Knowledge that Transforms

Reviews the book "Accountants' Index: A Bibliography of Accounting Literature, January, 1932-December, 1935."

Reviews the book "Cases on Business Law With Notes and Problems," by Leslie J. Ayer and Paul P. Ashley and Stephen D. Brown.

Reviews the book "American Bank Failures, " by C. D. Bremer.

Reviews the book "Twenty Five Years of Accounting Responsibility— 1911-1936," by George O. May.

Reviews the book "The Modern Economy in Action," by Caroline F. Ware and Gardiner Means.

Abstract The article discusses the role that budgets and a system of budgetary control play in the development and operation of standard costs. In fact, the statement can safely be made that budgeting must precede the accurate and effective determination of standard costs, at least as far as price standards of material, labor, and overhead are concerned, and conversely, a plan of budgetary control is much more successfully installed in concerns having standardized production processes and operating under standard-cost-accounting systems. Budgetary control and standard costs are inseparable and are each a necessary adjunct of managerial planning. Standard costs are estimated costs that are believed to represent ideal conditions to which it is hoped that actual costs may be made to conform. Standard costs are neither actual average, nor normal costs, but are estimates of what costs should be under as nearly perfect conditions as it is possible to secure. Standard costs may, therefore, be defined as representing a forecast of what costs should be under normal conditions, and as furnishing a basis for measuring productive efficiency.

Reviews the book "The Problem of Investment," by F.I. Shaffner.

Reviews the book "Accounting Fundamentals," 1st ed., by George A. MacFarland and Robert D. Ayars.

Abstract The article says that it is good educational psychology to explain difficult topics by simple diagrams. Diagrams in economics books have long explained the forces of supply and demand. Diagrams have frequently showed the circulation of money. There is, in fact, no value in keeping a thing difficult that might he made simple and easily understood by a diagram. The article further says that annuities constitute the axis of the entire field of actuarial science. Innumerable business problems are entirely or in part annuities and they are found in accounting and insurance, and even in corporation finance and public finance. The article presents a diagram to reveal their exact nature and which can be remembered much longer than any well-worded page. The graphic method of showing annuities can be used for many types of annuities and kinds of problems. The horizontal scale gives the time in periods from left to right. The vertical scale is used only to show the sequence of rents of the annuity, the first at the top and the last at the bottom. The interest is shown as an addition to the rents in order to give the final amount or as an addition to the initial present worth in order to give the rents.

Abstract Although the title of this article would indicate that it is primarily concerned with assets, this is not the case. It is much more directly focused upon the liabilities including net worth, or the equities in those assets. These equities, through their priorities, their contractual restrictions upon the corporation and its assets, limit their use and disposal. They also indicate the participation in the assets as well as their earnings and losses. The true significance and relationships of the equities to the assets, as well as to one another, is usually obscured. Accountants particularly have failed to give due recognition to them. It is the purpose here to state these limit actions on assets, to point out their significance, and to show how serious has been the failure of accountants adequately to appraise them in their statements. Not infrequently certain classes of purchases are financed through short term or intermediate term notes. These notes may have special characteristics, which limit assets and their disposal. But these are quite similar to those found in certain bond indentures and preferred stock deeds. Hence, a few of the restrictions, common to all of these equities, as a class, may be discussed together. There are many provisions requiring the maintenance of given slims of working capital.