Knowledge that Transforms

Abstract The transition from an academic to professional career is a major achievement and one that can be accomplished most efficiently by a working association with those practicing in the professional field. The desirability of a period of professional apprenticeship is recognized by most states in the requirements to be fulfilled in order to receive a certificate as a public accountant and by some schools in their recent efforts toward establishing, as an integral part of the curriculum, a period of time during which each accounting major works on the staff of a certified public accountant firm. This being the case, the college senior who desires a certificate must first secure employment. Some of the principal touchstones of a desirable staff accountant to which a prospective employer will give consideration can be academic accomplishments in all courses, particularly accounting and related subjects, ratings received in the achievement, orientation, and vocational preference tests sponsored by the American Institute of Accountants, extent of participation in extracurricular activities of the school such as athletics, arts, and other group activities, personal appearance, use of the English language and sincere desire for professional success.

Reviews the book "C.P.A. Law Manual," by Andrew J. Coppola and Harry Katz.

Reviews the book "A Survey of Pension Planning," by Robert E. Sibson.

Abstract To institute a workable plan for a system of internal audit there must be present those essentials of an underlying structure of management without which a good internal auditor is likely to suffer from continued frustration and the best internal auditor, if he can stay on the job and sweat it out, may find his work singularly ineffective. The first of these organizational essentials is a full-scale recognition of the nature and interdependence of authority, responsibility, and accountability: administrative powers that may be called the three basic operational activators. Second among the essentials is the firing of centers of activity within the various parts of the organizational structure. Third is the empowering of each center with the three operational activators in just the right degree: a quantity and quality of authority designed to provide some freedom of action, the exercise of judgment, no matter how limited, and the development of enthusiasm and pride in work done; a charge of responsibility that will develop, exercise, perhaps even tax supervisory capacities, with substantial curtailment of the need of continuous scrutiny from above; and a scheme of reporting by virtue of which automatic and as far as possible informal accountability is the order of the day.

Abstract This article presents a report on the balance sheet of the American Accounting Association as of December 31, 1932 and the related statements of income and expense and of changes in net worth for the General Fund and the Life Membership Fund for the year then ended. The examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances. Following past practice, inventories of Association publications are not included in the balance sheet. The costs of publications have been charged to operations in the year of printing. The balance sheet and statements of income and expense and of changes in net worth present fairly the financial position of the American Accounting Association at December 31, 1952 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

Abstract The article highlights that a recent issue of The American Economic Review contained an article challenging the widely held view that depreciation allowances necessarily fail to cover replacement costs during a period of rising prices. This view, it is argued, ignores the effects of physical asset expansion. The present article demonstrates by mathematical techniques that physical growth, by itself, would cause depreciation allowances to exceed replacement costs. It is possible, therefore, that the effect of rising prices on replacement costs may be completely offset by the effect of growth on depreciation allowances. The intention of the article is to demonstrate and analyze these propositions through three arithmetic models and to develop the implications of this analysis. The first model is designed solely to illustrate the effects of physical asset expansion on the relationship between depreciation charges and replacement costs. In the interests of clarity, certain simplifying assumptions are made. They are not essential, however, to the validity of the principles being demonstrated. Two other models will show the effects of altering some of these assumptions.

Reviews the book "Financial Statements: Form, Analysis and Interpretation," edited by Ralph Dale Kennedy and Stewart Yarwood McMullen.

Abstract Under a system of free enterprise, profit is essential to the continuation of business. The effectiveness of management is therefore, judged by its ability to maintain constant earnings. Accountants have frequently defined earnings or profits as the residue remaining after matching costs against related revenues. To alter this profit picture, two possible courses are open to management: (1) either increase the sales income, without a similar increase in costs, or (2) reduce the costs endeavoring to keep the sales income constant. In order for a manufacturer to increase his sales, he must first try to determine what the future may hold for his business in so far as the demand for his product is concerned, and then to plan the activities of the business to capitalize profit-wise on the increased sales. In order for the business executive to forecast business activity, there are certain fundamentals which should always be considered. The past experience of the business concerned is of paramount importance. The sales records of the company are the source for all this type of information. The economic condition of the business, the industry and of the country should also be considered. Also the type of industry will have significance due to the type of market demand which it may have.

Reviews the book "Accountant's Office Manual," by Charles S. Rockey.

Abstract Between the end of World War II and the outbreak of the Korean police action, the subject of tax reform engaged considerable attention from the U.S. Congress. Since 1945, certain inequities in the law have been removed; a few loopholes have been closed while others have been enlarged. Meanwhile, the income tax monster has grown apace. Under the new administration, a serious study of tax revisions, already labelled as the "free enterprise" tax system, is being made. The changes that may eventuate under this system are presumed to be some mitigation of the double tax on dividends, shortening of the holding period for long term capital gains, easing of the tax impacts on new enterprises, a more liberal approach to allowable depredation and similar changes designed to encourage risk taking. The time for enactment of emergency tax legislation would be simultaneous with Congressional recognition that an emergency existed. A tax reduction might mean the continuance of budget deficits in times of burgeoning prosperity. With huge expenditures predictable for years in advance, the taxpaying public should be given assurances as to where it stands. Tax bills should be kept fair and equitable as the national need and income dictates.