Knowledge that Transforms

Reviews the book "Foundations of Productivity Analysis: Guides to Economic Theory and Managerial Control," by Bela Gold.

Abstract When the present Committee On Costs And Standards was formed several years ago in the U.S. it was charged it with the responsibility for developing a statement of cost concepts without specifying either the objectives or content of that statement. For many reasons development of a statement paralleling those issued by the Association on accounting principles underlying corporate financial statements was abandoned in favor of a more general statement relevant to management purposes. This decision reflected an awareness of the growing importance in accounting of the management viewpoint and the lack of any statement of sufficient general validity to perform for management costing the same functions presents statements on accounting principles do for income determination. Rapid developments in recent years in other disciplines have placed a premium upon proper cost constructions. Statistical decision theory, linear programming, mathematical prograimning, waiting line theory, input-out-put analysis, and the like all depend upon accounting for cost data relevant to purposes other than income determination.

Abstract In an article entitled Income Taxes in Financial Statements appearing in the April 1957 issue of The Accounting Review, Maurice Moonitz presents the case for the allocation of taxes on business income. The basic proposition is essentially that embodied in Accounting Research Bulletin Number 23 of December 1944. Moonitz's contribution lies in the orderly development of a supporting rationale. The object of this paper is to rebut these arguments and to develop from this rebuttal an alternate and opposing thesis. Although Moonitz considers the intra-period application of the accrual doctrine, attention will here be directed to the admittedly more important question of inter-period income tax allocation. There is no doubt that current practice defines the business income tax as a cost. However, the majority position is not invulnerable. In response to Moonitz's challenge, it can be asserted that a dollar of corporate income tax differs from a dollar of corporate wages in that the former is paid only if period revenues exceed period costs. In this respect, the tax dollar is suspiciously like the dividend dollar.

Abstract Before discussing the problem of what constitutes desirable qualifications for college accounting teachers, the general aims and objectives of the four-year college program should be considered, based upon the opinions of leaders, both in the field of education and of business. The objectives of college accounting programs have been widely discussed. The variety of opinions ranges from the feeling that accounting is purely vocational in nature to the conviction that accounting is a liberal arts subject. The American Institute of Accountants devoted a considerable portion of their 1948 convention to studying the training problems of public accountants. Their findings were published in "New Responsibilities of the Accounting Profession." In a recent survey completed by the writer upon "Accounting Education at the University Level" questions were included for the purpose of obtaining the opinions of college accounting professors, certified public accountants, and industrial accountants, regarding the general and vocational objectives of college accounting courses, along with the suggested qualifications for college accounting teachers of these subjects.

Reviews the book "Studies in the History of Accounting," edited by A.C. Littleton and B.S. Yamey.

Abstract Earnings may be retained for a variety of reasons, some obvious and definite, others more difficult to analyze and to measure. Faced with the need to reflect information about the retention of earnings on financial statements, accountants have resorted to the use of reserves to accomplish this task. According to John A. Beckett retained earnings can be subjected to critical analysis for the benefit of management and other interested parties by indicating the reasons for retention of undistributed earnings. The normal problem of replacement is accentuated when a decline in the purchasing power of the dollar takes place. Since the subdivision of retained earnings will reflect both past accomplishments and future plans, it is doubtful if in many cases the un-appropriated balance will be large enough to warrant questioning by the Tax Department under the accumulated earnings tax provisions. This assumes, that the corporation presents substantial and acceptable evidence of serious intent to support its functional breakdown of retained earnings.

Reviews the book "Corporate Finance," by Elvin F. Donaldson.

Abstract The author of this article examines the source and supply of teachers. He emphasizes on the publicization of teaching as a career recommending that every staff member of a school of business administration should advertise the advantages of the teaching profession. The second point he highlights is making the profession more attractive by increasing salary scales, recognition of good teaching and productivity, and encouragement of ways to promote greater efficiency. Thirdly he emphasizes on the encouragement of graduate work leading to teaching careers which include financial assistance for students, procurement of master's degree, realistic doctoral programs for potential teachers. Fourthly, he recommends the encouragement of experienced public accountants to assume teaching duties. He also recommends the encouragement of ex-teachers to assume full or part-time teaching responsibilities, tapping non-accountant sources which are related discipline for teaching assistance and using retired qualified talents. He finally proposes the re-examination of the demand for teachers by noting several points.

Reviews two books on accounts. "Investissements, Rentabilite et Progres Technique," Guy Hosmalin; "Economic Analysis," by Edmund Whittaker.

Abstract Accounting in governmental units and particularly in municipalities, has improved during the last two or three decades. During this period, the accrual basis has become accepted procedure for handling most items of revenue and expenditure. In one important respect, progress seems to be lacking in the field of governmental accounting. The published reports of governmental units show little, if any, progress over those which were published earlier. If publishing a report of some sort can be assumed to be better than no report at all, then progress has been made. The typical report of a municipality is a lengthy, detailed, footnoted conglomeration of prose and figures. Page after page of tables, financial statements, charts and other data is the rule. Few accountants can thaw basic conclusions from these statements without intense study. For purposes of financial control, it is necessary to keep separate records for each fund and reports showing the status of each fund are required. But whether these individual reports are the ones which should be generally distributed is another and different question.