Knowledge that Transforms

Abstract The new Dominion of Canada Companies Act, which came into effect in October of 1934, is a distinct advance on the law as it stood with regard to the prospectuses and the accounting of companies; but in so far as, so-called, "Distributable Surplus" is concerned, it only ameliorates a dangerous condition and does not remove it altogether. The phrase "Distributable Surplus," used as it is in Dominion of Canada Company Law, is not a good one. It's meaning is limited to the surplus contributed by shareholders, when paying for their no-par-value shares. It has been pointed out that "Distributable Surplus" is desirable, where a holding company is taking over a subsidiary, the shareholders of which have not had a dividend for the period just closed. They are to be paid their dividend out of the "Distributable-Surplus" set up. With regard to profits and losses of the company and its subsidiaries the auditor must report on their nature and source for the three preceding years, or for less, if the company has been in business for less than that period. The same must be done for a business, which it is intended to purchase out of the proceeds of the issue, directly or indirectly.

Abstract In this article the author proposes a system for teaching elementary accounting. Because it might be contended that this paper is attempting to make a virtue out of necessity or rationalizing that which had to be, according to the author, the system of teaching accounting at Miami University, Ohio was inaugurated before restrictive legislative appropriations might have forced the same system on accountants. Furthermore, because of the latter factor, it may be that what accountants are doing is not now as unique as it might have been some years before. According to the author, laboring under a delusion in believing there is or ever was anything unique in methods. All students take the same course regardless of whether they are accounting majors, business students interested in other majors, or students in other divisions of the University taking the course for various reasons.

Reviews the book "Simplified Mathematics for Accountants and Executives," by Harris D. Grant.

Abstract Within the last few years there has come to the fore in merchandising a sales promotional device based upon available accounting records of which comparatively little has been written but one possessing tremendous potentialities. This device, known among practitioners and theorists alike as customer analysis and control, is an attempt on the part of large stores to get acquainted with their customers, their needs and buying habits. By means of an analysis of customer accounts, buying habits can be discovered. The need for customer analysis has manifested itself in many ways during the last ten years. As a result of this condition not only are sales not as great as they might be but the success of ensemble merchandising is very definitely threatened as well. It is felt by many also that customer analysis and control is the one method by which advertising can be made more effective as the effort in many instances is aimed more directly at actual purchasers of a specific type of merchandise, waste circulation thus being reduced to a minimum. It must be realized that any problem of customer analysis and control is of a strictly individual nature. Thus, much of the success of any one merchant is at the expense of his competitors.

Abstract In this article the author discusses various methods of teaching cost accounting to accountancy students. It is apparent that the instructor may have either of two points of view in teaching accounting. The subject may be considered primarily as a skill, a technique, or a method of recording and summarizing the facts of business transactions. With such an aim, emphasis will be placed upon the accounting processes and much time will be spent on accounting procedure. On the other hand, accounting may very well serve the useful purpose of providing a method for teaching business processes. Cost Accounting is a very specialized, detailed technique and is concerned with bringing an intelligent order out of a mass of details. But, it may be more than that for the college student, for it is in the field of costs that accounting touches so closely that division of economics, production, and most easily understood by him. According to the author, if a study of cost accounting throws new light upon economic values, then, one may believe, the student has acquired a deeper insight into the social structure; has been given a useful key to other values.

Abstract A course in CPA problems is universally accorded a place in the curriculum in the senior year and represents the end of the work in accounting for the accounting major. Here is an attempt to bring in materials from the outside with which to test the mettle of the prospective accounting practitioner. Here is a departure from the consistent use of materials created by university teachers in accounting to extend and develop the teaching of accounting principles. Perhaps to the alert student, there is carried a warning of harder days to come, of more complex problems to solve in the work which lies ahead. In searching for the specific purpose of a course in CPA problems, it can be stated that it should provide a thoroughgoing review of accounting principles and practices. This means that by the use of CPA problems an attempt should be made to cover the field of accounting in review.

Reviews the book "The Nature of Dividends," by Gabriel A.D. Preinreich.

Reviews the book "Problems in Accounting," by Windsor A. Hosmer, Thomas H. Sanders, and Arthur W. Hanson.

Reviews the book "Corporate Earning Power in the Current Depression," by William Leonard Crum.

Abstract The purpose of this article is to review briefly the accounting treatment of the bond sinking fund and its reserve in their relation to current corporate financial policy. The writer does not intend to discuss the bookkeeping technique involved as such. Most studies on accounting theory review, at least briefly, the entries necessary to record the creation of the fund and the accompanying reservation of surplus. It is intended here, rather, to raise certain questions concerning the background of financial policy and procedure out of which this technique arises. The author wishes to emphasize two points. First, a study of accounting theory necessarily is related to business practice. Students draw inferences concerning it even though they are directly concerned with theoretical concepts and with problems of recording technique. Second, the study of corporation accounting respecting dividend policy has over-emphasized the surplus approach and consequently has resulted in students acquiring a too legal viewpoint.