Knowledge that Transforms

Reviews two books by E.L. Kohler "Advanced Accounting Problems;" "Solutions for Advanced Accounting Problems."

Public accounting is a personal service profession. Its future depends to a large degree upon its ability to continue to attract the highest quality of recruits and in increasing numbers. Improvement of academic standards and improvement in selection of personnel are tremendously important fundamentals. Formalized staff training which has evolved from the experimental to the development stage is the medium through which the accounting profession can discharge its obligation to bridge the gap between theory and practice. The contribution of staff training to a well integrated personnel policy is so manifest as to leave little if indeed any scope for serious debate. The form in which training may best be accomplished and the area in which it may be applied most productively remain questions in which the profession has a searching interest. There is need for guarding against the very natural inclination to concentrate on those in a group who appear to be the best prospects at the expense of those who may not immediately have demonstrated equivalent qualities and who need the most aid.

Reviews the book "Fundamentals of Accounting," by Perry Mason.

Reviews the book "Investigations for Financing," by David Himmelblau.

Reviews the book "Cost Accounting," by Charles F. Schlatter.

This article focuses on the author' views about staff training programs. The author says that along with other accounting firms everyone faced during the war with the necessity of devoting more and more time to the training of staff. As one know, the number of junior accountants turned out by colleges during this period was cut to a mere trickle. Many of accountants saw service in the armed forces while others went into war industries. As a result the quality of staff was considerably impaired. To maintain professional standards, everyone was forced into a more intensive training program. The cessation of the war, of course, has relieved but it has not cured the situation. The author further says that one still find it necessary to devote a very considerable time to the continued training of staff. In view' of this condition, the author is happy to see once again a healthy flow of qualified graduates from colleges which he is sure will in time do much to improve the quality of the entire accounting profession.

Accounting has been said to perform a service function. It consists to serve commerce, industry, and government. These three branches of economic endeavor are constantly evolving into new forms with new content and new orientation. It would thus appear to follow that, in an effort to distill principles of accounting out of the myriad rules of thumb of practice, the subject must be placed in its historical context and those features of it which might change with the form of economic organization differentiated from those which are unlikely to do so. An example in this connection is the change in attitude toward the balance sheet which has taken place over the past one hundred years. Furthermore, the attempts to arrive at principles of accounting have so far been mere compilations of "good things" in the present context, drawn, as it were, out of thin air, without any regard for their functional relationship or historical validity. It is true that these lists have been arranged in what was thought to be an order of merit, but neither the order nor the content has received any marked degree of general acceptance.

The recent discussion among accountants concerning reinstatement of fully amortized emergency facilities was in some respects, too late. It is tempting to use hindsight and observe that perhaps a more useful and timely framework within which to handle the question of reinstatement might have emerged if the profession had started to think about and to discuss the problem earlier. The quasi reorganization device has been applied during periods of business depression. In the depression situation the recorded amounts were written down in an attempt to restore current reality to tile accounting process. There is considerable justification for arguing that some of the most pressing problems currently facing accountants, namely, depreciation on a replacement cost basis, the use of inventory reserves, and the practice of expensing a portion of current capital outlay, have as their common origin a feeling that currently the accounting process is producing inadequate and, perhaps, misleading financial statements. There is not the slightest intention to argue that now is the time for quasi-reorganizations, in reverse or otherwise, but it does appear that now is the proper time to investigate, discuss, and settle upon the limits of accounting reorganizations. The relevant conditions precedent may not be far distant.

During the past year a committee was appointed by the American Accounting Association to consider the rating of curriculum and instructional standards among the various institutions of higher learning having accounting courses. It might seem reasonable to require that the accounting work should be offered in a school or college of business and not in some other division of the college or university, in order to secure proper integration of accounting with important related subject matter. It is taken for granted that graduate work requires the extensive use of current periodicals, reference books, and other library facilities, and therefore graduate students in accounting should have access to them. The adequacy of library facilities might be measured quantitatively by the number of bound volumes on hand, or by the amount expected annually for library purposes.

The basic concept in accounting, as in economics, is the concept of income, and accountants are supposed to be experts trained in the procedures of measuring the amount of income earned by or accrued to business enterprises during their fiscal periods. The chief reason for the present-day disagreement in the measurement of income for a given period does not lie in tile necessary use of subjective measurement for certain items of cost, but it does lie in the fact that the basic standards or principles on which the very concept of income rests are not agreed to and generally accepted. If this doctrine of definitive income determination were accepted generally by the profession, it would simplify and make more precise and objective the measurement of annual income. The earnings of American corporations are facts which are strongly affected with a public interest, and the amounts of these earnings have a definite bearing on social and governmental policies, on labor compensation, on taxes and on prices to the consumers. It does not seem to be an overstatement to say that accountancy can become a science once the basic concept of net income is precisely defined and measured in accord with generally accepted principles and standards.