Knowledge that Transforms

Reviews the book "Auditing Practice Set," 3rd ed., by Paul E. Bacas.

Reviews the book "The Monetary Experience of Belgium, 1914-1936," by Henry L. Shepherd.

Abstract The article discusses the statement of accounting principles, published in the June 1936 issue of the journal The Accounting Review. It involves the entire question of income determination, the most fundamental of all accounting problems. In the first place earnings, earned surplus, capital surplus, and capital represent important conceptions which are necessary to be kept distinct, in spite of the constant interchange among them. Changes in the accounts representing these four different things should accordingly be kept equally distinct. The income statement should be marked off in three stages showing income of the year, income adjustments for prior years, and realized capital gains and losses. Second, corrections of the costs and income of past years are not costs and income of this year. Earned surplus is the account containing the present resultant of all past income charges and credits, and it is the account to be used for subsequent corrections therein. Third, substantial capital losses and gains are certainly not proper items for the income account of any year. It is necessary to be clear at the outset that they really are capital losses and gains.

Abstract This article focuses on the inventory reserves as element of inventory policy. Within the last two years a marked revival of interest in the base-stock method of inventory valuation has developed. Recent literature on the subject has stressed its long-run benefits and its significance under present and prospective conditions of rising prices. These aspects are of major importance, though doubtless the interest of many advocates has been quickened by the possibilities of the method in the computation of profit subject to the undistributed profits tax, should the government allow it for this purpose in the near future. The article describes the important features of the base-stock method and some of the implications and fundamental concepts involved in it. Following this, an alternative procedure now in use, namely the stated reserve method, is presented for consideration in the belief that, as a practical matter at the present time, it is desirable to devote attention to alternatives which involve less drastic changes in traditional practice and yet provide the major advantages of the base-stock method.

Reviews the book "Two Cycles of Corporation Profits, 1922-1933, 1934-19xx," by Laurence H. Sloan.

Reviews the book "Facing the Tax Problem."

Reviews the book "An Index to Business Indices," by Donald H. Davenport and Frances V. Scott.

Reviews the book "Investigations for Financing," by David Himmelblau.

Abstract Under various sponsorships, certain proposals are being made which may bring about a complete reorganization in public accounting practice. These proposals may be sound. They may lead to a public accounting renaissance. They may, in fact accomplish a thing that all accountants have for years eagerly sought-higher standards in public accounting. But certainly these proposals should be analyzed and they should be subjected to acid test of intelligent and far-seeing consideration. It would be most unfair to ascribe all of this sponsorship to self-interest. Motives of these various groups are mixed. It is quite natural for university teachers to have complete faith in their own work. It cannot be said that the sponsorship of this movement by professors and instructors in accounting is wholly due to self-interest. The sponsorship of this movement by an organized group of non-certified public accountants represents a seeming contradiction. Without going into technical exposition, bills for all practical purposes will open doors.

Reviews the book "Principles of Accounting," by Arnold W. Johnson.