Knowledge that Transforms

Reviews the book "Accounting Theory and Practice," vol. 2, 2nd ed., by Roy B. Kester.

Abstract A number of difficulties of accounting analysis are presented by the building construction company. The kind of concern whose problems will be described enters into contracts for the erection of various types of buildings, has dealings with subcontractors, hires laborers, buys materials, makes plans and estimates on jobs contemplated, and perhaps owns a few lots and does a little building on its own account. All these activities require a precise and careful accounting, the success of which depends on a thorough understanding of the financial significance of the various operations. The principal problems have to do with the keeping of accounts with the jobs and with the customers. The proper handling of the jobs is largely a matter of cost accounting. Every job must be charged with all labor and materials, payments to subcontractors, and other costs which can be assigned to it. The customer's account in the case of a cost-plus contract is of fairly simple nature. The costs are transferred from the job account to the customer's account at appropriate times, and a further charge is made for the proper portion of the fee.

Abstract The teachers of accounting as a group have made the major contribution, to the subject in the last thirty years. Yet, in spite of this, the technique of imparting a knowledge of accounting principles and practices, has been given very little constructive thought. Experts in educational psychology have been able to accomplish wonders in primary education by studying the technique of learning by children and of teaching for children. Certainly research might well be made in analyzing the ways of criminals and the methods under which they have operated in the past, as well as methods for preservation and especially methods of detection. Method of interpretation research in developing the best methods for presenting accounting data - the development of non-traditional statement forms, the application of graphics to accounting, the art of simplifying the essentials for report presentation and so on. The public accountant naturally enough perhaps gives so large a portion of his time to the balance sheet and other statements as of a given moment of time or at best for the fiscal period, that he has not had much opportunity to give thought to the methods of analyzing accounting data over a considerable period.

Reviews the book "Cost Accounting," by W.B. Lawrence.

Reviews the book "Theory of Accounts," by D.R. Scott.

Abstract This article focuses on the use of costs in setting up selling prices. In almost every presentation of the advantages and purposes of a cost accounting system the possibility of using costs as the basis for fixing selling prices is given special attention. In so far as the individual producer can not set his own selling prices he needs a better cost system and more detailed analyses of cost data in order to compete successfully in the market. Price determination is a complex process with many interrelating forces and proceeding largely by trial and error methods. Even the monopolist, setting prices at will in order to get the highest possible return, must know his costs in order to compare the net return from different prices. Cost, then, can sometimes be used as a direct basis from setting selling prices, is often one of the important factors in the determination of provisional selling prices, but many times the problem of the individual producer is to keep his costs below a selling price determined by general market forces and conditions.

Abstract This article focuses on the practice of Italian double entry system of accounting in early England as of June 1926. It appears that the early ledger entries were fairly complete sentences expressing complete ideas. They were in fact memoranda of what the writer wanted to avoid forgetting and probably were cast into the forms of expression of ordinary speech. What we find written in the old books gives us therefore some idea of how 15th century merchants thought their transactions through for recording purposes. The social background, so different from the independent life of the individual in Italy, would be expected to produce a very different kind of "recording-need" and a very different attitude toward the ends to be accomplished by the records. Feudalism produced an atmosphere of agency and stewardship rather than ownership and proprietors hip, such as was engendered in the more commercial Italy. None but the King was absolute sovereign over his property with full, free, and untrammeled power to dispose of it without consulting the plans or will of another. The nobles held their lands under the King's pleasure and the noble's peasant tenants held such land as they used solely tinder their master's pleasure. English "business" in the 13th and 14th centuries was confined to small artisans and peddlers-nothing to call up any sort of record-keeping. The largest activity was the maintenance of the manor house and its self-sufficing community.

Abstract To business men it has long been apparent that concerns which sell exclusively on account are obliged to set their prices at higher levels than those which sell exclusively for cash. Three major reasons are commonly assigned to explain this fact. First, a concern selling exclusively on account requires a larger amount of working capital than one which sells exclusively for cash, which necessitates higher prices or a more rapid turnover or both for the business selling on a credit basis, if Its profits are to be equal to those of the business on a cash basis. Second, a concern which sells exclusively on account find its working capital continually undermined from losses on un-collectible accounts receivable. To show a satisfactory rate of profit, therefore, it is essential that the management charge an estimated insurance premium to compensate for this loss. Third, the concern on a credit basis finds additional expenses incurred in granting credit and In making collections. And on this account, also, businessmen early recognized the necessity for a higher price list when sales were made exclusively on account then that needed when sales were made exclusively for cash.

Abstract National Tent and Awning Manufacturers' Association is a strictly modern invention of about fifteen years of age. Primitive man had to live in tents and in the oriental countries today shops and bazaars are covered with awning. In our modern life over here we seem to think that tents and awnings are not necessities and the business has somewhat deteriorated. In fact, it was in a terrible condition about fifteen years ago. There was a mortality of, perhaps, forty or forty-five per cent of the manufacturers each year going into bankruptcy. There exists perhaps a number of 2200 of what one might call manufacturers in the U.S. today. During the busy season, which is the late spring and early summer, these men know no hours. They are on the job from six o'clock in the morning, perhaps, putting up work, until nine or ten o'clock at night and then they may go in the shop and work until one or two in the morning, trying to get enough work ready to go out and put up the next day. Naturally, with conditions of this kind, where men did not know the value of their service a terrible condition was found as far as prices were concerned. Goods were being sold far below cost, because the mechanics that came into the business had absolutely no conception of what cost meant. They might know the cost of materials, they might know how many hours of labor were put upon a particular job, but when it came to overhead the only thing they saw was the blue sky above.

Abstract The paperboard group manufactures a heavy kraft and chipboard called liners, which form the outer and inner surface of combined board in the container industry; also a chipboard used in containers and a manila and cupboard with a special surface finish for folding boxes. The container group uses the liners and chip by passing even layers together to make and heavier board called solid fiberboard, or by Inserting a corrugated or fluted straw sheet between two liners there is made a corrugated board. The folding box group accepts the board as made by the mills, and without combining It, print and cut into finished product. The term container is used to designate a box or outer package made of paper fiber, and while limited In gross dimensions may be of any size or shape. The container group has the largest membership of our three divisions and represents about seventy five percent of the output of the country. This totaled in 1924 1,260,000 tons. It is with this group that the accounting work has been done and principally in connection with the corrugated branch.