Knowledge that Transforms

Reviews the book "Advanced Accounting," 4th ed., by Roy B. Kester.

Reviews the book "Business Law—Principles and Cases," 3rd ed., by Harold F. Lusk.

Reviews the book "Preparation of Company Annual Reports."

Reviews the book "Principles of Accounting, Intermediate," 3ed., by H.A. Finney.

The article presents information regarding laws and legislation related to accounting procedures in savings and investments. In 1908, the State of New York Legislature, enacted laws which in effect and intent required savings banks and insurance companies to put bond purchases on the books at cost and thereafter to make correct entries as coupons. There was much opposition from the densely populated group in banking and accounting circles who never forget anything and never learn anything and even after the law had been in more or less successful operation for about two years a prominent Wall Street oracle, in a Bankers' Convention speech, denounced the whole scheme as "a delusion and a snare" and about the same time the "Commercial & Financial Chronicle," editorially attributed the existence of said law to the influence of "an evil genius" that had arisen. But the first important thing that happened almost immediately alter the enactment of the "Amortization Law" was a decree from the Banking & Insurance Commissioners at Albany, New York, whereby they catered to the lazy and ignorant by authorizing, if desired, the use of the "pro-rata method" instead of the correct one.

The business policies of a department store, like any other sound business enterprise, are finally decided by top management, generally the corporate officers or the Board of Directors. These policies, once laid down, must be administered by the next immediate echelon of operating personnel consisting of the merchandise manager, the general superintendent or store manager, the publicity director and the controller. One of the major problems in retailing today, from the controller's viewpoint, is that of adequate merchandise control. The emphasis has been the need for carrying such techniques through to the point of benefit to every branch of the business. There has been an attempt also to talk of speed—shorter time lapses between the occurrence of an event and the recording and reporting of that event—and finally there has been an attempt to tell that accounting, at least in an organization is a process of seeking the best manufacturing techniques to enable to produce a fast, dependable and low-cost tool which has a very positive effect on shaping business policies because it is not a dusty, historical record over which to hold post-mortems, but instead it is a live, current force from which such policies can be created.

The operating budget is a very highly polished instrument of management control. An operating budget when properly constructed is a master plan of not precisely what is going to happen, but a plan of what will have to happen in accepted measures of activity during an operating period if certain profit results are to be achieved. Clearly, the first value of a budget is that it is an aid to management in eliminating waste and in directing the course of the business along profitable lines, that is, in identifying loss operations so that such conditions can be remedied. The next value which shall be discussed is developing leadership. The third "beyond value" of a properly constructed operating budget shall be teamwork. The fourth value of an operating budget shall be to call a more positive attitude toward business operations. The fifth and final "beyond value" in an operating budget is the courage decision. Nevertheless, good accounting is an indispensable force in business progress. Through good accounting weakness and waste are made apparent; it keeps inefficiency from being concealed in total profit figures; it gives the "beyond values." Every business, surely, should have the illumination and the unity which disinterested accounting knowledge can provide.

Reviews the book "Auditing Questions from the Professional Examinations," by Myron M. Strain.

Reviews the book "Advanced Accounting," by E.I. Fjeld and Lawrence W. Sherritt.

This article presents accounting questions that were prepared by the Board of Examiners of the American Institute of Accountants and were presented on May 14, 1947 as the first half of the certified public accountant examination in accounting practice. Candidates were allowed four and a half hours to solve two problems. Time limit for each question was also specified in the question paper. Problem 1 carried a weight of thirty points and problem 2 a weight of twenty points. The first question presents trial balances of a company and its subsidiary at December 31, 1945. From them and the other information given in the question, the examinees had to prepare a columnar consolidating work sheet showing in separate columns a consolidated balance-sheet and a consolidated income statement at December 31, 1945. For the second problem the examinees were asked to prepare a columnar worksheet of a company showing the postings of cash transactions, the adjustments, and the cash available for final distribution, a statement of loss on realization and expenses of liquidation and a statement showing the amount of cash to be distributed as a liquidating dividend to each stockholder.