Knowledge that Transforms

Reviews the book "Fraud: Its Control Through Accounts," by George E. Bennett.

Reviews the book "Economic and Social Problems of the Machine Age," by Arthur Bruce Anthony.

Reviews the book "Funds and Their Uses," edited by Henry B. Hall.

Reviews the book "Mortality in Retail Trade."

Reviews the book "Certified Public Accountant Laws of the United States," compiled by the American Institute of Accountants.

The article presents an interview with the author on the teaching of cost accounting. The article also presents comments of scholar Gould L. Harris on answers given by the author. In response to a query about the future use of cost accounting by students, the author replied that during the last ten year I have made a practice of asking my cost accounting students whether or not they expected to work in a factory after graduating. Less than five percent replied in the affirmative. This percentage is all the more important because most of my students have been residents of Washington and Baltimore. Therefore, it can be stated that the main purpose of the Cost Accounting course is not to directly prepare students for future work in factories. Indirect uses students will make of cost accounting seem to be chief reasons for giving the course. All students will use ideas that are given of, accounting controls, systems of internal check, computing costs according to suitable bases, departmentalization of expenses, detailed interlocking of paper work, adaptation of paper work and accounting routine to meet local company's condition, preparation and use of budgets, use of budgetary reserves and preparation and use of accounting reports.

The decision given by judge Cardozo in a case of Ultramares Corp. v. Fred Stern & Co. Inc. brings up the question whether certificates in their present form have any real significance. In the Stern certificate auditors certified to two things, the agreement of the balance sheet with books and their opinion of the correctness of the balance sheet. Concerning the former, it should be recognized that in the U.S. practice there is no demand for a statement of the correspondence between books and published balance sheets. The correspondence is implied by the acceptance of the statement, if the management has no confidence in it and refuses to accept it, outsiders will certainly never see it. In English practice, with auditors appointed by and responsible to stockholders, a definite reason for certifying to the correspondence exists. This half of the certificate might well have been omitted without subtracting from the worth of the whole. As to the opinion of correctness, the very vagueness of terms certify and opinion ought now to condemn their use. Judge Cardozo made no attempt to analyze their meanings, he was content, quite properly, to infer that auditors put forth the balance sheet as a correct statement of financial condition.

Reviews the book "Walton Federal Income Tax Course."

In approaching the problem of changes in monetary values of fixed assets and what the accountant's attitude should be thereto, it must be considered as affecting both the profit-and-loss statement and the balance sheet. That leads one, at once, into a very fundamental question, what is it that the accountant wants to show in the statement of profit and loss and in the balance sheet, or, what should he show, in these statements, when he is faced with the fact that properties used for the production and sale of commodities are worth more, or less, in terms of price, than the values indicated by the fixed asset accounts? To say, as some do, that the accountant should entirely ignore changes in monetary value, is the equivalent of saying that the tide rises, but the extent of its rise is of no consequence to anybody. Monetary values do change, and they are of consequence. Their consequences should be recognized, measured and expressed, because business is conducted in terms of present monetary values. There is no other way for business to express itself. Yet the orthodox accountant wants business transactions expressed in terms of both past and present monetary values, and he believes that net worth, at any time, can also be properly expressed in such variable terms.

Reviews the book "Principles of Accounting," by Eric L. Kohler and Paul L. Morrison.