CMR) 4312
competition amongst 3367, 364
concept of 3317
decision-process 464
defined 336, 464
economic-event 464
Kuhns general theory of scientific
revolutions 330, 3346, 352, 4634
as politics dependent 336
principalagent 100, 4446
punctuated equilibrium 3314
Ritzers multiple paradigms 3357
INDEX

hardness 2334
lack of 138
management accounting 251
measurement 42
possible meanings of 232
reliability 2235, 2323
see also epistemological objectivity
objectivity principle 2235, 227
objects, as distinct from concepts 845
obligations
Nozicks theory of justice 2589
utilitarianism 69
observation techniques 346
observational concepts 85
observational validity 86
OCBOA 489
off-balance-sheet financing 69, 173
Ohlson, J.A. 312, 4001, 41921
Ohlsons valuation model 312, 345, 41921
oil company accounting 142, 200, 426
Olson, Norman O. 128
omitted variables 429
ontological objectivity 126
ontological subjectivity 126
ontology, nature of social science 304, 315
operating capability, assessment of 5502
operating income
accounting 545
operating profit
operating trends, disclosure obligations 63
operational characteristics 197, 198
operational definitions 80
operational income, sociological approach to
theory 115
operational interpretation, of a concept 85
operational results 479
operationism 856
Oppenheim, P.A. 91
opportunity cost of an action 503
opportunity cost of an asset 503
opportunity costs

INDEX
588
stimulusresponse 372
user-behavior 465
see also analytical/agency paradigm;
anthropological/inductive paradigm;
decision-usefulness/decision-maker/
aggregate-market-behavior paradigm;
individual-user paradigm; decisionusefulness/decision-model paradigm;
information/economics paradigm;
trueincome/deductive paradigm
paradox of conceptualization 84
parent-foreign subsidiary accounting 14, 16
Park, Chul W. 455, 460
parochial studies 382
participant observation 3067
participation, formism 30910
participative budgeting and performance 346
Particular Humanist (PH) 302, 304
particulars, formism 30910
Pasewark, William R. 198
past annual earnings 399
past quarterly earnings 399
patents, broad principles of accounting (ARS 3)
240
Patillo, James W. 113, 250
Paton, Jr., W.A. 489
Paton, W.A.
basic foundations of accounting 210
deductive theory 112
true-income/deductive paradigm 339, 340
pattern explanation model 91
Pavlik, Ellen 270
Payne, J.N. 376
Payne, Roy 3001, 302
PEA see political economy of accounting (PEA)
pedagogy 13, 14
pension accounting 6, 9
pension costs 56, 453
Pepper, Stephen 30811
Peragallo, Edward 4
perception 377
percepts, as distinct from concepts 845
performance evaluation
entity theory 216
information/economics paradigm 443
as informational process 41
period costs
matching principle 222, 223, 481

period financial statements 4
period postulate 480
periodic earnings, financial statements 171
periodic income 485, 487
periodic profit
Italian method 4
periodicity, development of double-entry model 5
permanent capital assets 223
personification 4
pessimist, response to data 105
Peters, E. 431
Pettaway, R.H. 406
Pfeffer, Jeffery 106
phenomenology 306, 307, 317
Phillips, Derek 2567
philosophy of science 79
physical capital 180, 281, 482, 483, 490
Picur, Ronald D. 271, 454
Pierce, Charles 308, 310
planning, as informational process 41
planning function 383
plant, measurement of 547
Plato 309
platonic idealism 309
POB see Public Oversight Board (POB)
policy-capturing studies 373, 374
political costs hypothesis 447, 448
political economy of accounting (PEA) 1256,
255, 3202
defined 321
political relativism 17
political ruling-elite theory of regulation
1356
politics
and paradigms 336
polycentric studies 382
Popper, Karl 82, 112, 353
positive accounting research 312
positive approach 364, 4419
analytical/agency paradigm 339, 4446, 447
evaluation of 4489
see also information/economics paradigm
positive theory 88, 322, 349, 4468
anthropological/inductive paradigm 339
concept of 449
deconstruction 350
fairness in distribution 255
mechanism 312
positive theory research 339
positive-agency paradigm 4446
positivism

