Knowledge that Transforms

Abstract Criticized and condemned but never thoroughly analyzed, the cash basis of accounting remains a relatively unexplored field of accounting theory. At the hands of the text writers, it has received meager treatment indeed. The perfunctory treatment may be adequate because the cash basis is a simple concept whose application is readily apparent. The writer hopes that this article will dispel that illusion. Indeed, an adequate treatment of all problems lurking in a comprehensive analysis of the cash method is too ambitious a project. The article is therefore confined to one small segment of the problem: the treatment of prepaid expenses. Suggestions changing the practice in respect of the cash method have not been lacking. For the most part, these have been confined to limiting its scope. Indeed, it has been forcefully suggested that it be entirely abolished in Federal income taxation. There is this to be said in favor of the abolition or serious curtailment of the cash method. It allows the taxpayer a greater degree of control over the amount of disbursements and thereby over the amount of taxable net income in any particular year.

Reviews the book "The Federal Income Tax," by Roy G. Blakey and Gladys C. Blakey.

Abstract The article focuses on some unsettled problems of income. Much has been written about income for tax purposes. Some writers have been concerned with concepts and definitions; some have been devoted to the more detailed problems of measurement. A study of the concepts and definitions shows a great variety of opinions among writers from such important countries as the U.S., England, France, Germany and Italy. Concepts of taxable income, which have been presented often come from writers in political economy who have in view some special social or national fiscal policy. The concept sometimes has an ethical flavor other than the capacity of the individual to pay. Types of definition vary greatly in fundamental content. At one extreme is the idea that income is determined by the disposition made of the form in which it is embodied while at the other extreme is the idea that there is income only after there has been ample deduction for both consumption and capital maintenance. Concepts applied vary with expediency social and political ends, or other consideration not based on individual capacity. There is often unfair discrimination as between individuals whose composite respective income situations might in fact be similar.

Reviews the book "Accounting for the Individual and Family," by Neva Henrietta Radell.

Abstract According to the author of this article, it is not his purpose to deal at length with the materials or subject matter with which accounting research might concern it. While some mention will be made of these materials, he is more concerned to develop certain points of view, which he thinks should animate the research worker in accounting. A common assertion by research workers is that a given generally accepted principle ought to be re-examined, or that indeed all of them ought to be re-examined. This is a proposition, which in itself can receive general consent. But it often happens that the statement "that generally accepted principles of accounting should be re-examined" is frequently made by those who already have rather definite ideas for converting those generally accepted principles into something entirely different from what they are, or were ever intended to be. Those accountants who pretend to anything at all along the lines of accounting research cannot ignore the idea which bobs up from time to time, that accountants should try to devise a presentation of their data in entirely new forms.

Reviews the book "Business and the Public Library: Steps in Successful Cooperation," edited by Marian C. Manley.

Reviews the book "Beginning Accounting," by Dana F. Cole.

Abstract The article discusses several issues related to accounting as a tool for economy in German business. With the start of European hostilities, innumerable questions concerning industries, commerce, raw materials, and economy of the belligerent nations were raised in the daily press. Of particular interest was Germany, which through the innovation of its "Four-Year" Plan, had set out some years before to place its national economy as much as possible on a basis of self-sufficiency. Stringent foreign exchange laws, rigid economy, strict control over capital and labor, barter-trade with other nations, and rationing of food articles have long been regarded as measures foreign to American trade, business, and national policies. It is the purpose of the author in this article to present the development of that phase in the German business world, which on the one hand has made such rapid and important progress, and, on the other hand, has been called upon to help in the struggle for greater economy and for the success of the Four-Year Plan.

Reviews the book "Corporate Financial Policy," by Harry G. Guthmann and Herbert E. Dougall.

Reviews the book "1940 Tax Diary and Manual."