Knowledge that Transforms

Reviews the book "Eleventh Annual Report of Stockholder Activities at Corporation Meetings," by Lewis D. Gilbert and John J. Gilbert.

Abstract It is a commonplace of modem industrial living that accounting methodology may be applied to the economic aspects of any group of transactions which are important enough to be evaluated, classified, and summarized as the basis for guidance of some person or persons. While it is true that the economic aspects of living are not the only important phase of human effort and activity they are, nevertheless, present in practically all activities involving the provisions of goods and services, Hence, accounting technique is not something completely separate from the facts of every day existence. Broadly conceived, every entry made according to accounting methodology is the result of a human judgment based, primarily, on an attempt to arrange a heterogeneous mass of economic data item by item according to a logically consistent scheme. This judgment in the first instance centers around an administrative determination of whether a transaction or transactions should be undertaken and in the second instance on a refitting of the money facts regarding the transactions into the accounting pattern of the business entity concerned.

Abstract The accountant's main task consists of the periodic determination of the revenue, costs, income and financial status of the business enterprise. In this connection, accounting has been defined as the art of recording, classifying, summarizing and interpreting. The statement accounting for variation in net profit is usually one of the rough spots encountered in intermediate accounting and the particular difficulty lies in the analysis of the factors causing the change in gross profit. Members of the Committee on Visual Aids are currently available to render assistance, upon request, to individual teachers of accounting. Highly effective use of visual aids has been made particularly in such courses of the accounting curriculum as cost accounting, auditing, elementary and advanced accounting theory, accounting reports, the analysis of financial statements and Certified Public Accountant problem review. Teachers of accounting are urged to call upon the membership of tile Committee on Visual Aids for any assistance desired in connection with attempts to develop visual aids applications or in resolving problems encountered.

Reviews the book "What Happens During Business Cycles: A Progress Report," by Wesley C. Mitchell.

Reviews the book "Operating Results of Limited Price Variety Chains in 1950," by Esther M. Love.

Abstract In view of the purpose and nature of business operation, the conventional cost theory of value stands well the test of logic and should be maintained. The disparity between cost and revenue caused by changes in the value of money does not Affect the validity of cost but gives rise to the problem of conversion of cost figures to the current dollar level. The primary purpose of conversion of cost is, therefore, to bring cost into identical dollars with revenue so that real income in the sense of increase of economic well-being may be reflected and that figures of cost and revenue may continue to be relied upon as barometers of operating efficiency. This being so, revenue which sets the limit to income need not be converted as sometimes recommended, except for purpose of comparison between periods. The accounting effect of cost conversion is a segregation from income of what represents, in the case of rising price levels, but a recovery of current dollar cost necessary to maintain the integrity of economic capital. Conversion of all forms of "investment" assets such as buildings, machinery, equipment and inventories is desirable for a correct statement of value of resources in terms of current dollars and incidentally also, placing the costs of successive acquisitions of assets, especially fixed assets, to homogeneous dollar nines as basis for cost computation.

Abstract The accounting course for economics concentrators can and should integrate accounting concepts with those of economics. No attempt is made in this paper to consider the equally important problem of how integration with economics may be brought to accounting courses taught for concentrators in business administration, accounting and other subjects. If one turns to the authors of textbooks one gets little more help. Among the multitude of accounting textbooks while there are a few written from a management point of view there is none that attempts to integrate accounting with economics or even to present those aspects of accounting which are especially important from the point of view of economics. Before accounting and economics can be studied together, a knowledge of the rudiments of each must be acquired. The economics concentrator normally studies accounting after at least one semester of elementary economics. To supply a background in accounting, the accounting course must start with a brief training in bookkeeping technique.

Reviews the books "Accounting: An Analysis of Its Problems," by Maurice Moonitz and Charles C. Staehling.

Reviews two books on taxation. "The Nature and Tax Treatment of Capital Gains and Losses," by Lawrence H. Seltzer and "Federal Income Tax Treatment of Capital Gains and Losses."

Abstract This article features problems that were prepared by the board of examiners of the American Institute of Accountants and were presented as the first half of the November, 1951 certified public accountants examination in accounting practice. Questions were presented in three divisions, with unequal time duration alloted for each. The first series relate to federal income tax in the United States. Questions of these series include conditions for income tax exemption, taxability of the interest earned from U.S. savings bonds issued for individuals, categorization of real property owned by a taxpayer, taxability of interest earned from the sale of municipal bonds and possibility of deduction from tax returns for stock owned by a taxpayer. The second question demands the examinee to prepare a balance-sheet and income statement after careful inspection of records of a sole proprietorship firm. Another question demands the examinee to prepare a statement showing the sources and applications of funds from information on financial transactions undertaken by a business concern.