589
preferability rule 225
preferred shares 518, 528
Preinreich, G.A.D. 418
present value
5345, 536
defined 534
present-value accounting 341, 534, 535, 536, 552
Previts, Gary John 7
price changes 54752
Price Waterhouse 23
price-level accounting see general price-level
accounting
price-level adjusted accounting 341
price-level balance sheet valuation models 345,
421
price-level changes 9, 128
adjusting specific items for 51317
see also general price-level accounting
price-level indices 512, 5202, 528
simplified illustration 5224
Prigogine, Ilya 332
primacy ego involvement 371
Prince, T.R. 111
principalagent paradigm 100, 4446
Principle of Generic Consistency (PGC) 2601
Prisoners Dilemma 445
private companies
GAAPs 503
selective financial misrepresentation hypothesis
55
private sector, regulation of accounting
standards 13841
probabilistic choice models 322
probabilistic explanation model 8990
probabilistic judgment model 346, 3745
probability-revision (Bayesian-version) analysis
347, 348, 443
problem solving, theory of 376
procedural knowledge 378
process-tracing methods 3756
product costs
product development 488
production costs, matching principle 222
productive-capacity maintenance 4834, 529,
540, 541
productivity
human-resource accounting 282, 283
value added reporting 268
INDEX

positivist, response to data 105
post-earnings-announcement drift 41718
post-industrial society 65
Poulantzas, Nicos 319
power, political economy of accounting (PEA)
321
power distance 3812
pragmatism 310
Prakash, Prem 41, 43, 372
preciseness theory 262
predecisional behavioral model 346, 3756
prediction
financial statements 169, 170, 1712
as function of theory 80, 81, 108
income concept 479
middle-range theories 84
nature of 912
theory verification 1078, 112
predictive approach 364, 397433
arbitrage pricing theory (APT) 41213
beta estimation 345, 415
bond premiums and bond ratings 4013
capital markets and external accounting 4089
capital-asset pricing model 344, 412, 413
credit and bank lending decisions 406
economic events 88, 349, 398408
4278, 431, 432
forecasting financial statement information
4068
future accounting earnings 399400
information content of earnings 4212
market model 88, 345, 349, 41314
market reaction 40833
models of relation between earnings and
returns 422
nature of 398
price-level balance sheet valuation models
345, 421
time-series analysis 399400, 423
predictive validity 86
predictive-ability criterion 342

INDEX
590
professional associations, development of
accounting principles 6, 910
professional judgment in public accounting
(PJPA) 379, 380
professional standards 234
professionalism 351, 352
profit
accounting profit equation 111
239, 240
capitalist goal of 12, 99
manipulation of 499
as object of smoothing 4512
true-income/deductive approach 340
see also cost-profit calculations; current
operating profit; operating profit;
periodic profit
profit-and-loss account, development of doubleentry model 5, 13, 99
profit-and-loss statements, financial statements
171
profit-oriented position 111
profitability, mergers 405
prognosis, unscientific prediction 92
proletarianization 657
proletariat, as a universal class 351
promotability 282
property
measurement of 547
propositions
and hypotheses 80, 867
truthfulness of 2301
see also accounting propositions
proprietary concept 194
proprietary information 135
proprietary theory 7, 215, 216, 340
prospect theory 371
prospective measures 434
psychic income 482
psychological functioning 383
psychology 304, 371, 372
cognitive style 3767
public companies
corporate fraud 601
definition 49
GAAPs 501
GAO Report (1989) 26
Metcalf Report 1012, 21, 140
hypothesis 55
public language 370
Public Oversight Board (POB)

