Knowledge that Transforms

Abstract In both termination and renegotiation the professional accountant may serve very useful purposes. Audit reports of independent certified public accountants, if available, are requested by Price Adjustment Boards in all renegotiation proceedings and many termination proceedings. Such reports lend credence to the financial representations of contractors. Likewise, the professional accountant can render valuable assistance in the orderly and conscientious preparation of data submitted in renegotiation and termination. In all these matters, the professional accountant must maintain his status of unbiased independence, avoiding advocacy, which is fundamentally incompatible with his function as independent certified public accountant. Provision for the renegotiation refund should be included in the balance sheet as a current liability, and in the income statement, preferably, as a specific deduction from sales with the related tax computed accordingly. Obviously, it is imperative that accountants in both private and public practice be thoroughly familiar with requirements relating to renegotiation and termination and that they should clearly comprehend their own responsibility therein.

Abstract Reviews the book "Inter-American Affairs, 1942," edited by Arthur P. Whitaker.

Abstract The public accountant and the company auditor, for instance, and possibly the firm's bookkeeper, have a twofold task at the end of the fiscal period, that of preparing financial statements and that of analyzing them by means of ratios and percentages. These results, arranged in proper form, are then submitted to the executive, who upon comparison with figures for former periods calculates trends of income, cost, tendencies toward overexpansion, overtrading, and many other problems of business management. To begin, the credit grantor analyzes the figures submitted to him for credit extension primarily to learn something of the debt-paying power of his firm's prospective customers. He is concerned less, if at all, with fixed asset valuation and the possibilities of a cash settlement through insolvency proceedings. Consequently, his scrutiny is centered upon that portion of the balance sheet which will reveal to him the working capital condition of his prospective customers. After the credit grantor has segregated the current portion of the balance sheet from the fixed, it is advisable that the credit investigator evaluate roughly the prospective customer's itemized current assets and liabilities to determine their worth.