Knowledge that Transforms

Abstract The article highlights that the general advantages of uniform accounting among hospitals are the same as for business enterprises, namely, comparison of operating efficiency between hospitals and periods of time, and establishment of effective relations with the public served by the institutions. Hospitals are a combination of commercial enterprise and social agency. As a commercial enterprise a hospital may provide services to customers, that is, patients, at prices presumably based upon the costs of the services rendered. As a social agency a hospital may serve a client or customer, regardless of his ability to pay, the costs being met by some other individual or group. This dual aspect of hospital service pervades every problem of administrative practice or public relations. Governmental hospitals are, for the most part, conducted strictly as social agencies with the direct beneficiaries paying none of the costs. Privately owned hospitals, on the other hand, are conducted strictly as commercial enterprises, with the patients paying the full costs including the fixed charges, and with charity provided only by compulsion through the uncollectibility of accounts receivable. The incorporated non-profit hospitals combine both the commercial and social aspects.

Reviews the book "Public Finance," by Clyde L. King.

Abstract Real estate is a simple form of capital; but the same underlying principles of valuation apply to industrial enterprises. As Professor Paton has pointed out, the physical elements of the properties and their intrinsic value are only one, and not the most important, consideration. The cost of replacement value of the properties of an enterprise may be considerable, but the enterprise as a whole possesses value only in proportion to its ability to supply human wants and thus create reasonable and continued profits. Economic factors are no less important. The position of the industry in relation to competing industries and competitive conditions within the industry itself; the possible effect of changes in local taxation or in tariffs, on the costs of raw materials and products; the organization of the industry as to price control and labor relations; any or all of these may have an important bearing on the continued profitableness of the enterprise. Some of the most far-reaching and fundamental conditions relating to an industrial enterprise in our complex modern civilization are human and social in their nature. Every successful business must have a sound reason for its existence and that reason is found ultimately in the satisfaction of human wants.

Reviews the book "Operating Results of Department Store Chains and Department Store Ownership Groups, 1929, 1931-1934," by Stanley F. Teele.

Reviews the book "Mathematics of Finance," by Thomas M. Simpson, Zareh M. Pirenian and Bolling H. Crenshaw.

Abstract One difficulty in discussing depreciation is in distinguishing between the fact of depreciation and the recording of the fact in the accounts. The fact is itself a physical or economic phenomenon. There is almost universal agreement that a physical asset does, in the process of use, wear out, at least to the extent of making its continued use uneconomical. The economic phenomenon which may be correlative with the physical phenomenon, but may often-times be independent thereof, is that with continued use of a physical asset the services which it renders tend to become exhausted. Hence, in the absence of disturbing outside influences, thee lessened number of service units which the asset remains capable of yielding are of less value than were the larger number originally embodied in the asset. Accounting does not concern itself with the actual wearing out of an object. But in so far as the wearing out of an asset, or the exhaustion of its potential services affects the value to be ascribed to the asset by the going concern, accounting is called upon to make some record of such changes.