Knowledge that Transforms

The article discusses the benefits of the statistical attributes of group depreciation. It has been argued in the article that the benefits of group depreciation go far beyond the bookkeeping simplification and its concomitant cost savings. Far more important are the statistical attributes of group depreciation that yield reliable information on the economic life of the assets included in the group. By means of finite Markov chains one can derive empirical probabilistic distributions of the age of the various assets, which should provide management with better data not only for asset depreciation, but also for maintenance, utilization and replacement of capital equipment. Once the transition probability-matrix is established and the initial aging of assets accomplished, data can be generated automatically for forecasts of retirements of assets, balances in the asset accounts and allowance for depreciation, as well as depreciation charges for each year over the forecasting horizon. The information generated can then be introduced and aid in the development of capital and cash budgets and forecasts.

The article presents information about various congresses and meetings in the field of Accounting. The American Statistical Association included a one-day symposium on statistics and accounting in its annual convention program held in Minneapolis at the University of Minnesota on September 10, 1962. The Financial Executives Institute held its Northeastern Area Conference June 8 and 9, 1962, in Toronto, Canada. The program included a discussion of international business problems. The Southeastern Association of Tax Administrators held a three-day conference in New Orleans on July 22-24, 1962. The 12th annual Tulane Tax Institute was held on September 26-28, 1962, on the Tulane campus. A list of executive recruitments and promotions in the American Accounting Association, and American Society of Women Accounts, is also provided. Various award presentations and appointments in the universities all over the U.S. are listed in the article. Laura L. Karadbil, assistant professor of accounting, The American University, was recently awarded the CPA certificate from Maryland.

Reviews the book "Financial Statement Analysis," by John N. Myer.

It is a common belief that accounting for the admission of a partner is relatively simple, but that it is one of the more difficult areas to teach. According to the author this paradox appears to be a result of a lack of delineation as to what is a problem in accounting theory and what is a problem in arithmetic. The article presents problems of this nature, divided into three basic formulae. the formulae are applicable only when the goodwill or bonus is implied by the statement of the problem. The formulae provided are for bonus problems, goodwill and asset revaluation problems and allocation of goodwill, bonus or asset increment. The kernel of the bonus problem is to determine the capital credit to the incoming partner. The essence of the goodwill problem is to determine the total capital of the ex-ante partnership. The author remarks that in some problems the data are not presented in exactly the same terms as that employed in the formulae. This should present no problem if the formulae are well understood.

Reviews two books. "Accounting Trends and Techniques in Published Corporate Annual Reports," 15th ed.; "Financial Reporting in Canada," 4th ed.

Reviews the book "Reporting and Investment Decisions," by Alan Robert Cerf.

The author in this article argues that accounting is a liberal arts form of discipline being offered by the colleges of business administration. Accounting is an art. In the process of income determination and asset valuation, one could allocate costs common to more than one period by treating the cost as a function of time, or of production, or of revenue. He insists that the choice and application of these varying principles or approaches is as much a form of art as can be found anywhere. The study of accounting is interdisciplinary rather than a specialization as are many of the other liberal arts subjects. Accounting is also an application of the discipline of mathematics. There has been much written about the need for mathematics as a tool for accounting in forecasting and decision making. In addition to the above, accounting is an application of other disciplines. Psychology is necessarily used to prepare meaningful statements, meaningful, that is, to their reader as well as to their preparer.

This article presents information on various seminars and events in the field of accounting, held at different universities and colleges in the U.S. as of July 1962. The University of Chicago has established an Institute of Professional Accountancy in its Graduate School of Business Administration. The Institute includes a workshop in accounting research, financial aid for accounting students, and adaptation of the accounting curriculum to increase emphasis on management services. The 11th annual national symposium of the Federal Government Accountants Association was held May 28-30 in Philadelphia. The University of Minnesota will sponsor an Institute on Information Retrieval September 19-22, 1962. Warren C. Bray, head of the Accounting Department, has been selected as one of the eighteen participants in the Accounting section of the Faculty Seminar in New Developments-in-Business Administration to be held on the Berkeley campus of the University of California in August. William F. Crum has resigned to accept a professorship at the University of Southern California, effective in September. Lloyd Morey, president emeritus and professor of accounting, emeritus, received the Alpha Kappa Psi Foundation Award for Distinguished Service for 1961.

Reviews the book "Principles of Public Utility Rates," by James C. Bonbright.

Reviews the book "The Basic Postulates of Accounting," by Maurice Moonitz.