Knowledge that Transforms

Abstract Any company which sells merchandise to which it has a title ordinarily has inventories on hand at the beginning and end of each accounting period. The inventory on hand at the end of the period appears on the balance sheet as an asset, and is also taken into consideration in the income statement in determining cost of goods sold. It is immediately apparent, therefore, that the method of pricing the inventory at the beginning and end of each accounting period will have an important effect on both the balance sheet and the income statement. Stated in another way, if the method of pricing inventories allows an overstatement of the final inventory, then the asset value appearing on the balance sheet will be overstated. Similarly, the cost of goods sold on the income statement will be improperly stated, the amount depending upon the pricing errors in both the opening and closing inventories. It is a matter of extreme importance, therefore, that every company in which inventories play an important part should, in preparing its financial statements, follow a consistent and well-devised method of inventory pricing. Failure to do so will result in inaccurate and inconsistent financial statements, and will also result in inaccurate costing of goods sold during any accounting period.

Abstract The article presents information about the deletion of timber in the United States. One fourth of the land area in the United States is well adapted to the growing of timber stands. These stands supply one of the most important raw materials for the U.S. industry. The forest-products industry as a whole is the country's fifth largest industry; the pulp and paper industry, completely dependent on pulpwood, is the country's sixth largest industry. Practically all of the other basic industries are to some extent dependent on wood supplies. The United States was extremely fortunate in having abundant stands of old virgin forests during the early period of her development. It was a simple matter to procure timber from a new area when local supplies were exhausted. In this manner first the forests of the New England states were cut over, then those of the Lake states, those of the South and, finally, now, those of the West and Northwest.

Abstract The article focuses on recent developments in accounting. The present age is an age of transition. Economic conditions prevalent in this transition period have been such as bring about a very large number of new registrations. In many cases, companies are taking advantage of current low interest and dividend rates to refinance their bond issues or to replace high-dividend preferred. Many more are seeking new capital for the first time, or at least for the first time in many years. In still other cases, the owners of closely-held businesses are seeking to sell part or all of their holdings to the public. In these last two groups are a great many small or medium-sized concerns in which there has never before been any major investment by the general public. Since a large percentage of the day-to-day accounting problems currently concern this type of case some typical accounting questions which such cases present can be outlined. In addition to their own special problems, the mine-run of such cases will include illustrations of nearly all of the major accounting problems arising in any of the accounting work.

Abstract In actual practice, is there such a thing as interpreting mathematical formulae with precision? The writer thinks not. The magnitude and complexities of the problems involved in many given situations give rise to interpretations requiring the aid of the courts. Untold factors must be considered before arriving at a decision. The law governing a stated situation must be determined upon the facts and circumstances of the particular case. That there has been constant and recurring litigation with respect to construction and interpretation of mathematical formulae is best attested by legions of cases officially and unofficially reported. The various cases discussed and set forth below merely touch the fringe in the gamut of mathematical formulae and their interpretations. Although the use of care and precision in describing mathematical formulae is essential if litigation is to be minimized or avoided, nevertheless even apparently simple formulae are inherently fraught with dangers that may involve expense and adverse rulings. Too often formulae are inartistically drafted and cluttered with barnacles of if's, and's, and but's.

Abstract In an excellent article entitled "The Accounting and Treasury Functions in a Modern Organization," J.A. Campbell, a prominent accountant of Chicago, made the very sage statement that the accounting department pays its way by serving the business, not by trying to run it." The author doubts that anyone could frame in fewer words a more accurate and inclusive statement of the fundamental purpose of accounting than was thus expressed by Campbell. The author in this article indicates at least one important way in which accounting can be made to serve business. On the whole, the administration of public affairs does not require the use of involved accounting systems, procedures, or techniques; except in occasional, special situations, the requirements are simple. But many years ago somebody got the idea that the budgeting of income and expenditures called for special methods and techniques, and somehow or other enough public officials fell for the idea to give it a firm foothold. In most businesses the practice as to the classification of expenses is not even to ascertain the expenses of the accounting department as such, let alone the cost of the several activities that constitute the department.

Abstract The importance of accounting reports in guiding management in everyday business policies cannot be overestimated in the retail business. The figures contained in these reports are scrutinized daily, weekly, monthly, and annually. On the basis of these reports, management determines its policies, alters them from time to time, corrects its plans on the basis of changing trends shown therein, and, at the close of the period, checks its performance by them against its predetermined estimates. In all of these activities, the accounting figures play a vital part. They are not static, historical legends when management utilizes them; they become living, dynamic partners in the business, speaking to those who are listening for their hidden meanings and who can interpret them. In the retail business the solution of the problem of expansion beyond physical plant capacity may be found in a number of moves. The author mentions three and the type of accounting information which would be submitted to management to assist it in making its decisions in the case of each.

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

Abstract Reviews the book "Cost Accounting Principles and Practice," 3rd ed., by James L. Dohr and Howell A. Inghram.

Abstract Reviews the book "Elementary Accounting," by Arnold W. Johnson.

Abstract The article presents information related to preparation for the Certified Public Accountant (CPA) accounting practice examination. Basically, there are four reasons for the failure of qualified candidates in the CPA examination in accounting practice: 1. Inadequate preparation 2. Insufficient time 3. Psychological pressure 4. Lack of aptitude. Insufficient time and psychological pressure go hand in hand with inadequate preparation. If a candidate is adequately prepared he will have both of these factors under control. Through practice in solving examination problems against time, under examination room conditions so far as possible, he will have built up his speed of solution to the point where he is confident of his ability to solve the problems within the time limit of the examination. Furthermore, through directed study and diligent application, he will have thoroughly prepared himself in the various types of problems indicated herein. Psychological pressure will be at a minimum, especially after the candidate has overcome the time factor.