Knowledge that Transforms

Six of the nation's outstanding accounting authorities have been invited to prepare papers expressing the views for and against the proposition that depreciation need not be restricted to the amortization of historical cost. While accountants have long realized that their basic standard of measurement, the dollar, is a varying one, they have, with one conspicuous exception, declined to recognize, as generally accepted accounting procedures, departures from cost because of changes in the purchasing power of money. In the list obstacles to good accounting is the misconception, often entertained, and blindly fostered by many accountants, that an income statement should reflect earning power or be confined to current operating performance. By moving depreciation expense up or down, according to predictions of the moment, a more accurate earning power or operating performance is said to be reflected in the net result. A good deal of mumbo-jumbo necessarily attaches to the process, for to them earning power or operating performance is a nebulous thing, visible only to initiates such as forceful corporate managements and accountants of discernment.

Business leaders are beginning to realize that it is just as important to have highly trained accounting technicians on their accounting staffs as it is to have lawyers on their legal staffs and engineers on their engineering staffs. These business leaders have learned through costly audits, system installations, federal tax assessments, and the like, that the old type "bookkeeper" who knew little more than a debit from a credit was, despite his low salary, a costly investment. They have found that their business will fail to prosper as it should unless their accountants can grow with it, assume new responsibilities, revise systems to meet operations, and help guide the business through the intricacies of modern government taxation and regulation. The disadvantages of a small concern are usually the advantages of a large one, and vice versa. In the large firm, probably a comparatively greater number of well paid accounting and other positions are open to the accountant there is theoretically no job ceiling below the president and there is a much broader field of business activity in which to acquire experience.

Reviews the book "Hotel Accounting," by Ernest B. Horwath and Louis Toth.

The basic objective of this article has been to stimulate the continued study and discussion of accounting standards and their periodic restatement, thereby assisting in the orderly development of accounting concepts and their wider acceptance both among accountants and among others in any way influenced by or interested in the findings of accountants. So many decisions are dependent on interpretations of corporate reports that uniform, objective, and well-defined standards have become a requisite for the use of the reports by the person. The assets or economic resources of an enterprise are its rights in property, both tangible and intangible. The most commonly useful financial statements report the origin and disposition of the assets of an enterprise in terms of costs established and recorded at the time the assets are acquired. The importance of costs as a record of the accountability of an enterprise for its resources makes it essential that their determination be based on available objective evidence.

Reviews the book "Accountants' Writing," by John Mantle Clapp.

Reviews the book "Manual on Commercial Law," by A. Lincoln Lavine.

Reviews the book "The Guarantee of Work and Wages," Joseph L. Snider.

The article discuss recent developments in the statistical utilization of accounting data by the federal government. In particular, attention will be focused on the statistical utilization of accounting information for what may be called top-policy purposes. Most accountants are familiar to some extent with the utilization of accounting data by various federal agencies for direct administrative purposes. In the administration of tax laws and for regulatory bodies, accounting data have proved indispensable for handling individual cases. Moreover, most accountants are probably familiar with the fact that individual case information is frequently compiled into statistical information as a means of orienting agency policy, setting standards, and serving as a basis for recommendations to the U.S. Congress. In a sense various recent developments in business financial statistics represent extensions of accounting to new areas of great importance. These extensions require the development of new techniques and point of view, and it is hoped that the instrumentalities of classification and analysis made possible by accounting will gain in the process. Full utilization of the potentialities of accounting will occur, however, only if accountants can be persuaded to take a continuing interest in these developments and to acquire the necessary familiarity with the problems involved to adapt their techniques to the requirements.

Reviews the book "Corporate Financial Policy," by Harry G. Guthmann and Herbert E. Dougall.

The art of accounting including cost accounting, consists primarily of accounting methods which may be described as procedures or practices. However, a comprehensive statement of cost accounting necessitates that one look behind the accounting methods and see upon what ground the whole system of cost accounting is constructed. Cost accounting concepts, as well as concepts of general accounting, may be divided into two groups: first, those ideas having to do with the nature and purpose to the organization which cost accounting. is to serve; second, those ideas as to the purpose and function of cost accounting in rendering its services to the organization. Cost accounting consists of those phases of accounting in general which have to do with the classification and assignment of costs to centers of operation, to product units, and to portions of the revenue stream. In addition it includes the reporting of all types of cost information. Within its scope are the accounting techniques which seek to determine the over all periodic net income of the business firm as well as the portions of that income derived from divisions, departments, product lines, or other subdivisions of the business enterprise.