Knowledge that Transforms

Abstract The problem of depreciation has had various interpretations in the course of its evolution in accounting practice and accounting literature. It has been treated as a problem of financing the replacement of fixed assets; as a method of presenting properly such assets in the balance sheet, and as a problem of the allocation of costs in operating statements. The usual practice among current writers appears to be to recognize these different interpretations and to admit their inconsistency. Depreciation is discussed from the viewpoint of the balance sheet and from the viewpoint of the operating statement, frequently with the expressed or tacit assumption that those viewpoints are irreconcilable. It is proposed here to show that a proper treatment of the problem from one point of views entirely consistent with its proper treatment from other points of view that the problem is one problem consistent within itself regardless of relative emphasis placed upon its different aspects. Depreciation originally made its appearance in accounting in the form of an appropriation from net income or surplus as a provision against the time when fixed assets must be replaced. In this form it related to financial administration and not at all to the immediate control of operations. So used, depreciation was, therefore, a financial and not an operating account.

Abstract This article focuses on the evaluation of student aptitude and student accomplishment in accounting. The best measure of student aptitude available was the scores on the battery of tests weighted as indicated by the coefficients of regression. The first step in the process was to set up an aptitude score for each of the 850 students in the accountancy course. This score consisted of the results of the battery of tests weighted. Eight groups of twelve students were then found whose aptitude scores indicated that they were approximately equal so far as their possibilities were concerned. There were eight instructors in the course and each one of these groups was composed of students who had studied under a different instructor. The total accomplishment score of the students in each group was taken as the measure of teaching efficiency of the instructors. Furthermore, the whole rating is based upon two fundamental assumptions. The first assumption is that the aptitude score actually measures accounting aptitude, and the second assumption is that the accomplishment test given actually measures accounting accomplishment.

Reviews the book "Mergers and the Law ."

Abstract In this article the author discusses the accounting practices in Italy. According to the author accounting is an application of economics, it does not mean that all university accounting department should be headed by economists. Most textbooks on accounting are written under the assumption that the economics has been the same, is now the same, and will be the same. Cash in bank in Italy necessarily means a whole set of contractual relations between the depositor and the bank. So it does in the United States, but in the United States they have assumed that cash in bank - means certain fundamental. A contractual relation between a depositor and a bank, at least in America, perhaps in England, is a definite contract between two free and independent citizens or persons under law enforceable in a free and open court of justice. The America banker has almost invariably loaned money to a corporation incorporated under the laws of Bavaria or under the laws of Italy or of Brazil subject to those laws and subject to those sovereign jurisprudence principle to be adjudicated by the courts in Germany or Italy or Brazil, payable perhaps in American dollar at an American fiscal agency, but, nevertheless, a clean-cut direct participation in the sovereignty where the money is used.

Reviews the book "The Exchanges of London," by S.W. Dowling.

Abstract There is no longer any considerable discussion on the point that the accountant must prepare condensed summary statements of the operations for the year and the resulting financial condition, and must maintain current records of the assets, liabilities and proprietorship items. But the function of greatest value to the organization is to provide analytical information which will promote operating efficiency, regardless of the complexity of operating details, organization or responsibility. Certain of these analyses to be of value must be compiled and used daily, weekly or monthly and must exhibit transactions immediately following their performance, and these statements must so interlock with the general program as to preclude duplication of work and result in the final formal closing at an early date each period. Few controllers in any of these fields of business activity could justify their outlay for clerical and statistical force, except on the ground of promotion of operating efficiency. To accomplish this task the accountant must analyze results and the cost of securing these results in such manner as to determine the desirability of existing policies and the performance of individuals in carrying out these policies.

Abstract One of the greatest events in accounting history was the International Congress on Accounting, held in New York during the week of September 9, 1929. Despite the variation in laws governing accountancy and in the forms in which accounting practice is conducts, a remarkable unanimity was recognized by everybody as existing in the problems faced by the profession throughout the world. There are two views rather definitely set professional auditing over against social economics; they contrast shareholder's desire for information concerning the remainders of original investments with managers' desires for information concerning the intricate details of profit making. To apply reproduction costs to the balance sheet would place the statement, therefore, in conflict with prudence and the sound principle of realized profit only. But on the other hand, the author points out, to apply only past costs in cost accounting would be to deprive the management of current information very necessary to proper market judgment, for competition is going to be most felt from those who most recently bought in the market and thus have secured a tangible new base for their pricing policy.

Abstract The morning session of the Thirteenth Annual Convention of the American Association of University Instructors in Accounting, held on December 27, 1928, at the Hotel Stevens, Chicago, Illinois, was called to order by its President. The president stated that he would not attempt a technical address in view of the excellent quality of the technical papers which had been read and were to be read at the sessions of the meeting. "The Accounting Review" was considered by the president to be a publication of which the Association should be proud. The president requested all possible support from members of the Association in support of "The Accounting Review" by way of preparing material for publication and securing additional subscribers. The president felt that certain accounting books which had been published during the past few years had shown a tendency on the part of the authors either to have hurried their work or have been somewhat careless in their statements, so that they had not achieved what might be called scientific accuracy.

Abstract The article focuses on the controversy created in the U.S. by a proposal contained in a book that every corporation should be compelled by law to publish complete detailed reports of its internal affair. Corporate reformers urge for the adoption of the proposal on the ground that it would protect defenseless stockholders from being swindled by corporate managers and would in other ways contribute to the public welfare. The opposition is composed of those corporate managers who maintain that the proposed laws would not only fail to produce the good results expected of them, but would also hamper business activity and progress. The complete reports would include a statement of affairs, or balance-sheet, and a statement of incomes and expenditures, or operating statement. It is intended to secure for public inspection reports which are detailed at least as fully as is customary in the particular trade for the use of creditor banks. The author analyzes the advantages and objections to the plan and finally some general observations and conclusions are given.

Abstract The article focuses on the changing objectives of accounting. There has been considerable discussion among accountants concerning such questions as the proper basis or bases for valuing balance sheet items, what constitutes income, what are proper elements to be included in costs and the responsibility of the accountant for furnishing statistical information on internal operations. The author examines some of the objectives of accounting with a view to ascertain if such a consideration may shed additional light to these questions. According to the author, much of use controversy would disappear if it is recognized that there are widely different purposes and problems for which accounting information is necessary and that the particular information which is needed will vary from one problem to another. The most orthodox view with reference to general accounting is that accounting records should be kept so as to reflect that income which is legally available for dividends the view is particularly concerned with realized income. This generally supposed to mean recognized in the accounts only when a sale is complete.