Knowledge that Transforms

The teaching of accounting represents one of the most formidable challenges to the adapting of visual aids to teaching situations. This is true because of the very nature of accounting. Accounting requires some abstract thinking, especially in advanced courses. Abstractions are very difficult to visualize. Accounting requires the study of detailed forms and statements, and, until recently, projection devices have not been of adequate power to project these necessary details. This explains in part the slight use of visual aids in accounting instruction. Another explanation is that accounting instructors are not aware of the possibilities of visual aids and arc not trained in their use. However, since tests show that an individual learns primarily through his sense of sight, it seems that efforts should be made to use visual aids in teaching accounting in spite of the difficulties encountered. Some of the visual aids are, The blackboard, motion pictures, lantern slides, filmstrips, charts plant visits, and others. Visual aids are only an aid or supplement to the instructor. They cannot replace a text or instructor or outside study on the part of the Student. The use of visual aids will not lessen the work of the instructor. The instructor will work more, but he will work more effectively. If properly used they will result in more thorough coverage of the material presented.

The article presents information on the statistical data on depreciation bases. As a result of the drastic rise in construction costs in the past few years and the expectation of a continuation of a high level of prices, it is not surprising that there is considerable discussion today on the problem of the basis to be used for the depreciation of plant assets. This article is devoted instead to the presentation of a series of data showing in a statistical manner the precise nature of the problem. To limit the problem, only depreciation of building cost is considered. The data included herein are taken from the records of a number of residence halls for men and women students at the University of Michigan. The depreciation expense per student per year varies widely that a noticeable effect on comparative operating results of the several halls will be obtained from accruing depreciation on a cost basis. Especially is this the case when it is remembered that revenue rates, salary and wage rates, and food prices, the three major items in a residence hall operating statement, are essentially the same for all halls.

Reviews the book "Cost Accounting," by Clarence L. Van Sickle.

The article presents information on the pricing of exports under the foreign assistance act of 1948. The ultimate objective underlying the plans for the re-establishment of economic stability in Europe, South America, and China will be lost if the U.S., in the course of making these great efforts, fails to maintain the essentials of a sound economy for itself. Strained and stressed as the economy already is from the transitions from wartime status to peacetime operation, two major factors now enter the picture, each one of which by itself can have a profound and decisive effect upon the course of economy. People are concerned here with that aspect of the problem of maintaining a sound economy which is affected by pricing policies, and in particular with the effect of certain cost concepts on pricing policies. Lest it be thought that this aspect is anything but a segment of the problem of maintaining a sound economy, it must be said that the answer lies in other directions for many phases of the problem. For example, where the productive capacity not only is insufficient to handle these new burdens but was proved to be insufficient to handle the needs of the last war.

From the outset the U.S. Securities and Exchange Commission has been sympathetic to this point of view and has sought the advice of leading accounting authorities in teaching, public practice, and among executives of corporations investment bankers, and financial analysts in the preparation of rules, regulations, and forms necessary in the administration of the acts which authorize the Commission to prescribe the forms, items, and details of financial statements to be filed generally, uniform systems of accounts, principles to be followed by registered investment companies in maintaining their accounting records and in preparing financial statements. On individual problems, however, where experience has disclosed serious discrepancies in practice as between companies and accountants and one has felt that uniformity in procedure would benefit investors by rule or regulation of the Commission or in an opinion of the chief accountant. It is imperative, therefore, that the Commission make certain that the financial statements contained in registration statements be completely unequivocal and are not used as a proving ground for innovational presentations.

Reviews the book "Principal and Governmental Accounting," by Carl H. Chatters and Irving Tenner.

The article presents an overview of problems prepared by the Board of Examiners of the American Institute of Accounting. The problems were presented as the second half of the C.P.A. examination in accounting practice in November 1947. The candidates were allowed four and a half hours to solve both of the problems. Each problem was given a weight of 25 points. Some of the problems were to prepare information from a statement of the company's loan account with X Bank for the two months of September and October 1947, a statement showing quantities of purchased-chased materials covered by trust receipts at October 31, 1947 and a statement showing the quantity of the company's product in inventory at October 31, 1947. In the second problem, data was given and the students had to prepare, an account sales for September, 1947, as rendered by each of the three consignees, columnar work sheet showing corrections to the accounts of the Winston Company, as of September 30, 1947, and a condensed income statement of the Winston Company for the year ended September 30, 1947.

Reviews the book "Cost Accounting," by John J.W. Neuner.

Against the extensive background of history it is of great interest to note the comparatively recent origins of two phenomena which people regard as outstanding characteristics of Western Civilization. The author refer to the establishment of responsible parliamentary government since the last quarter of the Seventeenth Century, less than three hundred years ago, and to the development of the industrial system of economy since the last quarter of the Eighteenth Century, less than two hundred years ago. The author is certain that accounting, even though elementary in method, served useful purposes in the governmental and economic undertakings through all the millenniums encompassed by the identifiable civilizations. However, an art or science cannot become a social force until the economic and governmental conditions permit an independent professional development which may then use its talent in making a contribution to the public welfare. These favorable conditions for the field of accounting did not arise until after the establishment of responsible representative government and an industrialized economy. As industrialization progressed business enterprises attained much wider scope and transactions became more and more complex. Under these conditions the proprietors found it necessary to divide duties among personnel in accord with the logical phases of the activities and to base judgment to a greater and greater extent upon facts and interpretations furnished by the accounting process.

Reviews the book "Money and Banking," by Raymond P. Kent.