Kirk Panel 30
report on litigation risks (1993) 28
report on scope of services (1979) 22
public sector, regulation of accounting standards
1414
Public Unity Holding Act (1935) 132
public-interest theories 135, 136
punctuated equilibrium paradigm 3314
purchasing power 192, 5212, 534, 535, 536
purchasing-power risk, bonds 402
purposiveness, Gerwiths theory of justice 259
quality, contextualism 311, 313
quantitative information 38, 98, 237, 317
quarterly-earnings series 399
quasi-deductive theories 80
quasi-ostensive interpretation, of a concept 85
questionnaires 346
quoted market prices 489
Radcliffe-Brown, A.R. 381
radical change, sociology of 315
radical humanist view 31516, 318, 319
radical school 477, 511
radical structuralist view 31516, 31819
Radner, Roy 348
railroad industry 5
Ramanathan, K.V. 254, 275
random coefficient model 414
random-walk model 399
Rappaport, Alfred 41, 43, 228, 372
ratio scale 44, 45
rational choice behavior 144, 347, 348, 443
rational decision models 342
rational expectations 322, 409
rationalism 126
rationality 348
rationalization 12, 103, 104
double-entry bookkeeping 111
intellectuals 352
rationalization machines 103, 104
Rawls, J.A. 2557, 276
Raymond de Rover 3
REA accounting models 366, 367
real income 482
real smoothing 56, 4523
realism
and formism 309
research methodologies 306
structure of a theory 81
reality

591
reliability
financial forecasts 279
191, 2235, 2323
reliable income measurement 220
reliance bias 224
renegotiation costs 447
replacement cost-new 489
replacement cost-used 4889
replacement costs
of accountants 67
Accounting Series Releases (ASRs) 142
assets-valuation base 192, 194
as attribute of assets/liabilities 5345, 536
239, 240
defined 502, 534
holding gains and losses 490
human asset 283
market impact of accounting regulation 426
SEC proposal 502
see also current replacement costs; general
price-level replacement-cost accounting
alternative accounting models 534, 535,
5378, 53940, 552
see also general price-level replacement-cost
accounting
replacement-cost net income 53940
replacement-cost operating income 53940
replacement-cost techniques 4924
reporting focus, standard-setting 194
representational faithfulness, financial reporting
125, 126, 187, 231, 232, 233
representativeness
probabilistic judgment model 375
representativeness bias 430
reproduction costs 4889
research and development 54, 55, 116, 240
residual equity concept 215
residual income model 424, 425
resource allocation
economic consequences of financial reporting
116
information system 106
internationalization 18
INDEX
external 1267, 223

phenomenology 307
see also economic reality
realization, defined 179, 220
realized holding gains/losses 5045
realized revenues
accounting income defined 480
accounting 544
recency ego involvement 371
recognition
conceptual framework 18990
defined 17980
disclosure 266
as research motive 335
recoverable amount 548
recursion value 420
reducing method 5
refutability
hypotheses 878, 349
theories 353
regression models 373, 402, 406
regulation
sociology of 315
see also accounting regulations
Regulation Fair Disclosure (FD) 135
regulation theories
free-market 1368
interest-group theories 1356
private-sector 13841
public-interest theories 135, 136
public-sector 1414
regulation-radical change debate 315
regulators, financial reporting 134
regulatory lag 141
regulatory monitoring 462
regulatory trap 141
Reichenbach, Hans 310
relational models 366
relationship sets 366
relative price level 535
relevance
accounting models 537
defined 537
explanatory 89
190, 191, 262, 398
accounting 546
accounting 545

INDEX
592
positive theory of accounting 255
relevance of accounting information 169
use of current price information 112
resource allocation earnings management 57
resources
as basis for taxation 478
use of 116
responsibility
auditors 65
ethics of 701
see also social responsibility
responsibility accounting, Greek civilization 2
restructuring behavior, corporations 4046
restructuring changes 54
restructuring liabilities 55
retained earnings
insufficiency of 18
retention policy 478
reticency, financial forecasts 279
retrieved systems theory 262
retrospective measures 434
return on capital 483
return of capital 483
returns, models of relation with earnings 422
returns across times and securities (RATS) 414
Revenue Act (1913) 7
Revenue Act (1918) 7
revenue recognition
accrual basis 2201
completion-of-production basis 221
critical event basis 220, 221
payment basis 221
reliable income measurement 220
sales basis 221
timing of 21921, 22930
revenues
239, 240, 241
defined 178, 188, 189, 219
earnings statements 174, 1756, 178, 179
entity theory 216

