Knowledge that Transforms

Abstract It would be a serious mistake to underestimate the importance of money substitutes in medieval and early modern times. The Italians especially were clever in replacing specie by other devices in the settlement of debts. Among merchants the setting over of debts was a common practice despite the absence of negotiable instruments. Local payments were often made by transfer in bank or by transfer of credit on books of an ordinary merchant or a merchant-banker. Transfer orders were given not in writing but by word of mouth. Such banks existed in most parts of Europe however, places where no transfer banks existed, prominent merchant-bankers comprising of foreigners sometimes accepted deposit accounts for clearing purposes. The use of oral commands to pay was rather satisfactory for the purpose of making local payments, but this method was not suitable for the purpose of making funds available in a distant place. In foreign trade, the use of written instruments was therefore a necessity. The bill of exchange became at an early date the principal instrument by which funds were transferred from place to place without shipping any specie.

Abstract The article focuses on the meaning of public accountants. It has different meaning for different individuals. The author is of the opinion that since some of the work of a public accountant is affected with a public interest, a definition suitable for use in a statute may be needed. But the best of definitions necessarily have their limitations. They will indicate the name of a larger group of which the item defined is a part and they will indicate one or at most a few characteristics which help to differentiate this item from other items in the larger group. It may be interesting, and possibly useful, therefore, to explore the historical background of the term public accountant as reflected in the literature of accountancy in the U.S. The administration of first Certified Public Accountant law was placed with the Regents of the University of the State of New York. To make effective the provisions of the new law, the Regents created the Board of Examiners for Certified Public Accountants that was authorized by Section 2 of the Act.

Abstract Reviews the book "CPA Law Questions and Answers, 1935-41," by John C. Teevan.

Abstract The article presents information on bank reconcilement. The agreement of the cash balances in banks as they appear in the books of record with the amounts shown to be on deposit by the statements of those banks at certain dates involves different procedures under dissimilar circumstances. The bookkeeper-cashier of a business concern follows the procedure of making necessary adjustments for items in transit or in process of collection omitted in error from either the bank's statement or his employer's records. The auditor however, is interested in more than this mere arithmetical agreement of the two balances. An important initial procedure is the comparison of each paid check returned by the bank with the individual debit charged on the bank statement. This step may be omitted, or reserved for the final procedure in the event of a remaining unallocated difference. If the client's bank statements and paid checks, with other debit and credit memoranda, are sent by the bank to the auditor's office. Deposits also require the careful attention of the auditor, not only in checking the daily totals lodged in the banks, but also in the comparison of the details of some of the daily deposits as indicated in the cashbook with the details as shown on the deposit slips in the possession of the banks.

Abstract Examination of changes in the position of accounts listed in successive balance sheets of a business is a useful analytical procedure. There are two kinds of statements for this purpose that may be derived from financial statements. Statement accounting for variation in net worth is a form of comparative balance sheet showing changes in account balances between balance-sheet dates is shown in the article. Changes are classified according to their effect on net worth, increases in assets and decreases in liabilities and reserves cause an increase in net worth, while decreases in assets and increases in liabilities and reserves result in a decrease in net worth. The change in net worth is the difference between these increases and decreases and this change is accounted for by the total of changes in the items composing net worth, in this instance, capital stock and surplus. This statement has been named by the writer the statement accounting for variation in net worth. The second kind of statements is statement accounting for variation in working capital. The vital activities of a business, such as the acquisition of capital and the liquidation of indebtedness, the purchase of equipment and merchandise, and the appearance of revenues and expenses, are reflected in the current asset and current liability accounts.

Abstract Reviews two books on business law. "American Business Law," vol. 1, by W.R. MacMillan; "American Business Law," vol. 2, by V. Winters Hoerr and Raymond J. Goss.

Abstract In three recent issues of the periodical "Accounting Reviews" dated October, 1943, January and July, 1944, representative educational programs of accounting majors have been printed for sixty colleges in the U.S. and for two in Canada. It is the purpose of this article to analyse the data thus collected. The first analysis, will deal with the quantitative aspects of the programs. This will classify the courses according to the usual departments of instruction and thus indicate the fields of education which receive particular attention in most programs in the sample. A subsequent analysis will deal with course names in order to derive further indications of the educational pattern of college students who major in accounting. Public accountants and others who give employment to college graduates with a major in accounting may find these representative programs helpful. They are individual programs, each representing the work of an actual student who was graduated from the school named. They can be studied individually as one deals in the office with one man at a time.

Abstract Reviews the book "Statistical Adjustment of Data," by W. Edwards Deming.

Abstract The article discusses the social significance of accounting and the public-interest aspect of public accounting. The author views the concept of accounting as a factor in social control. Too few men come from college with any appreciation of the relation between the accounting principles and practices which they have studied and the social consequences that may result from their application. Regulatory bodies in recent years have taken it upon themselves to determine accounting principles and practices in many cases in order to promulgate their regulatory objectives without making their social consequences clear. The question can be fairly raised as to whether the profession and the teachers have made the contribution that should be made in relating accounting policies in use to such consequences. Any consideration as to the soundness of a particular accounting policy is sterile which does not embrace the possible social consequences thereof. The theory apparently underlying the typical program in business or accounting reflects a belief that education for living and education for working can be successfully integrated throughout the four years leading to a bachelor's degree, or the five years to a master's degree. This expresses the idea that working is a part of living and living involves working.

Abstract It is not unusual for accounting teachers to stress knowledge as an important aspect of preparation for a career in professional accounting. And it is perhaps understandable that sometimes they may not show full appreciation of the existence of other factors besides technical competence. Accounting practitioners, on the other hand, often emphasize the fact that qualities other than technical competence contribute greatly to successful professional service. Perhaps they sometimes give the impression that personal factors are more important than technical preparation. In one occupation rating scale constructed from data supplied by twenty industrial and vocational psychologists, occupations of university professor, oculist, civil engineer, journalist are classified in the first category of high abstract intelligence. But no mention is made there of the certified public accountant (CPA) or his counterpart in industry, the controller. It is not necessary to assert that a CPA is the intellectual equal of an oculist, a journalist, an engineer, or a professor, in order to point out that there may be a real question here concerning the adequacy of sampling which omits an important occupation.