Accounting in Small Business Decisions

148 Pages·2014·9.215 MB·English

by  James L. Gibson,W. Warren Haynes

ACCOUNTING IN SMALL
BUSINESS DECISIONS
Small Business Management Research Reports
Prepared by the University of Kentucky for the
Small Business Administration, Washington 25, D.C.
PUBLISHED UNDER THE UNIVERSITY
OF KENTUCKY STUDIES PROGRAM
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ACCOUNTING IN SMALL
BUSINESS DECISIONS
By JAMES L. GIBSON
Assistant Professor of Business Administration,
Arlington State College
and W. WARREN HAYNES
Professor of Economics, University of Kentucky
Prepared by the UNIVERSITY OF KENTUCKY
under the Small Business Administration
Management Research Grant Program
Proiect Director: JAMES W. MARTIN
Director, Bureau of Business Research
UNIVERSITY OF KENTUCKY PRESS
Lexington, 1963
Copyright © 1963 by the University of Kentucky Press
University of Kentucky Printing Division
Library of Congress Catalog Card
No. 62-19376
FOREWORD
This study has been conducted and prepared under the
direction of James W. Martin, project director for the
University of Kentucky. The research was financed by a
grant made by the Small Business Administration, United
States Government, under the authority of Public Law 699
(85th Congress).
Only a limited number of copies of this report have been
printed. It is available for reference in any of the Small
Business Administration offices throughout the United States
or at many reference libraries. Copies of the report also may
be purchased directly from the University of Kentucky Press,
Lexington, Kentucky.
Summaries of this study are being printed and will be
available in reasonable quantities. These summaries may be
secured from SBA field offices or from the Small Business
Administration, Washington 25, D. C.
The Small Business Administration assumes no responsi
bility for the accuracy of the data contained herein, nor does
it necessarily endorse any opinions, conclusions, or recom
mendations which may be a part of this report.
JoHN E. HoRNE
Administrator
Small Business Administration
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ACKNOWLEDGMENTS
This study results from the efforts of a great many people.
We are indebted to the managers of small firms who con
tributed their time and interest; without their cooperation
the descriptive findings could not have been gathered. We
are indebted to Bernard Davis, Lawrence Goodman, Robert
Haun, Dale Osborne, and Martin Solomon, Jr., who, with
us, comprised the research team which collected and analyzed
the case studies. James W. Martin's excellent editorial
assistance and Mrs. Judy Shewmaker's unsurpassed secretarial
skills must be acknowledged. Finally, various members of the
University of Kentucky faculty read and commented on early
drafts; their attention saved the authors from many errors of
logic and detail. We assume full responsibility for any short
comings of the study which remain.
JAMES L. GIBSON
w. wARREN HAYNES
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CONTENTS
FOREWORD, by John E. Horne page v
ACKNOWLEDGMENTS vii
INTRODUCTION 1
1. ACCOUNTING AND ECONOMICS: THEIR
RELATION TO DECISION MAKING 4
Accounting and Business Decisions 5
Recognition of the need for a decision 5
Assembly and organization of relevant information 9
Managerial Economics in Business Decisions 14
The principles of managerial economics 15
A variety of cost concepts 18
Economists' criticism of traditional accounting 20
2. GARDEN AND LANDSCAPE NURSERIES 23
Some Generalizations 25
Why cost accounting is not used 27
A note on nursery cost accounting literature 30
A Prescriptive Model for Nurseries 30
Certainty model: plant mix decisions 31
Certainty model: pricing decisions 33
Certainty model: other decisions 34
Cost considerations 34
Significance of the present value approach 35
Removal of simplifying assumptions 36