Knowledge that Transforms

Professional accountants have long been divided on the question whether a charge for depletion should or should not be made in connection, with the preparation of financial statements for mining corporations. This division of opinion is noted particularly in accounting for non-ferrous metal mining corporations. Although the mining industry accounts for only about two percent of the total national income, the subject of depletion accounting is of sufficient theoretical as well as practical importance to merit adequate solution by the profession for the benefit of the investment public, management and the practitioner in the field of accounting. The public accountant expresses an opinion in his certificate as to the fairness of the financial statements as a result of application of generally accepted auditing procedures and based on consistent application of generally accepted accounting principles. However, that opinion is affected by those of experts in other professions in regard to financial areas which are not within the province of the auditors knowledge. Obviously, one of those areas requires the opinion and knowledge of mining engineers and geologists as to mine property, extractable yield and its exhaustion or depletion.

In the National-Income Accounts the National Income and Product Account is the production account for the entire output of the U.S. economy. Total unduplicated costs of producing the nation's output of products and services are listed on the left side of the account while the market values of final products and services produced are listed on the right side of the account. The purpose of this paper is to explain the nature and content of this important account in business-accounting terms. Most of the national-income terms in the production account are used also in business accounting and have a similar meaning. The production account of the U.S. economy may be regarded as consisting of four subsidiary production accounts covering business, persons, government, and foreign trade, respectively. The business production account includes the production activity of business firms, including that of government enterprises. The persons production account consists of wages paid by persons to other persons and interest paid by persons to business or government.

In the article, the available literature of the eighteenth and nineteenth centuries has been examined to discover when the idea of controlling costs was first rather clearly expressed and to trace the steps which were subsequently taken in developing the function of cost control. This article is noteworthy because it presents two new ideas relating to the purpose of keeping cost records. These objects are to examine and explain past results and to form a guide for future trading. The first object is based upon historical cost analysis which is of minor importance in controlling costs, but the second object indicate a forward looking purpose for keeping cost records which is of primary importance today in planning and controlling business activities. Furthermore, it emphasizes the importance of preparing statements that contains useful data and also attempts to explain a remedy for the justifiable lack of interest on the part of management in accounting reports, as they are usually prepared.

Reviews the book "Effects of Taxation: Depreciation Adjustments for Price Changes," by E. Cary Brown.

The purpose of national income compilations has been discussed many times, but as yet there has been no definitive survey of the actual uses to which the data are currently being put. It may be that the time has come for those who calculate national income and gross national product to extend their objectives further. The need has developed for an objective, factual report of the position and the progress of national economy. The present form of reporting national income does not adequately meet either of these requirements. The present "account" form of reporting national income, although frequently employed in the construction of business balance sheets, is virtually never used by business or other groups for income statements, and so is completely alien to the experience of the public. The system used for the development of basic data, with its theoretical framework of "factors of production" and "final products," its subordination to economic sectors, and the absence of what may be called "journal entries," is also completely alien to the experience of the public.

Reviews the book "College and University Business Administration."

Reviews the book "Internal Control Against Fraud and Waste," by Bradford Cadmus and A.J.E. Child.

Reviews the book "Cost Accounting," 4th ed., by John J.W. Neuner.

Reviews the book "Business Fluctuations," by Robert Aaron Gordon.

The purpose of this article is to analyze purchased goodwill with a view to seeing whether it ought to be amortized by charges to income, and in general to present a case for amortization. Goodwill refers to favorable attitudes toward an enterprise. Thus, it includes the favorable attitudes of customers, employees, credit grantors, investors, suppliers, governmental regulators, politicians and the general public. Other descriptive terms for goodwill are reputation and customer habit. Usually goodwill is transferred only on the sale of the entire concern. However, there are cases where the goodwill involved in a patent, copyright, secret process, or trademark is transferred with the patent or other item without selling the entire business. Goodwill may fade from memory unless the reputation is fed or replenished by new feats or reminders. Reputations fade from memory unless the reputation is fed or replenished by new feats or reminders. Goodwill is hard to build up, so the buyer of a concern will often pay a large sum of money for the goodwill.