Knowledge that Transforms

Reviews the book "Public Utility Accounting," by J. Rhoads Foster and Bernard S. Rhodey.

Abstract Accounting is passing through the familiar stages that other and older fields have traversed in their development. In accounting, as in other fields, practice preceded theory. Practice went forward on a hit-and-miss basis, but it went forward. There was no ready reference to a body of carefully reasoned principles, and there was no time, under the press of everyday business, to develop one. In the first stage of accounting development, about the only steadying factor was the high caliber of the men engaged in evolving practice. These men mostly relied on their common sense to solve problems. Modem accounting is now struggling through the second stage of its development, the stage of criticism. The criticism is mostly of practice including terminological disputes but criticism has also been made and received on such fragments of theory as we find in written form. The present stage has also changed course and shifted emphasis by reason of an ever tightening trend of governmental regulation, and ever increasing burden of taxation on concerns and individuals alike.

Reviews two books. "Effects of Taxation: Executive Compensation and Retirement Plans," by Challis A. Hall; "Effects of Taxation on Executives," by Thomas H. Sanders.

Abstract The preparation of statements of realization and liquidation is a topic, which frequently troubles classes in advanced accounting or advanced accounting problems. This condition is certainly not caused by the analytical complexity of the topic. The legally oriented form in which the statement is presented explains part of the difficulty encountered, but the chief stumbling block usually arises in securing a proper classification of the data. If all the transactions of the period are recorded in the appropriate columns of the work sheet, preparation of the statement of realization and liquidation merely involves transferring of the figures from each work sheet column to a column similarly headed in the statement. Use of a ten column work sheet with a pair of columns for each of the five classes of data to be reported will overcome much of the difficulty it is believed. Such a work sheet permits all of the transactions to be classified immediately in the proper categories. Categories according to which data should be presented are also listed with full explanation.

Reviews the book "Effects of Taxation: Corporate Mergers," by J. Keith Butters, John Lintner and William L. Cary.

Reviews the book "An Accounting Technique for Reporting Financial Transactions," by R.K. Mautz.

Abstract Teaching and training of students who are planning to enter the public accounting profession has been the target for many articles and has been the subject for much discussion by both accountants and educators. The American Accounting Association and the American Institute of Accountants have contributed greatly to the exchange of ideas on this topic through their conventions and in their publications. So great is the interest, in this still unsettled question, that large sums of money have been spent in developing aptitude and achievement tests for colleges and universities and for the promotion of research in the interest of improving the training of prospective public accountants. The achieving of this so-called balance in the accounting program is not an easy task but it is an interesting one. A carefully planned curriculum is only the beginning. Many educators are now advocating graduate training and five year courses for public accounting majors. Perhaps this is the answer to the problem of turning out finished accounting students. Perhaps they are expecting too much of the four year college graduates.

Abstract It is the purpose of this article to explore some of the factors which tie us to the historic basis of cost, and which inhibit all but the very bold from advocating current values along with a concrete plan for carrying their theory into effect. For a good many years from now, perhaps it might be safe to say several decades; most accounting authorities have been against the revaluation of plant assets. Cost or its equivalent has been the time-honored basis for the valuation of fixed assets on the balance sheet. On the other hand, there is no denying that there have been and are outstanding men in the profession who recognize the need for some sort of revaluation under certain conditions. Yet it is the author's impression that very few will ever give their unequivocal endorsement to any basis but cost. This apparent hedging may be due to the fact that no satisfactory substitute has yet been found to replace the cost theory. Also in all references to plant assets, the author has deliberately ignored land or its related natural resources. Revaluations of these assets are necessary in order to give a true picture of the enterprise. For these reason the above assets usually require separate treatment from the so-called man-made possessions.

Reviews the book "Municipal Accounting and Auditing."

Abstract The Executive Committee of the American Accounting Association reactivated the committee on cost concepts and standards for the year 1951. The Executive Committee hoped that in reestablishing this Committee, the groundwork laid by previous committees would be carried forward to the benefit of the Association and the profession of accounting as a whole. The 1951 Committee made an intensive exploratory study of the possibility of setting forth principles, concepts and standards of accounting. As an approach to offering positive guidance to current cost accounting problems, the Committee felt that this afforded the best opportunity to be of service at the present time. As a consequence, major stress of the 1951 Committee is upon cost concepts and related business decisions and policy and, to a lesser extent, upon principles or standards of cost accounting. Cost accounting is a tool of management. In so far as it aids management in the preparation of general financial statements, it supplies data, which may be used eventually as a guide to the overall efficiency of an organization, the relative efficiency of a firm to other firms in an industry, or the relative profitableness of present pursuits of management as contrasted to alternative opportunities.