Reviews the book "Effects of Taxation--Investments by Individuals," by Keith Butters, Lawrence Thompson and Lynn Bollinger.

The article focuses on business-type statements in the budget of the U.S. Business-type statements are printed in the budget for Government-owned corporations and other revolving funds established by law or regulation. Accounting and budgeting for business type operations have definite characteristics not generally found in many of the ordinary government-type fiscal procedures. The statement of sources and application of funds in the business-type presentations is the counterpart to the schedule of amounts available for obligation used in the budget for funds subject to appropriation controls. The purpose of the statement is to show the amounts made available to the fund and how these amounts have been used. Funds applied to operations reflect amounts used for acquiring fixed and other long-term assets, expenses incurred that involve working capital items, and the net increase in working capital other than the U.S. Treasury cash for the fiscal period. The "funds applied to" and "funds provided by" financing show the changes in amounts of money relating to transactions with the treasury.

Efforts to induce accountants to give recognition to the distorting effect of inflation in the financial statements and reports that they prepare have met with little or no successs. Proponents of the inclusion of such information in financial reports might advance their cause more effectively if they joined in the advocacy of steps that do not digress very far from established and conventional practice. It is suggested that such a first step might be the inclusion in financial reports of a com- paratively non-technical, brief explanation of the extent to which inflation has distorted conventionally-calculated net income. Such an explanation might include mention of any loss from the depreciation of net working capital, and any gain from the liquidation of noncurrent liabilities. The source and application of funds statement (if properly amended) will serve to provide many of the figures that need to be adjusted in order to estimate the magnitude of the inflationary-caused distortions of reported operating results. A revision of the statement to exclude inventories and current prepayments from the definition of funds (net working capital is recommended. The results of the computations of the type suggested cannot be regarded as mote than reasonable estimates. Their credibility is less likely to be challenged if they are reported (in round amounts) are no more than this. Accountants who profess to pay allegiance to the principle of full disclosure can do, at least this much.

Reviews the book "Cost Accounting."

Reviews the book "Principles of Accounting--Introductory," 4th ed., by H.A. Finney and Herbert E. Miller.

This article comments on inventory pricing and changes in price levels. Ideally, the measurement of accounting profit involves the matching precisely of the identified costs of specific units of product with the sales revenues derived there from. Secondly, where conditions are such that precise matching of identified costs with revenues is impracticable, identified cost matching may be simulated by the adoption of an assumed flow of costs. Also, a flow assumption can be realistic, in that it reflects the dominant characteristics of the actual flow of goods; thus it may reflect an actual dominance of first-in, first-out, average, or last-in, first-out movement. A flow assumption can be artificial, on the other hand, in that it premises a flow of costs that is clearly in contrast with actual physical movement. However, the periodic income of a business enterprise is computed by deducting from the revenues of the period the costs which are properly associated with those revenues. In the case of certain costs, for example sales commissions, the relationship to the revenues of a period is quite direct and the matching process is accomplished with a minimum of uncertainty.

This article discusses the information on the paragraph no. 5. The Paragraph No. 5 under "Expense" in the 1948 Revision of Accounting Concepts and Standards Underlying Corporate Financial Statements of the U.S. reads that An assignment of all or a portion of the cost of an asset to expense, made in good faith after considered judgment and after competent review, in accordance with the accounting concepts and standards of the time, is not subject to reversal in a later period. Errors of a mechanical and non-judgment nature should be corrected in the period of their discovery. The Committee on Concepts and Standards is in agreement with the apparent basic purpose of this statement to reduce the possibility of manipulation of the net income calculation through reversals, revisions and reaccounting of past depredation charges and other amortizations. At the same time it recognizes that a position unalterably opposed to the correction of errors of judgment is both arbitrary and difficult to defend.