Knowledge that Transforms

Although accounting has long served business, there still remain a number of challenges to its healthy survival. These include the monumental task of accumulating and using pertinent data with respect to all scales and complexities of business activity. Such marshaling of quantitative data is not only a problem of managing the flow of information to assure its reliability but also one of timing the flow to insure its useful freshness. For one thing, the accumulation of adequate needful information is costly. This is especially true since most systems of data flow are predicated on the assumption that complete recording is necessary. This thinking generates systems involving much detail. Frequently such accounting is sufficient to swamp the group of personnel which economically can be assigned to the processing of quantitative information for use in business. Any process of balancing cost of data with the benefits derived from them necessarily involves the problem of providing quantitative data sufficiently reliable to be useful in business.

One of the objectives of the American Accounting Association is to encourage and sponsor research in accounting and to publish or aid in the publication of the results of research. The association seeks to accomplish this objective in several ways, including the publication of research and scholarly articles in The Accounting Review, in the work of various association committees concerned with research, and in the publication of monographs and studies. Publication of monographs is financed through the "Life Membership Fund" of the Association. Manuscripts are invited. Authors may be assured that their contributions will receive careful examination by appropriate officers and committees of the Association. Manuscripts or inquiries can be directed to the Director of Research of the Association.

Reviews the book "Book-keeping and Accounts," ed.15.

Reviews the book "Standard Costs for Manufacturing," by Stanley B. Henrici.

The path leading to a degree with a major in accounting is a rugged one at best. Obstacles are to be encountered at every turn. Many an eager student has dashed confidently down this path only abruptly to encounter a sizeable obstacle known as partnership dissolution resulting from the admission of a new partner. Managerial Accounting as a course of study represents a recent addition to the accounting curriculum of many schools of higher education. The addition of this course reflects the current demand for an approach to accounting that emphasizes the utilization of accounting data for management planning and control. At the present time many accounting departments are in the process of reevaluating their entire accounting curriculum to determine to what extent present offerings may continue to serve their traditional purpose as well as fulfill the need for an approach which takes into greater consideration the managerial aspect. The non-accounting major terminates his study of accounting with the Managerial Accounting course. The accounting major, almost without exception, takes the same Managerial Accounting course as the non-major which means that he takes the course between Introductory Accounting and Intermediate Accounting.

The measurement of a firm's short run' ability to pay its debts as they come due is a very important aspect of financial analysis. A quantitative, formula type of measurement is required for such purposes as bond indentures, bank loans, and comparative analysis of firms, although a subjective analysis of a firm's capacity to withstand temporary delays or declines in receipts may perhaps be more appropriate. At present, the current ratio is generally used for this purpose. The necessity of this relationship is inherent in the purpose for which a firm hold defensive assets. These assets are held as a buffer against the uncertain future flow of funds. There will probably be times when receipts do not come in as quickly as expected or when sales decline temporarily. Conversely, the firm might be faced with a sudden increase in expenditures caused perhaps, by an increase in production in response to an order which must be filled immediately or by the opportunity to make an especially advantageous purchase. Current receivables like cash are also defensive assets. Receivables serve as a substitute for cash, although the amount held at any time is a function of sales and sales policy.

It is not easy to decide from the entries in the accounts-book who was responsible for ensuring that each person received the commons to which he was entitled, and for keeping proper records to show that he had received it. Another household book, maintained by group of people at Tattershall Castle in Lincolnshire for sixteen weeks during the Autumn of 1447 and the Spring of 1448, shows that in 1476, a caterer was responsible for marketing and for providing food and other supplies for a lady and her household who were then living at the castle II, at Tattershall in 1447- 1448, there was a caterer with similar duties. From the way the accounts-book was kept, it appears that each week the caterer was expected to provide sufficient food to cover the meal allowances of the "communarii" and to meet emergencies, such as feeding casual visitors and people present for single meals and for part of the week. He divided his supplies into two categories, larder goods and store goods. Larder goods appear to include fresh fish, dairy produce, bread, and meat. And store goods include salted fish, oatmeal, spices, candles, fuel. Having put a money value to his purchases and drawings from stocks, the caterer added the separate items and compared the result with the total for meal allowances due to the company present during that week.

Reviews the book "Investing for a Successful Future," by Thomas E. Babson and David L. Babson .

Reviews the book "Forecasting the Price Level, Income Distribution, and Economic Growth ," by Sidney Weintraub.

Reviews the book "Auditing: Principles and Case Problems," by Arnold W. Johnson.