Knowledge that Transforms

The article focuses on accountancy under economic self government. There is general discontent with the economic system, with the political system, and with the relation between the two. There is also general aversion to political and bureaucratic government interference in economic affairs. A National Economic Council is often proposed. But usually this council is conceived as a superstructure to be imposed upon the existing national economy. A National Economic Council to fit the American idea therefore should receive its powers, duties and responsibilities from the business system which it would represent. Such a body would not be a revolutionary proposal; it is modeled upon the system long accepted by the American people in political matters. Through the channels of this organization accounting information would flow from the business enterprises, through the institutes and federations of accounting, to the National Economic Council, particularly its Division of Accounts. This information would provide the basis of a national economic balance sheet and economic budget plan.

The article focuses on importance of clarity in balance sheet display. One of the most important pieces of work which a public accountant is called upon to perform is the preparation and analysis of balance sheets and financial conditions. By no means is this the mere listing of certain assets and liabilities. It resolves itself into a matter of judgment in arrangement and valuation, and judgment is often a matter of one's experience in judging and noting the results in previous situations. The matter of prime importance to consider is the type of person who will be called upon to read the balance sheet. In a recent examination, it was discovered that the management had been giving itself some systematize, but serious-minded kidding by working on the assumption that installment accounts receivable were not subject to the need forbad debt reserves. This is a matter of problem of valuation. According to the author, balance sheets must be prepared for the benefit of the reader and must be grouped to give him the benefit of the most accurate information available, in the most readable form. It should give him all of the facts and the facts should be stated clearly.

Reviews the book "Planned Money," by Basil P. Blackett.

This article discusses the status of partners' loan accounts in partnership dissolution by the provision of the Uniform Partnership Act. It was the intention of the lawmakers, in this provision, to give partners' loans a claim ahead of capital. The rank of liabilities in order of payment follows--those owing to creditors other than partners, those owing to partners other than for capital and profits, those owing to partners in respect of capital, and those owing to partners in respect of profits. The practical application of this provision, due to the effect of other related legal provisions, leads to a different result. A partner's loan and the capital, in case of dissolution, will be added together and handled as a single claim. Infact, not only loans and capital, but all claims of a partner against the partnership or of the partnership against this partner, at the time of dissolution, may be entered to the same account, whether the claim is for loans, capital, interest, wages or withdrawals.

Reviews the book "Principles of Business Law," by Essel R. Dillavou and Charles G. Howard.

Reviews the book "Basic Standard Costs," by Eric A. Camman.

Whereas the terminology of law or medicine is intended to serve primarily if not exclusively the members of those learned professions, the accountants' language must be understood by everybody who has occasion to refer to financial statements. Professional jargon is utterly out of place. Editors of accountants' dictionaries should have desired to make their publications as comprehensive as possible, including not only terms current in business life, but also miscellaneous additional information which might be useful to accountants and business men in general. British usage as well as all words used in their ordinary sense should be omitted or at most, listed with a reference to standard dictionaries. Commonly used terms, which differ from a defined term only by a self-explanatory adjective were also to he excluded. The terminology committee of the American Institute of Accountants has no higher goal than that negative recompense which, according to Dr. Johnson, is the only one that lexicographers can ever hope to attain, namely to escape reproach.

Reviews the book "The Federal Reserve Act: Its Origin and Problems," by J. Laurence Laughlin.

Reviews the book "Prices," by George F. Warren and Frank A. Pearson.

The article focuses on accountants and the securities act. The significance of the Securities Act of 1933 to the accounting profession can hardly be underestimated. The accounting officer as well as the independent certified public accountant see their public recognition greatly enhanced, but along with this welcome enhancement of standing comes a burden of responsibility that is truly appalling. The risk assumed by an accountant-officer or by a professional accountant, who signs the registration statement submitted to the Securities Commission of the Federal Trade Commission is quite out of proportion to the possible material benefits that may be derived from the service rendered. The Federal Securities Act is the response to demands of a wide majority of the nation. More effective protection of the investor was promised in the platform of the Democratic party as adopted in Chicago in 1932. A general criticism of the act would urge certain restrictions on the civil liabilities and on the other hand certain extensions to make the act a better instrument for the social control of new investments.