Knowledge that Transforms

Reviews the book "The Business Enterprise As a Subject for Research," by Howard R. Bowen.

An efficient intracompany pricing system should establish a price that: 1. Fosters a healthy interdepartmental competitive spirit. 2. Provides an adequate profit yard-stick for the measurement of departmental management. 3. Provides figures to top management for use in policy decisions to make or to subcontract. 4. In some cases minimizes federal income taxes. The four methods available are: (a) Price established by top management. (b) Cost, cost plus fixed percentage, and standard cost methods. (c) The retail price offered to the producing division's other customers. (d) Interdepartmental bargained price method. Ideally the standard cost method would appear to afford the best answer to the four basic requirements. Certainly a company already using standard costs would find little in the other available methods to warrant their use. In the absence of an adequate standard cost system, the bar-gained price method has much to recommend it particularly if a list price with class discounts is used to offset long and tedious negotiations.

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

Reviews the book "Other People's Money," by Donald R. Cressey.

This article presents information on the graduates entering into the field of accounting. There has been an increasing trend of business graduates, who are pursuing their majors in accounting and attracted to public accounting. It has been indicated that there had been a definite downward trend in the quality of the students in the accounting curriculum. As an additional example of this viewing with alarm, undergo the rigors of the accounting curriculum. There are undoubtedly many reasons why schools of business do not attract more of the good students. Business does not have the same prestige, as do some of the professions, notably medicine, law, and engineering. The field of business covers a broad range of activities and accommodates persons of widely varying abilities, as contrasted with the more highly specialized sciences and professions. A committee of the school of business recently made a study of the quality of their incoming students and on the basis of their findings suggested the three objectives to the faculty--to strengthen the background preparation of high school students entering college, to attract a larger percentage of the better high school students, and to give the field of business administration greater prestige in high schools.

Report of the Commission on Standards of Education and Experience for Certified Public Accountants (C.P.A.) has at one fell swoop placed a frightening responsibility, a magnificent opportunity and a sweeping challenge before the U.S.'s accounting educators. This report, in recommending a shift from experience to education as the major element in securing the C.P.A. certificate, also states categorically "the formal educational preparation of candidates for the profession needs to be more thorough and comprehensive than is now provided by most educational institutions." It was suggested that schools of business must provide curricula which will equip young men and women for the world of their future as well as the world of today. This task will require a complete re-examination of the present educational program. Constant reappraisal of objectives will be necessary as a consequence of the drastic changes in prospect for business and for the U.S. economy. College administrators and faculties must be bold, resourceful, and imaginative. Action is required to develop a long-range program.

Reviews the book "Montgomery's Federal Taxes," by Philip Bardes, James J. Mahon, John McCullough and Mark E. Richardson.

This article focuses on non-linear depreciation in accounting. The depreciation of a physical asset is its decline in value by the action of deleterious or adverse factors. These generally are wear-and-tear, the elements, neglect, and so on, but may also include obsolescence and other nonphysical factors. The basic problem of accounting for depreciation is the selection of the systematic manner in which the cost of the asset is to be written off over its useful life. The value of the asset declines from its initial value at the beginning of its useful life to a terminal value at the end thereof. This terminal value may be either zero or a residual value commonly termed the scrap value. The problem is to state the residual or depreciated value of the asset at any selected point during its life. There are two general types of continuous functions available for depreciation computations, the rectilinear and the curvilinear. The facts of curvilinear depreciation will be formulated herein in such a manner that anyone desirous of utilizing such a scheme for the computation of depreciation need only substitute the basic data of the problem in a formula.

In the area of consolidated statements, as perhaps in no other, there is the danger that the student will place full reliance upon working papers, elimination patterns, and technical procedures as demonstrated in the classroom and textbook in achieving a set of answers. If the student simply applies mechanical techniques, without thinking of the consolidation framework set by the past or the frame-work to be provided for the future, he will be unable to offer any theoretical support for his conclusions and will not possess any real confidence in them. Even worse, if the student leaves the matter at this stage, be may feel that certain areas in accounting are beyond his grasp, and may thus develop a basic insecurity. The possibility of any such insecurity can be avoided by the careful presentation of this subject matter.

The article presents matters related to accounting for students of accounting. The students of today will be the practitioners of tomorrow. One of these is the trend toward a constantly increasing proportion of fixed to total costs. The article presents theory cases for undergraduate courses. After some examination, the writers have found a means of achieving, in part, some of these goals. In a two-hour undergraduate course called "Current Accounting Topics," an effort is made to give students something other than conventional text-book material and to encourage the discussion of matters of theory in a framework that differs from the usual problem-solving approach. The article also presents a simplified three variance technique. The basic concepts involved in calculating the three components that make up the difference between manufacturing expenses incurred and the amount that is charged to production under a standard cost system are difficult matters for most students of cost accounting. The article describes about helping accounting students to learn how to analyze a business transaction.