Accounting Capstone
Spring 1997


Harrington, Michael. Socialism, Past and Future. New York: Mentor, 1989
Hayek, Friedrich A. The Road to Serfdom. Chicago: The University of Chicago Press, 1944.
Johnson, H. Thomas, and Robert S. Kaplan. Relevance Lost: The Rise and Fall of Management Accounting. Cambridge: Harvard University Press, 1986.
Mulloy, Joseph P. Kansas City Zephyrs Baseball Club Inc. Boston: Harvard Business School, 1987.
Paciolo, Luca. Bookkeeping. Venice: 1494. (Handout)
Paton, W. A., and A. C. Littleton. An Introduction to Corporate Accounting Standards.
Sarasota, Florida: American Accounting Association, 1940.
Sterling, Robert. Theory of the Measurement of Enterprise Income. Houston:
Scholars Book Co., 1970.
Financial Accounting Standards Board. Statements of Financial Accounting
Concepts No. 1, 2, 5 and 6. Norwalk, Conn.: FASB, 1994.


The purpose of this course is to examine historical and theoretical ideas about accounting and the interface between business and government. We will be reading, discussing and writing about books that take major theoretical stands on issues of interest. First we will examine the role of business enterprise in the larger economy and society. Second, we will examine some of the theoretical issues that underlie the practice of accounting in the contemporary economy.

The first part of the course will be based on works by Hayek and Harrington, who represent contrasting views about socialism and capitalism, that is, about the role of business enterprise as the vehicle by which free peoples carry on economic activity, and about the role of government intervention in that activity . Because accounting is a business discipline it is appropriate to examine these issues as part of an accounting capstone experience.

The second part of the course will focus on strictly accounting issues, examining two broad problems. First, we will look at the complexity of income measurement in a world of changing price levels. Contemporary accounting practice largely ignores the effects of inflation and of changes in specific price levels on asset, liability and income measurement. Here we will ask whether this is adequate to the task of financial reporting. We will start with Paton and Littleton's classic work, which has formed the basis for modern accounting standard-setting. Then we will turn to Robert Sterling's work criticizing contemporary standards to form the basis for discussion of alternative measurement systems. Of particular concern will be contrasting concepts of income measurement and the related question of the meaning of the balance sheet.

Finally, we will look at the evolving relationship between management accounting and financial reporting through a study of Johnson & Kaplan. Management accounting objectives are sometimes in conflict with financial accounting objectives and vice versa, and these authors argue that the latter has come to be a corrupting influence on the former.

Class procedures.

The class will be conducted as a seminar, with all students expected to prepare by a thorough study of the day's readings. Daily grades will be assigned on the basis of class discussion and short papers due each week.

There will be two written examinations, one at the last class before spring break and the other on the last day of class. Content of those examinations will be announced as we approach the exam dates

Basis for grades:

Exams (2 @ 25) 50%
Daily grades:
Class participation 10%
Short papers 40%
Total 100%

A larger purpose of this course is to further develop our critical thinking and communications skills. [I say "our" skills, because we are in this together--I learn more every time I teach this course.] The readings consist of complex arguments for particular viewpoints about controversial issues, and they cannot be comprehended without critical analysis. The assignment of weekly papers will afford you valuable experience in expository writing and analysis.

I hope your minds will be stretched by the readings and discussions in this course, not in the sense in which leases or pensions or consolidations stretches your minds through learning complex computations, but in the sense that you come to understand what we do and develop the curiosity about why we do it and what we might do to improve on present practice.


Week of:
Jan. 13 Introduction
Jan. 20 Hayek
Jan. 27 Hayek/Harrington
Feb. 3 Harrington
Feb. 10 Harrington
Feb. 17 Harrington; class debate
Feb. 24 Paciolo; Paton & Littleton
Mar. 3 Paton & Littleton

Mar. 10 -- Spring Break --

Mar. 17 Paton & Littleton; Sterling
Mar. 24 Sterling
Mar. 31 Sterling
Apr. 7 Sterling
Apr. 14 Sterling; Johnson & Kaplan
Apr. 21 Johnson & Kaplan
Apr. 28 Johnson & Kaplan; FASB Concept Statements


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