Knowledge that Transforms

Reviews the book "The Taxation of Small Incomes: Social, Revenue and Administrative Aspects," by Paul J. Strayer.

Abstract Those who use cost data often discuss cost finding as though it were possible to ascertain one true or actual cost figure which, once found, can be used for any and all purposes. There are as many different kinds of costs as there are points of view from which to analyze a given business problem. Hence, as a step preliminary to intelligent consideration of cost problems and the choice of a method for computing cost figures, it seems essential that the accountant should possess a clear understanding of the different needs for cost data within a business organization, the cost concepts that are available to meet these needs, and which of these concepts of cost is appropriate under the circumstances. After the cost that is sought has thus been clearly defined and its relevance established, attention may then be turned to ways of assembling the figures. In general, it may be said that method of measurement used is a basis of cost classification that has a great deal of significance to the accountant, for he is directly concerned with formulating and applying techniques for cost measurement.

Abstract A number of papers in the March 1940 issue of the journal The Accounting Review, dealing with Federal accounting and auditing, have been prepared by persons familiar with practices now being followed and are both descriptive and critical in character. These papers will furnish a background for accountants who desire to know something about Federal accounting procedures, and it is hoped that they may in some degree crystallize the broad criticisms which have frequently been leveled at theories of Federal fiscal responsibility: many of which have been inherited from the days of intellectual Alexander Hamilton. The Budget and Accounting Act of 1921 placed the responsibility for the accounting systems of the government in the hands of a Comptroller General who as head of the United States General Accounting Office was made independent of current administrations. But the U.S. Congress neglected to provide adequate machinery to control the activities of the Comptroller. Under existing law, it may be worth noting that the person accountable for expenditures of Federal departments is not even the administrator but the lowly "disbursing officer," an employee of the administrator charged with the duty of paying obligations incurred by others.

Reviews the book "Turning Points in Business Cycles," by Leonard P. Avres.

Abstract The statements of the Homestake Mining Co., a gold-mining company, and of its wholly owned subsidiaries, the Golden Gate Mine and Timber Company and the Wyodak Coal and Manufacturing Company, provide an interesting example of the treatment of depletion and of the difference between percentage depletion allowed by the Federal income tax law and unit depletion based upon the cost or March 1, 1913 values of the property. The Bureau of Internal Revenue for income tax purposes at $13,250,416.16 established the March 1, 1913 value of the ore body of the Homestake Mining Co. For a number of years depletion based on a percentage of gross income as permitted by the Federal income tax law was credited partly to depletion reserve on cost or market values as of March 1, 1913 "on a per-unit basis, and the remainder to "Depletion reserve, percentage basis in excess of cost or March 1, 1913 value." A change in the treatment of investments in subsidiaries by the parent company, required by the United States Securities and Exchange Commission, is also of significance.

Abstract The study of cost accounting has come to occupy a significant place in schools or departments of commerce. Many instructors feel that it should be part of the preparation of students who have no particular fields of business specialization. No longer is it looked upon as a subject for accounting majors only; the contents of the course should, therefore, be adapted to the needs of both the accounting major and the general business student. It would be interesting to know if graduates, who had studied cost accounting, and later became associated with various fields of business, would agree with the opinions of cost instructors on course content. It is possible that their views might differ, at least in some instances, from those of their teachers.

Reviews the book "State-Chartered Savings, Building and Loan Associations in Illinois 1920 to 1936," by Arthur H. Winakor.

Reviews the book "Manual on Commercial Law," by A. Lincoln Lavine.

Abstract The article focuses on accounting reports for management investment companies in the U.S. In the past 15 years American investment trusts and investment companies have developed from a little-known type of financial institution to the stature of an established industry. In this relatively short period the new industry has been faced with the varied problems of developing investment, trading and dividend policies, reporting techniques and accounting principles and procedures. It is not surprising that the same rate of progress was not maintained in all fields but it is unfortunate that one of the early lags appeared in the field of reporting techniques. In their early years, American investment companies were influenced to some extent by experiences of British investment trusts. In addition, American companies were faced early in the development of the industry with the accounting and reporting problems arising from a very rapid increase in size, rapidly increasing stock prices and subsequent drastic breaks in stock prices. The rapid increase in the importance of American investment companies can be indicated by tracing the number of companies in existence and assets of these companies.

Reviews the book "Government and Economic Life," by Leverett S. Lyon, Myron W. Watkins and Victor Abramson.