Knowledge that Transforms

Abstract Reviews the book "Operating Results of Department and Specialty Stores in 1940," by Macolm P. McNair.

Abstract In the corporate field the most important use of accounting lies in the preparation of statements of financial position and of operating results. So many vital decisions of business and government depend on the interpretation of such statements that they have come to be of prime economic and social significance. The subject may be approached by considering the uncertainties of corporate accounting practice which sometimes vitiate comparisons of published financial statements of different corporate enterprises, and even comparisons of the financial statements of the same enterprise for successive years. In some instances business managements and accountants have permitted themselves such freedom of action that published statements have been difficult of interpretation without extensive supplemental information. To avoid these difficulties every corporate statement should be based on accounting principles which are sufficiently uniform, objective, and well understood to justify opinions as to the condition and progress of the business enterprise behind it.

Abstract The article presents various problems that were presented on May 16, 1941 as the second half of certified public accountants examination prepared by the board of examiners of the American Institute of Accountants. The total weight allotted to this section was 50 points and was divided as follows: problem 1, 20 points; problem 2, 16 points; problem 3, 14 points. Examinees were allowed six hours to prepare their solutions. In one of the questions examinees were requires to prepare an estimate of fair market value of the stock of the Hall Instrument Co. and submit full explanations and computations. In addition other determinations and estimates that are made with respect to the position and prospects of the Hall Instrument is the gross volume of business for the next three or four years is expected to average around $110,000. In another question, a detail of the annual report to shareholders of the State Stove Co. is provided. Examinees are required to submit worksheets and complete computational analysis of the data.

Abstract Reviews the book "Farm Accounting," by Donald R. Mitchell.

Abstract Public accountancy is admittedly one of the newer professions. From time to time accountants have deemed it appropriate to remark the similarities existing between the accounting profession and the professions of medicine and law. There have been fewer likening of accounting to the still older professions of teaching and the ministry. Accounting has been accorded its place in the general educational program. At least one year of accounting, the elementary course, is available in almost every college in the U.S. Nearly all colleges and universities offer, in addition to this elementary course, some courses in "advanced accounting." These "advanced courses" usually include cost accounting and some auditing. Courses carrying the equivalent of from nine to fifteen semester hours of credit constitute a rather common accounting curriculum in even the very small schools. Unquestionably there has been a universal recognition of the demand for instruction in accounting. There are two schools in accounting instruction, that school which emphasizes primarily the philosophy of accounts, and that school which emphasizes primarily the mechanics of accounting.

Abstract Reviews the book "Business Policies and Management," by William H. Newman.

Abstract The article presents information on the fact that the Sixteenth Amendment 1913 was formulated to delegate power to the U.S. federal government to levy a tax on the income of natural persons. An income tax on corporations had been effective four years before the amendment. It was decided as early as 1904 that an excise tax could be measured by gross income and a corporate income tax was construed to be an excise tax for the privilege of doing business as a corporate entity. Whatever might have been the intent of the amendment or the popular belief, the income tax has not developed into a personal tax in a strict sense either in law or in other respects. The present Federal income tax is unique in the sense that it cannot be classed with any other known form. From a legal standpoint the tax does not follow the person. From an economic standpoint it does not fall on persons in proportion to their respective economic circumstances. It is neither legally nor otherwise a personal tax based on ability to pay.

Abstract It would be a strange business that could exist for any length of time without incurring risks, this essay will be confined to the audit of banks and similar financial institutions. Insofar as the ordinary commercial house is concerned it would not be unfair to state that contingent liabilities are comparatively unimportant the reason being, of course, that the direct liabilities that have definitely been incurred in the course of trading are usually much greater than the risks which may or may not arise as the result of some unforeseen contingency. A banking company that holds partly paid stock or shares in a Limited-Liability Company is liable in case of need to pay up the "calls" made upon shareholders, and it is therefore easy to assess the bank's risk under this heading. The audit should include an inspection of the stock and a careful examination of its wording. The current accounting practice is to mention the amount for which the bank stands liable if a call of all the unpaid capital is made.

Abstract Reviews the book "Advanced Accounting," by W.A. Paton.

Abstract Reviews the book "Elements of Accounting," by Raymond W. Coleman.