Reviews two books "Profit Sharing and Pension Plans (Practical Planning and Administration)," by C. Morton Winslow and "Profit Sharing and Pension Plans (Law and Taxes)," by K. Raymond Clark.
The topic assigned, that of discussing the graduate accounting curriculum from the viewpoint of schools offering undergraduate concentration in accounting, presents an opportunity to explore various phases of a most interesting and important subject. Prior to the twentieth century graduate work appeared to be limited to a high type of scholarship looking toward an intellectual career as opposed to a professional career. Accounting is universally recognized today as a profession ranking close if not on par with the older professional pursuits. The American Institute of Accountants has made extensive progress in preparing tests to ferret out those individuals with accounting aptitudes. Of late there has been developing some sentiment among some professors in some schools that the time put into writing a formal thesis could be better used in some other direction, such as additional courses or even field work. The MBA candidate should be required to pass a comprehensive test either written or oral or both. This examination to have any meaning and significance should be taken seriously by the examining committee as well as by the candidate.
Not long ago the author's college chose for a first year accounting textbook one of those modern versions whose publishers make life easier for the busy teacher by providing standardized objective type tests at no extra cost. Faced with one of the busiest years in history and with graders or readers obtainable only at premium, it is needless to add that all instructors used the tests. Nevertheless, some of the older teachers used them with a sense of misgiving. In probably no field is the belief more ingrained, both in student and faculty, that the objective test and the problem test differ in their measurement of a student's accounting ability. The latter test, it is believed, really measures true accounting ability while the former may merely measure general intelligence, familiarity with English, etc. Many teachers, therefore, rely exclusively on problem tests for measuring purposes, although they are willing occasionally to use the objective test for study motivation purposes. The reliability and validity of each question needs to be determined by statistical methods rather than psychical ones, and there are many pitfalls for those who attempt haphazardly to construct a reliable objective type test. Publishers spend a great deal of time and money in the development of their tests, and even in these many questions prove to be so ambiguously worded as to impair their value as a measuring device. However, whereas this is true of only a comparatively few questions in the printed forms, it may be true of the majority in a privately developed test, which accordingly may or may not be a reliable measuring instrument.
Consistency in accounting usually is considered the policy of adhering to procedures which are identical with procedures used in the past. The definition gives little suggestion of the problems that might arise in an effort to follow the policy. Most accountants would agree that the doctrine should be pursued with a limitation. It should applied only is so far as there is no desirable need for a change of accounting procedure, for making such a change seems to violate the doctrine. It is this area that appears to deserve attention, since the limitation may at times be overlooked. Where consistency is wrongly applied, it becomes a fault rather than a virtue of accounting. The major weakness of unlimited application of the doctrine is glaring when admitted errors are repeated. To omit an asset once from the balance sheet through error does not mean that future balance sheets should exclude the asset just because it would be consistent to do so. This idea seems well accepted and appears to call for a certain amount of inconsistency, thus providing an example of the limitation of the policy.
The article presents a brief description of a graduate curriculum in accounting. It begins at the introductory level and extends over a period of two years. It includes the very interesting and important problem of providing accounting instruction for nontechnical students. As liberal arts graduates the students will have had a minimum of two years' additional instruction at the university level and, as liberal arts go these days, they will have had something in the way of a background in such areas as economics, banking, statistics, etc. The program of the first semester is designed to lay a foundation. The student is to be acquainted with economic resources and activities. In the second semester the student continues his study of accounting and law while he explores the administrative problems in the three basic fields of production, distribution, and finance. The second year is wholly one of accounting study in the basic areas of principles, costs, verification, taxation and research.
This article presents problems which were prepared by the Board of Examiners of the American Institute of Accountants and were presented as the second half of the certified public accountants' examination in accounting practice on May, 1948.
Fundamentally, present price movements create a serious accounting problem because the precise significance of these movements is not known. Ultimately, the extent to which the present inflation was composed of temporary cyclical elements and of more permanent secular trends will be known. But no one should be overly-sanguine as to the derivation of a satisfactory solution on the accounting level until the more basic economic problems arc rendered more manageable.