Recent Developments of Statistical Approaches in Aspects of Accounting: a Review

Abstract

Summary We review and simultaneously introduce a convenient statistical concept for the mathematical representation of the Statistical Activity Cost Theory (SACT) introduced by Willett (1987, 1988). Further, we discuss, and present a critique of a variety of statistical models with respect to long debated accounting problems, such as the allocation of joint costs and depreciation. We finally propose that taking the effort to combine those models results in a novel statistical accounting system and this is discussed by means of the so‐called virtual firm. Our approach is methodological rather than empirical. We endeavour to demonstrate that the statistical models presented herein have a more natural interpretation and applicability than their deterministic analogues: hence, this review presents promising outcomes and useful perspectives for the accounting profession.