Knowledge that Transforms

Abstract A number of texts and reference books on accounting were examined for the purpose of learning the correct method of computing the value of a nonparticipating life-insurance policy, for presentation on the balance sheet of a going concern. Most of the books examined omitted all mention of the subject. In the five books that mentioned it, four different methods were recommended. In the case which the author had under consideration, the four methods produced four different answers. The variation between the high and low answers was substantial. A study of the four recommended methods convinced the author of this paper that the variations were not due to differences of opinion on the relative merits of the various methods, but to several causes. One is that accuracy has not been earnestly sought. The proper valuation of life-insurance policies owned is relatively unimportant, because the asset value is not large, and a misstatement does not seriously distort the balance sheet. Another cause is that a life-insurance policy is a unique combination of investment and expense. Accounting principles applicable to investments and accounting principles applicable to expense are alike involved in determining the asset value.

Reviews the book "Bond Investment Policies for Banks."

Reviews the book "Operating Results of Consumer Cooperatives in the United States in 1937," by Carl N.Schmalz.

Reviews the book "Bookkeeping and Accounting," by Arthur Henry Rosenkampff and William Carroll Wallace.

Abstract Over two hundred million dollars a year is lost to industry through employee frauds. This, however, is only the amount that is ferreted out and made public. There is no telling how much additional is lost either in undetected frauds or those that for one reason or another are hushed. That the record should contain fraud in such prolific measure is not the exciting feature. The part about these frauds that does cause blush, at least to the cheek of an auditor, is that when the frauds do "pop," it is found that so many of them had been started and blithely going on for long periods of time untouched by auditing pursuit. Even more damaging is the fact that frequently some of these frauds come to light not as a result of internal control or auditing technique, but wholly out of accidental or adventitious circumstances. Chance, rather than auditing, prevails. In the hope that laboratory dissection and analysis of frauds might, through the development of some new or modified auditing technique, narrow if not eliminate the fortuitous aspects of detection, a case study was undertaken. The study was confined to employee frauds and did not consider skullduggery by employers themselves. For case material, accountants, surety companies, banks, stock brokerage concerns and industrial and commercial organizations were invited to submit details of frauds that were unearthed by "happenstance" rather than by the normal workings of accounting controls.

Reviews the book "How to Operate under the Wage-Hour Law," by Alexander Feller and Jacob E. Hurwitz.

Abstract In this article, the author discusses economic aspects of fixed-capital obsolescence illustrating issues in patent laws and ordering. He describes that prior to the twentieth century, obsolescence of fixed capital or intellectual assets was usually treated as a factor of depreciation. In recent years an attempt has been made in some instances definitely to separate depredation and obsolescence. ice. Although alike in their fundamental nature, the two are traditionally separated because the latter is consumed in a single use, while the consumption of the former extends over a longer period of time. The physical results of depreciation are apparent, but the same cannot be said of financial results. Accountants also suggested that in many cases producers must use their judgment as to what they consider the best time to retire certain assets from use. There has been considerable agitation in recent years toward a change in the patent laws. It is claimed that modern economic conditions require several modifications of present laws in order to prevent the misuse of patent rights.