income smoothing 56
measurement of 219
nature and components of 21819
see also realized revenues
revolutionary periods
punctuated equilibrium paradigm 3314
see also scientific revolutions
Revsine, Lawrence 545, 59, 4956
rewards 282
unequal distribution of 257, 319
rewards, external 41
R.G. Barry Corporation 281
Rhode, J.G. 67
Riahi-Belkaoui, Ahmed 270, 271, 272, 371
right to know theory 262
rights
utilitarianism 69
rigidity 377
Ripley, William Z. 6, 8
risk
AICPA Task Force 24
beta estimation 415
bonds 402
objective of financial reporting 194
see also audit risk; litigation risks
risk-avoiding behavior 451
rituals 989, 1023
Ritzer, George 3357, 464
Robert Morris Associates 406
Rochester School of Accounting 446, 448, 449
Rockness, J. 277
Rogero, L.H. 198
Rokeach, M. 377
role, concept of 689
Roll, Richard 41213
Roman civilization 2
Romanelli, E. 332, 333
Ronen, J. 451, 453
root metaphor theory 30811
Rosen, L.S. 522
Ross, E.A. 634
Ross, Stephen A. 41213
Roth, G. 333
Royce, Josiah 311
Rubin, Steven 47
rule conflict, avoidance of 69
rule consequentialism 70
rule-based morality 70

593
as advocate for investors 63, 142
agency conservatism 136
and APB 132, 133
congressional hearing (1986) 24
as creative irritant 1412
development of accounting principles 78, 9,
10
efficient market hypothesis 428
Electronics Data Gathering and Retrieval
(EDGAR) 135
environmental risk 276
and FASB 132, 133, 139, 143
financial disclosures 63, 135, 142, 225, 261,
427
GAAPs 47
GAO report on derivatives (1994) 30
GAO Report on public companies (1989) 26
Kirk panel 30
market impact of accounting regulations 426
Moss Subcommittee 20
Regulation Fair Disclosure (FD) 135
report on auditor independence (1994) 29
Reserve Recognition Accounting 142
Sommer Report 428
security analyst approaches 406
security analysts
earnings information 281
as users of financial statements 50, 135
Security Industry Association 130
segment disclosures 48, 52, 226
Seidler, Lee J. 18
selective financial misrepresentation hypothesis
545
self-insurance reserves 116
self-selection bias 429
semantic differential technique 370
semantic validity 86
semi-strong efficient market hypothesis 411
sensation, receiving of information 302
sense perceptions 84
sensing-feeling (Sfs) personality type 302, 303
sensing-thinking (Sts) personality type 3023
sensitivity, research methodologies 306
service-hours depreciation method 223
sex roles 382
Shanmugam, A.V. 383
Shapiro, Brian P. 126
share price valuation models 404
shareholders
entity theory 216
INDEX
St. Pierre, K. 65
Saliero, Earl A. 5
Salomon Brothers 413
sameness assumption 306
Samuels, J.M. 404
Samuelson, Lars 235
Sandilands, F.E.P. 501
Sandilands Report 4834, 5012
Santa Fe Institute (SFI) 432
Sapir-Whorf hypothesis 370
savings and loans (S&Ls) sector 256
scales, types of 445
scams
false input 612
false thruput 62
output 62
Schelling, Friedrich von 311
schemas 379
Schilit, H.M. 59
Schipper, K. 57
Scholes, M. 413, 415
Schrag, Calvin 70, 71
Schreuder, H. 254
Schroeder, H.M. 377
Schuetze, Walter 30, 141
Schwartz, A. 284
Schwartz, R. 415
science
accounting as 87, 201, 236, 331, 34850
conceptual nature of 84
defined 87, 349
philosophy of 79
unity of method thesis 87, 349
scientific fields, punctuated equilibrium
paradigm 331, 332, 333
scientific prediction 912
scientific revolutions, Kuhns general theory of
330, 3346, 352, 4634
Scott, D.R. 5, 113, 250, 254
Scott, George 152
Scott, J. 400
Scott, Sir Walter 12
SEC see Securities and Exchange Commission
(SEC)
secrecy 235
Securities Act (1933) 7, 132, 139, 142
Securities Exchange Act (1934) 78, 132, 139, 142
Securities and Exchange Commission (SEC)
Accounting Research Bulletins (ARBs) 127,
139
Accounting Series Releases (ASRs) 8, 9, 133,
139, 142
accounting standards 1323, 139, 1412, 143,
147

