Knowledge that Transforms

The article presents questions and answers to the problems, which were prepared by the Board of Examiners of the American Institute of Accountants and were presented as the second half of the May, 1950 C.P.A. Examination in accounting practice. The candidates were required to solve all problems. The time allowed was four and a half hours. The weights assigned were: Problem 1, 10 points; Problem 2, 10 points; Problem 3, 30 points. A suggested time schedule is given below: Problem 1: 75 minutes; Problem 2: 60 minutes; Problem 3: 120 minutes. You have been engaged to audit the Thomas Trading Company as of December 31, 1949. A summary of the general ledger accounts is presented below. Based on the transactions as stated and the supplementary information, you are to prepare working papers which show in detail "Ledger Balance 12/31/49," "Audit Adjustments," "Profit and Loss for Year," and "Balance-Sheet 12/31/49." Columns for "Surplus Changes" may be included or entries to "Surplus" may be shown in the other columns provided such entries are clearly identified as applicable to "Surplus." Key all audit adjustments and in journal form present the adjusting entry together with a brief explanation of the purpose of or reason for the entry. A worksheet for Balance-Sheet accounts and a separate worksheet for Profit and Loss accounts may be prepared. The article presents the balance sheet in response to this question.

This article presents a review of the recent developments in accounting theory and practice. The term "recent" is unavoidably relative. It would not be appropriate to consider that it restricts a consideration of the subject only to the developments during the current year. Probably the most important recent development in the field of accounting is the rapidly increasing awareness of accountants of their social responsibilities. The financial reports of corporations, for which accounting is responsible, are the principal means, and probably the most important, by which investors and others having an interest can obtain information of their affairs. Accordingly, it is essential that the information so presented be clear and meaningful, truthful, and realistic. That accounting, so far, has failed in its obligation to present adequately the story of business is amply evidenced. One of the greatest criticisms which has been directed against accounting is that financial statements are presented in such a manner as not to be readable or understandable by the average investor or by labor. For some years there have been a few companies that have attempted to meet this criticism by abandoning the stereotyped balance sheet and income statement and the progressive extension of this practice is an interesting development.

Reviews the book "Office Management and Control," by George R. Terry.

Reviews the book "American Transportation in Prosperity and Depression."

Accountancy education, one of the newer fields of professional training, has developed rapidly in the United States in an effort to keep pace with the growth of the profession itself. If the accounting profession is to maintain its position of responsibility and respect, accountancy education must be maintained at a high level. The rapid growth of accountancy education in the past fifty years has resulted in a wide variety of types and levels of training. In 1945 there were at least 137 colleges and universities, recognized by state, regional, or national accrediting agencies, which had established schools of business. With the expanding scope of responsibilities of the accountant, the need is not for more accountants, but rather for more thorough and intensive preparation of those who do enter the profession. The State of New York has recognized the need for higher standards of professional preparation, when the requirement of graduation from an "approved" college was made a prerequisite to the CPA examination.

Reviews the book "Internal Auditing in Industry," edited by Victor Z. Brink and Bradford Cadmus.

The article focuses on the development of measurement and guidance techniques in the field of public accounting. In response to the expressed need for improvement of selection procedures, the American Institute of Accountants appointed in 1943 a Committee on Selection of Personnel. This committee was asked to investigate procedures whereby the general caliber of personnel in the profession might be improved. The early deliberations of the Committee led to the identification of four broad factors which may condition success in the profession. These four were general aptitude, technical competence vocational interests, character and personality. Vocational interest was the first field to be attacked experimentally. It was decided to experiment with the Strong Vocational Interest Blank, an immediately available test, rather than to attempt construction of a new test of interests. Through the cooperation of nearly a hundred accounting firms scattered throughout the U.S., Strong blanks were completed by more than 2,000 public accountants and returned to the project office for analysis. On the basis of the results a median profile was established for public accountants in general.

Reviews the book "Introduction to Accounting," by Robert R. Milroy and Geoffrey L. Carmichael.

Reviews the book "Lasser's Business Tax Handbook," by J. K. Lasser.

Reviews the book " The Economics of Agriculture," 2ed., by R. L. Cohen.