Knowledge that Transforms

Abstract The allocation of income with respect to periods of time is of fundamental importance in both accounting and taxation. Under the accrual basis of accounting the sale is looked upon as one of the best evidences of realized income. However, the determination for Federal income-tax purposes of the time when income is realized from a sale gives rise to such questions, as: a) Is income realized when a contract of sale is entered into by the parties? b) Is there income to the seller when legal title passes? In this paper the time of income realization will be examined with reference to dispositions of personal and real property. The study is based upon reported cases of the Federal Courts and the Board of Tax Appeals. Although the subject of deferred payment sales will be discussed generally, a consideration of installment sales is excluded. In as much as the legal principles applied to sales of personalty in determining passage of title differ from those applicable to transfers of title to realty, the two types of transactions sales will be considered separately.

Reviews the book "Debts and Recovery: A Study of Changes in Internal Debt Structure From 1929 to 1937 and a Program for the Future," by Albert C. Hart.

Reviews the book "Accounting Manual for Counties of Tennessee," by W.H.Read.

Reviews the book "Solutions for Advanced Accounting Problems," by E.L. Kohler.

Abstract This article discusses various elements of accounting theory and practices which appear to be somewhat clarified when interpreted in terms of the transaction basis of internal accounting. This discussion has served to focus attention upon both the importance of accountancy and the extreme difficulty of many of the problems with which it must deal. It appears wholly unlikely that the various elements of accounting practice, as developed in separate business units, can ever be reduced to a single consistent body of principles. As all accounting is based upon the dual concept of property, which refers property as a thing of value to the business is an "asset", and property as an ownership right to such thing is an "equity." The amounts of the two are essentially equal, they are simply different aspects of the same thing. It is suggested that accounting assets and equities can respond only to the transaction flow of actual business properties and although the accounting equities may usually be summarized in terms of the legal equities, they cease to be accounting equities the moment they reflect legal rather than accounting changes in amounts if the two are in conflict. Thus there comes into existence a technical accounting concept embracing only the things, called assets; while simultaneously there comes into existence a second technical accounting concept embracing only the ownership claims to these things, called equities.

Reviews the book "Auditing," by Ernest C. Davies.

Reviews the book "Introduction to Business," ed. 2nd, by Edwin H. Spengler and Jacob Klein.

Abstract It was in May, 1921, that the Nippon Kwaikeishi Kwai or Japanese Society of Public Accountants was first formed with a very limited number of members. The first professional accounting organization in Japan, it was merely a private body at the time of its formation. However, the society was incorporated in November, 1922, in accordance with Mimpo, the civil law covering incorporation of such organizations. Although a few other societies of accountants did exist in the country at that time they were rather small and inconsequential. Many years before the Japanese Society of Public Accountants was formed, a bill to regulate the profession and to register accountants had been placed before the House of Representatives. The bill was introduced eight times in the Japanese Diet from 1914 to 1927, when a law, named "Keirishi-ho," was passed and put into force in September of that year. By the terms of the law all registered accountants are called "Keirishi." It should be remembered, however, that under the law registration is optional; but nonregistered accountants are not influential and their number is very small. At the end of June, 1939, there were 8,994 registrations, although most of them are not practising accountants.

Abstract This article presents brief description, about the suggestive advocation and adoption of standards by accountants in the preparation of financial statements, presented by the editor of the journal "The Accounting Review," with discussing accounting theories and practices. In 1929, the editor proposed to the American Society of Certified Public Accountants a program of research that would lead to the adoption of professional standards. The December 1934 issue of the journal, containing an editorial entitled "A Nervous Profession," discussed the traditional ideas of accountants and strike-suits which were being brought against members of the profession were becoming a legalized racket. The Securities and Exchange Commission in one short year had already made well-founded complaints against the accounting profession; that the profession had been singularly unresponsive to the enlarged social responsibilities the Commission was trying to get the profession to acknowledge; and that individual members of the profession had strenuously opposed regulations which the Commission had made over certain accounting procedures.

Abstract Although auditing, in varying forms, has been practiced for a long time, little attempt has been made to formulate a theory regarding the subject. Accounting is a process of keeping records of current business facts according to a system of theory and practice suitable to the circumstances. The auditor is a critic and auditing is an analytic, retrospective process of examining the system of accounting theory and practice of a specific enterprise. Although many audits fall into the same general class as to purpose, in no two cases are all the conditions identical. Every audit is an individual problem the solution of which requires a thorough understanding of the particular circumstances obtaining in that case. Since the auditor must judge the validity of the evidence supporting the transaction it is necessary for him to be able to recognize what is valid and what is not valid. Verification by impartial testimony based on information in the possession of persons outside the business is the most valid evidence that can be obtained to support any given item or transaction. An auditor must decide whether to secure confirmations from all or only a portion of the customers. In addition he must decide whether to ask each customer circularized for a statement as to the correctness of the balance shown owing to the company or to notify the debtor that he stands charged with the amount, with the request that he advise the auditor as to any exceptions that he may take.