The article provides information on the factors that limit the accounting process. When accounts are summarized in the form of financial statements, they compactly present figure-pictures of the economic results of transaction decisions affecting the enterprise concerned. The information service of accounting makes a unique contribution to the needs which interested parties have in order to understand the impact management's decisions have had on the enterprise involved. Clearly, account data, even when carefully summarized into financial statements, must be read analytically and with a clear awareness that those data only report on specific transaction experience previously consummated by that specific enterprise. In reading financial statement summaries of enterprise transaction experience, one should clearly realize that the reported amounts originated in prior transactions acceptably completed between independent parties free to trade or not to trade. Enterprise accounting can perform a socially useful service because its data are "pure," that is, faithful to the price-aspects of that enterprise's actual transaction events in the markets.

Reviews the book "Interpretation of Accounts," by F. Sewell Bray.

Reviews the book "An Outline of Accounting," 4th ed., by Louis Goldberg.

Economists have long realized that over the years much of the impulse to write anew about economic principles originated in the mood of the times. This awareness of the relativity of economic thought to its time of appearance has produced a special literature history of economic doctrine. The focus of interest in accounting however has for centuries been turned toward its usefulness in practical affairs. Its evolutionary development has been strongly influenced by that fact. Its service from the beginning has been that of expressing and systematically organizing the data of economic acts and business decisions stated in quantitative terms. The acceptability of that kind of service has been so positive that the literature has been concerned with improved technology and the professionalization of independent auditing. Although the recording methodology which developed into accounting is usually called double-entry bookkeeping, a much more descriptive name would be "Italian capital-income accounting." That phrase carries a deeper significance than duality. For dual entry and equality of trial balance totals are very superficial aspects of accounting technology.

The article focuses on choice among alternatives in accounting for verbal builders. The verbal builder, chains ideas into idea-models with a relatively free hand, he can choose the units to be included, selecting among alternative ideas the ones he thinks most desirable; his arrangement of units is also of his own choosing his objective is a simple one that of choosing and arranging idea-units in a manner convincing to himself and persuasive to his readers that by his sequence of thought another idea has been given creditable support. The fact of the matter is that there are two ways of thinking of accounting theory. One way is to consider the theory as many explanations, reasons, justifications which will help to understand why accountancy is what it is, and second view of accounting theory is being reflected particularly in some of the items in the literature which suggest in one way or another that economic engineering needs better data for its use than that supplied about enterprise net income by the usual process of accounting. Since accounting cannot offer a universal service to all types of entities, one of the basic premises needed for a theory of accounting seems not to support a conclusion in favor of modifications by application of index numbers.

This article says that an American, E.G. Folsom, made a praiseworthy attempt two generations ago to show the student that bookkeeping procedures reflect rational purposes and implement reasonable and understandable objectives. His pedagogical intention dearly was one of easing the learner's task by teaching him the thought processes behind the technical features of double entry. In this approach he displays a penetrating insight into the weakness of learning a technology by memorizing rules for dealing with typical situations. Perhaps Folsom was Conditioned by his education to attempt the broadening of instruction in bookkeeping. He signed his book as a master of arts and displays an acquaintance with the economics of his day far beyond that reflected in most contemporary text books on bookkeeping. One of Folsom's aims in writing his text, like that of many other authors, was to teach the student how to analyze transactions into debits and credits for entry into double entry ledger accounts.

Reviews the books "The American Association of Public Accountants, Its First Twenty Years," compiled by Norman E. Webster and "English Accountancy, 1800-1954," by Nicholas A.H. Stacy.

In order to operate an enterprise well, management needs to plan future operations and maintain close control over materials and activities. One of the most useful techniques of planning is forward budgeting. Its figures are based on known intentions decided by high-level authority and on knowledge of the results of prior activities that grew out of prior planning. This necessary knowledge de- rives from detailed records (i.e. accounting) periodically compacted into summary reports. Of the many techniques of managerial control, several that are essential include to set up an operating organization and carefully provide for subdivided duties. It may be helpful if production standards are established as a guide to workers and supervisors. Secondly, provide trained personnel, plus suitable supervision, frequent inspection, etc. Although, present day accountants may justly take pride in the intricate techniques and the professional status of our independent auditors. Yet they can well afford now and then to acknowledge a large intellectual debt to generation after generation of unknown contributors to this art.

The article presents the author's views on an article previously published in the October issue of the Accounting Review, entitled "Limitations on the Significance of Invested Cost." Accounting is progressive; it clearly has shown that tendency in the marked development, strange to ancient usages, of its industrial and managerial aspects. A similarly far-reaching progressive development was slow to appear in auditing although that is the professional area. Still less has accounting shown a full measure of progressive development of its interpretative aspects, i.e., in the collateral work of making the results of technical accounting processes understood by more and more people. Perhaps index number adjustments are intended to constitute an advance in the latter area. And few indeed will take exception to this or any other interpretative endeavor, provided the effort does not meanwhile emasculate the well-known and still very useful data that emerge from the normal accounting process. It could hardly be progress if its price were the submerging of accounting's basic information or of yielding anything on the objectivity issue. It is not likely to prove to be progress merely to develop the new and wider areas of data to be brought within the framework of double entry, following ever farther the lead in this respect of fund accounting and standard cost accounts. There must be limits to accounting adaptability as there are limitations in the significance of "invested cost." A permanent cleavage between balance sheet and income statement (between objectivity determined real and nominal accounts) can not properly be called "progressive."

The article discusses the significance of invested cost. Accountants have shown reluctance at submerging the long developed techniques related to double entry accounts and historical cost. So they are sometimes charged with being unbending traditionalists. The current impact of changing price levels has stimulated a spirited discussion of accounting ideas. Accounting has always been concerned with doing with its present day ramifications and such, it would seem, as to show that people are in need of other experience also, particularly experience in dealing analytically and persuasively and verbally with controversial ideas. Invested cost seems to embrace more of the concept involved here than any of the other terms alone. It does this in part because invested cost is a phrase that can speak of liabilities and income as well as of assets and expense. It must be clear that expressions such as replacement costs, income expectations, fluctuation profits, lack the concreteness attached to the term invested cost.