Knowledge that Transforms

Abstract The article presents the accounting and reporting standards for corporate financial statements. The primary function of accounting is to accumulate and communicate information essential to an understanding of the activities of an enterprise, whether large or small, corporate or non-corporate, profit or non-profit, public or private. Accounting procedures and reports are based on the premise that quantitative data provide an effective means of description and are basic to the communication of qualitative information about the enterprise. Financial statements are based on conventions derived from experience. These conventions represent the accountant's best efforts to meet recognized needs in the most useful manner. Underlying the conventions of accounting are a number of concepts: business entity, enterprise continuity, money measurement and realization. Assets are economic resources devoted to business purposes within a specific accounting entity; they are aggregates of service-potentials available for or beneficial to expected operations. The significance of some assets may be uniquely related to the objectives of the business entity and will depend upon enterprise continuity. Uniformity of accounting method is neither expected nor necessarily desirable, but reasonable comparability of reported data is essential.

Abstract The critical review and appraisal of school accounting records and procedures is an essential step in the continuing development of more effective school administration. As school facilities and faculties grow, the school executive must rely on proven business techniques. The results produced by these techniques should be disclosed to interested parties. It is the auditor's function to consider whether the disclosures fairly reflect the results of school operations. It appears that each state has different audit requirements. A hopeful approach might be the establishment, by the accounting authorities in conjunction with education authorities, of auditing procedures and accounting principles for school districts.

Abstract The article critically examines the aspects of direct costing. It discusses the development of the principle of burden application as the antecedent of direct costing. The article discusses the thinking of the absorption costing school as opposed to the ideas of direct costing which led to refinement involving the rate of activity in computing burden taxes, measurement of burden variances and use of separate burden rates for allocating fixed and variable portions of overhead. In contrast, direct costing school proposes an almost complete overthrow of the burden application principle. The article then describes the differences between direct costing and marginal costing, scrutinizing the techniques involved in obtaining both costs. The article then illustrates the shortcomings, discussing in length the instability of direct costing and the necessity of foresight into the future. The possibilities of direct costing in multi-product plant operations and its contribution to product pricing has been discussed in length. Restriction on cost and product flexibility, a result of too much reliance on differential cost analysis for price-output decisions and the factors involved in making long run price-output decisions by a firm operating within an oligopolistic market are detailed.

Abstract Beyond anything else, successful communication of fact and opinion is an essential for accountants. Nor is it likely that the attention of the profession is properly focused when it tries to refine a technical terminology so as to make it understandable to the nonspecialist. The layman requires, upon occasion, a personal interpretation of a special matter. The accountants and other specialists must be sure that their understanding of each other is such that all are able to give the layman his explanation. A recent study indicates that this understanding does not always exist. As an example the article considers how the term, depreciation, is used by accountants. In this study all issues of the periodicals, The Accounting Review, Journal of Accountancy, and Bulletin of the National Association of Cost Accountants from 1930 until October 15, 1954 were scrutinized for intended or implied definitions of many accounting terms, of which depreciation is one. Also examined were miscellaneous publications and all textbooks in accounting which were published currently on October 15, 1934.

Abstract The article discusses about educating tomorrow's accountant. In many Universities there are courses of study, more or less formalized, which can be described as accounting "programs," "majors," or "curricula." These programs generally are designed to equip the student with the knowledge and attitudes necessary to enable him to enter the accounting profession and to develop in that profession his maximum inherent capabilities. The literature of accounting is punctuated with ideas about the nature of accounting education, and one rather monumental study of educational requirements for CPA's has been made. The generally accepted accounting principles in conformity with which so many accounts are kept consist not of fundamental truths or basic doctrines, but of conventions designed to enhance the usefulness of accountants' reports. These conventions are sufficiently broad to shield a wide variety of accounting practices. The rule-making function consists of two kinds of activities. The first establishing broad rules of conduct is carried on primarily by the academicians and the public accounting practitioners, the two most highly professionalized segments of the field of accounting. These broad rules of conduct are "generally accepted accounting principles." The accounting curriculum that extends itself through such courses as retail accounting, accounting for engineers, accounting for ranch hands, accounting for hotels, and other special accounting courses which are nothing more than specific systems and techniques should be frowned upon. Such problems can be solved upon contact by the well educated accountant.

Abstract The author discusses accounting system automation in this article. He defines electronic data processing in electronic computers and draws a distinction between special-purpose and general-purpose electronic computer equipment. He illustrates the point that the degree of complexity of accounting or reporting problem and its simplification possibilities influence the decision to install an electronic computer or not. He examines the advantages of the application and use of a computer with relation to clerical labor savings and the limiting factors in the use of computers to handle new work as compared to the ability of a man to review a given problem analytically and chief clerical problems in production control. The potential applications of a computer in the areas of projecting labor requirements and the production of more comprehensive and timely markets forecasts and sales analyses have been detailed. The author also brings into consideration the problems that confront the management of a business which has installed electronic data-processing equipment.

Abstract The Task Committee on Standards of Accounting Instruction of the American Accounting Association was originated to study present college offerings in accounting, to find out what standards are being followed, and ultimately, to suggest desirable standards of accounting instruction in the U.S. The predecessor committee recommended certain standards for undergraduate accounting curricula in the journal The Accounting Review for January, 1954. The present Committee surveyed the various colleges and universities to ascertain the standards in use. This survey was reported in the January 1956 issue of the journal. The Committee is now undertaking a study of graduate programs in accounting. First a pilot questionnaire was sent to a few schools to discover the problems that would be encountered. It was found that master's programs and doctoral programs would need to be studied separately. Accordingly a questionnaire dealing with the master's program was prepared and circulated to 180 schools. The result of the finding has been provided in this article.

Reviews the book "Accounting in the Federal Government," by Eric L. Kohler and Howard W. Wright.

Abstract The article presents a report from the President of American Institute of Accountants. The annual convention of the Association was held on the campus of the University of Washington, Seattle. The prestige of the Association rests heavily on "The Accounting Review." This quarterly is generally recognized as one of the best publications in accountancy. One of the major objectives of the Association is the promotion of research. One of the features of the annual convention in recent years has been the presentation of the Alpha Kappa Psi Award. Due to the continuing growth of the Association and the increasing burden of work on the Executive Committee, it was decided that an additional vice-president would facilitate the operations of the Association. At the annual meeting in Seattle, Washington, a special committee report adding a fourth vice-president to the Executive Committee was approved. This expansion in the membership of the Executive Committee will be made at the next annual election.

Reviews the book "Retail Merchandise Accounting," by Hermon F. Bell.