Knowledge that Transforms

The concept of business income is dependent on the ends served by the use of the income measurement. There is no one correct method of computing net profit. The question of which procedure to use can be decided only on the basis of the purpose or purposes for which the figures are to be used, not on an abstract basis. Hence, the result will vary according to the purposes for which the calculations are being made. The income statement as prepared by the accountant is used for a variety of purposes. It is used by management in decision making. It is used by the officers and directors of a corporation as a report of stewardship to stockholders on the results of operations and availability of dividends. It is used by regulatory bodies in determining rates and regulations. It is used by labor in formulating its wage demands. It is used by economists in preparing national income statistics and in economic analyses. These are also some of the more important uses for accounting results. The accounting procedures to determine net income relate only to money values and do not undertake to produce results in terms of real values. The accountant's failure to attack the problem of price change is sufficient reason for a complete re-examination of these two main concepts of income. This re-examination may serve as a guide to the interpretation and understanding of accounting figures as presently calculated and possibly as an aid in bringing about a reconciliation of the two theories and the two practices.

There is a healthy difference of opinion concerning the scope which may justly be assigned the accounting courses of a well-integrated collegiate curriculum in business administration at both the undergraduate and at the graduate levels. There are clearly discernible trends of emphasis among the offerings of the collegiate schools of business in the United States. Although educational forces may be detected and projected into the future with questionable accuracy, it is possible to secure some guidance in accounting curriculum policy-making by an exploratory survey of current conditions. Interpretive observations of any great validity must await a full-scale research endeavor aimed at the renovation and refurbishment of the accounting curriculum in the light of reliable evidence that such changes would be justified by sound educational aims. This paper is an attempt to "sift out" some of the educational forces which have formed our accounting curricula of the past and which may be expected to shape the developments of the future. An important set of forces is contributing to the development of the field of administrative accounting and may be expected to affect the basic curricula of our schools of business and industrial administration. There is considerable apparent argument concerning the degree of emphasis which should be assigned the currently basic segments of the administrative curriculum. The liaison (and the quality of the relationships) between the staff of the divisions of marketing, finance, management, economics and accounting often has an important bearing upon the content and scope of the accounting courses which will be offered by the accounting division.

Reviews the book "Theory and Technique of Cost Accounting," by Lawrence L. Vance.

The article presents a list of problems that were prepared by the Board of Examiners of the American Institute of Accountants and were presented as the first half of the Certified Public Accountants examination in accounting practice on May 13, 1953. The candidates were required to solve all problems in four and a half hours.

Social integration has two main phases, the real and conceptual. The social integration which the author talks about in this article is individual and personal. It denotes the development of the individual student in terms of comprehension of problems, the ability to select and marshall relevant materials, gaining a historical perspective, thinking reflectively, and the acquisition of facility in oral and written expression. The author proposes that one of the principal challenges to higher education has been to concern itself more definitively with practical affairs. Top educators are calling for universities to extend their activities to defining ultimate social objectives. Among the practical objectives which may be suggested for the consideration of accounting educators are the establishment of amicable relations among nations, expansion of national income without sharp disturbances, attainment of substantial equity in the distribution of real income, the safeguarding and expansion of personal freedoms. In this pattern of educational effort, vocational and professional training would be included as a responsibility of higher education.

Reviews the book "A Dictionary for Accountants," by Eric L. Kohler.

Mergers give the concept of big business. The combining of accounting firms of moderate size with others to become a nationally known organization can lead certified public accountants away from professional status. In the mind of the layman, the practitioner of a profession is one who gives personal attention to the intimate affairs of a client or a patient, and although some actual service may, as in the case of public accountants, be delegated to staff assistants, yet the client of the smaller firm is acquainted with, and feels he has the personal interest of, one of the principals. It may be said that the same relationship can be continued under the new firm name, and it is true there are clients who may like the idea of the larger organization, but there are a great many persons who do not desire information concerning their private affairs to be in the flies of a widespread copartnership. Public accounting has come a long way in the past fifty years and enjoys a well earned high place in the public esteem, but if big business with all that description connotes, is the aim of many of its practitioners, then all pretense to professional rating should be dropped. Merely to state that a vocation is a profession does not make it such. Actions speak louder than words.

The article discusses the Statement of Accounting Principles and Standards for Guidance of Executive Agencies in the Federal Government, recently released by the Controller General of the U.S. This statement is not intended to specifically cover many individual situations which arise from day-to-day and which can only be resolved by the application of judgment. Rather, it is designed to provide a framework sufficiently flexible that accounting can be fitted to the needs of each group to be served, stimulate the development of the highest standards of accounting and financial reporting and encourage the continued orderly improvement of all phases of financial management. As a prelude to the main discussion of accounting principles and standards, the related factors, which are important to their successful development and application, are reviewed. The article discusses the growing analysis of the utility of the statement and establishment of accounting standards. Moreover, since management depends on accounting for current factual information on financial operations for purposes of planning and control, top management should integrate and coordinate the results of accounting, budgeting, reporting, and internal auditing.

Reviews the book "Managing Your Money," by J.K. Lasser and Sylvia F. Porter.

Reviews the book "Mathematics of Investment," by Paul R. Rider and Carl H. Fischer.