Knowledge that Transforms

Reviews the book "C.P.A. Review and C.P.A. Answers and Solutions," by Sidney G. Winter.

Abstract In February, 1924, Messrs, Touche, Niven, & Co. audited for the fourth successive year books of one Fred Stern & Co. Inc., of New York, a rubber importer and dealer and prepared thirty-two copies of a balance sheet to which the following certificate, dated February 26, 1924, was affixed. According to the balance sheet, the net worth of the company was more than one million dollars. The Ultramares Corp., professedly relying upon the balance sheet, began to loan money to the Stern Company on trust receipts in March, 1924. Actually, the company was insolvent and the balance sheet false, in December of the same year the Stern Company collapsed. The Ultramares Corp. then sued Messrs, Touche, Niven, & Co. and in the appellate division of the New York State Supreme Court (I) secured judgment of $208,058.97 for damages arising out of the negligence of accountants but was unsuccessful in reinstituting a charge of fraud and collusion on the part of accountants' employees with Stern officials, which had been dismissed by the trial court. The case was then carried to the highest court of the state by both plaintiff and defendant. Judge Cardozo in an exceedingly able and trenchant opinion reversed both findings.

Reviews the book "Psychology in Modern Business," by H.W. Hepner.

Abstract Many accountants have lack of knowledge of their own profession. Neither they have the desire to gain knowledge. Not only the historical aspects of accountancy are unknown but important matters as laws affecting the profession, societies of accountants, and the ethics absolutely essential to the proper practice of accountancy are unheard of in some cases. The study of history of one's profession, acquaints a student with the mistakes and the achievements of those who preceded him. The study of fact and conditions is important as it gives the student reasoning ability that later will permit him to apply such remedies and measures that are necessary to turn possible failures into successes. Specifically, the accountant who merely has his knowledge of debit and credit, or who knows a chart of accounts and has had training in recording facts in books of account will not succeed unless he knows how to present these facts to his client in such manner as to preclude any misunderstanding.

Abstract This article focuses on the editor's views about the significance of corporate's financial statement. The editor says that records of the company both in the books and elsewhere is a curious expression, the last six words of which constitute another questionable pleonasm. In the everyday language of the auditor, the "records" are the books of account, documents and files. The reader of the certificate has the right to expect a term to be all-inclusive if it is not explicitly limited, there would seem to be no need of telling him the obvious. Besides, the auditor, for a portion of his information, goes beyond the records of the company during the course of his examination, if he did not do so, he would undoubtedly be guilty of negligence. Perhaps it was meant that the auditor has made some of his customary verifications "elsewhere" than in the records, but the language used falls short of saying so. Condition of affairs apparently is meant to convey the idea of "balance sheet" and "statement of profit and loss" as it stands it brings to mind "statement of affairs" and is confusing.

Reviews the book "Modern Bookkeeping Practice," by Nathaniel Altholz and Anthony W. Klein.

Reviews the book "A Solution to the Appreciation Problem," by William B. Castenhols.

Abstract The article presents a report on the fifteenth annual convention of the American Association of University Instructors in Accounting, held in hotel Cleveland on December 29 and 30, 1980. President A.H. Rosenkampff presided over the sessions. The annual dinner of the association held on Monday, December 29, at 7:15 P.M. At the close of the dinner, President Rosenkampff called for reports of committees. The Classification of Accountancy services as presented by the American Society's Committee, may be worked out for students who are preparing to enter the professional field of accountancy. The Committee on Research sent out, under date of August 19 1980, to the entire membership, a Questionnaire on the Treatment of Appreciation. The content of the report of Membership Committee was divided into, Organization of the Committee, Plan of Operation, Results and Conclusions. The plan of procedure followed by the committee seems to hold much promise.

Reviews the book "Income Tax Accounting," by J.F. Sherwood.

Reviews the book "Accounting Principles," by James O. Mckinsey.