The industrial revolution since 1850 has made most industrial processes more capital intensive.

Surprisingly, however, the accounting systems in the early capital intensive factories did not immediately account for long lived fixed assets. A good example is the Carnegie Steel Company.

a. What were the main reasons for Carnegie not accounting for long lived fixed assets?

b. By not accounting for fixed assets, did Carnegie miss out on crucial business opportunities?

Explain.

Somewhat later on, the Scientific Management Movement stimulated the development of new accounting methods, like ‘standard costing’ and ‘variance analysis'.

a. Explain why the Scientific Management Movement stimulated the creation of the two management accounting methods.