Knowledge that Transforms

Abstract The article presents information about a Committee appointed by the American Accounting Association. The work of the Committee on Monographs during the year, 1943, has been devoted primarily to two projects. The first consisted of preparing a compilation of the releases and pronouncements on accounting matters issued by the Securities and Exchange Commission, the Committee on Accounting Procedure and the Committee on Auditing Procedure of the American Institute of Accountants. The second project was the preparation of a monograph on the principles of consolidated statements. This monograph was written by Dr. Maurice Moonitz of Stanford University, and was reviewed and approved for publication by the Committee. The Committee has also given some attention to two or three other projects and manuscripts. The president of the Committee said that the educational institutions and programs are all being subjected to special stresses and difficult restrictions during the war. The programs of most colleges and universities in fields customarily followed by men have had to be materially curtailed or completely eliminated.

Abstract An analysis of the accounting curricula of thirty-eight member schools in the American Association of Collegiate Schools of Business shows no unanimity as to method of offering accounting courses or course requirements. A few generalizations can be drawn, however. Half of the schools offer elementary accounting in the sophomore year and a very substantial minority offer that course in the freshman year. There is a tendency on the part of the former group to require fewer accounting courses and fewer credit hours in accounting than are required by the schools which begin accounting instruction in the freshman year. This tendency shows itself in the accounting courses required of all commerce students and also in the requirements to be satisfied for an accounting major. Schools which begin accounting instruction in the sophomore year tend to require fewer hours to accounting for the major than do those which offer accounting in the freshman year. Member schools which replied to the questionnaires constituted 73 per cent of the total membership of the association.

Abstract Reviews the book "Elementary Statistical Methods," by Helen M. Walker.

Abstract The article presents details of problems presented by the Board of Examiners of the American Institute of Accountants as the first half of the May 1944, examination in accounting practice. The time allowed to solve all problems was four and a half hours. Accountants are supposed to prepare from the following data a statement of net assets of A as at December 1-10, 1943 and changes during the period ended December 10, 1943. A, a sole proprietor, intends to form a partnership with B, Because of A's failure to keep records, however, he cannot furnish to B statements indicative of financial position and earnings to serve as a basis for determining the respective capital interests of the prospective partners and for reaching agreement on other financial matters. Accordingly, it is agreed between A and B that A should continue operating as a sole proprietor for a six-month period ending May 31, 1944 and to keep proper accounting records to serve as a basis for the drafting of a satisfactory partnership agreement.

Abstract Reviews the book "Industrial Accounting in a War Economy."

Abstract The purpose of this article is (1) to point out the trend in delegating to business a greater and greater share of the burden of tax collection through the medium of withholding taxes on wages; 2) to describe the effects of such a policy on business and (3) to evaluate this development in the light of possible alternatives. Although in the past government has called upon business for assistance in collecting revenue, such activity has been of relatively minor importance in affecting the accounting routines and the operating expense of each particular business involved. Record-keeping detail expanded with the advent of the Social Security Act. Wages exempted from the act were to be recorded separately from those covered by the act. Totals of taxable wages and totals of taxes withheld from wages were to be computed for individuals and for the firm as a unit. Receipts were to be furnished to employees periodically and reports made to the government quarterly, annually and at separate dates. State unemployment laws which required the reporting of specified data at frequent intervals added to the record keeping burden. Thus arose the universal need for more complicated and detailed pay-roll records and equipment.

Abstract In placing contracts for tremendous quantities of equipment and materials needed to meet requirements of war, the United States Navy Department, as well as other government departments, used the cost-plus-fixed-fee type of contract extensively. This type of contract requires continuous audit of costs incurred by the contractor as a necessary part of the procurement and payment procedures. The performance of this audit work for all Navy cost-plus-fixed-fee contracts constituted the major portion of the work-load of the Cost Inspection Division. In organizing to meet this responsibility three primary phases required attention, the development of a sound plan of organization structure for the Washington office and for the field offices in the various Naval Districts of the country. It also required the recruiting of experienced and unqualified accounting personnel and the preparation of a codified and understandable manual of instructions for the guidance of cost inspection personnel.

Abstract Accounting is involved in practically every stage of termination. This must necessarily be so, since accounting is the science of income determination and capital valuation. Whenever profits or values are involved accounting is a must. In termination settlements, the government has adopted a liberal and practical attitude. Accounting principles need not always be rigidly applied in the final settlement. Cost principles governing termination settlements are not applied in the same manner as in settling claims under cost-plus-fixed-fee contracts or facilities contracts. The settlements are more liberal. Furthermore, termination settlements are not complicated like income tax and renegotiation. It is the desire of the government in the U.S. that war contractors, receive speedy and equitable final settlement of claims under terminated war contracts. This desire is expressed by the U.S. Congress in the Contract Settlement Act of 1944 which became effective on July 21, 1944. Provisions in the Act indicate the determination of the government to be fair and square in the settlement of terminated war contracts.

Abstract The article comments on aptitude tests for accounting students. Aptitude tests may be divided into two types. One type constitutes a miniature job-trial under standardized conditions. This type is well illustrated by typing tests, in which the candidate for a position is given a representative typing job to do and the results are carefully evaluated in terms of criteria set up in advance. This type of test is most appropriate if the individual has had some training in the field and if a combination of present achievement and aptitude is desired. An analogous but more costly approach is one in which the individual is given a trial for several weeks on the job before a decision is made about his permanent employment. Another type of aptitude test is one in which the individual is given a number of specific tasks to do under standardized conditions, tasks which have no apparent relation to the work required on the job or to the educational program, but which have been found to possess high predictive value.

Abstract Reviews the book "Managerial Control Through Internal Auditing," by Victor Brink.