Knowledge that Transforms

The purpose of this paper is to show the growth of instruction in accounting in the U.S. universities and colleges from 1900 to the present, as of June 1927. The interest in accounting has also grown rapidly in secondary schools, normal schools, and foreign schools in this same period, but the scope of this study is restricted to the U.S. universities and colleges. The year 1900 was selected as a starting point because instruction in accounting prior to that time was not very important. In fact, even during the first few years following 1900 there was not much development in accounting instruction in the universities; and in such work as was given the art and science of bookkeeping were emphasized rather than the fundamental principles of accounting. In order to determine the extent of this growth a study was made of the courses in accounting as shown by the catalogues of forty two of the leading universities and colleges. In this study the catalogues were carefully examined for each year from 1900 to 1926, inclusive. In addition, in order to determine definitely the growth in the number of schools giving courses in accounting, the catalogues of seventy-five additional universities and colleges were studied for the year 1900, 101 for 1910, 303 for 1916, and 575 for 1926.

That fixed assets should appear in the accounts on the basis of their original cost, adjusted only for depredation, has been a much revered canon of accounting, and much has been written and many considerations urged in support of this rule. Among the affirmative arguments should be mentioned the following: 1) original cost represents the value of such assets to the enterprise as a going concern; 2) writing up the value of fixed assets necessitates a corresponding credit to surplus and such credit constitutes an unrealized profit; 3) changing values of fixed assets are due in a large measure to the changing value of the monetary unit and it is both unwise and impractical to attempt to use the dollar as a unit of measure and at the same time endeavor to allow for the fluctuations in its purchasing power; 4) accounting is fundamentally a system of recording logically the historical facts of a business enterprise and this record will be most accurate and trustworthy if there be strict adherence to actual financial transactions and no attempt made to incorporate into the accounting structure the hypotheses and postulates of economic analysis or the dictates of individual judgment; 5) the practical difficulties inherent in the task of measuring current economic values are such as to invalidate the use of accounting as an effective instrument of business control.

Reviews the book "Questions and Problems in Accounting," by R.A. Stevenson and R. Emmett Taylor.

It has been seen, especially in the U.S., that for any given industry an increasing or decreasing of accounting structure parallels a similar increase or decrease in the organization. Business organization and administration tend to place emphasis upon the personal elements in business activity. Personal element, that is, recognition of the parts played by individuals within their business units, is a factor which makes vital the accounting records. Business organization expresses the relationships of owners among themselves and to operators or managers engaged in the service of the owners. A second form of relationship is found in what Is sometimes called "internal organization," organization in terms of the various functions performed by the individuals or by groups of Individuals within the business unit. In the article, a brief consideration of two types of organization relationships between the element of business organization and administration and accounting have been discussed, which include, firstly, the work of the auditor in certification, and secondly, the recent development of the operating statement for purposes of administrative control.

A condensed balance sheet which reflects all the adjustments arising from and incidental to the proposed financing is often used in the circular issued by the banker, when offering securities for sale. The adjustments fall into three main groups: new funds obtained from-bonds or notes to lie sold; stock to be sold; assets to be liquidated; new funds to be disposed of-to retire funded debt; to retire certain issues of preferred stock; to liquidate short-term debt; for additions to plant, by withdrawal of cash or other assets from the business; internal readjustments-reclassification of capital stock issues; revaluation of assets, stock dividend; etc. The cost of the new financing is usually included in deferred charges and the excess of the funds obtained over funds to be expended is included in the cash item. A matter of importance in constructing and handling special statements is that of interim changes in conditions. It is essential that the auditor examine the accounts for these intervening months to ascertain that nothing transpired during that period which affects adversely the company's financial condition. It is also important that the statement reflect as nearly as may be the prospective financial condition after the financing is consummated.

Reviews the book "Auditors' Certificates," by David Himmelblau.

Reviews the book "Accounting for Universities," by Earl L. Washburn.

Reviews the book "Corporations Doing Business in Other States," by H.A. Haring.

The article focuses on the valuation of intangibles in business practices for the purpose of purchase and sale. There have been a large number of variable factors that have to be taken into account in the process. However, there are several general considerations which are to a greater or less extent taken into account in all case of valuation of intangibles. In buying a business with an established earning power in excess of what is considered ordinary in the particular line of industry, the purchaser expects to pay for the capitalized value of the estimated excess earnings which may be judged to continue for a fairly definite number of years. In computing this value, a number of factors have to be considered, like, the earnings of the concern; the value of investment or which a normal rate of income is to be allowed; normal rate of earnings for the industry concerned; the amount of the excess earnings that can be transferred; the number of years during which the transferable excess earnings may be expected to accrue; and the rate for capitalizing the excess earnings thus determined.

The article focuses on antecedents of double-entry in bookkeeping. It is proposed in this paper to follow the genealogy of bookkeeping back beyond those parental ancestors whose respectability was so ably proved at the time. The purpose here will be to trace out those blood-lines of preparental inheritance which finally converged at a certain time and place, there to confer certain characteristics upon the offspring. In trying to perceive the forces which produced double-entry, two questions, must be answered in the process. First, what were the antecedent elements out of which double-entry finally evolved. An answer is needed to this question, so that one may better appreciate how closely accounting has been, and still is, related to several collateral fields. Second, what surrounding conditions were necessary to give vitality to these antecedent elements? The antecedents of double-entry, those factors which in time became so interwoven as to render double-entry inevitable, are all familiar quantities; some of them are very old and some are very obvious, but all of them are, in the writer's opinion, indispensable. The art of writing is an indispensable antecedent, since bookkeeping is before all else a record; arithmetic is essential also, since bookkeeping is a sequence of simple computations, even though they are cast into certain forms; private property, since bookkeeping is concerned only with recording the facts about property and property rights.