THE RATE OF RETURN FROM INTERIM FINANCIAL REPORTS AND THE ALLOCATION PROBLEM IN FINANCIAL ACCOUNTING |
| |
| Authors: | Jeffrey Jarrett |
| |
| Institution: | The author is a Professor in the Department of Management Science, at the University of Rhode Island. He wishes to thank an anonymous reviewer for some very thoughtful comments, and he also wishes to thank Richard Brief for encouraging him to explore the estimation problem in financial accounting further. |
| |
| Abstract: | Estimation theory in accounting explains how accountants allocate noncash expenditures to estimate such concepts as the firm's long run rate of return. If the accountant's goal in estimation is some high degree of precision, the usefulness of financial reports can be evaluated in light of that goal. In this study, the property of unbiasedness is identified with respect to the purposes of interim financial reports. Furthermore, the magnitude of the bias in estimates from financial reports is measured. |
| |
| Keywords: | |
|
|