INDEX
594
increasing numbers 6
manufactured consciousness of 678
marginal-economics-based accounting 321
needs for social information 2767
satisfaction of 338
hypothesis 55
as users of financial statements 164, 169
Sharpe, W.F. 412, 413
shenanigans 5960
Sherer, Michael J. 1256, 321
Shields, Michael D. 371
Shils, E. 352
Shleifer, A. 430
signal efficiency 410
similarity, formism 30910, 31112
Simon, H.A. 376
simple inductance see information inductance
simulation analysis 406
Singapore, income smoothing 454
Singer, F.A. 406
Sinkey, Jr., J.F. 406
sinking-fund depreciation method 5, 223
Sivaramakhrishnan, K. 45960
skepticist, response to data 105
skills level 282
Skinner, Ross M. 46, 478, 109, 111, 226, 250
Sloan, R.G. 460
small enterprises
defined 49
financial statements 503, 1467
GAAPs 48, 4953, 1489
Smith, Adam 482
Smith, J.T. 198
smoothing see income smoothing
social benefits 114, 172, 254, 255
social change 126, 141
social conditioning 68
social contract 255, 276, 383
social costs 114, 172, 254, 255
social goals 125, 136
social indicators accounting (SIA) 274
social inventions 277
social investment 277
social measurement 115, 2747
social minimum, Rawls theory of justice 256, 257
social norms 64
social obligations 2589
social responsibility 115, 274
social responsibility accounting (SRA) 254, 274
social responsiveness 2545
social rules, Gerwiths theory of justice 260

social science
accounting as 38, 40, 71, 236
nature of 304, 315
social values 60, 114, 115
social welfare
accounting standards 125, 126, 1979
social contract 276
social-value-oriented accounting 115
socialization 351
society, nature of 315
socioeconomic accounting (SEA) 115, 212, 226,
254, 257, 274
sociolinguistic thesis 370
Solomons, David 104, 145, 200, 487
Sombart, Werner 12, 13
Sommer, Jr., Al 428
sophisticated falsification 353
Sorter, George 364, 365
Spacek, Leonard 11314
Special Committee on Research Program 9
special obligations, utilitarianism 69
specific price indexes 489
specific price level 535
accounting 545
speculation 81
Spiegelberg, Herbert 307
spinoffs 404, 405
Sprouse, R.T. 110, 112, 128, 339, 503
stability, evaluation of theories 83
stable measuring units 238
stable monetary postulate 214, 529
stakeholders 259, 260
accountability to 277
earnings management 57, 461, 463
Stamp Report (Corporate Reporting) 164,
1926, 197
as conceptual framework 196
conceptual issues in standard-setting 1934
criteria for assessment of
quality/accountability 196
employees as users of corporate reports 273
objectives of corporate financial reporting
1945
standard-setters problems 193
users of corporate reports 195, 273
users needs 1956

595
stockholders welfare-maximization (SWM) 480
Stolowy, Herve 59
Storey, R.K. 213
straight-line depreciation 5, 223, 453
Strawser, Jerry R. 198
strength, evaluation of theories 82
strong efficient market hypothesis 41112
structural corroboration 308
structural functionalism 316, 381
structural identity thesis 91
structural symmetry thesis 91
structuralism 381
subjective goodwill 487
subjective judgment 126, 280
subjective probability 89, 375
subjective rate return 486
subjectivism, structure of a theory 812
subjectivity, interpretive view 317
submartingale process 399
Subrahmanyam, A. 431
Subramanyam, K.R. 460
subsidiaries accounting 14, 16
subsidiary books 4
substance, medieval goal of 12
successful-efforts accounting 200
sum of years digit depreciation method 223
Sumerian civilization 2
Sunder, S. 199, 200
suppliers, assurance services 38
supportive system, Gerwiths theory of justice
260
survey of organizations model 285
sustainable income 495
Sutherland, Edwin 64
Sweden 115
Sweeney, Henry W. 112, 339
Swieringa, R.J. 368, 443
symbolic anthropology 381
symbolic order 989
symbolic representations 99100, 1023, 109
syndicate-theory model 443
synthetic propositions 86, 231
synthetic theories 309, 31011
system theory 316
systematic presuppositions 80
systematic risk 415
systemic validity 86
takeovers 4046
talent, assurance services 39
Tanaka, Y. 383
tar-baby effect 141
task characteristics, effects on achievement and
learning 374
INDEX
Standard & Poors Corporation 402

