Knowledge that Transforms

Abstract The presentation of the subject of installment accounting, if guided by the material of many texts, is a difficult task which too often leaves the student, at least the average student, confused. This confusion arises from the obscure relationship between the procedures and the objectives. This relationship is obscure because the usual procedures approach the objectives in a round-about fashion, and have no apparent similarity to material already mastered by the student. When the students have reached the level where installment accounting is studied, they are sensitive to procedures, for so many tests have stressed journal entries, adjusting entries, and computations. Since the procedures of accounting for installment transactions appear to differ so radically from those of ordinary transactions, the student feels that the subject matter is foreign to other accounting topics. Instruction in installment accounting should emphasize income determination, but because of procedural difficulties, stress has too often been placed on the journal entries. By following familiar patterns, procedures will be clarified and stress can be placed on the recognition of income and the circumstances existing in various businesses which serve as dues for the recognition of income.

Abstract The ultimate aim of cost finding lies in the proper usage of the figures produced. In order to make use of figures, the meaning behind them must be brought to light by analysis and interpretation. The aim of this article is to discuss some fundamentals of analysis and interpretation and to indicate some of the steps involved. Breaking up of accounts or figures has to take place since the flow of figures cannot always be set in advance so that they come "out of the mill" as ready-made analyses, usable for all purposes. Analytical work in cost and finance takes principally the shape of working papers. The working papers may integrate perfectly with the books and records of an enterprise and may be impeccable masterpieces. Creativeness should be based on facts or should lead to the gathering of other pertinent facts. Interpretation may be viewed as a catalytic process of the intellect. The analyst absorbs the analytical data and tries to bring to light the significant features behind them.

Abstract The article highlights that in problems in the mathematics of finance where it may be desired to find an unknown rate of interest, a uniformity of approach to approximation formulas of considerable accuracy can be achieved for the three fundamental functions and their inverse functions, and also for the bond function, by means of the concept of the total interest growth over the term of the investment, or indebtedness. The article presents various methods to calculate the rate of interest. The total interest, present value of annuity, amount of annuity is first calculated. By means of these relations, the article is able to make substitutions in the usual formulas, obtaining what may be termed indirect formulas, which give rise to series that converge more rapidly than the series obtained by expansion of the original formulas. The new formulas are used as the bases for approximations to the interest rate. The article also presents a table to show the formulas for the calculation of present value of annuity or installment payment problems.

Abstract In the U.S., teachers show a desire for self-improvement, parents show great determination that their children shall take advantage of the opportunities offered or citizens show great willingness to bear the necessary expense. The courses in business and commerce can now become a substantial segment of the educational fields of the country. The classes in accounting are the backbone of the business courses. Not every student is an accounting major, but in nearly every case they take some accounting subjects. The granting of the CPA certificate is a matter of law. While the possession of diplomas and degrees from accredited schools may satisfy certain requirements, the laws require that the can date must present other proof satisfactory to the Board of Accountancy that he possesses adequate skill, knowledge and judgment in accounting matters. Accounting education labors under the serious handicap of having grossly underpaid instructors. There is a continuous struggle to keep good instructors at the salaries that are available and it now appears to be impossible to acquire and keep young and alert men who are tiling to make the financial sacrifices necessary to remaining in the teaching profession. Once the standards of educational preparation are established and adopted, experience can then become a supplement rather than a substitute for education and this is how it should be regarded.

Abstract The curriculum for prospective industrial accountants might begin from either of two viewpoints. One is that of taking a conventional body of subject matter which is organized into textbooks and inadvertently presenting this material as an end in itself. Almost needless to say this approach takes the more difficult part of curriculum building for granted. Thus, the curriculum builder would only select and prescribe course titles; the instructor would follow up the routine task of presenting the "tried and the true" while keeping student interest alive and enhancing it as much as possible. The aim of each course in such a curriculum is to "give the student a good understanding of" something or other which is rarely well defined. The principal defect of this approach is its poor adaptability to the needs of a changing world. A different approach would place less emphasis on conventional course content as pertains to both subject matter and method of teaching. In the beginning there would be little apparent presumption of a fixed body of subject matter to be covered or learned, but the instructor, of course, would have an abundance of subject matter at hand. This is based partly on the belief that the candidate to a major profession cannot know long in advance much about what the later requirements of his profession will be. The student must discover these objectives as his educational development unfolds, and his opinions will not be held for long. Most of this curriculum would be prescribed with but few elective courses. Instead of subject matter to be taught, the learning process would be the focus of attention.

Abstract The article presents the author's views on an article previously published in the October issue of the Accounting Review, entitled "Limitations on the Significance of Invested Cost." Accounting is progressive; it clearly has shown that tendency in the marked development, strange to ancient usages, of its industrial and managerial aspects. A similarly far-reaching progressive development was slow to appear in auditing although that is the professional area. Still less has accounting shown a full measure of progressive development of its interpretative aspects, i.e., in the collateral work of making the results of technical accounting processes understood by more and more people. Perhaps index number adjustments are intended to constitute an advance in the latter area. And few indeed will take exception to this or any other interpretative endeavor, provided the effort does not meanwhile emasculate the well-known and still very useful data that emerge from the normal accounting process. It could hardly be progress if its price were the submerging of accounting's basic information or of yielding anything on the objectivity issue. It is not likely to prove to be progress merely to develop the new and wider areas of data to be brought within the framework of double entry, following ever farther the lead in this respect of fund accounting and standard cost accounts. There must be limits to accounting adaptability as there are limitations in the significance of "invested cost." A permanent cleavage between balance sheet and income statement (between objectivity determined real and nominal accounts) can not properly be called "progressive."

Reviews the book "Executive Accounting: Part Two, Construction Accounting," 6th ed.

Reviews two books. "An Outline of Elementary Accounting," 3rd ed., by Royal D. M. Bauer and Paul H. Darby; "Accounting Problems With Answers," by Joseph C. Schabacker and Paul K. Schroeder

Reviews the book "Cost Accounting and Productivity, the Use and Practice of Cost Accounting in the U.S.A."

Abstract Organized plans for providing old-age benefits first appeared in Great Britain around 1850. At the present time pension plans are being initiated in all types of industries and institutions. Each may be slightly different from the others in form but the main theme is preserved. The emphasis is upon benefits to the workers. The outlook for the future is that more and more benefit plans will be inaugurated in progressive business firms. The board of directors as the voice of the stockholders is usually the first group to decide to investigate the possible adoption of a pension plan. However in some cases the actual consent of the stockholders may be necessary because of charter provisions or by-laws. After deciding to initiate a pension plan, a firm must consider the manner through which it will set aside and pay the benefits derived from the plan. Several types of plans are open to the firm, but the choice depends on the conditions existing within the particular company. For small businesses the individual policy plan may be advantageous because the continuity of employment is generally greater and participation can be more selective.