This article focuses on the theory of account and the principal deficiencies in this financial statement. These deficiencies are the basis of valuation of the marketable securities should be disclosed. If carried and reported at cost, the market value of such securities should be disclosed if significantly different from cost. The current value of such securities represents the approximate amount of cash obtainable from sale of the securities. The type of marketable securities against which the tax liability is offset is not disclosed. Because U.S. treasury bills may be used to pay income taxes owed to the U.S. government, it is considered acceptable to offset such bills against the income tax liability. The offsetting of other types of U.S. government securities against a tax liability has little theoretical justification although such a presentation may not require an exception. Finally, more adequate disclosure of the offsetting of U.S. treasury bills would be obtained by stating the full amount of accrued taxes payable less the taxpaying value of the securities in the current liability section of the balance sheet.

The article presents the theory of accounts portion of the Uniform Certified Public Accountant Examination given by the American Institute of Certified Public Accountants on May 20, 1966.

The public accountant sells his services to a client and these services usually resulting a product, the accountant's opinion. The client, as the accountant knows and expects, passes this opinion on to the ultimate consumer. Admittedly, there is no specific consideration flowing from the ultimate consumer to the public accountant. Certainly, however, there is an implied consideration and its nature is evident in the actions against public accountants that have come to trial. In many of the cases, the third party refused to extend credit or to make investments in client companies until such time as he had received the accountant's opinion on the client's financial statements. An illustration of the type of defense that would be available against an allegation of negligence can be found by referring again to the law governing a manufacturer's responsibility. In a fairly recent case, a manufacturer was held not liable for his failure to discover certain defects in an airplane motor part because he could prove that he had adhered to the generally accepted method of testing these parts as required by the Civil Aeronautics Administration. Thus, the public accountant could rebut the allegation of negligence by showing that he had adhered to generally accepted standards of conduct as enunciated by a recognized authority.

The article discusses about the qualifications for college accounting. The position impliedly taken is critically examined and a number of paradoxes that result is illustrated. The business school faculties have been criticized by employers, including accountants, virtually an infinite number of times, because of the graduates' inability to communicate effectively. Yet the act of passing the CPA examination resulting in the awarding of the certificate, which may have been accomplished without so much as a single high school course in English, supposedly qualifies the recipient of the certificate to pass upon the communicative ability of the college accounting student. The very nature of accounting is such that an accounting instructor must rely upon his knowledge of other subjects in his discussions and explanations of accounting. The teaching of even a survey course in accounting or federal income taxation to students majoring in economics, engineering, psychology and many other fields would quickly prove this point to the doubtful. Formal education is no panacea, but neither is practical experience. Surely the depth and breadth of a person's knowledge can be more quickly expanded through formal education.

A topic which has of late been receiving attention from accountants is that of their legal responsibility, not only to clients but to third parties, the client's creditors and stockholders in the U.S. The purpose of this article is to discuss some of the characteristics of reported third party actions against accountants. All these actions were brought at common law and were instituted by third parties seeking to recover in damage losses supposedly sustained as a result of a contended proper reliance upon the independent accountants' allegedly negligent or fraudulent misrepresentations. It is not the purpose of this article to discuss the development of the common law principles governing third party actions against accountants, but a brief statement of these principles may facilitate an understanding of a portion of the material, which follows that, in general, the major principles are accountants may not be held liable to third parties for negligence, and accountants may be held liable to third parties for fraud.

Reviews the book "Accounting for Profit Recognition on Sales of Real Estate."