This article focuses on the relation between depreciation and rate base. Depreciation of capital assets and depreciation accounting in public utilities have long been the source of much controversy between the utilities and the state. The problem has been complicated by the unwillingness of some to recognize depreciation at all and by the insistence on the part of others that reproduction cost should be the fundamental element in the rate base determination, and in the decision made relative to the amount of the depreciation charge. It has been still further complicated by using one amount of depreciation for total charges to operating expenses and another, a smaller amount, or none at all, for deductions in calculating the rate base. A generalized statement of sound procedure has been hard to formulate, because the application to specific companies is so varied. One approach to the problem of understanding the relationship between depreciation and the rate base, consists of presenting thirteen examples which may be looked upon as thirteen cases handed down by a commission and which call for adjudication. Some of these examples represent undepreciated rate bases, some depreciated rate bases and some bases for which no names are given. Some follow the retirement method, some the depreciation method and some both the retirement and the depreciation methods. By no means are all of these examples equally satisfactory or typical. In fact some are quite the reverse.

Reviews the book "Essentials of Accounting," by W.A. Paton.

Reviews the book "Problems in Auditing," by Arthur W. Hanson.

Reviews the book "Packinghouse Accounting," by Howard Greer.

To business men it has long been apparent that concerns which sell exclusively on account are obliged to set their prices at higher levels than those which sell exclusively for cash. Three major reasons are commonly assigned to explain this fact. First, a concern selling exclusively on account requires a larger amount of working capital than one which sells exclusively for cash, which necessitates higher prices or a more rapid turnover or both for the business selling on a credit basis, if Its profits are to be equal to those of the business on a cash basis. Second, a concern which sells exclusively on account find its working capital continually undermined from losses on un-collectible accounts receivable. To show a satisfactory rate of profit, therefore, it is essential that the management charge an estimated insurance premium to compensate for this loss. Third, the concern on a credit basis finds additional expenses incurred in granting credit and In making collections. And on this account, also, businessmen early recognized the necessity for a higher price list when sales were made exclusively on account then that needed when sales were made exclusively for cash.