Knowledge that Transforms

The meteoric rise of the 1925 Florida real estate boom, with its great volume and complexity of real estate transactions, forced the practicing public accountants in the state to adopt many changes and variations in the methods usually employed in the accounting for such types of business activity. In the more stabilized or settled sections of the country the purchase or sale of real estate is a rare or extraordinary event in the history of the average individual or firm. Individual purchases or builds a home, which may require years of sacrifice or self-denial to pay for completely. The typical business concern acquires land only for immediate or future use as a business site. Land or buildings used for productive purposes do not change hands rapidly. Even in the case of the purchase of real estate for speculative purposes the turnover is not great, as rapid price increases making possible a quick profit through re-sale are not regularly experienced. In other words, no great number of real estate transactions need be recorded in books of account of the typical business concern in most sections. In most instances one land account and one building account suffice. The rules of debit and credit laid down for such accounts contemplate the use of the real estate solely for productive or investment purposes.

Accounting instructors at quiz and examination periods are placed on their mettle to prepare questions and problems, which may be answered by a student, who naturally works very slowly, within the time limit set for examinations. How many times we find the complaint that the quiz or examination is too long Certified Public Accountant (CPA) candidates likewise continually criticize the CPA examination questions as being too long. If students and candidates taking examinations were familiar with a satisfactory short method of solving problems, their chances of completing the work within the time limit described would in many cases be greatly increased. And examiners should be glad to encourage the use of such a method, assuming that it will serve to bring out all the essential features of the problems set. A question has been often raised by students as to the acceptability of this type of working papers by examiners. There is no doubt of the working papers being acceptable if the results and technique are correct.

Reviews the book "Analyzing Financial Statements," by Stephen Gilman.

Reviews the book "Auditing-An Introduction to Practice," by George E. Bennett.

As a group, teachers of accounting have contributed largely to the literature of accounting in the way of general treatises and of special studies on particular phases of the subject, but, in so far as published material may he taken as evidence, have given comparatively little attention to the problems which arise in the teaching of accounting. It is true that at least one institution gives a course in the college curriculum in accounting for six weeks during the summer and that a number of articles have been published on one phase or another of college courses. The material, however, is scanty at best, and the writer does riot know of any attempt to give a complete statement of the problems which confront the head of an accounting department in a collegiate school of business. The present paper, however, is not concerned especially with discussing the problems of the individual teacher, but it is designed to raise the question of the responsibilities of the head of a department of accounting in directing the instructional work of his department. The writer feels that the department head should take an active part in planning the courses, in encouraging and aiding his instructors to do their best work, and in providing conditions which will pave the way for effective teaching.

Under regulations prescribed by the Commissioner with the approval of the Secretary, a person who regularly sells or otherwise disposes of personal property on the installment plan may return as income there from in any taxable year that proportion of the installment payments actually received in that year which the total profit realized or to be realized when the payment is completed, bears to the total contract price. The solution of the problem is so simple that there would be no excuse to raise a discussion of the subject were it not for the published decisions of responsible revenue officers. Every beginner in accounting understands or should understand the use of suspense and deferred revenue accounts. Accordingly it is not difficult for him to appreciate that what is received in one accounting period may be income of a different period, just as a cost incurred in one period may be an expense in another.

Reviews the book "Accounting Systems--Their Design and Installation," by William Rodney Thompson.

This article is a description of a system of cost and general accounting which was installed by the writer for the Hartwell Iron Works Inc., a company incorporated and organized under laws of the State of Texas and located in Houston, Texas. This plant consists of a foundry, machine shop, structural steel or plate shop and a pattern shop. Each department is fully equipped and the establishment is prepared to handle all classes of general foundry, machine work, or structural and plate fabrication work. The Company undertakes a great deal of general jobbing work and also manufactures for stock such items as cast iron ventilators, ash doors, water and gas fittings and general ornamental or structural castings. Buildings of the Company are well arranged with respect to the routing and handling of orders. The machine shop is housed in one building along with the office and stock room. The foundry is located at the back of the plant adjacent to the scrap yard, this arrangement facilitates the handling of the old iron and other second-hand material that is commonly used in the manufacturing of grey iron castings. The pattern shop and the plate or structural steel shop are located in two adjoining buildings. A storage room is included in one of these buildings.

Abstract it is sometimes said that the basic principles of bookkeeping have not changed since the origin of double-entry in the middle ages. The statement is true if the term "basic principles" be closely construed but the casual reader is likely to interpret it broadly and thus carry away the impression that bookkeeping has to all intents and purposes stood still for 500 years. That idea would be erroneous, of course, because the forces of evolution act upon man's tools as well as upon man himself. Fundamental ideas regarding the nature of business transactions and theft recording have not changed in centuries but that is not equivalent to saying that progress has been absent or that evolution has not been at work. It is with the idea of noting the direction of some of these developments that a series of ledger accounts extending over nearly 500 years is studied here. A few of the available examples come from old ledgers, more of them are from the textbooks of the day. The illustrations given in such books are accepted as reasonably dependable examples of the then current practices, and in but few cases is there more than a fifty-year break in the date sequence of the texts examined.

Reviews the book "Elements of Accounting," by Frederick W. Woodbridge.