Knowledge that Transforms

Abstract The article presents the report of the Committee on Auditing Education appointed by the American Accounting Association. The concern of the committee was to secure an evaluation of the job the colleges are doing in preparing students for public accounting. The committee solicited the opinions of public accountants along the above lines by the use of a questionnaire which was mailed to 98 local firms and ten national firms. Responses were received from 57 per cent of the local firms and from all of the national firms. The questionnaire invited an expression of opinion regarding which objective colleges should adopt in preparing students for the public accounting profession. Poor English and lack of ability to write and speak effectively are the most serious of the weakness of college graduates reported by the public accountants. The public accountants believe that such weaknesses can be corrected by requiring accounting students to take more courses in grammar and public speaking slanted to the interests of accountants.

Abstract A critical shortage of certified public accountants is one of the big problems facing the American Institute of Accountants (AIA) today. The first major effort in this recruiting drive is a 16 mm. 21 minute monochrome sound film, "Accounting--The Language of Business," which was officially released on December 15, 1953. The script was carefully scrutinized by members of the AlA personnel and public relations committees with at least one AlA representative being present during the whole process of production to assure the correctness of details. The film is introduced by a brief scene in which a father asks a friend who is a certified public accountant to explain possibilities of public accounting as a career for his son who is about to graduate from high school. The final episode deals with tax work. The AlA feels the film will have served its purpose if it conveys a generally favorable impression of the certified public accountant and his standing in the community. This film has even greater public relations value than recruiting value.

Abstract This article presents a bibliography on the application of statistical methods to accounting and auditing. Section I includes articles, books and papers which have been published up to November 30, 1953, and which relate specifically to the application of statistical techniques to accounting and auditing problems. Section II includes unpublished papers on the subject of the application of statistical methods to accounting and auditing. Section III lists a number of statistical texts, reference works, and tables which may be helpful to the accountant interested in going deeper into the field of statistical theory or in making specific applications. In section IV this section are listed a limited number of articles and papers which are generally more technical and which relate to specific areas of statistical applications. This bibliography was prepared in connection with a broad study of the application of statistical techniques to accounting and auditing problems being carried in some colleges of the U.S.

Abstract The article focuses on a professional accountants library. The graduate class in accounting systems included in its accounting exhibit for the dedication of the new buildings on May 25, 1953, a Professional Accountants Library of approximately 140 books and pamphlets, all recent editions, in accounting and related fields. This Library was on display at the annual convention of the American Accounting Association last September. The books were selected by Alton G. Sadler, Associate Professor, University of North Carolina, and were arranged for publication by Kenneth F. Easter, an M.B.A. Service Scholar. A list of books their author and publishing company have been given. Some of the books included are Principles of Industrial Management by L.P. Alford and H. Russel Beatty published by Ronald Press Co. in 1951. The Impact of Budgets on People by Chris Argyris and Frank B. Miller. Successful Tax Practice by Hugh C. Bickford and published by Prentice Hall. Professional Ethics of Public Accounting by John L. Carey and published by American Institute of Accountants.

Abstract The article focuses on the extent to which predictions can be made about certified public accountants (CPA) examination results. Studies of the use of the Institute sponsored Orientation and Achievement Tests as a means of making such predictions have produced encouraging results. On the basis of these studies, which are of limited scope, it appears that reasonably accurate predictions can be made in many instances. There are many benefits which will accrue to the profession and to individuals if fairly accurate predictions can be made that a particular individual should be able to pass the CPA examination; that another individual is unlikely to pass, and that still another one has a slight chance to pass. Such predictions would aid appreciably in guidance work, and would be of value to employers. Predictive devices might be used by state examining boards in various ways. Boards might be aided in their efforts to encourage potentially able men to continue preparation and to discourage those who are obviously not ready to take the examination as well as those who may never qualify. Predictive devices might aid considerably in reducing failures.

