Knowledge that Transforms

Reviews the book "Manual of Municipal Accounting," by Lloyd Morey.

Abstract The Wharton School of Finance and Commerce is the under-graduate school of business of the University of Pennsylvania in Philadelphia. After forty-five years of experience and development, the ideal set for the school by its dean, Emory R. Johnson, and the faculty, is to offer courses of study which will give to each student: first, a reasonably general education; second, a special training in the principles of business; and, third, opportunity to specialize in the field of business in which he is most interested. Where does accounting instruction belong in this three-part division of the curriculum? Certainly not in the first division with subjects such as English, history, political science, economics, sociology, and other studies of general educational value. Incidentally, these general studies are not concentrated in the first two years, but are taken concurrently with the technical subjects throughout the four years. Two accounting courses come in the second division of the curriculum, which division includes subjects offering a training in the principles of business in general, a training which must be considered a minimum vocational equipment for any business man.

Abstract It is generally recognized that one of the leading factors contributing to the present high level of prosperity is the economy from large-scale production. The reduction of overhead and the lowering of unit costs due to the manufacture of commodities in large quantities has brought within reach of the average workman comfort. which were sheer luxuries a generation ago. This would scarcely have been possible under the sole-proprietorship and partnership forms of organization, as no small group of investors would have been able to furnish sufficient capital to finance the requisite volume of business. It has been the corporation, under the guidance of farsighted executives, which has contributed so largely to this progress. This change in the general aspect of business (with the scientific approach to problems of finance, production, and marketing which is now required) has placed business on the plane of a profession; and colleges and universities have recognized this by establishing departments of business administration with curricula designed to train men as leaders in this profession.

Reviews the book "The Mathematics of Business," by W.V. Lovitt and H.F. Holtzclaw.

Reviews the book "Goodwill and Other Intangibles," by J.M. Yang.

Abstract The purpose of this paper is to show the growth of instruction in accounting in the U.S. universities and colleges from 1900 to the present, as of June 1927. The interest in accounting has also grown rapidly in secondary schools, normal schools, and foreign schools in this same period, but the scope of this study is restricted to the U.S. universities and colleges. The year 1900 was selected as a starting point because instruction in accounting prior to that time was not very important. In fact, even during the first few years following 1900 there was not much development in accounting instruction in the universities; and in such work as was given the art and science of bookkeeping were emphasized rather than the fundamental principles of accounting. In order to determine the extent of this growth a study was made of the courses in accounting as shown by the catalogues of forty two of the leading universities and colleges. In this study the catalogues were carefully examined for each year from 1900 to 1926, inclusive. In addition, in order to determine definitely the growth in the number of schools giving courses in accounting, the catalogues of seventy-five additional universities and colleges were studied for the year 1900, 101 for 1910, 303 for 1916, and 575 for 1926.

Abstract That fixed assets should appear in the accounts on the basis of their original cost, adjusted only for depredation, has been a much revered canon of accounting, and much has been written and many considerations urged in support of this rule. Among the affirmative arguments should be mentioned the following: 1) original cost represents the value of such assets to the enterprise as a going concern; 2) writing up the value of fixed assets necessitates a corresponding credit to surplus and such credit constitutes an unrealized profit; 3) changing values of fixed assets are due in a large measure to the changing value of the monetary unit and it is both unwise and impractical to attempt to use the dollar as a unit of measure and at the same time endeavor to allow for the fluctuations in its purchasing power; 4) accounting is fundamentally a system of recording logically the historical facts of a business enterprise and this record will be most accurate and trustworthy if there be strict adherence to actual financial transactions and no attempt made to incorporate into the accounting structure the hypotheses and postulates of economic analysis or the dictates of individual judgment; 5) the practical difficulties inherent in the task of measuring current economic values are such as to invalidate the use of accounting as an effective instrument of business control.

Reviews the book "Questions and Problems in Accounting," by R.A. Stevenson and R. Emmett Taylor.

Abstract It has been seen, especially in the U.S., that for any given industry an increasing or decreasing of accounting structure parallels a similar increase or decrease in the organization. Business organization and administration tend to place emphasis upon the personal elements in business activity. Personal element, that is, recognition of the parts played by individuals within their business units, is a factor which makes vital the accounting records. Business organization expresses the relationships of owners among themselves and to operators or managers engaged in the service of the owners. A second form of relationship is found in what Is sometimes called "internal organization," organization in terms of the various functions performed by the individuals or by groups of Individuals within the business unit. In the article, a brief consideration of two types of organization relationships between the element of business organization and administration and accounting have been discussed, which include, firstly, the work of the auditor in certification, and secondly, the recent development of the operating statement for purposes of administrative control.

Abstract A condensed balance sheet which reflects all the adjustments arising from and incidental to the proposed financing is often used in the circular issued by the banker, when offering securities for sale. The adjustments fall into three main groups: new funds obtained from-bonds or notes to lie sold; stock to be sold; assets to be liquidated; new funds to be disposed of-to retire funded debt; to retire certain issues of preferred stock; to liquidate short-term debt; for additions to plant, by withdrawal of cash or other assets from the business; internal readjustments-reclassification of capital stock issues; revaluation of assets, stock dividend; etc. The cost of the new financing is usually included in deferred charges and the excess of the funds obtained over funds to be expended is included in the cash item. A matter of importance in constructing and handling special statements is that of interim changes in conditions. It is essential that the auditor examine the accounts for these intervening months to ascertain that nothing transpired during that period which affects adversely the company's financial condition. It is also important that the statement reflect as nearly as may be the prospective financial condition after the financing is consummated.