Knowledge that Transforms

Abstract Reviews the book "Fundamentals of Accounting," by Harry H. Wade.

Abstract Reviews the book "Principles of Corporate Finance," by Milo Kimball.

Abstract Reviews the book "The Stock Market," by Charles Amos Dice and Wilford John Eiteman.

Abstract This article points out the deficiencies in early cost accounting methods. Early text books on cost accounting commonly carried a graphic presentation of what was known as the cost formula . The formula stated that material cost plus labor cost equals prime cost and prime cost plus manufacturing expense equals cost to make. These propositions and the figure representing them have almost vanished from recent accounting literature, but occasionally they do reappear. It is because of such reappearances that this critique is presented. The earliest attacks on the formula were made by accountants with a economic turn of mind who insisted that few manufacturers were so fortunate as to be able to establish the selling price of their products by adding the desired profit to theft peculiar costs to make and sell. It is certainly true that direct material is no less an asset because it is taken from stores and placed in process or because it is taken from process and placed in finished stock, at least if production is for an existing demand. Without attempting to decide what might or might not be wise business policy relative to producing goods for a market which fails to provide a selling price high enough to cover all costs, it might be noted that the implication of cost priorities does not enjoy universal acceptance.

Abstract Two basic statements have been developed in accounting to disclose the financial structure of an enterprise: the balance sheet which reflects the condition of a company at a given date and the operating statement covering transactions of a certain period. The profit-and-loss statement and the balance sheet are closely linked by the fact that the result of the operations of a fiscal period, determined in the income statement, is transferred to the balance sheet account, earned surplus. The balance sheet emphasizes the amount of surplus; the operating statement gives information as to the source of surplus and the reason of changes therein. It has been argued that the decision of whether certain items should be included in the income statement or should be carried directly to surplus is "a matter to be determined by sound business judgment, made upon all the facts of the particular case and guided by the principle of conservatism. The surplus viewpoint can be identified with the common law way of thinking, whereas the income viewpoint, claiming categorically that all gains and losses should be reflected in the income statement resembles more the civil law approach.

Abstract Reviews the book "Production, Employment and Productivity in 59 Industries," by Harry Magdoff, Irving H. Siegel and Milton B. Davis.

Abstract Reviews the book "The Securities Market and How It Works," by Birl E.Shultz.

Abstract Cost analysis in electric-utility accounting has been somewhat neglected in the U.S. The common attitude has been that since there is only one product in most cases, the determination of cost per kilowatt-hour at various points in the generative and distributive process is as far as cost analysis need go. Many of the larger private and municipal utilities, however, have given serious attention to the possibilities of more extensive cost analysis. The estimates of the detail of expenses at various levels of output need to be studied to show which items were fixed and semi-fixed, and which could be more properly classed as variable. Since in an electric utility the productive capacity required is that necessary to take care of the peak load (with a reasonable margin of safety), it is a simple matter to reason that those customers who demand service at the time of the peak should bear the capacity costs in proportion to their respective demands at that time. They are the customers who are responsible for the peak and the advocates of the method hold that such customers should bear the costs of providing and maintaining the necessary capacity.

Abstract The article focuses on the twenty-sixth annual convention of the American Accounting Association that was held in New York from December 29 to 30, 1941. The first session started on December 29, 1941. The topic for the first session was related to accounting principles underlying corporate financial statements. Some of the papers discussed were — "The Cost Principles," by Walter A. Staub, "The Revenue and Income Principles," by James L. Dobr and "The Capital Principle," by Samuel J. Broad. The second session was held on the same day. Six years ago in this city at the twentieth annual meeting of the American Association of University Instructors in accounting the association was reconstituted as the American Accounting Association. At that time many felt that what was accomplished at that meeting was only a streamlining of name and only a few recognized the change as particularly significant. For some years prior to 1936 a small group of members were attempting to awaken the association to its opportunity to render a real service.

Abstract Reviews the book "Corporate Executives' Compensation," by George T.Washington.