Knowledge that Transforms

The principal effect of a corporation law on financial statements is in the presentation of the net worth accounts. This effect arises from the definitions, sometimes implied, of capital and surplus, and from prescribed methods of establishing, and of increasing or decreasing capital and surplus. It is essential that an accountant, properly to serve and protect the interests of his client, interpret for that client and for the public which relies on the client's financial statements, the effect produced by law on such statements. Only by making a study of the law of the states of incorporation and residence may he determine how the facts may be best displayed. Certain requirements of the Michigan and Delaware Corporation Acts with regard to the capital and surplus accounts of corporations are worthy of special note. By a study of certain sections, and by amplifying and clarifying, the accountant may display the facts in a manner which will more clearly inform clients on important matters, and enable them properly to chart their future course. The discussion in the article deals only with the net worth section of financial statements, such as the display of information showing changes in capital and surplus, and the effect on the balance sheet of a corporation by the purchase of its own capital stock.

Reviews the book "Accounting in Law Practice," by Willard J. Graham and Wilber G. Kats.

Reviews the book "Wages and Wealth," by Roy Dickinson.

Reviews the book "Duties of the Junior Accountant," by Alfred B. Cipriani.

Reviews the book "The Detroit Money Market," by G.W. Woodworth.

The work of teachers of accounting in colleges or universities falls into two broad divisions. One of the two major responsibilities is the training of students, equipping them with such knowledge of accounting as will be most useful to them in the business world, in professional practice and in all the activities of life. The other of the major responsibilities is the active promotion of research in the accounting field, the determination of sound principles and practices, the development of adequate standards and the formulation of ideals which should guide all those engaged in the application of accounting to economic and social problems. In the author's opinion, accounting teachers have given greater recognition to the first of these responsibilities than to the second. Teachers have built up a great body of teaching materials, and have evolved courses of training which are extensive in their scope and intensive in their method. Conditions in the fifteen years prior to 1930 gave rise to a phenomenal growth in the teaching of accounting in colleges and universities. There are now hundreds of schools and teachers offering accounting courses, thousands of students enrolled in these courses, as of March 1933.

This article presents information on the 17th annual convention of American Association of University Instructors in Accounting which was held in Cincinnati, Ohio from December 28-29, 1932. Various topics discussed at the convention were recent Developments in accounting methods, problems of accounting teaching, accounting and law and problems of accounting research. The article also presents a list of professors who had read papers on these topics during the convention. The annual dinner was held on December 28, at 7:00 p.m. After introductions in which each member in turn arose, announced his name and his connection, professor F.W. Woodbridge announced the name of the winner of the scroll awarded by Beta Alpha Psi, the national accounting fraternity in the U.S., for the most notable contribution to accounting literature during the year ended April 30, 1932. The scroll was awarded to A.P. Richardson, editor of "Journal of Accountancy," for his book "The Ethics of a Profession." Following the announcement of the award, J.L. Carey, secretary of the American Institute of Accountants was introduced and he spoke briefly.

Effectiveness in teaching, because of the vast amount of material offered in the average course in accounting, may be determined by the approach selected and the material emphasized during a period of instruction. The importance of this statement is the reason that efforts are constantly made to learn of new methods which may in some degree increase the student's general comprehension of the science, as of March 1933. In this article a skeleton-plan consisting of five accounting concepts and detailed explanation of three aspects of the accounting mechanism is presented. The proposed plan is made up of three parts. The first part consists in sketching in the early lectures a general view of the field by aid of five basic concepts which, with adequate refinements, begins with the account and ends with the financial and income statements. The second part consists of intense study of the account, the accounting equation, the accounting records, the accounting period and the work sheet. The third part, which reviews in a general fashion the foregoing, consists of thorough analysis and explanation of the accounting equation, inventories and the adjusting entries section of the work sheet.

The French Code de Commerce, a law promulgated in 1807, contains a striking instance of an official changing of usage in a matter of business terminology. In making legislative recognition of the business corporation, the framers of the code applied to the corporation, as its official designation, the term "société anonyme," which means anonymous society. In so doing they appropriated a term which hitherto had been employed both by laymen and by members of the legal profession to designate various types of informal associations of business men, not one of which at all resembled a corporation. These forms of association were, in fact, characterized by features which are diametrically the opposite of those which characterize the business corporation. Yet the change in the official meaning of the term, société anonyme was effected, and the new meaning has apparently entered into common usage on a permanent basis. One of the earliest forms of the société anonyme appeared as the association of persons who participated secretly in the farming of taxes. The tax farmer for a town, city or other district associated with himself several capitalists to participate in the profits or losses of the undertaking.

Reviews the book "Practical Problems of Budgetary Procedure in Business," by Edwin L. Theiss.