Reviews the book "Cases in Accounting Policy," by Neil E. Harlan and Richard F. Vancil.

"Accounting," says professor W.A. Paton, "is plagued with fetishes and sacred cows. It is high time that homage be shifted from these to the primary objective furnishing owners and managers with essential economic data." The sacred cow in accounting is a belief or doctrine which is accepted without critical analysis and which, like the Indian cow, it is a sacrilege to destroy. It is based, not on logic or on any necessity of record keeping or financial presentation, but merely on tradition or blind acceptance of what has been. Unlike the universal (among Hindus) acceptance of the doctrine of bovine sacredness, no accounting sacred cow is the subject of universal acceptance among accountants. Each accountant has his own collection of such irrational beliefs. A sacred cow which leads us all astray from time to time may be designated as the belief in objectivity as an infallible accounting guide. In the need of distribution cost analysis are found some of the most perplexing of accounting situations. Conservatism causes accountants to recognize unrealized losses, but never unrealized profits.

The article focuses on the need to draw a distinction between cost accounting and book keeping. Bookkeeping is usually considered to be a purely clerical function, directed by the accountant and proceeding along lines laid down by the requirements of accounting. The most distinctive of the accounting activities relate to the presentation and interpretation of the results of bookkeeping for the benefit of management, owners, creditors, and the general public. Cost accounting, includes four major functions, which includes devising cost accounting systems and procedures, recording cost data, or cost bookkeeping, preparing forecasts of costs which serve as the basis of planning and budgeting, and presentation and interpretation of cost data, including the making of comparisons between cost data derived from one source and those derived from another such as comparisons between actual and expected costs. For the teacher, the distinction between cost bookkeeping and cost accounting is important principally as a basis for putting into their proper perspective the several matters which are dealt with in the cost accounting course or textbook.

The American Institute Committee on terminology has recently advocated a study of possible substitutes for "surplus," and it may be that the 1948 executive committee has found an acceptable answer. The 1948 statement includes a section on financial statements wherein are gathered all observations on. the form and content of income statements and balance sheets. Many of the same comments were made by the 1941 statement, but they were scattered throughout the text under other headings. Several of the 1948 suggestions are new, however, and deserve particular attention. The remark that "the income statement should reveal the amount of cost assigned to expense by reason of any reduction of an inventory to its recoverable cost" may be applauded. Two considerations should be kept in mind. The first is that it is most difficult to distinguish between the judgmental errors of accountants and those of management. The second consideration is that the accountant is continually accused of being unrealistic, dogmatic, and academic.

In the face of all the exciting and absorbing economic, military, and political aspects of the defense program, it is difficult to confine a talk to the prosaic and humdrum affairs which are supposed to be of interest to accountants. One of the obvious effects of the defense program of interest to accountants is the increased demand for accounting services. One of the important questions faced by those who are charged with making defense expenditures is how to contract for the necessary commodities and services. The traditional governmental purchasing technique is by competitive bidding, with very few exceptions. This method is intended to give the government the lowest possible price and to eliminate favoritism and collusion in the award of government business. However, it is slow and cumbersome, and it works best when the quantities of goods ordered are small enough to fit into production programs without too much of an upset. The advantages of negotiation are speed and flexibility. Work on many contracts can actually be gotten under way before all plans, specifications, quantities, delivery dates, and other features of the deal are completely worked out. Also the negotiated contract makes it possible for the contracting officers to take into consideration many matters other than price which have seemed important to the Defense Commission.

The article presents a comment on a previous article that appeared in the journal The Accounting Review. The presentation of an author's paper on obsolescence at Philadelphia, Pennsylvania last winter and its publication in the June issue of the journal The Accounting Review represent long overdue attention to this important subject by accountants. It is to be hoped that this paper is the beginning of really adequate attention to this subject, and that the author's other writings will shortly see the light of day in published form. At first glance the proposal that obsolescence should be accrued separately from the physical factors in what accountants commonly lump together under the head of "depreciation" is likely to arouse no great enthusiasm in the mind of the orthodox accountant. In spite of the rather gloomy picture of the present status of depreciation accounting presented in the article, or perhaps because of it, the impression should not be created that improvements cannot be expected. Quite the contrary is true. Further inquiries into the causes of depreciation in an attempt to measure their relative importance are fully justified. The result will be improved determination of depreciation rates and a sounder approach to the problems of managerial control.

When the National Industrial Recovery Act (NIRA) gave the U.S. President power to impose requirements for the making of reports and the keeping of accounts, when it banned unfair competitive practices and indicated that destructive price cutting was one of them, and when the codes of fair competition almost from the first provided for uniform systems of accounting for industries and specified that selling products or services below cost was destructive price cutting, accountants began to sit up and take notice. The NIRA does not, of course, constitute the first time that accounting has been given recognition as a means of facilitating the relations of government to private industry. One needs only to point to the uniform accounting systems devised by the Interstate Commerce Commission and the several state utilities commissions for railroads and utilities. The several Revenue Acts enacted since 1913 have in effect required all taxpayers and potential taxpayers to keep such records as would make possible an accurate determination of the liability for income taxes.

Presents a tribute to William A. Paton, founder of `The Accounting Review' and was its first editor. Studies conducted on Paton; Paton's boyhood in Wisconsin; Educational attainment; Professional career.

Reviews the book "Price Discrimination Under the Robinson-Patman Act," by Frederick M. Rowe.