1. SURVEY OF ACCOUNTING ACTG 3000 Presented by Charles Kile, Ph.D. Professor of Accounting Middle Tennessee State University 11:20 am - 12:40 pm BUSINESS AND AEROSPACE BUILDING S301

2. Reccomended Reading: “Guests of the Kremlin” By Robert G. Emmens The updated and reprinted Guests of the Kremlin was reprinted in 2007 by Ishi Press with Pictures, Maps and Introductions. Available in Paperback, 342 Pages, ISBN-13: 978-0-923891-81-7, ISBN: 0-923891-81-1

3. Do you ever wonder why there are so many accountants? Do you ever wonder why accounting is so prevalent throughout our society?

4. Let’s “Put the Accountants Out of Business”

5. WHY ARE THERE SO MANY ACCOUNTANTS?

6. WHY ACCOUNTING? Accounting is part of the system that helps determine... Who makes decisions over resources What those people do with the resources

7. We Live in a Finite World There are few, if any resources that are infinite (plentiful); Most are finite (limited). Such limitations impose severe restrictions (binding constraints) upon what we can do.

8. Two Compelling Questions Because of such limitations in the physical world within which we live, the two most compelling issues at any level in life are probably Who makes decisions over resources? What do those people decide to do with those resources?

9. Where are the Resources? The truth is that the large majority of resources are held by organizations, rather than individuals Governments Corporations Non-profits

10. Organizations Don’t Make Decisions! People within organizations Do Most decisions made by people within the organizations are not what a rational, altruistic, value-maximizing government or organization would make.

11. Organizations Don’t Make Decisions! People within organizations Do

12. Organizations Don’t Make Decisions! In other words, in the large majority of instances, OTHER PEOPLE are making decisions over the resources that belong to SOMEBODY ELSE.

13. Organizations Don’t Make Decisions! And people tend to make bad decisions over OTHER PEOPLE’S MONEY. The purpose of accounting is to help protect other people’s money

14. Why People within Organizations Make Suboptimal Decisions Human psychology does not lend itself to making rational decisions. People making the decisions do not have the incentives to make decisions that maximize the organization’s value.

15. People within Organizations Make Suboptimal Decisions Human psychology does not lend itself to making rational decisions. People making the decisions do not have the incentives to make decisions that maximize the organization’s value. EXAMPLES

16. Chinese Government 1949 Mao Zedong proclaims that China will be under the “leadership of the Communist Party of China” Tiananmen Square, Beijing October 1, 1949

17. Agrarian Reform Law 1950 Land was to be taken and “given” to the peasants Over 1 million landowners were executed. Most of the remaining were “reeducated”

18. Redistribution of Land Over 300 million peasants became landowners over the next two years. People happily received free land and Mao gained their support.

19. Collective Farm Program 1953 People share the work on the land within their collective. People are organized into “collectives” But, collectives did not lead to increased production.

20. The Great Leap Forward 1958 Mao abandons the strict Soviet model for a pure Communist design. Cooperatives are replaced with Communes. Everything comes under complete government control.

21. China’s Entire Economy was to be Built on... STEEL GRAIN

22. Mao Introduces Revolutionary New Farming Methods People share the work on the land within their collective. Land ownership illegal. The government owns the land People are organized into “collectives”

23. The Great Leap to Somewhere The Great Leap Forward launches the largest peacetime mobilization of personnel as Mao removes 50 million people from the farms and reassigns them to construction projects.

24. Estimated Grain Output During China’s Great Leap Forward The Great Leap Forward: Anatomy of a Central Planning Disaster Wei Li University of Virginia, Cheung Kong Graduate School of Business, and Centre for Economic Policy Research Dennis Tao Yang Virginia Polytechnic Institute & State University

25. People are Instructed to Bring the Excess Grain to be Exported Unfortunately, there was no excess grain. Instead, there was a shortage. However, grain was exported anyway on the basis of fabricated results.

27. “Steel” Production in China Backyard furnaces were prevalent throughout every commune.

28. While people starve, 90 million workers are diverted to a misguided national effort to overtake the Western industrialized nations in steel production.