Reviews the book "Proceedings of the Fourth International Congress on Accounting."

Beginning students usually find their introduction to nominal accounts and accruals the hardest spot in their first semester. A large part of the confusion may often be due to the undigested condition of illogical material presented earlier, nominal accounts and accruals themselves should not be hard to grasp. But even though they do present difficulty to the student they should be strongly stressed very early because in them is the essence of the accrual basis of accounting which accountants are so anxious to see replace the cash basis. In fact so completely do nominal accounts and accrued items embrace the heart of modern accounting that they might well be made the foundation of the introductory work itself. This would mean a start based upon the Income Statement rather than the Balance Sheet. Instruction in elementary accounting is still very much under the influence of age-old traditional methods of teaching bookkeeping. Bookkeeping instruction traditionally aims at teaching a balanced recording methodology, it appeals to imitative faculties rather than reasoning processes, it over-simplifies a naturally complex subject by artificial rules of thumb, it introduces personal debts very early, presumably merely because external transactions and personal accounts bulked large in early bookkeeping.

Reviews the book "Delaware Laws Affecting Business Corporations Annotated," edited by John Briggs and Stewart Lynch.

There is an increasing tendency for the U.S. statutory law to rest dividend declarations upon the existence of an excess of assets after excluding appraisal increases. This is accompanied by a tendency to drop the traditional common law test of the existence of undivided profits. The growing preference therefore seems to be for an indirect control over dividends by rules which say in effect, maintain capital and all excess assets may be disbursed as dividends. This type of rule creates the problem of defining the capital which is to be maintained. On the other hand, a direct approach to dividend control would favor a rule which would say in effect, no dividend disbursement may be made beyond the amount of the accumulated, undivided profits. The problem then would become one of defining profits for dividend purposes. Presumably either method could be made to work satisfactorily provided only that respective definitions were comprehensive and their interpretations clear enough to furnish trustworthy controls in all instances. But recent changes in corporation statutes have not shown much tendency to produce an adequate definition of the capital fund to be maintained before dividends may be declared.

The British were the first to face the problem of finding a way to control unsocial individualism without resorting to absolute prohibitions. Early in the nineteenth century the government was under pressure to relax the prohibition of company promotion which dated from 1720 and to make the incorporation of joint stock companies somewhat easier. But the thought of simple repeal of the Bubble Act brought visions of another disastrous era of unrestrained stockjobbing and wild speculation. The problem was to find a way to yield to the pressure for free incorporation without opening the way for former excesses. The answer was found in breaking the privacy of accounting information. This was the British approach in the early nineteenth century to a control over private business affairs through semi-public accounts. Attempts at control in the United States came later and seem in comparison rather unorganized. The U.S. have had nothing quite as effective as the British registration of proposed incorporations.

Reviews the books "Public Utility Valuation," by Williard J. Graham and "Depreciation, A Review of Legal and Accounting Problems."

The fault of having two bases for dividend is that they may be considered identical when that is not the case. With two bases in existence the way is opened for creating an excess of assets by revaluation and for paying dividends out of prior profits while allowing revaluation surplus to take the place of the profits withdrawn. Recent experiences have suggested the need for some measure of enlarged control in the public interest over corporation finance and operation. For the most part these control measures have been aimed at the issue of securities, that is, aimed at controlling promotion. But promotion is secondary to the expectation of profits and expectations of future profits rests very largely upon the current and recent past experience in producing profits. It is clear therefore that a sound legal and accounting determination of real profits has much more significance than has the theoretical preservation of a margin for the protection of creditors of a limited liability corporation.