Reviews the book "Reporting and Investment Decisions," by Alan Robert Cerf.

When discussing the professionalism of accounting, a question that often arises is, how does accounting compare to the other professions, for example law or medicine? Many statements have been made in the accounting literature on the acceptance of accounting as a profession in this relation, but generally these are opinions made by CPA's and very few non-accountant, objective analyses, are ever made. The present stage of the professional development of accounting could be measured by comparing it to some other vocation that has been accepted and recognized as a profession, which at some point in history has gone through a similar stage of development. To make this comparison, a list of authoritative criteria defining a profession should be used as a foundation for measurement. There seems to be no doubt that accountancy as practiced by certified public accountants is generally accepted as a profession. There are a few specific areas where accounting falls below law and medicine in the status of professionalism, but these cannot be labeled as areas of weakness. Rather it is an indication of growth; that accounting is still in its middle stage of development, analogous perhaps to law and medicine in their era of growth.

With the growth in the controlling shareholdings in subsidiary companies the presentation of a consolidated balance sheet in published reports has become the rule rather than the exception. The increase in the use of consolidated statements warrants a review not only from the standpoint of presentation but also from the standpoint of preparation in respect to certain aspects which are peculiar to consolidated statements. In the preparation of a consolidated balance sheet, the elimination of inter-company profits is limited to the interests of the parent company. This means the minority interests of the subsidiaries are considered as outsiders and the profit applicable thereto is properly considered as realized from the standpoint of the parent company. The net effect of this is that the amount of inter-company profit eliminated is represented by the amount of profit which has been taken up by the parent company as at the date of the balance sheet. This treatment is in conformity with the principle that the consolidation is merely a presentation of the parent company's position rather than a combination of the parent company and subsidiaries. Much of the confusion which exists can be traced to certain of the situations which have been outlined above. Of all the items mentioned the most significant lies in the area of recognizing that a process of substitution is taking place in presenting the consolidated statements rather than a process of combination, and that until such time as this basic principle is recognized misconception in the area of consolidation will continue to arise.

Reviews the book "Accounting: The Basis for Business Decisions," by Walter B. Meigs and Charles E. Johnson.