Knowledge that Transforms

Abstract Looking at the question of desirable education from the standpoint of employers, accountants find many accounting practitioners who prefer employees with a liberal arts background. Some of these employers have stated that philosophy, history language, sociology, and physical science are useful to accountants in their work. Others have pointed out that emphasis on business and accounting courses in college frequently precludes an adequate program of cultural training. Accountancy needs men with varied talents and varied educational programs. It is also apparent that some accounting firms may require a few specialists in mathematics, statistics, English, economics, and possibly certain technical fields other than accounting. There are a considerable number of outstanding schools of business, and there is no question as to the advantage of college study of accounting and the related subjects of business law, economics, finance, and business. Especially is this true if the specialized study is preceded by a two-year study of liberal arts. Practitioners would do well to have a substantial proportion of their employees with this kind of technical training. The profession, by carefully selecting college-trained men, has a means of controlling standards, which is more effective than legislative requirements alone.

Abstract Reviews the book "The Economics of Peace," by Kenneth E. Boulding.

Abstract The article presents information on treatment of income taxes in corporation income statements. The provision for income and excess profits taxes has become a very important item in the income statement of most corporations. In determining the amount, description and placement of this item in the statement, the following questions may require consideration: (1) should federal and state income and excess profits taxes be treated as (a) a cost of doing business, or (b) a distribution of profits? (2) if the earnings of an enterprise for a fiscal period are partly from ordinary operations and partly from special nonrecurring transactions, should the amount of tax applicable to each class of earnings be separately deducted from such earnings or should all earnings of the enterprise first be combined into one figure and the total income and excess profits tax deducted in a single sum? (3) If an allocation of the tax total between classes of income is permissible, may the same principle be applied if one class of transactions has resulted in a profit and the other in a loss? That is, may the statement be arranged to show the saving in taxes as a deduction from the loss, while the full tax without benefit of the saving is deducted from the profit?

Abstract Two considerations led the author to accept the invitation to prepare a paper on education for nontechnical students. The first was the great importance of the subject. The second consideration was a conviction that the opportunity and the responsibility must be shared by those who teach and those who practice accounting. A part of the task is to consider our responsibility for providing education that will result in the production of the best financial statements that can be devised. Another part is to promote recognition of the fact that the significance of such statements is both very great and definitely limited. Education upon this latter point is needed not only by businessmen and investors, but also by lawyers, economists, administrators, in fact, by all who occupy responsible positions in the national economic life. Failure to recognize the importance of the part played by accounting in the complex affairs of today is scarcely more common than a disposition to attach to accounts' significances which they cannot possibly possess.

Abstract Two college students were working in the accounting laboratory at the university finishing their term problem. One asked the other that he wondered why they use the abbreviation dr. for debit in accounting? He said he could see the sense of cr. for credit, but not dr. for debit." Perhaps such a question has flashed through the minds of countless thinking students who have been unable to pause long enough, in their eagerness to get on with the business of learning to use the techniques of accounting, to permit them to investigate the sources and evolution of such details. Relatively few students of accounting or those who use it in their daily work, on reading the newspaper accounts of the progress of our victorious army in Italy, would be likely to associate that country with the origin of double-entry bookkeeping. However, from all available facts now at hand, we are indebted to Italy for originating double-entry bookkeeping and we know that the basic ideas of the method were in use there no less than six hundred years ago.

Abstract The article presents information on the professional accounting examination. The following problems are the first half of the May 1943, Certified Public Accountants examination in accounting practice prepared by the Board of Examiners of the American Institute of Accountants. The examinee was given four and a half hours to solve problem 1 and either problem 2 or problem 3. The problems were weighted as follows: problem 1, thirty points; problems 2 and 3, twenty points. A suggested time schedule was given: ninety minutes for problem 1, sixty minutes for problem 2 and ninety minutes for problem 3. Problem 1 was concerned with the preparation of a consolidated balance-sheet of H Co. and subsidiaries, A Co. and B Co., as at December 31, 1944. Problem 2 was concerned with the determination of the net income (before federal taxes on income) of Ace Co. Inc. for 1944 in conformity with generally accepted accounting principles and prepare a reconciliation of such net income and normal tax net income. Problem 3 was again concerned with the preparation of the balance sheet working papers for each of the following funds of Morton City as of February 28, 1944.

Abstract Representative programs from sixty colleges and analyses of them have appeared in four earlier issues of periodical The Accounting Review. In the section published in October the educational pattern was presented in a number of frequency tables showing the distribution of courses among the several departments of instruction. It is now proposed to show the pattern as it is reflected in the titles of the courses taken by this group of sixty students. The commerce courses will be examined first. These include accountancy, economics, business administration and business law. The data about courses in non-commerce subjects will follow. The content of a specific course is not too well foreshadowed by the title of the course. And this limitation would still apply in some degree if the text book used were also named. Although course names are not standardized and sometimes seem unnecessarily vague, they nevertheless can furnish some useful clues to the educational pattern followed by the students concerned. For students who major in accountancy, the courses in that department naturally bulk large in most programs. At the top of the list are the courses called by various titles that indicate they are introductory and intermediate.

Abstract Reviews the book "The Taxation of Corporate Income," by Charles John Gaa.

Abstract In the preparation of accounting statements there are, broadly speaking, two phases of the work: the compiling and assembling of the underlying facts and data and, second, the form and method of presentation. One reason why many accounting statements are not easily produced or satisfactory when completed is that the underlying accounts and records are not designed with an eye to the final statement. There are naturally many purposes for which records are used besides the preparation of statements and exhibits, and full weight must be given to these purposes. It is generally possible, however, to arrange underlying records so that both purposes may be served. The prime purpose of a record of sales is to provide a medium for recording the day's transactions as they occur and to make certain that each customer is correctly charged with what is sold to him. Many other purposes may be served by such a record, none of which may be directly connected with its primary purpose, but which, on the other hand, will not obscure or hinder it. It is likely that the sales manager will need a distribution, say by products and by geographical divisions.

Abstract The article presents information on the standards for certified public accountant (CPA) legislation. The wide diversity which still exists among state CPA laws and regulations indicates the need for future changes. Many of these changes will probably come about through regulations established by the state boards of accountancy. Others must of necessity be accomplished by action of state legislatures. There is an especial need to solve the problems of interstate practice, restrictive legislation and education for the profession. It is desirable that improvements be made in other sections also in order that legislative and administrative requirements shall be as uniform as possible at a high standard throughout the United States. Efforts to improve CPA legislation have taken three forms: (1) the expression of approval or disapproval of the state laws in connection with admitting certificate holders to membership in national accounting organizations, (2) the adoption of uniform examinations for candidates and (3) the preparation of model legislation.