Knowledge that Transforms

Reviews the book "The Analysis and Control of Distribution Costs," by J. Brooks Heckert.

Abstract The article focuses on accounting exchange. There are many fields in which useless survivals in custom continue for an almost indefinite period; perhaps the stock illustration is found in buttons on a man's cuff, which once had a distinctly utilitarian purpose. Bookkeeping is particularly subject to instances of atavistic survival. Some of them have disappeared. One such universal custom, which even today is occasionally found in textbooks, is that of using the broad column in the conventional ledger to record the name of the contra account. In recent years, the custom of recording the contra account has very generally been abandoned except in textbooks. This in part was due to the introduction in the early 17th century of compound journal entries with the consequent meaningless entry, "Sundries," as no single account represented the amount credited. The curious fact is that while the broad column is generally left vacant there still appears as a last item the word "balance." Such an account no longer exists in American ledgers.

Abstract The article presents problems that were presented by the American Institute of Accountants on May 16, 1940, as the first half of the examination in accounting theory and practice. Candidates were required to solve all problems in six hours. The following weights were assigned, problem 1, 10 points; problem 2, 15 points; problem 3, 20 points; problem 4, 20 points; problem 5, 35 points.

Abstract It goes without saying that the Federal government because of the huge size of its annual budget needs to utilize the most approved, modern, and scientific systems of accounting, financial reporting, and auditing. Methods, which were reasonably satisfactory years ago when expenditures were relatively small, may be wholly inadequate today. The present financial administration of the Federal government was subject to strong criticism in the reports of the committees of the U.S. Congress and the President on government reorganization in 1937. There is serious need for the improvement of the accounting, reporting, and auditing of the Federal government. The evidence indicates that in many respects the accounting methods and practices are not up-to-date, and do not provide the essential financial data to the departmental executive officers, the President, the United States Bureau of the Budget, the Congress and to the public. The improvement of the accounting systems of the departments and bureaus will require constant and continued expert attention and study. The road to such improvement would appear to lie in building in each major governmental unit a competent accounting office, headed by a trained and experienced accountant, who is made responsible for departmental accounting.

Reviews the book "Mathematics for the Accountant," by Samuel Waldo Specthrie.

Reviews the book "New York Laws Affecting Business Corporations, Annotated," 21st ed., by J.B.R. Smith.

Reviews the book "Practical Budget Procedure," by John H. MacDonald.

Reviews the book "Social Security and Pay-Roll Tax Accounting," by J.F. Sherwood and John A. Pendery.

Abstract Accountants have often marveled at the misunderstanding of generally accepted accounting procedure and concepts, which the courts have in the past exhibited. Many decisions not only show misunderstanding but also indicate a failure on the part of the courts to attempt to ascertain the meaning of accounting terminology, which their decisions employ. It is unfortunate therefore to find a court in a recent tax decision turning for guidance to "correct accounting" as set forth in theory and practice only to find lack of agreement on the part of accountants as to theory and even greater disparity between theory and practice. It is only fair to state that the court found a similar lack of agreement on the question in the court decisions it examined. The "sale" of treasury shares can never result in "gain or loss." The question of "gain or loss" arises solely at the time of "purchase," not at the time of "sale." The account "treasury shares," carried on the books when stated capital has not been reduced as provided by law, represents an unallocated reduction and adjustment of shareholders' equities. If the treasury shares are later disposed of, the entire amount received from the new shareholder, should be recorded as any issue of stock, the par or stated value being credited to "Capital Stock" and the difference, if any being adjusted through surplus.

Abstract In England the emergence of the limited-liability company as the dominating force in economic life and indeed in public-accounting practice constitutes one of the major business phenomena of modern times. English auditing procedures are fundamentally the concern of practitioners themselves rather than of the law. Minimum requirements for the balance sheet are stated in the Companies Act 1929 and on file at Somerset House is a minimum amount of information in regard to all registered companies, which the public may utilize. English shareholders as a general rule receive more information than that filed at Somerset House. As auditors owe their primary duty to shareholders they are striving to arrive at a formulation of principles underlying the preparation of profit-and-loss accounts, and the accounts and statements of holding companies and their subsidiaries, since the law gives little definition of the principles to apply to these cases. If the profession can lay the groundwork in such matters the law can later embody these principles in amendments to existing legislation, if such a course in the view of all circumstances appears advisable. The English accounting profession endeavors to uphold higher standards than those set by the present laws in order that its protection of the rights of shareholders may be complete and effective.