Knowledge that Transforms

Abstract This article considering the accounting and marketing techniques which flow from state and federal laws affecting price and pricing policies in the U.S. It is needless to stress the fact that government intervention in business has increased greatly in recent years. This trend is likely to continue to increase, but the rate of that increase can and will be modified by the extent to which business itself puts its own house in order. It is necessary at this point to lay the foundation for an important distinction which needs to be drawn between true open-price reporting and the variety of price reporting which prevailed in many instances during the National Recovery Administration. Since many trade associations arise out of the state of business depression within an industry, it is not unnatural to find that their spirit and purpose is strongly defensive. To those who enter upon an Open-Price Association under the conviction that they have joined hands to fight a common enemy, the legal requirement that all price data be made available to buyers and sellers alike comes as a rude shock. It is tantamount to an order to disclose everything to the enemy, and is hardly consistent with usual defense tactics.

Abstract This article presents the problems and answers which were presented as the first half of May 1939, Certified Professional Accountant examination in the U.S. In problem 1, the candidates were required prepare a statement showing the amounts payable to different beneficiaries. In problem 2, the case history of the Universal Patent Corporation was given. The Universal Patent Corporation acquired 700 shares of the capital stock of the General Development Company. The shareholders of the General Development Company ordered the liquidation of the company as at the close of December 31, 1938. The shareholders were to receive a pro-rata assignment of their interest in the patent on January 2, 1939. The candidates were asked to prepare the entries which the Universal Patent Corporation should make to record the amortized cost of its interest in the patent on the date of assignment. Problem No. 3 stated that a governmental authority was constituted about July 1, 1937, to carry out certain recreational activities for which the authority was to buy or construct the equipment. The candidates had to prepare a columnar work sheet recording the transactions of the authority so as to show the asset and liability and budgetary accounts for the year ended June 30,1938.

Reviews the book "Federal Income-Tax Course."

Reviews the book "Cost Accounting," by Clarence L.Van Sickle.

Abstract In this article, the author discusses theories and suggestions related to maximising profits of investments in stocks and securities. He reports that William Hughes, an actuary in London, has suggested that, it would be interesting if someone possessed of the necessary patience would ascertain "on paper" what would have been the results of a fund invested in common stocks as against one invested in high-grade bonds, but over a long period of years. Further on this suggestion, professor Irving Fisher, of Yale University, and some of his associates proposed that in order to keep pace with the cost of living one's investments would have to be in equities rather than in bonds, or in investments having equity connections. According to the common-stock theory, it is stated that assuming the continuing growth of industry, then over long periods of time investment in a diversified list of representative, leading, industrial common stocks will prove to be a better investment than will investment in high-grade bonds. Several consequences and limitations of this theory have been identified in terms of profit.

Reviews the book "Financial Organization and the Economic System," by Harold G. Moulton.

Abstract This article focuses on the basic content and needs of the auditing course. It describes that auditing is considered as the application of accounting principles to the various transactions which come before the public accountant in his daily work. It is advised that instruction in auditing should essentially include not only the application of the principles to a certain transaction but the application of the principles to the same type of transaction under varying conditions and circumstances. As an advanced subject auditing is restricted to those students who have satisfactorily completed courses in other accounting subjects such as bookkeeping, theory of accounting and accounting problems. It should not include detailed discussions of principles of accounting, or give any basic instruction in such principles. The course in auditing as distinguished from other courses in accounting and many other subjects should emphasize continually the habit of clear thinking.

Reviews the book "Applied Time and Motion Study," by Walter G. Holmes.

Reviews the book "Seidman's Legislative History of Federal Income Tax Laws, 1861-1938," by J.S.Seidman.

Abstract One of the important practical problems in governmental accounting is the preparation of reports the essentials of which can be understood by the reasonable informed portion of the public. There are two methods of approach to the problem of increasing the public's understanding of financial reports. One approach is through education, colleges and universities have been doing practically all the educating that has been done. Through the colleges, the courses of business administration have been sending forth each year a substantial number of people who, being fairly conversant with the various problems of municipal accounting, were in a position to understand the financial reports of their various communities if, as, and when presented to them. The second approach to the problem is in the presentation of municipal financial reports. Each report when issued might contain some explanation of the operation of the fund principle upon which the reports are prepared. Care must be exercised in the number of funds displayed in these columnar reports, and often combination of similar funds can properly be made for this columnar presentation. Certainly the report to be effective must make comparisons of the budgets with the actual performance. Each report requires careful study so that such budget comparisons may be informative without being so voluminous as to be confusing.