Knowledge that Transforms

Abstract There are many questions asked related to information reported to stockholders. There is no generally accepted answer to these questions. Activity on the part of the United States Securities and Exchange Commission in promulgating rules for registration of new issues and for permanent registration of "listed" securities is directing attention to this vital question. Stockholders may be divided into two classes: "controlling" and "investing." Controlling stockholders are in a position to know what is happening. Such stockholders combine personal ability and judgment with their capital investment, thereby becoming entrepreneurs. Other stockholders are more nearly pure investors though legally they are owners. They possess the legal right to vote on certain matters, but practically, theirs is solely a function of the decision to "buy, hold, or sell." In order to make a sound decision to buy, hold, or sell, an investor must have a comprehensive knowledge of the forces at work tending to expand or contract general business. He needs to have an opinion also of the trend of interest rates.

Abstract In the teaching of accounting systems one finds that it is often difficult for the student to see the practical application of the accounting theories discussed in the classroom. No doubt this is due largely to the lack of practical experience on the part of the student. Some schools overcome this handicap by arranging for part time work in the accounting departments of local business concerns. Other schools find this arrangement impossible, due to the scarcity of such business concerns or the general policies of the college or university. This lack of experience may be at least partially overcome by means of the written report, which may be used to supplement the course in accounting systems. In this report the undergraduate may select a business concern either in the college community or elsewhere, usually near his own home, and make a first hand study of the accounting system of that business. The outline is given to the student early in the semester and soon afterwards he is asked to name the kind of business in which he is interested and on which he would like to make a report.

Reviews the book "Corporate Profits as Shown by Audit Reports," by W.A. Paton.

Reviews the book "Financial Reports for Colleges and Universities."

Abstract The editorial in the December issue of the journal The Accounting Review is entirely right in pointing out the importance at this time of a better development of accounting principles. Everybody engaged in accounting work, whether in teaching or practice, has the feeling that this is a crucial era for the profession and all its adherents. The fact that accountants are, as everybody hopes, on the eve of another great expansion of business activity, makes it urgently desirable that business take every step which may help to make the next period of prosperity healthier and more permanent than the last one. The work of the United States Securities and Exchange Commission is bound to have a vital influence in defining and giving effect to accounting principles. But when the editorial referred to uses this situation as a stick with which to beat the accounting profession, chides it for its tardiness and reluctance to submit itself to a prescribed discipline. The editor is entirely right in his primary contention. This matter cannot stand still. The principles, practices, and literature of accounting must be advanced and developed to the point of being more definite, more helpful, to all the interested parties.

Reviews the book "Accounting in the Zenon Papyri," by Elizabeth Grier.

Reviews the book "A Test of the Consumer Jury Method of Ranking Advertisements," by Neil H. Borden and Osgood S. Lovekin.

Abstract In any consideration or discussion of the methods of teaching in Auditing it would seem that the question of paramount importance, or at least the one causing the most difficulty, is what might be called one of realism or practicability and the developing in the student of the feeling that the course is not just a theoretical course but that it is tangible and practical and has a direct relationship to actual business procedure. There is no particular difficulty in connection with text material covering the theory of auditing. There is an overabundance of printed material explaining what to do in the course of any type of audit engagement, although much of this material consists principally of statements as to what the auditor should do. The chief difficulty is in giving the students an understanding and appreciation of the practical problems of audit procedure and the developing of a sense of realism in the course and in the work. The ideal and most satisfactory method of handling the situation would be to have actual accounting records and to have a wide enough selection to illustrate the variations in form and procedure that would be encountered in actual business and a sufficient number of sets of books so that students could work on these records individually under the supervision of the instructor.

Abstract Accounting is a young profession, but in recent years the public has come to realize that an accountant has some ability beyond that of keeping books. Its recent recognition in the various federal and state laws, stock-exchange regulations, and the Investment Bankers' code of fair competition should bring about a still greater recognition of the value of its service. The lawyer's interests are mainly those of his client, but the accountant is called upon to report to his client, his client's creditors and bankers, his client's security holders, and the public. The average audit report serves many purposes, and the accountant's responsibilities extend to all the readers of his report. Recent laws, which have given recognition to accountants include, the Securities Act of 1938 which deals with the registration of new securities for interstate sale, the Securities Exchange Act of 1934, which provides for the registration of listed securities, etc. These new laws with their drastic liabilities should certainly result in some improvement of work done, and thus will be of great benefit to reputable accounts.

Reviews the book "The New Monetary System of the United States."