Management And Accounting Web

Caplan, E. H. 1966. Behavioral assumptions of management accounting. The Accounting Review (July): 496-509. (JSTOR link).

Summary by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Behavioral Issues Main Page | Controllership Main Page | Theories Main Page

The purpose of this paper is to discuss the differences between the underlying assumptions of traditional management accounting and modern (1966) organizational theory. The following table provides a brief comparison between the concepts underlying the two theories. Follow the McGregor link for a summary of theory X and theory Y.

Comparison of Traditional Management
Accounting and Mordern Organizational Theories
Concept or
Traditional Managment
Accounting Theory
Organizational Theory
Objective of Organization Maximize profit. Assumes that sub-goals are divisible and additive (responsibility accounting). The dominant members have goals, the organization cannot. Survival of the dominant members is the main goal and satisficing* is second. Sub-goals are not divisible and additive and may conflict.
Human Behavior Lazy man theory X.
Motivation is economic need.
Motivation factors include psychological, social and economic factors. Mixed theory X and Y.
Management Behavior Must control employees with close supervision to maximize profits. Make decisions to balance the contributions from participants with organizational inducements. Control through assigning and obtaining acceptance of authority.
Management Accounting Used to aid in maximizing profit with emphasis on bureaucratic control, but accounting is neutral. Used to provide information for planning and controlling to balance contributions.

* Satisficing is a term coined in the economics literature and refers to achieving satisfactory results rather that maximizing.


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