standard deviation 232
standard setters, selective financial
misrepresentation hypothesis 545
standardization see accounting standardization
state-contingent contracts 149
Statement on Accounting Theory and Theory
Acceptance (SOATATA) 110, 3301, 337,
463
statement analysts, ordinal scale 45
Statement of Basic Accounting Theory 110, 175,
364
statements of financial accounting standards
(SFAS) 46
Statements of Position (SOPs) 127
states-of-affairs 2301
statistical auditing 322
statistical decision theory 348
statistical laws 88, 89, 232, 349
Staubus, G.J. 215
Stengers, Isabelle 332
Sterling, Robert R.
conceptual framework project 201
conditioned reaction of users 4289
conservatism 227
interpretability 536
positive accounting theory 449
relevance 343, 537
usefulness 342, 343
stewardship function
community assets concept 254
management ability 170
objective of financial reporting 183, 194
principalagent relationship 100
social welfare 172
virtues of accounting 41
stimulusresponse paradigm 372
stochastic laws 88, 350
stockholders
conflict of interest with bondholders 447
entity theory 21516
fairness 250
satisfaction of 338
valuation model 4789
stockholders equity 216, 240, 51617

INDEX
596
Taussig, R.A. 404
tax accounting
GAAPs 48
harmonization with financial accounting 7
tax collection systems 18
tax relativism 17, 153
taxable income 6, 7, 463, 478
taxation see income tax
taxonomies 14, 15
Taylor, Dennis 274
team-theory model 348, 443, 444
technical analysis 411
technical proletarianization 667
technological advances 40, 135, 273, 484
technological inventions 277
technology displacement 40
teleological explanation model 901
telos 311, 314
tendency laws 88, 349
tentativeness, basic postulates of accounting 237
terms, as distinct from concepts 845
texts, deconstruction 350
texture, contextualism 311, 313
Thaler, R. 430
theoretical attempts 80
theoretical concepts 85
theoretical structures, types of 7980
theory
defined 7980, 83, 108
evaluation of 823
formalization of 80
functions of 81
heuristic use of 81
and hypotheses 7980
knowledge acquisition 300
and law 7980
notions of 7984
structure of 812
thinking, reaching of decisions 302
thinking-intuition (Its) personality type 302, 303
Thomas, A.L. 280
Thompson, J.D. 103
Thompson, R.B. 407
thought, development of 14, 15
Threadway, Jr., J.C. 63
time period, basic postulates of accounting 237
time-equivalent subseries 399
time-series analysis 399400, 423
timeliness, financial reporting 166, 186, 191,
21921, 22930, 265
timing errors 536, 552
accounting 546

accounting 545
Tinker, Anthony 320
Tirole, J. 454
total accrual models 457
total impact accounting (TIA) 274
total pure-profit income 485
Touche Ross & Company 281
trade 13
trade lending decisions 406
trade unions 270
trademarks 265
transaction approach, accounting income 480
transaction costs 138, 263, 417, 447
transactions
dimensions of 45
personification of 4
transfer of holdings, Nozicks theory of justice
2579
transferability 282
translation rules 109
translation theory 16
Triandis, Harry C. 382, 383
triangulation 3078
true income 57, 101
true-income/deductive paradigm 337, 33941, 353
exemplars 33940
methods 341
theories 3401
Trueblood Committee 1920, 16773, 197, 278,
479
Trust Indenture Act (1939) 132
truth
in accounting 2306
as coherence 231
contextualism 311
as correspondence 126, 230
ethical approach to theory 68, 113, 250
formism 310
impossibility of 2356
measurement of 2324
mechanism 310
as neutrality 231, 232, 233, 234
notions in philosophy 2301
as objectivity 232
organicism 311
reliability of 2323
roles of accounting 2345
as what works 231

