Knowledge that Transforms

Reviews the book "Financial Policies of Public Utility Holding Companies," by Mervin H. Waterman.

Reviews the book "Money," by D.H. Robertson.

Reviews the book "The New York Money Market ," vol. 1, "Origin and Development," by Margaret G. Myers, vol. 2, "Sources and Movements of Funds," by Benjamin Haggott Beckhart and James G. Smith, vol. 3, "Uses of Funds," by Benjamin Haggott Beckhart and vol. 4, "External and Internal Relations," by Benjamin Haggott Beckhart, James G. Smith and William Adams Brown.

The statutory laws governing corporate dividends are significant to accountants and teachers of accounting. The directors of a corporation have power, in their discretion, to determine what, if any, dividends shall be declared and paid to stockholders. This is the general statutory rule which applies in all states and territories of the United States and which also prevails in England. The variations from it are few and slight. The rule applies in New Jersey unless otherwise provided in the certificate of incorporation or in by-laws adopted by at least a majority of the stockholders. In England, a company in general meeting may declare dividends, but the amount must not exceed the amount recommended by the directors. The statutes of several jurisdictions give the stockholders power to exert a limited degree of pressure upon the directors in the matter of dividend declaration. In New Mexico and Puerto Rico in United States, unless otherwise provided in the certificate of incorporation, the directors must declare a dividend of the whole of the company's profits exceeding the reserve and pay it to the stockholders on demand.

The article focuses on the failure of the city of the Glasgow bank. Recent bank closings recall the history of the City of Glasgow Bank, which closed its doors a little over half a century ago. The last balance sheet published before the closing was dated June 5, 1878, and indicated capital reserves and undistributed profits totaling £1,600,000. The accountants' examination, made immediately after the closing of the bank, three months later, revealed that the capital and reserves were entirely wiped out, and that there was a deficiency of capital estimated at the astounding figure of £5,190,000. The immediate arrest of the bank's directors was ordered. During the five years preceding the dosing of the bank, between fifty and sixty percent of the total of advances on credits, discounts and overdrafts represented the debt of eight firms and the bank's directors. The City Bank failure once more brought up the question of the desirability of the acceptance by the Scotch bank of the principle of limited liability to stockholders as a measure of protection against disastrous situations comparable to that resulting from the City Bank failure.

Reviews the book "Public Utility Regulation," by W.E. Mosher and F.S. Crawford.

Economists, statisticians, accountants and others have long realized that the various income tax returns filed with the Bureau of Internal Revenue contain a vast quantity of valuable statistical data. The American Association of University Instructors in Accounting, the American Economic Association and the American Statistical Association, designated a Joint Committee to consider the entire problem and to draft suggestions to the Bureau of Internal Revenue for the amplification, revision or elimination of the existing tabulations. This report recommends that the specific recommendations of the Committee as set forth in the report be approved in principle; that a new Joint Committee be appointed to continue the work and that a modest appropriation be made for its traveling expenses. The purpose of this article is to summarize briefly the various problems involved and the Committee's attempts at solution. Certain phases of the problem at least are of considerable importance to accountants and teachers of accounting and it is suggested that a consideration of the statistics as now published would be of interest to all of the members of the Association.

In September 1930, the American Institute prepared a compilation of Certified Public Accountant (CPA) laws of the United States and a study of these laws discloses a most tragic fact concerning educational training as an aspect of the accounting profession requirements. As to college education, there is a great scarsity of recognition in the various state laws. Practically no recognition is given college training in accounting. There still persists the most prevalent idea that practical experience shall be the sum and substance of one's training if he is to be a successful accountant. The years of practical experience thought so essential find the individual with a narrow, limited vision of the accounting profession and no general training. Specifications in laws providing that the university faculties shall aid in examinations are even more restricted than provisions relating to credit for college work. C.P.A. should be on an examination basis. Then too a comprehensive examination works for uniformity in accounting which in itself will raise standards.

The article focuses on different aspects of teaching cost accounting. Commerce students who have had little or no business experience present a problem to instructors in cost accounting because their lack of background keeps them from comprehending the aims sought by a cost system and particularly the managerial aspects of such a system. This condition seems to be general with all classes of students, whether they be those in day classes who are taking a complete commerce course or evening students who have some experience in business and are seeking to develop themselves in a special branch of accountancy. It therefore seems necessary for the instructor in cost accounting to carry on some preliminary work with his students to give them a philosophy of cost accounting whereby they will appreciate the importance of internal transactions in a business, the use that can be made of cost records for managerial purposes as apart from mere record keeping and the general relation that exists between all the manifold activities of a business, as well as some idea of what those activities are.

Abstract "Third parties" refers to anyone other than the auditor and his client, the two parties who have agreed between themselves as to the scope of the work to be done in a specific case. It includes the stockholders when examining the certified accounts of their corporation; credit men and others when examining the auditor's statement on a given concern as a basis for granting credit to it; courts and other governmental officials when examining certified statements purporting to set forth certain facts produced as evidence. The auditor's responsibilities include maintaining a balance sheet, creating a test audit. The auditor can best carry out his responsibilities to third parties by removing the common misunderstandings. If auditors and third parties agree on a classification, misunderstandings are avoided because the auditor can readily state within which classification a particular financial statement falls; the third party can quickly satisfy himself as to whether such a financial statement serves his immediate purpose and if it does not, he can ask for a specific modification.