Knowledge that Transforms

The teachers of accounting as a group have made the major contribution, to the subject in the last thirty years. Yet, in spite of this, the technique of imparting a knowledge of accounting principles and practices, has been given very little constructive thought. Experts in educational psychology have been able to accomplish wonders in primary education by studying the technique of learning by children and of teaching for children. Certainly research might well be made in analyzing the ways of criminals and the methods under which they have operated in the past, as well as methods for preservation and especially methods of detection. Method of interpretation research in developing the best methods for presenting accounting data - the development of non-traditional statement forms, the application of graphics to accounting, the art of simplifying the essentials for report presentation and so on. The public accountant naturally enough perhaps gives so large a portion of his time to the balance sheet and other statements as of a given moment of time or at best for the fiscal period, that he has not had much opportunity to give thought to the methods of analyzing accounting data over a considerable period.

Reviews the book "Cost Accounting," by W.B. Lawrence.

Reviews the book "Theory of Accounts," by D.R. Scott.

This article focuses on the use of costs in setting up selling prices. In almost every presentation of the advantages and purposes of a cost accounting system the possibility of using costs as the basis for fixing selling prices is given special attention. In so far as the individual producer can not set his own selling prices he needs a better cost system and more detailed analyses of cost data in order to compete successfully in the market. Price determination is a complex process with many interrelating forces and proceeding largely by trial and error methods. Even the monopolist, setting prices at will in order to get the highest possible return, must know his costs in order to compare the net return from different prices. Cost, then, can sometimes be used as a direct basis from setting selling prices, is often one of the important factors in the determination of provisional selling prices, but many times the problem of the individual producer is to keep his costs below a selling price determined by general market forces and conditions.

This article focuses on the practice of Italian double entry system of accounting in early England as of June 1926. It appears that the early ledger entries were fairly complete sentences expressing complete ideas. They were in fact memoranda of what the writer wanted to avoid forgetting and probably were cast into the forms of expression of ordinary speech. What we find written in the old books gives us therefore some idea of how 15th century merchants thought their transactions through for recording purposes. The social background, so different from the independent life of the individual in Italy, would be expected to produce a very different kind of "recording-need" and a very different attitude toward the ends to be accomplished by the records. Feudalism produced an atmosphere of agency and stewardship rather than ownership and proprietors hip, such as was engendered in the more commercial Italy. None but the King was absolute sovereign over his property with full, free, and untrammeled power to dispose of it without consulting the plans or will of another. The nobles held their lands under the King's pleasure and the noble's peasant tenants held such land as they used solely tinder their master's pleasure. English "business" in the 13th and 14th centuries was confined to small artisans and peddlers-nothing to call up any sort of record-keeping. The largest activity was the maintenance of the manor house and its self-sufficing community.

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.

National Tent and Awning Manufacturers' Association is a strictly modern invention of about fifteen years of age. Primitive man had to live in tents and in the oriental countries today shops and bazaars are covered with awning. In our modern life over here we seem to think that tents and awnings are not necessities and the business has somewhat deteriorated. In fact, it was in a terrible condition about fifteen years ago. There was a mortality of, perhaps, forty or forty-five per cent of the manufacturers each year going into bankruptcy. There exists perhaps a number of 2200 of what one might call manufacturers in the U.S. today. During the busy season, which is the late spring and early summer, these men know no hours. They are on the job from six o'clock in the morning, perhaps, putting up work, until nine or ten o'clock at night and then they may go in the shop and work until one or two in the morning, trying to get enough work ready to go out and put up the next day. Naturally, with conditions of this kind, where men did not know the value of their service a terrible condition was found as far as prices were concerned. Goods were being sold far below cost, because the mechanics that came into the business had absolutely no conception of what cost meant. They might know the cost of materials, they might know how many hours of labor were put upon a particular job, but when it came to overhead the only thing they saw was the blue sky above.

The paperboard group manufactures a heavy kraft and chipboard called liners, which form the outer and inner surface of combined board in the container industry; also a chipboard used in containers and a manila and cupboard with a special surface finish for folding boxes. The container group uses the liners and chip by passing even layers together to make and heavier board called solid fiberboard, or by Inserting a corrugated or fluted straw sheet between two liners there is made a corrugated board. The folding box group accepts the board as made by the mills, and without combining It, print and cut into finished product. The term container is used to designate a box or outer package made of paper fiber, and while limited In gross dimensions may be of any size or shape. The container group has the largest membership of our three divisions and represents about seventy five percent of the output of the country. This totaled in 1924 1,260,000 tons. It is with this group that the accounting work has been done and principally in connection with the corrugated branch.

The article presents information on instruction in Accounting at the New York University as experienced by the author himself. In this University men who undertook to teach accounting when the school was organized admitted that they had very little idea of what it was all about. They got some men from the practical field, out of accountants' offices, to come up in the evening and talk to a small class of about thirty students. They were full sized books of accounts and they were accompanied by a syllabus of transactions and the members of that class were required to work out these transactions, put them into the books and make some statements from them. This proved to be of very great interest. The Instructor or professor who handled the Class in problems was a very busy practicing accountant He gathered a number of C.P.A. problems that was the basis for the whole thing in the early years; and he worked out his own solutions on pieces of paper which he kept In the lower left-hand drawer of his desk, filed away with the problems. There were no pedagogue in the group of faculty. They were hard-headed, practical accountants, most of them, but they had very few and hazy ideas about teaching.

This article focuses on fund and proprietary accounts in governmental accounting. The ledger accounts of municipal and other governments may be classified under two heads, "proprietary," including accounts with assets and liabilities, and with revenues and expenses; "fund," including those accounts necessary to reflect the operations of the budget. Fund, or budget, accounts are peculiar to governmental organizations. They are necessary because the finances of such organizations are carried on in accordance with the budget system, which requires accounts which control and analyze the transactions incident thereto in accordance with the limitations set in the budget. All revenue estimates and appropriations are for a fiscal period and at the end of that period any unencumbered balances in the appropriation accounts fall back into "unappropriated surplus." The net difference, therefore, between the original amounts debited to "unappropriated surplus" for appropriations and the amount thrown back into "unappropriated surplus" represents the total expenditures for the fiscal period plus encumbrances outstanding at the end of the period.