Knowledge that Transforms

Students with no previous knowledge of accounting often have considerable difficulty in appreciating the rationale of the debit/credit technique and its implications in relation to basic double entry theory. In performing the task of accounting for assets, one account for just these two concepts, namely, (i) assets themselves, and (ii) the rights to ownership of the assets. The term "equities" has been used up to the present as the one most appropriate to convey the notion of this ownership of or rights to assets. Thus, one can get as the interpretation of this twofold aspect of this positive notion of assets, the first expression of the basic accounting equation, that is, assets are always equal to equities. The right of ownership of assets constitutes a source of claim upon them, and these claims can be distinguished as resting in two main categories, designated "liabilities" and "proprietorship." That is, equities is equal to liabilities plus proprietorship, and hence, assets is equal to liabilities plus proprietorship.

An examination of American accounting literature indicates that five methods have been used to solve accounting problems requiring the preparation of source and application of funds statements. These methods are: (1) comparative balance sheets, (2) working sheets, (3) "T" accounts, (4) schedules to show changes in certain accounts, and (5) no formal papers. The purpose of this article is to indicate the present state of development of the working sheet and the "T" account solution methods and to illustrate a new working sheet approach which is believed to be superior to other methods. The problem in Exhibit I that is used in this article for illustrative purposes was given on the November 1951, Uniform Certified Public Accountants Examinations Accounting Practice. The primary objective of this article has been to illustrate a simple working sheet plan for the quick solution of source and application of funds problems. The working sheet proposed here is easy for students to learn because it uses straight-forward entries instead of reversing entries. Furthermore, it enables a person to work a funds statement problem in less time than is required by conventional working sheets, "T" accounts, or schedules. It is vastly superior to the haphazard plan that makes use of marginal notes on the problem sheet itself without the use of formal working papers.

Reviews the book "The Federal Taxing Process," by Roy Blough.

The undergraduate accounting student generally faces his first main experiences with the practical facts of accounting life in the course in report writing. He meets reality somewhat, of course, in such studies as auditing and taxation, but, in the main, he has been concerned primarily with theoretical concepts. He has not faced the necessity ordinarily, for example, of preparing realistic, complete, and formal communications for actual readers with vested interests. The aim of the report writing course thus becomes one of generating dear and comprehensive understanding on the part of students as to the purposes, scope, and manner of presentation of reports by independent public accountants. Personal experience has indicated that the most effective approach to realistic student comprehension of the "whole" report has been through the direct use of actual reports prepared by practicing accountants. Visual aids have provided the medium by which such reports could be handled practically in the classroom.

The scheme of social accounts presented and discussed in this paper has made provision for subsistence and family production but has done so within the framework of a separate and segregated sub-sector. Likewise the same scheme of proposed accounts provides for the segregation and separate reporting of barter transactions. As a consequence of the above, provision is made for separate and segregated reporting of all items which have to be based on estimate and imputation and which consequently are subject to a considerable degree of possible error. This facilitates interpretation and evaluation. The remaining segments of an industrially backward economy should be subject to the same scheme of social accounting as that for the Western nations.

A profession is characterized by the type of activity in which its members are required to possess a highly specialized knowledge and have the ability to apply it with skill and wisdom in the rendition of personal service. That a philosophical bent pervades modem thinking about the implementation of the methodology of each of the two professions, Law and Public Accounting, is evident to any reasonably informed person. This trend implies the existence and need of a dose interrelation and interdependence between the two professions. In the professional curricula for each of the subject fields there has been a tendency to supplement the basic offerings of theory with well chosen cases carefully integrated with the theory. With respect to coordinated training programs by organized practitioners and cooperating colleges and universities, the two professions are highly comparable. Each has a strong national society supported by well organized and integrated state societies or associations. The majority of practitioners in each profession will hold membership in either or both of the types of societies operating in the respective fields. It is to be noted in connection with the above comparison that a few states have, in recent years, been requiring or experimenting with short internship or probationary practice periods as requisites to final licensing for legal practice. It may be concluded that the training programs for each of highly specialized professions such as Law and Public Accounting tend to turn out products who possess trained abilities to render opinions and decisions that are free from illusion or personal desire, but instead are founded upon intellect and reason.

The article discusses modifications made to a family tree introduced by scholar Lewis A. Carman in 1932. He used the tree to analyze the use of equity ratios in distributing the combined capital stock and surplus on the balance sheets of companies affiliated by both unilateral and bilateral common stockholdings. The family tree is adapted very slightly to have it obey some modem principles of family tree construction like arrows point with the force of authority, percentages of ownership and separate family trees are made for each class of stock. In 1948, the use of equity ratios was extended to the preparation of income and surplus statements involving both common and preferred stockholdings, and a mechanical method of calculating the equity ratios was introduced for use after the ratios of the bilateral groups have been computed. In 1949, a new formula for computing the equity ratios for bilateral stockholdings was developed in an advanced course in consolidations at The University of Texas by Myles Joseph Aaronson. The new formula is very simple to use because the determinant aspects cancel out leaving an equation, which enables anyone to handle the most difficult cases of mutual stockholdings, by using only simple arithmetic processes.

For the operation of law and economics in connection with income is often joint rather than several. Statute law, Common law, legal decisions and economics are the ultimate authorities on income. They lay down the requirements. This article discusses the

Today, the members of the American Accounting Association have assumed the performance of an important, dual mission. As teachers of accounting they have accepted the responsibility to train young men in the sound accounting theory and practice which will provide the foundation for whatever these men may build during their careers. And as teachers they have the opportunity to influence young men at that time in life when they are forming the habits, attitudes, virtues and vices which are likely to remain with them throughout their lives. To accomplish this dual mission, it is essential that accounting teachers be alive not only to new techniques in education, but to the changing complexity of business and government, and to new developments in accounting theory and practice. Nor is it enough to be aware of such changes. A vital group of teachers not only recognizes change; it causes change. These necessities to progress require primarily the exchange of ideas, for ideas-bartered in the free, competitive forum-are the life-force of any art, including the arts of teaching and of accounting. In this respect the American Accounting Association has played a major role since its organization in 1916.

This article focuses on the professional accounting school and the natural school year and proposes some changes which can make these two more accessible to students. The article suggests a three-year professional school with an entrance prerequisite of two or more years of liberal arts work. As little prescribed work in the pre-professional preparation should be required as is feasible in order to make admittance to the professional school as easy and as flexible as possible. It is suggested to develop a more or less standard curriculum which would include the more important accounting courses designed to provide well-rounded training, considering the needs of both the executive and public accountants. Room should be left for elective work. Some room should be left for electives from the standpoint of individual choice of the student. The natural school year would be a natural part of the professional school. It would have its summer vacation during the first three months of the calendar year. The two semesters or three quarters would start after the "busy season" and end just before the Christmas vacation period. There would be breaks between these periods, of course. The idea would be to have a sort of built-in internship program.