Planning Concepts in the "Tentative Statement of Cost Concepts".

Abstract The article discusses about the planning concepts in the "tentative statements of cost concepts." In this article, a portion of that document is discussed from the point of view of the business manager who would attempt to apply it. It is the purpose of this paper to examine the cost for planning portion of the statement. The business manager has been told that he is to discount future outlays, necessarily measured outlays, at an appropriate rate of interest; again he is later told that future costs, that lend themselves to measurement, are to be discounted at a rate which reflects time, risk, uncertainty, etc., and finally he is told other costs which cannot be measured, but must be "considered." To the business manager's way of thinking, any cost to which a dollar and cents figure is attached has been measured; and in essence he has been told to handle these costs in three quite different ways. All costs in the future, by the very nature of the uncertainty of the future and the time element involved, carry some element of risk which must be allowed for. In conclusion, the authors stated that it is much, much easier to criticize original thinking than to do that same thinking. The tentative statement has certainly accomplished one of its main objectives, i.e., to stimulate further study and discussion of the accounting information needed by management, but also has gone well beyond.