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Commissioners, when in 1875 he noted that Illinois Railways earned 4.8 percent. Because Adams was concerned about the overvaluation of assets, he made some adjustments to the capi-tal of railroad stock in Kansas—considered along with Illinois, Iowa, Minnesota, and Wis-consin to be the five states most affected by the Granger movement of the 1870s—and esti-mated a return on capital of 6 percent. Adams was concerned about the railroad policies of these states. By 1885, A.M. Wellington, a rail-way engineer, showed considerable concern about present value in terms of justifying a capi-tal expenditure. John H. Van Deventer, an en-gineer, in 1915 further expounded on the present-value approach for judging investments well before the modern classic in 1951 by Joel Dean, a managerial economist, Capital Budget-ing, as noted by George A. Wing (1965). The classic description of the return on investment on a nominal basis was done by General Mo-tors executive F. Donaldson Brown in the 1920s (Johnson, 1978). The two components of this computation were income as a percentage of sales multiplied by the sales over net assets. In 1991, a review of the Return on Investment heading in Accountants' Index found 90 refer-ences, with a wide range of methods of comput-ing return on investment.
Richard Vangermeersch
Bibliography
Adams, C.F. Jr. "The Granger Movement," North American Review, April 1875, pp. 394-424.
Johnson, H.T. "Management Accounting in an Early Multidivisional Organization: General Motors in the 1920s," Business History Review, Winter 1978, pp. 490-517.
Marshall, A. Principles of Economics. 8th ed.
London: Macmillan, 1920. Scorgie, M.B. "Rate of Return," Abacus, Sep-tember 1965, pp. 85-91. Smith, A. The Wealth of Nations. 1776. Re-print. New York: Random House, 1937. Wing, G.A. "Capital Budgeting, Circa 1915," Journal of Finance, September 1965, pp. 472-479.
See also BROWN, F. DONALDSON; DIS-COUNTED CASH FLOW; FISHER, IRVING; MAN-AGEMENT ACCOUNTING; RAILROAD ACCOUNT-ING (U.S.); RIPLEY, WILLIAM Z.; SMITH, ADAM; SMYTH V. AMES
Rex v. Kylsant
An English court decision in Rex v. Kylsant (1931) placed limits on financial understate-ment. The auditor of the Royal Mail Steam Packet Company was accused of aiding and abetting in the publication of false annual re-ports. The company had placed 2 million pounds earned during World War I into a funded taxation reserve, and during the 1920s it turned operating losses into apparent profits by trans-ferring portions of this reserve to its current in-come account. The auditor's defense was that management had a right to smooth profits over the business cycle; that in fact such practices were needed to stabilize dividend payments and pro-mote investor confidence. The only explanation given in the Royal Mail's annual report was the phrase "including adjustment of taxation re-serves," and the case turned on whether these words gave statement readers sufficient warning. The auditor was acquitted of intent to deceive, but the court made it clear that conservatism was no longer a substitute for accounting disclosure.
Michael Chatfield
Bibliography
Davies, P.M., and A.M. Bourn. "Lord
Kylsant and the Royal Mail," Business History, July 1972, pp. 102-123. Hastings, P. "The Case of the Royal Mail." In Studies in Accounting Theory, edited by W.T. Baxter and S. Davidson, pp. 452-461. Homewood, IL: Irwin, 1962.
See also CONSERVATISM; LEGAL LIABILITY OF AUDITORS
Ripley, William Z. (1867-1941)
William Zebina Ripley earned a bachelor's de-gree in civil engineering at Massachusetts Insti-tute of Technology in 1890. Later, in 1893, he earned a doctorate in political economy at Co-lumbia University, submitting a dissertation titled "The Financial History of Virginia, 1607-1776." Although he began his teaching career at Columbia, he soon gravitated to the Econom-ics Department at Harvard University, which thereafter remained his academic home. At Harvard he eventually occupied the Ropes Chair in economics.
Ripley's thinking about accounting institu-tions was conditioned by his perceptions about the forces that had begun to transform Ameri-can society during the last quarter of the nine-
r e t u r n o n i n v e s t m e n t 502
Object Description
| Title |
History of accounting: An international Encyclopedia |
| Author |
Chatfield, Michael Vangermeersch, Richard |
| Subject |
Accounting -- History |
| Date-Issued | 1996 |
| Source | Originally published by Garland Publishing, Inc. |
| Rights | Copyright and permission to reprint held by: Academy of Accounting Hitorians |
| Type | Text |
| Format | PDF scanned at 400dpi with corrected OCR |
| Digital Publisher | University of Mississippi Libraries. Accounting Collection |
| Date-Digitally Created | 2011 |
| Language | eng |
| Identifier | vangermeersch |
