Knowledge that Transforms

The article focuses on an examination of contemporary practices in accounting for intangible assets. The primary purpose of the study was to establish a rational basis for reconciling differences, which exist at the present time between accounting theory and practice in regard to accounting for intangible assets. In order to provide a conceptual framework within which contemporary practices could be accepted or rejected, an appropriate body of principles and procedures, which was in accord with the "income determination" approach was selected. A preliminary investigation was conducted to determine the nature of accounting malpractices, which accompanied many of the early-day corporate organizations and reorganizations and which resulted in the inclusion of fictitious amounts on the published financial statements. A related statistical study was also made to determine the extent to which these early malpractices affect present-day financial statements. The major portion of the research consisted of an examination of contemporary practices of American corporations in accounting for all kinds of intangible assets.

The article focuses on comprehensive treatment of public stock financing for small corporations. It is based principally on case studies obtained in the field by the author, and also on mail surveys, the study of appropriate prospectuses, and published materials. The first part of the study considers the desirability and feasibility of public stock financing. Among the advantages found were the value of raising permanent funds without fixed charges or restrictions, the resulting improvements in credit rating and increase in borrowing power, the creation of a market useful in "unfreezing" the investment of old stockholders and helpful in settling estates, the ability to allow employees to participate in ownership etc. Disadvantages included the high cost of flotation and cost of capital, the assumption of new responsibilities, the time and effort involved and sometimes the uncertainty of obtaining the desired funds. An almost complete lack of understanding of public financing and unjustified fears of loss of control were found among presidents of many corporations which were ripe for public financing but had never attempted it.

Reviews the book "Integrated Auditing," by Sidney W. Peloubet and Herbert Heaton.

The article focuses on the non-factory costs and the period concept and an analysis of certain accounting practices in manufacturing enterprises and their effects on reports to marketing management. Sales result in part from marketing effort measured by expenses or costs incurred in periods preceding that in which the sales materialize. Consistently, parts of current marketing costs are related to sales of future periods. If current marketing expenses are matched against current sales, the net income or contribution resulting may be an imperfect measure of operating results. The purpose of the dissertation is to examine these statements critically, through an examination of corporate accounting practices relating marketing costs to sales. Objectives include the identification of marketing activities that give rise to costs affecting sales of future periods, and determination of the extent to which conventional accounting practices in handling marketing costs may give rise to distortion of income. Present business practice, with limited exceptions, is to charge current marketing costs against current sales. This is true whether or not situations occur that cause marketing effort to be directed toward future sales.

The article presents an analysis of current theory and practice regarding elements of cost included in inventory by manufactures. One of the traditional ideas in accounting is that inventory cost for manufacturing concerns should include manufacturing costs, but exclude non-manufacturing costs. Since inventory valuation has a direct effect on the income reported for an accounting period and since many groups are interested in the income of corporations engaged in manufacturing operations, it seems desirable that there be some uniformity of practice, at least within each industry, as to the particular cost elements, which become product costs and those which are treated as costs chargeable to the period. In the approach to the subject two major hypotheses were set up to be tested: whether traditional theory provides a sound and workable guide as to which items are includible in inventory of manufacturers and whether practice of companies complies with this traditional theory, and if not, the extent of variation and reasons for the practices found. Profit determination, including inventory valuation, was accepted as the function of cost accounting to be given primary emphasis in this study.

Superior courses in intermediate and advanced accounting in colleges and universities are necessary to provide students with the adequate training needed for advancement in the profession. It is therefore necessary that the subject matter in these courses supply both depth and scope of coverage. This reasoning has led the accounting staff at the University of Houston to study that the content of the mentioned courses should be. By using the outline the instructor knows what topics he should cover and has a quick reference to study materials related to that topic. A greater degree of uniformity will be established for various sections of the same course. Also, as a guide to help him plan lectures, the instructor is given a suggested number of 50-minute class periods to be devoted to each unit. The net overall result of using the plan outlined in this article should be a more effective course with the teacher doing something more than "cookbooking" from a single text. The adoption of a standard outline and the use of a basic text with guided references seems to be an important step toward helping the universities and colleges produce better qualified professional accountants.

Reviews the book "Intermediate Accounting," by Arnold W. Johnson.

Reviews two books. "Advanced Accounting Problems-Theory and Practice" and "Workbook to Accompany Advanced Accounting Problems," by Irving J. Chaykin and Max Zimering

Reviews the book "Proceedings of Convention."

Reviews the book "Book-Keeping System for Family Farm," by Masao Otsuki.