Abstract The purpose of this article is to examine some of the factors involved in the present concept of generally accepted accounting principles as well as their application. Even though no formal, codified set of accounting principles exists, there is general agreement among those who prepare and use financial statements as to the basic principles. The concepts of the going concern, matching of income with related expense, and cost as an original measure of value are probably unchallenged. Conservatism, or the postulate of anticipate no profits and provide for all probable losses is likewise widely accepted. The following criterions are suggested as a means of selecting those who might assume the responsibility for determining standards of application as well as principles: a demonstrated proficiency in accounting and an interest in accounting as a rational subject, per se. In seeking those who satisfy the first requirement, an acceptable though not infallible guide is the C.P.A. certificate. Finding those who also satisfy the second requirement is more difficult. However, practicing certified public accountants and college instructors in accounting should in general satisfy this second requirement.

Abstract A careful review of the course outlined above discloses that much of the material included in the typical accounting survey course is covered. In spite of its novel beginning, it ultimately provides the student with an orthodox picture of double entry bookkeeping. By the time section nine is reached, we are using the accrual basis of accounting, with four common special journals, plus a general journal, a complete general ledger, and controlling accounts and subsidiary ledgers. Inventory problems and accounting for notes and interest are explained. Payroll preparation and employee earnings records have previously been covered, as have property taxes. Sales tax, use tax, privilege license tax, and the individual income tax are covered in subsequent sections. The balance sheet and statement of income and expense have been shown in several uses. Methods of analyzing published corporate reports are explored, and governmental financial problems and reports are considered. In addition to this coverage of traditional material, our course has the advantage of offering specific helps in some of the more common financial and record keeping problems an individual is likely to meet. Designed as it is for students in fields other than commerce, it may provide theft only exposure to the subjects of credit, insurance, and taxation. While coverage of these matters is by no means comprehensive, it should serve to answer the more general questions and to indicate the point beyond which professional counsel should be obtained. As noted above, perhaps the most significant feature of the course is its approach to accounting instruction. Without preliminary discussion, the student begins to record data in a combined cash journal. Through this approach, the student finds himself at the very outset keeping a practical record whose immediate usefulness to him in his present situation he can readily understand.

Reviews the book "Cost Accounting," 4th, ed., by W.B. Lawrence and John W. Ruswinckle.

Abstract The article presents answer to the question how the accounting officer can best contribute to effective management. The controller's department is the pivotal point, to which is forwarded the significant and vital information of business activity. It is his responsibility to analyze and interpret the performance of other branches of business activities and submit his conclusions through the medium of financial reports and statements It is in this area that the controller can make his greatest contribution to effective business management. Management should be supplied with continuing reports that spell out the cost of distribution by product, territory, mode of transportation and dollar value of order. The credit and collection phase of business, which in many instances is a function of the controller's department, must be assiduously watched. In the area of budgeting, accountants can and must make a vital contribution in the planning and control function of business management. The preparation and interpretation of budgets, which in essence are a set of management plans assembled in terms of transactions to be effected and aims to be accomplished, constitute one of the most significant contributions that dynamic accounting can make to effective business administration.

Abstract This article presents an account of questions prepared by the Board of Examiners of the American Institute of Accountants that were presented as the second half of the C.P.A. examination in accounting practice on November 5, 1953. The candidates were required to solve all problems in four and a half hours. The weights assigned were: problem 1, 12 points; problem 2, 8 points; problem 3, 30 points. Questions relate to federal income taxes were also in the examination. Parts (a) and (b), dealt with items of gross income and deductions, respectively, and were to be answered true or false. However, in not more than one sentence, a candidate was allowed to give the reason for the conclusion where an explanation seemed appropriate. The merit of the explanation was to be considered if given. The first question required candidates to prepare journal entries to record at December 31, 1952 the recognition of profits and any other adjustments arising from the data provided for a given company. Secondly, to give complete explanations in support of entries and Give one acceptable alternate method of handling the repossession and discuss merits of it.