Knowledge that Transforms

Reviews the book "Accounting Principles and Procedure," by Malcolm L. Goggin and Leslie Tonner.

Depreciation may be defined as that inevitable disappearance of the value of certain items of physical property which can normally be expected in the course of the conduct of business enterprises. The reason why the unit is no longer of value to the owner may be actual physical deterioration, or it may be that changes in demand for the product of a machine or technical improvements of one kind or another have made the unit obsolete. The accounting problem in connection with depreciation, is to record in some way the amount of depreciation which should be taken in each accounting period and this amount in turn may have to be spread over several products or services which were produced or were in process during the period. Much of the disagreement in the discussions of depreciation reserves has undoubtedly been partially caused by the use of only one reserve for depreciation for the entire property instead of one reserve for each type of property. A great deal of confusion concerning depreciation arises from the interpretation of the depreciation policy as a means of providing for or facilitating the making of replacements.

Reviews the book "Accounting for Executive Control," by Monard V. Hayes.

Reviews the book "Accountants Working Papers," by Leslie E. Palmer and William H. Bell.

No one knows precisely what portion of the income-streams of corporations goes to the "insiders." Insiders are the executive head of a business firm. He is typically on the board of directors and is acquainted first-hand with practically all the policies, the future plans and past operations of the business unit in question. Practically always bankers and very often the members of professional firms, such as, management, legal, accounting or engineering concerns might be considered "insiders." The indicated income-stream of a given business firm over short periods of time can be changed radically by the "insiders." And these changes can be so made that over a long period of time the income-streams to the "insiders" will be enhanced over what they would otherwise be. They can manipulate the accounting practices of the business unit, thereby affecting the amount that will be considered as the profit-share during any given period of time. The manipulation of accounts-takes the form usually of tampering with the valuation of assets and liabilities.

On September 10, 1929, the special committee of the American Institute of Accountants on definition of earned surplus submitted its report to the Council of the Institute. This report was subsequently sent to all members and associates of the Institute and given somewhat general publicity. Earned surplus is the balance of net profits, income and gains of a corporation from the date of incorporation after deducting losses and after deducting distributions to stockholders and transfers to capital stock accounts when made out of such surplus. Surplus in its broadest sense is the amount of the stockholders' equity in a corporation in excess of that represented by capital-stock accounts. Capital surplus comprises paid-in surplus, donated surplus and revaluation surplus-that is, surplus other than earned surplus. Profits arising from the sale or other disposition of fixed assets or from the resale of the corporation's own capital stock are properly included in earned surplus. Earned surplus is not properly consolidated with capital-stock accounts on the balance-sheet without specific corporate action authorizing such procedure.

The article presents information about various universities. Algo D. Henderson, Professor of Business Administration and Business Manager of Antioch College, Yellow Springs, Ohio, has been appointed Dean of the College. Perry Mason, Instructor in Economics at the University of Michigan, will be Associate Professor of Business Administration at Antioch College next year. Mr. Clarence Cox and Mr. G. E. Baggs, assistants in accounting, University of Illinois, are leaving the department to go into business. Mr. Perry Mason, a member of the staff for the past few years, has accepted a position as associate professor at Antioch College, University of Michigan. The Ohio Society of Certified Public Accountants on May 24, 1930 and May 25, 1930, held a meeting on the university campus with the Columbus chapter of the National Association of Cost Accountants. Mr. James A. Johnston, associate professor of accounting, has been appointed professor of accounting at the University of Utah. Mr. H. H. Burhaus, instructor in accounting, is leaving the department and Mr. C. Sorrell has been added to the staff as instructor.

Before looking at accountancy in Germany, it will be advisable to consider bookkeeping briefly. The foundation of the bookkeeping employed in Germany is the system of double entry derived from the Italian, Lucas Pacioli. In addition to the "Italian Bookkeeping" a more widely used system is the "German Bookkeeping." This system is striking on account of its arrangement for dealing with a great number of bookkeeping items and the possibility it affords for the greater distribution of labor. The French System is a further development of the German system. Here the distribution of labor is carried to such an extent that for every more important account they open a separate book. The recording organization of business enterprises in Germany has made great progress especially in recent decades. With the improvement in the qualifications of the bookkeepers, the enlargement of the business enterprises and the multiplicity of their activities, it was necessary also to improve the accountancy of the enterprise.

Reviews the book "Bookkeeping: principles and Practice," by A.H. Rosenkampff and W.C. Wallace.

An Interesting situation exists at the present time with reference to the position of accounting in the curriculum of the small Liberal Arts College in the United States. The selection was made from the catalogs on file in the Business Office of Knox College, and the only principle observed was to pick institutions with less than one thousand students offering a liberal arts course. The resulting group of one hundred three colleges is merely a fair sample or cross section of American Colleges, and no claim is made for completeness or finality. Certain titles, such as Banking, Investments, Labor, Insurance, Marketing, Public Finance and Business Law offer no difficulty for they are applied to practically the same subject matter in all cases. There is another fact about the selection of courses, which should be stated. It is based on courses advertised in the catalog, not on courses taught. If Natural Science is tinctured with Business, as in the case of Economic Geology it often proves an attractive lure. The number of times a week that a course meets was not considered.