Knowledge that Transforms

Reviews the book "Financial and Administrative Accounting," 2nd ed., by C. Aubrey Smith and Jim G. Ashburne.

Reviews the book "Advanced Accounting," by Arnold W.Johnson.

Reviews the book "Criteria For Disclosure of Post-Statement Events," by William Baker Flowers.

The accounting systems of business have traditionally provided much of the financial data and much of the analysis of that data applicable to decision-making purposes. Today, however, there are symptoms of management dissatisfaction with current accounting systems. Accounting for decision-making involves a particular way of viewing the decision-making, or managing process in business. Choice of a best alternative requires criteria against which to judge various possibilities. Choice requires information concerning the various alternatives, information cast in a form consistent with the criteria. It has been assumed that the decisions to he made by an organization must first he specified before an intelligent design of the information flow is possible. Determination of the decisions to be made comes properly before specification of the data which should be supplied. An organization which does not recognize that it has a poor system for routine inventory decisions will suffer reduced profits. Accounting has an obligation to take a significant part in the development of new quantitative information systems. Accounting must divert itself from its preoccupation of the past with fiduciary and stewardship responsibilities.

Reviews the book "American Institute of Certified Public Accountants, Accounting Trends and Techniques," 14th ed.

The article assess the accomplishments of seven International Congresses of Accountants held to date. The first congress held in 1904 in St. Louis, Missouri sponsored by the Federation of Societies of Public Accountants in the U.S., must be attributed to George Wilkinson, an Illinois certified professional accountant (CPA) who was born in England, but spent his professional life in the U.S. The 1904 Congress was an ambitious event for the American accounting profession. It was held when The American Association of Public Accountants had a membership of only 140 scattered over 15 states, of whom 81 held CPA certificates. The Third International Congress was held in New York City in September 1929. Joseph E. Sterrett and F. van Dien, presidents of the earlier congress, served as Honorary Presidents, while Robert H. Montgomery held the role of President of the 1929 sessions. The 1952 Congress, convened in London, England, included about 80 CPAs from the United States. It exercised a constructive influence on international finance and commerce, and stimulated avid discussion and subsequent research on fluctuating price levels in relation to accounts, accounting requirements for issues of capital, the accountant in industry, the accountant in practice and in public service, and the incidence of taxation.

The article presents information on problems that were prepared by the Board of Examiners of the American Institute of Certified Public Accountants and were presented as the first halt of the C.P.A. examination in accounting practice on May 17, 1961. The candidates were required to solve all problems. One of the problems that was there in Accounting practice is discussed here. A company has hypothecated its accounts receivable with the bank under an agreement whereby the bank lends the company 80% on the hypothecated accounts receivable. Accounting for and collection of the accounts are performed by the company, and adjustments of the loan are made from daily sales reports and daily deposits. The bank credits the Distributors, Inc. account and increases the amount of till loan for 80% of the reported sales. The loan agreement states specifically that the sales report must be accepted by the bank before Distributors, Inc. is credited Sales reports are forwarded by Distributors, Inc. to the bank on the first day following the date of sales. The bank allocates each deposit 80% to the payment of the loan and 20% to Distributors, Inc. account. Thus, only 80% of each day's sales and 20% of each collection deposit are altered on the bank statement. Distributors, Inc. accountant records the hypothecation of new account to receivable value (80% of sales) as a debit to cash and a credit to the bank loan as of the date of sales. One hundred per cent of the collections on accounts receivable to recorded as a cash receipt; 80% of the collections is recorded in the cash disburse

Reviews the book "Auditing Principles: Objectives, Procedures, Working Papers," second ed., by Howard F. Stettler.

The proper treatment of manufacturing costs has been a topic of discussion among accountants for many decades. Various treatments recommended range from including only prime costs in inventory to a full costing policy. In recent years, a new treatment of manufacturing costs has been introduced into accounting literature. The advocates of this new concept, generally referred to as direct costing, and the supporters of the conventional costing concept have been engaged in a lively debate as to the relative merits of these concepts. Such debate is desirable and necessary since every new concept should stand the test of controversy before being accepted or rejected by the accounting profession. Most of the debate thus far has centered around the practical usefulness of the two concepts. It is difficult to find a thorough treatment of the theory of manufacturing costs. The fundamental difference between direct costing and absorption costing is in the treatment of fixed manufacturing costs; both costing concepts treat the variable manufacturing costs as part of the product cost. Absorption costing charges fixed manufacturing costs to the product while direct costing charges these fixed manufacturing costs to the period in which incurred.

This article focuses on some facts of federal fiscal life and their importance to Americans. At present the United States Government owes about 288 billion dollars to the holders of government securities, and the annual interest expense for carrying that debt was estimated last January at around eleven per cent of the total budget receipts of the Federal Government anticipated in fiscal 1951 or 9.5 billion dollars. The Government is committed in the future for plenty of other costs. For example: first, merchant Marine subsidies and ship replacement just for currently subsidized ships will cost 4.3 billion dollars. Second, 5.4 billion dollars is already committed for future Federal contributions for public housing. Third, Federal civil public works projects al ready started will cost 7 billion dollars after 1961 to complete. Fourth, it may cost as much as 30 billion dollars or more to complete the inter state highway program. It is at this point that the matter of the country's rate of economic growth comes to the fore. For as the economy grows, tax revenues-at the same or even lower tax rates-increase. And that increase in Federal revenues could be used, if not for debt reduction then perhaps to absorb some of the additional costs of added public service.