Knowledge that Transforms

Reviews the book "Accounting Trends and Techniques."

A survey of consolidated financial statement practices conducted by the American Institute of Certified Public Accountants in the mid-fifties pointed up the lack of, and consequently the need for, uniformity in consolidation practices. In an apparent attempt to get some degree of uniformity in the consolidation area the Institute's Committee on Accounting Procedure in the late fifties issued Accounting Research Bulletin No. 51. While only time will tell whether the recommendations of the Committee are widely adopted in practice, they have already had, in this writer's opinion, far-reaching effects upon the teaching of consolidations. The Bulletin has had and will undoubtedly continue to have a tremendous influence on teaching in such areas as what to consolidate, when to consolidate, and how to consolidate. Its greatest impact, however, from the teaching standpoint has probably been felt in the area of intercompany profit transactions.

In relation to the comments concerning the laws of learning and their application to accounting instruction, attention will be focused upon some of the learning methods with which accounting teachers are all generally familiar. These methods are commonly labeled teaching methods by many of the people but, for a more proper designation, should be expressed in terms of learning. Too many instructors in their enthusiasm for subject matter either forget or tend to subordinate the role of the student in the learning process. All too frequently one need to be reminded that one is not just teaching subject matter but rather that one is teaching students. It is readily recognized that there is no effective teaching-taking place if leaning does not result. Accounting is a diverse field and covers a wide range of materials, from basic bookkeeping processes to abstract theoretical concepts. This permits and necessitates an equally wide range in educational methodology. To determine the best learning-teaching method to employ is indeed a complex question. The author believes there is no one best way. A variety of methods is no doubt essential within a given course and even a combination of several methods proves most useful within a single class period.

Reviews the book "Accounting Theory--With Special Reference to the Corporate Enterprise," by William Andrew Paton.

Under the entity concept, financial statements are considered to be means through which a corporation's point of view is made known. As a corporation moves from one stage of development to another, changes in accounting procedures are needed so as to depict properly its changes in outlook and strategy for survival. So long as disclosures are made, and if coupled with education and/or public accountants' evaluations, it is contended that the use of alternative accounting procedures will not only make financial statement presentation more revealing and meaningful, but also permit corporations at different stages of development to compete for financial competence. The use of alternative accounting procedures is thus consistent with a corporation's objective of survival.

The article presents information related to recent developments in accounting. The 1963 convention of the American Accounting Association will be held on the Stanford University, Palo Alto, California, with the University of California at Berkeley, California as co-host, on August 26, 27 and 28. Much work has been and will be done to make one's visit a pleasant as well as profitable one. The committees involved ask only that one help them plan effectively by doing one's own planning as early as possible, and that one send in one's pre-registration forms as soon after they are issued as one can. The Controller, periodical publication of the Financial Executives Institute, an organization, has changed its name to The Financial Executive, effective with the January, 1963 number. The University of Illinois has announced the establishment of a new Center for International Education and Research in Accounting at Urbana, Illinois. Professors C.A. Moyer and V.K. Zimmerman will be director and associate director, respectively. The Center will be designed to stimulate the international exchange of ideas, students, faculty and research in international problems of accounting.

Reviews the book "Memoirs and Accounting Thought of George O. May," edited by Paul Grady.

Reviews the book "Dividends Under the Income Tax," by Daniel M. Holland.

Much progress has been made in recent years in developing a complete working system for computing an accurate and dependable rate of return measure, which is useful in making investment decisions. The framework of this analysis is known as the discounted cash-flow method. It is undoubtedly true that the complete investment analysis method must be shown and explained clearly before it will be well accepted and utilized. One area of vagueness, which still, remains in the literature concerns tax loads and effective tax rates. It is clear, probably, that each project cannot be assumed isolated from the others in respect to tax loads, i.e., to call it independent from the other operations. If this assumption were made, however, the venture's tax load would be estimated by using the statutory tax rate against the expected yearly net income figures, not considering any deductions, which may be available from other parts of the company. The true worth of prospective projects can be badly underestimated when there are large amounts of re-allocable deductions, which are not allocated to the prospective ventures. It can be said that a rate of return estimate, which has been computed without considering the re-allocable deductions cannot be made to be accurate with some simple correction factors.

One hundred years ago the Parliament of the Great Britain enacted the Companies Act of 1862. This Act was to be, for nearly half a century, the main statute for the regulation of British companies; and in the Act's provisions, or in what was lacking in those provisions, the strong individualism and laissez-faire spirit of latter 19th century Great Britain were manifest. For the Act contained no mandatory provisions with respect to accounts or audit: these were matters of private contract, to be left to the stockholders. Major reforms related to company Act took place in Great Britain. In the year 1962, Jenkins Report was presented. Much of the Report is concerned with the general law. Generally, the accounting recommendations of this Report can be regarded as an attempt to add marginal improvements to existing legislation, rather than as a plan of radical change. Many of the improvements will be valuable. The general impression that the Report gives is of a Committee that, as a whole, possessed a high technical competence in law and accounting, but a substantially lower one in economic policy.