597
U-curve Hypothesis 377, 378

uncertainty
accounting practices 103, 104
AICPA Task Force 24
measurement 42
objective of financial reporting 194
realization principle 220
uncertainty avoidance 381, 382
understandability, financial reporting 166, 172,
191
unexpired costs 218, 222
unifying power, evaluation of theories 83
uniqueness, research methodologies 305
unit cost method 5
unit-of-measure postulate 21314, 237
classical school 477
cost principle 218
neoclassical school 477
unit-of-output depreciation method 223
United Kingdom
employees as users of annual reports 270
objectives of financial statements 164, 165
see also The Corporate Report; Institute of
Chartered Accountants in England and
Wales
United Leasing Corporation 1478
United States
accounting assistance to developing world
1501
institution contribution phase 6, 79
major accounting studies (19721995) 1930
management contribution phase 67
objectives of financial statements 164, 165
politicization phase 1012
professional contribution phase 6, 910
unity of method thesis 87, 349
universal accounting 1415
universal class of the proletariat 351
universal laws 88, 349
universal theory 16, 17
univocality, evaluation of theories 83

unlimited-term items 240
usefulness
accounting information 223, 225, 250, 342,
343, 369
see also decision-usefulness/decision-maker/
aggregate-market-behavior paradigm;
individual-user paradigm; decisionusefulness/decision-model paradigm
user primacy principle 2634
user-behavior paradigm 465
user-need school (value approach) 364, 365
users
accounting messages 105
direct 1334
employees as 270, 273
of financial statements 501, 1335, 1467,
1645, 169, 191
indirect 134, 135
manufactured consciousness of 678
middle range accounting theories 84, 108
needs for social information 2767
unions as 270
see also behavioral approach; creditors;
investors; shareholders; stakeholders
utilitarian ethics 6970, 255
utility
as a criterion 110
as main objective of accounting 111
vagueness, evaluation of theories 82
value added reporting 26872
value approach 364, 365
value to the firm 192, 194, 5012
Van Maanen, John 307
Vance, J.S. 404
variable costs 222
variance 232, 233
Vasicek, O. 415
Vassilion, V. 383
Vatter, William 2356
veil of ignorance, Rawls theory of justice 255
Venice, Method of 3, 45
verbal protocol 376
verifiability
of accounting theories 1078, 112, 363
financial reporting 166, 187, 232, 233
measurement 42
Verrecchia, R.E. 138
INDEX
Tuden, A.A. 103

Tullock, G. 145
Turopolec, Lawrence 106
Tushman, M. 332, 333
Tversky, A. 375, 430
Tzoannos, J.T. 404
INDEX
598
verstehen method 317
virtual firms 265
virtues, distinguished from laws 41
Vishny, R. 430
visual curve extrapolation 406
voluntariness, Gerwiths theory of justice 259
voluntarism
voluntary contracts 4445, 447
Von Bohm Bawerk, Eugene 482
Voss, W.M. 342
voyage accounts 4
Wahlen, James M. 462
Wake, D.B. 333
Wake, M.H. 333
Waller, W.S. 378
Wallman, Steven 2656
Walsh, P. 59
Wang, Z. 455
warranty costs, accounting changes 54
wasting capital assets 2223
Watt, Arthur B. 128
Watts, Ross L. 143, 164, 338, 429
weak efficient market hypothesis 411
Webb, Laurie 274
Weber, Max 12, 99, 308, 318
Weber, R. 379
Websters Third New International Dictionary 108
weighted-average cost of capital 486
Weirich, T.R. 1415
Welb, John 371
welfare benefits 58
well-being
well-foundedness, evaluation of theories 82
Wells, M.C. 330, 331

Whalen, James N. 57
Whitcomb, D. 415
Whitmore, G.A. 480
Wholesale Price Index 521
Williams, J. 415
Williams, Paul F. 68, 2534, 257
Williams, P.E. 277
Williams, T.H. 455
Wilson, J.A. 17
Wilson, R.B. 443
window dressing 69
Winjum, James O. 13
Witkin, H.A. 377
world accounting 1415
world hypotheses 30814
formism 30810, 31112, 313
mechanism 3089, 310, 31213, 314
world theory 16
world views 98
writing 2
Wulff, J.K. 198
Xie, H. 460
Xros 59
Yamey, B.S. 45, 13
Young, S. Mark 106
Yu, S.C. 113
Zaltman, Gerald 82, 86, 90
Zenon 2
zero-cost phenomenon 141
Zimmerman, J.L. 164, 338
Zimmerman, V.K. 11415

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