Reviews the book "The Business Enterprise As a Subject for Research," by Howard R. Bowen.

The article presents a case study of price-level adjustments to the financial reports of a large department store. The method outlined is designed for a study of a twenty-year period. The results of the adjustments to dollars of constant value revealed the expected distortions in periodic income reporting. In as much as the general price level rose during the year ended January 31, 1947, the adjusted balance sheet reveals that the non-monetary items, such as inventories, land, and depreciating assets, exceeded the historical costs by material amounts. In the proprietorship section, the value of the stockholders' original investments in common stock was increased by $6,368. The retained earnings are not as high as reported by $3,621, due to the continual overstatement of "real" income during the inflation years. The net income after taxes was distorted in the annual report by almost a half million dollars. In addition, an unrealized loss of $946 was omitted entirely from the report to stockholders. It appears that this type of information would have been very informative to existing and prospective stockholders.

The Commission on Standards of Education and Experience for Certified Public Accountants (CPAs) was organized in 1952. The commission is independent of the American Institute of Accountants or any other one body. Its membership includes professors of accounting, deans of university schools of business administration, practicing CPA's and members of state boards of accountancy. The commission hopes to set goals which the state boards and schools might strive to approach over a reasonable term of years, together with suggestions for interim procedures which may be practical to follow in approaching what it is hoped may be accepted as longer-range objectives. Since the commission is concerned primarily with uniformity of standards, the CPA examination which has now been adopted by all jurisdictions in the U.S. may be said to be a subject of secondary importance to the commission. Any improvement or standardization of educational or experience training for the profession, however, is bound to lead to some consideration of the level and content of the written examinations.

Reviews the book "Spicer & Pegler's Practical Auditing," by Walter W. Bigg.

Reviews the book "Cutting Your Unemployment Taxes," by Richard J. Potter.

Reviews the book "Price Practices and Price Policies," by Jules Backman.

Reviews the book "Cost Accounting," 4th ed., by John J.W. Neuner.

Accounting uses a universally known measuring stick, the dollar. Yet the common dollar is not an invariant measuring unit. Dollars in 1950 do not measure the same purchasing power as did 1940 dollars. Accounting, in other words, assumes a stable measuring unit. In periods of major price movements this assumption is clearly invalid for certain purposes, as has been pointed out by various writers in recent years. Undoubtedly interpretive accounting faces a challenge at this point. Management and accountants should remember that their primary responsibility is still to the investors, those who seem to be the forgotten men. The absentee investor, unlike the owner-operator, has no opportunity to combine reported information with first hand knowledge of the conditions and activities of the business. Management and accountants have the responsibility to provide information to aid the stockholder in wise decisions. The stockholder requires information to aid him in decisions to hold, sell or buy more stock, in other words, information concerning the comparative merits of his stock and alternative investment opportunities.

Reviews the book "Advanced Accounting," by Arthur W. Holmes and Robert A. Meier.

All business firms have felt the impact of rising prices in one way or another. In many cases their financial statements have yielded peculiar results. On the balance sheet, the historical cost basis of valuation of plant and equipment, and the "lower of cost or market" method for the valuation of inventories have tended to undervalue assets grossly. Credit ratings, current ratios, and insurance coverage often cannot be determined adequately from these figures. On the income statement, reported earnings have often soared to unprecedented heights, due mainly to the matching of out of date inventory and depredation figures against current, higher selling prices. Accompanying this exaggeration of profits are the problems of higher replacement costs of inventories and plant, of sharing these illusory profits among the government taxing agencies, laborers, and stockholders, of the determination of future selling prices, etc. The accounting records become much less useful as aids in solving these perplexing problems, in as much as they have not been adapted to the changing price level.