Knowledge that Transforms

Reviews the book "Business Law, Principles and Cases," by Harold F. Lusk.

Abstract The article presents information on the proceedings of the 23rd annual convention of the American Accounting Association, held at Detroit Leland Hotel, Detroit, Michigan, between December 28 and 30, 1938. The chairman introduced the representative of the American Institute of Accountants, Thomas H. Evans. The first order of the regular business was the reports of officers. The president addressed that a considerably larger Life Membership Fund would enable them to publish a number of worthwhile studies which would add to the prestige of the association. He adds that the cooperation of all members and especially of the heads of accounting departments and others in keeping the directors informed of projects which are in the offing and in putting the committee in touch with promising men who might undertake studies on subjects needing research works. He admits that their educational committee has not been assigned any particular projects this year, but several studies of collegiate training in business and accounting are being made by other organizations, and it is likely that they shall be called upon in the near future to take part in one or more of these.

Reviews the book "Origin and Evolution of Double Entry Bookkeeping," by Edward Peragallo.

Abstract In the last decade, the point of view and the relative emphasis upon various phase of problems related to accounting practice for lawyers have shifted greatly. In 1930, before the American Law School Association, it was necessary to present evidence that lawyers needed and wanted accounting training. It is no longer necessary to prove that lawyers need some training in accounting. Reason for that depends upon the general relationship between law and accounting and the bounds and limits of the two professions. In spite of the fact that the two professions are fundamentally dissimilar, there are many situations which involve mixed questions of accounting facts and law. Not only do the courts adopt and lend sanction to accounting principles as exemplified in accounting practice; the reverse is equally true-that the law, and administrative bodies created by the law, themselves in turn influence materially the development of accounting principles and practice. The U.S. Securities and Exchange Commission has set forth formally and informally a number of "requirements" for registrants, and is daily rendering "decisions" on disputed points of accounting practice.

Abstract A basic concept of cost accounting is necessary before one attempts to evaluate a particular type of cost-accounting system. Varying and narrow concepts of the function of cost accounting cause much of the controversy as to the relative merits of the various systems. As a starting point, it may be said that cost accounting is not a separate and distinct field, but is merely a phase of the general accounting. A cost-accounting system should "tie in" or be coordinated with the general accounting system, for both are concerned with the transactions and status of a single business entity which operates for the purpose of making a profit. The function of accounting, in a broad sense, is to furnish interested parties with certain information when it is needed. This function may be viewed from the uses to which the information is put. Among them are the following: 1) pricing policy of product; 2) other policy formation; 3) preparation of periodic statements; 4) control of operations with the object of securing efficient production. The relative importance of the various uses of cost data will vary greatly with the type of industry, size of the business, and other circumstances; but management realizes that there are various possible uses and makes such use of cost data as circumstances necessitate.

Abstract The authors of "Tentative Statement of Accounting Principles" have accomplished something for which the accounting profession, teachers and practitioners alike, should be grateful. They have described carefully and concisely what accountants do and their "statement" indicates the nature of current "good accounting practice." They have not attempted to prepare a text for those who have no knowledge of fundamentals, for such texts exist in ample number. As was to be expected, the results of this effort did not meet with universal approval. Accounting, as author A.C. Littleton declares, is "...relative and progressive. The phenomena which form its subject matter are constantly changing. Older methods become less effective under altered conditions: earlier ideas become irrelevant in the face of new problems." Professional accord seldom occurs in such fields of knowledge. Fortunately much of the recorded disharmony is more apparent than real: Disagreements frequently arise when conclusions are stated without reference to premises. The evolution of accounting practice sometimes, in fact usually, proceeds more rapidly than the statement of postulates. It is therefore intended, in this paper, to indicate how some of the grounds for discord will disappear when the premises of an accounting and a theory of business enterprise are made explicit, and to suggest that some of the work by the committee for revision should be concerned with a statement of premises and a theory.

Reviews the book "The Theory and Practice of Modern Taxation," 2nd ed., by William Raymond Green.

Reviews the book "Papers on Accounting Principles and Procedure Presented at Fifty-first Annual Meeting of the American Institute of Accountants."

Abstract In June 1936, the executive committee of the American Accounting Association published "A Tentative Statement of Accounting Principles." Accounting theory has been debated in the Association's annual meetings and in accounting periodicals with an energy never before displayed. From the beginning the Committee recognized the tentative nature of the statement of principles and looked forward to the time when revision would be undertaken. The appearance of revenue marks the accomplishment of the principal objective of business, namely, placing new utilities in the hands of consumers. The tests by which the reality of the profit or loss that may be embedded in revenue has been judged are as follows, economic tests, service has been rendered by a producer, utility has been accepted by a purchaser, a price has been determined by independent bargaining; legal tests, delivery has been completed, title to product has been passed, producer's claim for payment in due course is "property." Since the association of revenue and performance is basic to the concept of revenue, accounting standards should direct the preservation of that association; recognition of revenue should neither anticipate performance nor be delayed beyond performance.

Reviews the book "Advanced Cost Accounting," by Charles F.Schlatter.