Knowledge that Transforms

Abstract Price Control is made necessary by the conditions which result from a War Economy. Nation's purchasing power increases at the same time the goods available for consumption and use decrease and a "gap" develops between the total expendable incomes and the total goods available in the community. More people are working than in normal times and more goods and services are being produced, but the major portion of these goods and services must be appropriated for military purposes. This gap, then, develops in civilian goods and services, individual incomes increase while the amount of goods available to be purchased becomes less and less. As the military and civilian demands for raw materials and labor increase costs go up and prices begin to rise. Allowed to run its course the "price-cost" inflationary spiral would envelop all sectors of the economy and would end in economic disaster. To combat the danger of inflation national price control has been established. Beginning under the authority of an executive order and operating primarily by means of voluntary agreements to keep prices down.

Abstract The article presents a discussion on testing the ability of the prospective candidate to enter the public accounting field, by examining the certified public accountant (CPA) examination standards in the U.S. The standard examination given by forty-six state and territorial accounting boards is prepared by the Board of Examiners of the American Institute of Accountants. Both educators and public practitioners have a definite part to play in preparing the candidate for the CPA examination. This brings up a very controversial subject, since most educators feel that the college graduate should be permitted to sit for the examination without experience, whereas most public practitioners lean to the belief that a man must have public accounting experience before he should become eligible for the examination. Presenting his opinion the author says that no candidate should be permitted to sit for the CPA examination until he has had a minimum of two years' public experience, or five years' private accounting experience.

Abstract Reviews three books "Final Report of the Committee on Industry and Trade," "Enqueteausschuss—A usschuss zur Untersuchung der Erzeugungsund A bsatzbedingungen der deutschen Wirtschaft" and "Temporary National Economic Committee on the Concentration of Economic Power in the United States."

Abstract This article focuses over the history of inventory valuation. The supposition that early evidence of the use of cost-or-market grew out of tax considerations is subject to other and more general objections. It might be expected that a method designed for tax purposes would include some reference to its purpose. But instead the explanation given is the kind which would appear if there was an accounting policy in effect that sought to recognize economic losses which were soon to be realized through sales-the statement that "their price has gone down." Furthermore, general conditions of what might somewhat inappropriately be called "public finance" in the fourteenth and fifteenth centuries were such as to make such a mild device as cost-or-market for the closing inventory insignificant as a tax-avoidance scheme. The contention has been made that the policy of write-downs disclosed above was an effort at tax avoidance, made in a time when ad valorem levies upon personal as well as real property were heavy, and hence has no general significance for accounting principles.

Abstract The U.S. Federal Government uses both definite and indefinite-quantity contracts, the latter being known also as "term contracts" and "open-end contracts." An indefinite-quantity contract ordinarily is one by which the government promises that, during a stated period, a specified agency or group of agencies will buy certain specified commodities only from a particular supplier. The supplier promises that he will sell to the agency or agencies as little or as much as they wish to buy of those commodities during the period named. A minimum-quantity contract differs from an indefinite-quantity contract only in involving a commitment by the government as to the minimum amount that it will buy. The Procurement Division of the U.S. Treasury Department is the nearest approach which Federal procurement has to centralized buying. It effects or aids in a far smaller percentage of the War and Navy Departments' total purchases than of civilian agencies' total purchases, and at present is of course overshadowed, in importance as a buying agency, by each of the former two agencies' vastly increased procurement.

Abstract Reviews the book "Regulation of Utility Valuation in Pennsylvania," by William Roy Buckwalter.

Abstract The article focuses on the importance of the knowledge of general economics for an accountant. It is insisted in this article that students of accountancy should do more work in general economics, and in advanced economics courses which are not very directly related to the field of accountancy, than they now do. Many accountants argue that economic principles and theories depend upon a great number of assumed conditions, many of which exist most imperfectly, in actual economic life, these principles and theories therefore seem to apply to some other world than this one and seem to have little significance for practical men who must concern themselves with economic life as it actually exists. According to the author this attitude toward economic theory, probably results from inadequate teaching in theory courses, poor textbooks, or some deficiency on the part of the students themselves. Economic theory is, of course, interested in the general aspects of economic phenomena and their typical relationships, properly and necessarily abstract and deductive.

Abstract In the general accounting field, underlying principles emerged more or less naturally because of the wide circulation of certified, published financial statements. A statement of the generally accepted principles underlying cost accounting, however, must be derived from much less promising conditions, first, because such "general acceptance" does not at present exist, and, second, because the cost practices of individual concerns are not publicly circulated. Once the job is started, however, there should be no lack of assistance and support. In distinguishing cost accounting from general or financial accounting, one of the more commonly emphasized points is that cost accounting is carried on primarily as an aid to internal management. Because of this special purpose, cost accounting has tended to develop within each organization in accord with the problems of the particular situation. Since these situations include many thousands of industrial and governmental organizations it is certain that variations in cost accounting practices are numerous. The fact that cost data are usually considered confidential tends to preserve the variations in practices and procedures

Abstract Reviews the book "Preparing for Business," by Charles W. Hamilton, J. Francis Gallagher and Charles Fancher.

Abstract In this article the author anticipates on the procedure of business management in the post-war era in the U.S. According to the author there are two points of view. One holds that there will be no problems for managers, the bureaucrats of government will have all the answers to all the questions, industrialists will look in the statute books rather than in their ledgers to determine their costs, and their merchandising plans will be based not upon market analysis but upon government directives. The alternative point of view is that the business administration will face additional complexities. Technology changes, changes in consumer's buying behavior and business organization changes can be expected. The author insists that in the light of knowledge that business management will, in the future, need more detailed information about those factors within the sphere of accounting, one shall do well to consider some of the recently developed tools which accountancy can supply. He suggests the consideration of graphic analysis of expense by using the break-even chart as an illustration of recently developed tools in accounting.