Knowledge that Transforms

This article discusses various aspects of capital. One aspect of capital stock is that it is an aliquot share in profits and residual ownership rights; a second aspect is that it represents the amount contributed. Both aspects of capital stock could be given adequate recognition by means of par value stock, if discounts thereon and premiums were considered unobjectionable, for if these be inseparable from the par account, the three elements together would be the sum actually contributed. The difficulty is that corporation law makes it inadvisable openly to treat par value, adjusted by premiums And discounts, as the capital. The legal definition of capital is the natural outcome of the kind of problems presented in litigation. One argument showing the derivation of the lawyer's definition is as follows. Capital marks the limit of the liability of the stockholders to the creditors. The creditors cannot rely on the private assets of the stockholders. These rights and duties, according to one view of thee matter, are implied by law, as stipulations in the contract presumed to run between the corporation and the creditor at the time credit is extended.

The Committee on Research of the American Association of University Instructors in Accounting has assembled certain material on the subject of appreciation for review by the membership at large. Thus, an opportunity will be afforded for criticism, and for the expression of any opinion which any one may have to offer. Appreciation, because of conflicting theories and opinions held by various parties at interest, presents one of the most trying problems with which business men, lawyers and accountants have to deal. Much of the difficulty probably results from the failure to make a thorough study of the subject from all its angles. Certain graduate students at the University of Illinois, under the direction of professor A. C. Littleton, have prepared a report on a survey made by them on the subject of appreciation. This material appears in the article under the main headings and is followed in each instance by the comments of certain members of the association. In seeking a definition of appreciation, an extensive search through the accounting literature fails to yield a very rich return. The fundamental idea of an increase in values is, of course, always present.

Reviews the book "The Stock Market Crash--And After," by Irving Fisher.

Reviews the book "Elementary Training for Business," revised by York Wilkes and Tirrell Wilkes.

Reviews the book "The A B C of Accounting," by Stanley Edwin Howard.

This article focuses on the movement towards refinement of terminology of accounting. The attempt of leaders in the field to give exact definition to the various accounting terms is evidenced chiefly by the activity of the Terminology Department of American Institute of Accountants. Not infrequently there is encountered in accounting literature the thought that accounting, being an aspect of applied economics, should be cognizant of the dictates of economic theory and should attempt to portray the concepts of the economist. It is the intention of the present article first to display the economic concept of cost of production and to follow that with the accounting concept so that when they stand in contrast any similarities or dissimilarities may become apparent. The concept of cost is truly fundamental in economic analysis. In fact one author has gone so far as to state that the backbone of economic science is the balancing of value against cost. It appears at the outset that before proceeding further in a consideration of the role which cost plays in the economic scheme of things it would be well to pause and examine the nature of cost as conceived by the economist.

This article focuses on the relation of taxation to the history of the balance sheet. The census which was introduced by the Emperor Augustus at the time of the birth of Christ was of great importance, for it was intended to obtain a firm financial basis for expenses; consequently, it laid the foundation of a budget and the proportional distribution of taxes among those who were liable to pay. The first entries were made upon wooden boards coated with wax, which were put together in the shape of a book, originally being called "caudex" and after the introductions of parchment, "charta." The taxpayer had then to declare upon oath that he had made no false entries. Citizens shared political authority according to the amount of property declared and the Roman, therefore, kept not only exact accounts of their daily receipts and expenditures, but also exact statements of their property. The relation between balance sheet and taxation can best be explained by. an examination of the business books and tax returns of the great Florentin banking house of the Medici.

Accounting at the outset was concerned largely with the financial relations existing between a concern and its customers and creditors. Very soon, however, this narrow aspect of accounting was modified so that the accounts would record all assets and liabilities and make possible the construction of the balance sheet directly from the ledger. Then followed additional changes which permitted the presentation of a profit and loss statement. In all instances, however, the accountant was concerned largely with recording the historical changes in the financial and operating aspects of the business. Although some thought was given to the uses to which these statements might be put the primary consideration involved showing the chronological events from the point of view of what had happened and whether any irregularities were disclosed. Later when it became evident that accounting possessed an important relationship to management, the accounts and particularly the statements, were modified. Accrued and deferred items became recognized, with consequent changes in the balances of the income and expense accounts, so that the latter displayed incomes earned and expenses incurred by periods.

This article focuses on the recommendations by an accountants, in public practice on the definition on earned surplus. This accountant meant phraseology according to the evidence in his suggestions. It is probable that the majority of persons who have been observed misusing the word mean diction. An aberration on the part of every accountant whom have been heard using the term is the mispronunciation of amortize and amortization. It is said that the accent of the first word and the secondary accent of the second word are on the second syllable.

Reviews the book "The Control of Distribution Costs and Sales," by William B. Castenbols.