Amount of bank deposit currency liable to disturbance from savings deposits, 26. — Initiative in expansion from saving and borrowing respectively, 28. — The features of a monetary expansion, 29. — Circulating and fixed capital as basis for money, 31. — The dispersion of prices, 32. — The appropriate price index, 33. — The facts of recent history, 35. — Prospects, 37.
Experience revealed the trade cycle; deductive explanations followed and were invented to fit the statistical evidence, 471. — The trade cycle is above all a periodical fluctuation in manufacturing activity and in the price level, the two fluctuating together, 472. — Statistical records show the correspondence between the fluctuations of consumers' outlay, prices, and production, while theory has arrived at the generalization deductively, 475. — Monetary theory of the trade cycle suffices to account for periodicity of 7 to 11 years. The sequence of events, 477. — The theory depends upon the connection between currency in circulation and the gold supply; but since the War this condition has not been fulfilled, 478. — Tests of the capital-goods and money theories, 483. — Difficult to find statistical test of the psychological theory, 484.
That fixed assets should appear in the accounts on the basis of their original cost, adjusted only for depredation, has been a much revered canon of accounting, and much has been written and many considerations urged in support of this rule. Among the affirmative arguments should be mentioned the following: 1) original cost represents the value of such assets to the enterprise as a going concern; 2) writing up the value of fixed assets necessitates a corresponding credit to surplus and such credit constitutes an unrealized profit; 3) changing values of fixed assets are due in a large measure to the changing value of the monetary unit and it is both unwise and impractical to attempt to use the dollar as a unit of measure and at the same time endeavor to allow for the fluctuations in its purchasing power; 4) accounting is fundamentally a system of recording logically the historical facts of a business enterprise and this record will be most accurate and trustworthy if there be strict adherence to actual financial transactions and no attempt made to incorporate into the accounting structure the hypotheses and postulates of economic analysis or the dictates of individual judgment; 5) the practical difficulties inherent in the task of measuring current economic values are such as to invalidate the use of accounting as an effective instrument of business control.
Accounting and statistics, are similar in their uses, for both are used as tools of control. They are also similar in their method, bearing, so to speak, a family resemblance, for accounting and statistics may be regarded as offspring of the single parent, quantitative method of analysis. The quantitative method of analysis has been very successful in the natural sciences, because most natural phenomena can be easily segregated and measured. This method has been the basis of many of the important scientific discoveries of recent years. In fact, it has been asserted that progress in the natural sciences has always waited upon the development of adequate quantitative technique. In the social sciences also it has been maintained that adequate control can only be obtained from better quantitative treatment of the phenomena. It is, of course, often difficult to measure economic phenomena accurately, nevertheless the measurement is necessary. The business enterprise organized for private profit has accordingly developed a technique of measuring and recording it. Facts, and business policies are now formed primarily on the basis of the quantitative data available in accounting and statistical report.
In recent times, many companies have cut selling cost materially because of better accounting control particularly of the field organization. Also, an increasing interest has been shown by sales executives in sales-cost accounting. The author attempts to show how sales-cost accounting can be made to aid sales executives. The discussion centers around defining and grouping, budgeting, and apportioning selling overhead costs. Various items which are charged to selling expense by some concerns are not so included by others. The wide variation in selling expense items no doubt to a large extent is due to the difference in the sales policies of organizations as well as a lack of a common conception of the functions of the sales department. Effective budgeting of expenses presupposes proper charting of the functions of an organization so that the responsibility of performing each function can be definitely fixed. It has been noted that cost of operating in each territory and the profit and loss of each give the sales manager a basis for reorganizing his sales districts so as to make the efforts of the sales people more effective.
Introductory, 361. — The bill obligatory, 363. — The Privy Seal demand note, 364. — The debenture, 366. — The payment order, 369. — The repayment order, or "order of loan, " 370. — The fiduciary order, or "order of the Exchequer, " 370. — The tally, 371. — Post-Restoration innovations, 372. — The circulation of fiduciary orders, 373. — The "Stop" of the Exchequer, 373. — A general classification of Carolean paper orders, 374. — Specimen copies of Carolean repayment, and fiduciary orders, 376. — Important characteristics of these orders, 379. The goldsmith banker's "running cash" note, 379. — The earliest metropolitan engraved promissory notes, 379. — The earliest provincial engraved promissory notes, 380. — The bill of exchange and its development, 383. — The emergence of assignability, 383. — Malynes, Marius, and Scarlett on bills of exchange, 384. — The "outland" and the "inland" bill, 386. — The assignability of the promissory note, 386. — The earliest cheques, 389. — The demand note upon the Exchequer, 390. — The Auditor of the Receipt's note, 391. — The origin of Exchequer bills, 393. — The Bank of England's earliest paper money, 397. — The Bank's sealed bill, 397. — The Bank's promissory note, 399. — The Bank's "accomptable" note, 400. — The Bank's "lettered" note, 401. — The Bank's "specie" note, 401. — The Banker's annuity order, 402.
The position occupied by depreciation as a determinant of the profit or loss of an industrial concern is of equal importance to that of the inventory in the case of the mercantile firm, but while the public is awakening to the significance of correct inventory adjustments it appears still to embrace many delusions as to the nature and true significance of depreciation. The explanation of this lies possibly in the fact that depreciation, although a charge arising from the operation of tangible assets, has no reference to diminution of weight or volume and frequently no reference to any apparent physical deterioration. Confirmation of this view is to be found in the contrasting accuracy of the popular conception of depletion, for depletion is analogous to depreciation in all but one respect. Whatever its origin may be, this popular ignorance concerning depreciation is much to be regretted, for a balance sheet or any other accounting statement relative to an industrial concern is but half intelligible and may even be grossly misleading to any person incompetent to appreciate and criticize the policy of the directors with regard to depreciation.