Knowledge that Transforms

Reviews the book "Progress in Development of Basic Concepts," by Thomas H. Sanders.

As the orthodox realization and liquidation account does not adequately present the affairs of a company under liquidation in bankruptcy or one being reorganized under a receiver, repeated attempts have been made to improve the reporting for such concerns, as of January 1946. Some of these attempts have adapted the ordinary interim work sheet by inserting additional columns so that the trading transactions may be distinguished from the non-trading transactions. The other method of attacking the problem adapts the principles of the articulation statement in that the money amounts involved are sorted into columns according to the types of transactions and sorted to lines according to the titles of the accounts affected. The article presents some general rules for the preparation of columnar realization and liquidation statements. First rule is to classify transactions according to the columnar headings and determine whether the entries should be recorded as debit or credit according to the effect the transactions have in the accounts named on the lines. Also, record all cash collections as realizations of assets and all cash disbursements as payments of liabilities.

Reviews the book "Accounting Manual for Small Cities of the State of Washington," by Arthur N. Lorig.

There should be a mutuality of interest, and therefore a certain coordination, between the teacher of accountancy and the practitioner. Both are interested in the same student product. But the emphasis in this relationship rather naturally tends to be one-sided; the emphasis is almost exclusively upon financial accounting. Without counter poise, it tends to perpetuate an unbalance which is now present in the structure and content of accounting education where, particularly in the large schools, the focus in one way or another is largely upon the public accountant and the practices of public accounting. The point is clear. If financial accounting is "hidebound and unimaginative" and college training in accounting is largely dominated by the conventions of financial accounting, then evidently educators and their institutions are not doing the best possible job for their students or for their future employers. A change in the direction of balanced emphasis is needed.

The article presents a discussion on the topic, College Education As a Requirement for Certified Public Accountants, The New York Experience. This is the second time that the author has been invited to present a study related to the topic. He discusses the result of the examination of 180 candidates from fifteen schools in several states of the U.S. and of ten times as many from New York State schools. This convinces the author, that students who have spent four years in the day classes or six years in the evening classes in the schools have been exposed to a quantity and quality of instruction which should have prepared them for the examinations in Commercial Law, Theory of Accounts, and the theoretical parts of auditing. The author does not believe, that schools were or could be prepared to teach successfully the subject of Practical Accounting or the practical part of auditing. A high school diploma does not insure that the holder has satisfactorily completed a four year course in that school.

Reviews the book "Special Items Arising Out of the War," by George D. Bailey.

From the point of view of the methods of exchange, there were three main stages of economic development the prehistorical or early medieval stage of natural economy, where goods were exchanged against other goods; the later medieval stage of cash money economy, where goods were bought for ready money; and the modern stage of credit economy, where commercial exchange was based on credit. If credit has played its important role for so long, then surely the history of book-keeping should supply further evidence on the point. Credit without written reckoning is almost impossible; the first and most fundamental reason for keeping accounts is to aid in remembering what one has trusted to their debtors. Early bookkeeping records fall into two groups, namely, the accounts themselves, and textbooks on accounting. A bad monetary system was still no unusual thing-even England did not put her coinage onto a moderately sound basis until 1696. But the plight of the New England colonies was exceptional. Nominally, their money consisted of pounds, shillings, and pence, each of these units being (in Massachusetts) worth about three-quarters of its British namesake.

This article focuses on the classroom technique of teaching. A method of gaining the cooperation of the class was by following their lead to a certain extent in the development of the course. Any time a question was asked, even though irrelevant to the matter on hand, if that question pertained to accounting material which would normally be taken up at a later date in the course, the question was answered fully and completely at the time if the author felt the class had sufficient background to grasp the major portion of the explanation. The reason underlying this approach was to develop naturally and informally the subject matter and to make it seem less formidable and easier to understand. Then later on, in following the text, when teachers came upon the same subject the class was reminded that the reading assignment was merely a review of what had been taken up previously in class discussion. It might be mentioned that at the end of the first week, the nomenclature of all first semester terms was taken up and a brief explanation given.

In 1937 certain justices of a U.S. state supreme court were of the opinion that there is no greater justification from the standpoint of public welfare for a law regulating accountancy than there would be for laws regulating rivet-catchers, janitors, or drain-layers, that the title "certified public accountant" is a trade name and that manifestly it was intended to give a monopoly of the accounting business. Happily, and as irrefutable evidence that progress as well as time marches on, this legal opinion was a minority dissenting one. Nevertheless, the statement that accountancy is a profession can scarcely be said to have attained the freedom from attack enjoyed by the statement that two plus two is four. On the other hand, the statement is now accepted as fact among the enlightened everywhere. One of the most difficult and misunderstood phases of defining the term "profession" is that of distinguishing it from the term "business." This distinction does not imply any superiority of the professions as such over business as such. The two are simply different. As a matter of fact, each is complementary to the other, for the professions could not exist without business and business would surely perish without the professions.

The title of this paper, College Education As a Requirement for Public Accountants in New York State, is rather ambiguous. It suggests that all public accountants practicing in New York must meet certain scholastic requirements. Of course, this is not true. There is no law in New York State restricting the practice of public accounting to certified public accountants (CPA). The college education requirement mentioned in the title refers to the New York CPA law which became effective from January 1, 1938. This law specifies that candidates for the examination leading to certification must be graduates of colleges or schools of accountancy registered by the State Education Department as maintaining satisfactory standards. To meet satisfactory standards, a school must offer a four-year course, or its equivalent, in cultural and business subjects including 24 hours of accounting, 8 hours each of business law and finance, and 6 hours of economics. This law, which for the first time set minimum scholastic requirements at college level, did not become effective until January 1, 1938.