Capital Investment Analysis: The Index Method

Adjusting for Inflation in the analysis of capital Investments can be achieved by employing either nominal cash flows and discount rates, or real cash flows and discount rates. This paper introduces a third methodology that is consistent with both the nominal and real approaches, yet simplifies the procedure through the use of an Index that simultaneously adjusts for differential rates of inflation in the cash flows and general price levels. The index is the ratio of one plus the nominal required rate of return, divided by one plus the rate of inflation in a particular cash flow, and yields the appropriate discount rate for Implementation of the technique

MBA, MSA and MST: Do They Make a Difference on CPA Exam Performance?

This study empirically investigates whether graduate degrees (MBA, MSA and MST) earned by candidates affect their performance on the CPA exam. By examining more than half million first-time exam sittings taken during the period 2005–2013, the authors find that candidates with a graduate degree performed better on each section of the CPA exam than those who only have an undergraduate degree. In addition, the authors find that the type of graduate degree also has an effect on the CPA exam performance. While candidates with an MBA degree generally performed better on the BEC section than those with an MSA or MST degree, those with an MSA degree performed best on the AUD and FAR sections; and those with an MST degree exceled on the REG section. This study contributes to the existing literature on the determinants of CPA exam success. In addition, this investigation provides valuable insights to candidates, academics and regulators. The findings of this chapter should be useful for academic administrators as they revise their accounting curricula to prepare for the new CPA licensure model. Furthermore, the results of this study should benefit accounting regulators in determining education requirements for future CPAs

Effective Classroom Presentation of FAS 87 Footnote Reconciliation

This paper introduces a visual presentation format to facilitate the teaching of one of the more difficult areas of pension plan disclosure, the footnote reconciliation of the funded status to the balance sheet accrual (reconciliation). The visual approach demonstrated in this paper is beneficial in that it enhances the explanation of the reconciliation by graphically depicting the impact of each component on the reconciliation. The graphic approach should make the reconciliation more readily interpretable and, therefore, more comprehensible by students. Given the overall complexity of the pension area, providing an efficient vehicle for teaching the reconciliation concepts is particularly important. The format presented provides an efficient vehicle for teaching the rather complex reconciliation concepts of FAS 87

The Measurement of Organizational and Professional Commitment: An Examination of the Psychometric Properties of Two Commonly Used Instruments

This study investigates the Porter et al. (1974) measure of organizational commitment and the Aranya et al. (1981) measure of professional commitment to determine whether the scales are measuring different constructs. Psychometric properties of both measures are examined using data gathered in a sample of university faculty and a sample of state and local governmental accountants. Results of item analysis, factor analysis, internal consistency (alpha), and convergent and discriminant validity tests (correlation analysis) indicate that the two scales are indeed measuring different constructs and that the professional commitment scale appears to be a reliable measure

The Effects of Labor on Accounting Policy Choice in Canada

This study examines the effects of labour considerations on accounting choice in Canada. Two potential labour-related incentives are considered: ability to pay and employee attraction and retention

Using Structural Equation Modeling to Investigate the Causal Ordering of Job Satisfaction and Organizational Commitment Among Staff Accountants

The significant results reported using job satisfaction and organizational commitment as antecedents to turnover intentions, and their extensive use in behavioral research, make the causal relationship between them a subject of interest in accounting and other fields. This study addresses the causal ordering of these two constructs. Using staff accountants as subjects, and structural equation modeling as the statistical technique, the results indicate a causal ordering from organizational commitment to job satisfaction. Public accounting firms experience annual non-partner turnover rates as high as 45 percent, primarily at the entry-level staff accountant position (Bao et al. 1986). Other studies have shown turnover rates to be as high as 85 percent for initial hires over a ten-year period (Rhode et al. 1976) to annual turnover rates of 23.9% for staff accountants who had one- to three-years experience with a firm (Lampe and Earnest 1984). Job satisfaction and organizational commitment are two constructs often considered when examining the turnover of practicing accountants. However, few studies have investigated the causal ordering of these constructs. Gregson (1992) reported the results of a study where job satisfaction is antecedent to organizational commitment in a turnover model of practicing accountants. However, there are some limitations to his study. Due to identification problems, a model with a reciprocal relationship between satisfaction and commitment could not be tested. Lack of identification can be caused by the rank condition, order condition, or both conditions not being met. Without proper identification, parameter estimates are arbitrary and the interpretation of these parameters becomes meaningless (Long 1986). A second reason for investigating the causal ordering of these two constructs is their numerous usage in behavioral research. The incorrect classification of either as an exogenous or endogenous construct to the other, will lead to incorrect models which can extend to mistaken conclusions. To test the causal relationship between organizational commitment and job satisfaction, this study uses sequential Chi-square difference tests (SCDTs) and other analyses to determine the best fitting model. The reciprocal relationship that could not be tested in the Gregson (1992) study is the focus of this study. The next section presents the theory for the study, followed by a section describing the models to be tested. Subsequent sections present the method employed, results and discussion. Lastly, limitations and implications for future research are presented

The Effect of Active Learning Activities on Knowledge Acquisition and Knowledge Application

This study examines the effect of active learning activities on knowledge acquisition and knowledge application by comparing three different teaching methods: traditional lecture, in-class competition, and tri-fold competition. We found that student performance on knowledge acquisition was better in the traditional lecture in comparison with in-class competition and tri-fold competition. On the other hand, in comparison with traditional lecture, student performance on knowledge application was better for the tri-fold board competition, but not for the in-class competition. From a practice standpoint, these results suggest that combining traditional lecture and active learning methods might be an optimal choice