The accountant of today must be particularly firm in his contention that costs incurred in a given year must be charged to that year and carried forward only in those cases where they will definitely benefit the future. This applies to cost of idleness and would prohibit its deferral by any such process as omitting the charge for depreciation because the equipment was not productive. It is also inadvisable to charge the costs of idle equipment direct to surplus on the grounds that such costs were not an element in the production of that particular period's income. One of the principal features of the current order of things which raises accounting problems is the lowered price level. Accounting involves both the establishment of a correct income estimate and the periodic showing of the financial condition of the concern for which those earnings are estimated. For such purposes, replacement values have a place unless the statement is to be merely historical in character. In a period of rising prices the use of a depreciation charge based upon cost leads to an overly optimistic attitude by the persons relying upon our estimates whether they be managers, investors or creditors. In periods of falling prices the effect is undue pessimism.

This article discusses the three-fold presentation of an accounting problem. The obstacles that confronts a layman eager to attain a good understanding of principles of accounting are limited knowledge of applied business practices, a group of terms, easy of spelling and pronunciation, but difficult of comprehension, a particular mechanism of thought, based upon certain phases of logic and an unavoidable drawing together of the conclusion of a selected example in relation to the probable past and future financial history of the business unit. The principal divisions of a plan proposed consist of – a statement of fact, an accounting interpretation of two parts, journalized form and T-form and observations as may be set out in trial-balance form. The consideration of the three-fold presentation of an accounting problem may depend upon its usefulness as a teaching device in bringing together in concise form certain implied facts and business and accounting relationships and offering a unique method of reviewing in a progressive manner basal principles and materials which form the essence of instruction.

Accounting for no-par stock issues during the years 1930-1932, where changes have been made in the methods of stating capital stock valuations in those years, presents several most interesting contrasts with the period 1921-1929. During the past three years business conditions have been, for most corporations, just the reverse of the period prior to 1929, and these reversals in financial conditions are being rapidly reflected in the changing methods of accounting for no-par issues, capital surplus, earned surplus and related accounts, as of March 1933. In the period prior to 1929, the par-value security was rapidly giving way before the newer and so-called advantageous no-par security. Properties were being appraised, the added value was credited to some surplus or no-par stock account, and the sum total used as an excuse to make stock split-ups, carry stock values at the net worth without a differentiation between types or sources, and so on. Where in 1918-1929 corporation valuations went wild in one direction today undoubtedly they are going wild in the other.

Effectiveness in teaching, because of the vast amount of material offered in the average course in accounting, may be determined by the approach selected and the material emphasized during a period of instruction. The importance of this statement is the reason that efforts are constantly made to learn of new methods which may in some degree increase the student's general comprehension of the science, as of March 1933. In this article a skeleton-plan consisting of five accounting concepts and detailed explanation of three aspects of the accounting mechanism is presented. The proposed plan is made up of three parts. The first part consists in sketching in the early lectures a general view of the field by aid of five basic concepts which, with adequate refinements, begins with the account and ends with the financial and income statements. The second part consists of intense study of the account, the accounting equation, the accounting records, the accounting period and the work sheet. The third part, which reviews in a general fashion the foregoing, consists of thorough analysis and explanation of the accounting equation, inventories and the adjusting entries section of the work sheet.

The article focuses on taxation and the business year. The inequality of titration resulting from a difference in accounting periods may be illustrated by a simple although somewhat extreme example adapted from actual practice. Income tax regulations make no specific mention of the matter, but applications for change supported by the plea that the corporate taxpayer wanted to bring its books into agreement with its natural business year have been approved by the Commissioner of the U.S. Internal Revenue Service. The theoretical limits of the natural business year may now be examined from the viewpoint of taxation. The last old closing date will evidently be defined as that point in time, at which the present value of all future income tax payments is a minimum. In order to single out the problem of seasonal fluctuations, it is necessary to disregard changes in profit due to the business cycle, the general long-term trend and the individual trend of the business under consideration. To obtain the amount saved per annum, all that is necessary is to multiply the present value of the total savings by the interest rate.

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.