Knowledge that Transforms

Abstract Accountants have been troubled in recent months over their responsibility in the matter of auditing inventories. It now appears to be settled that whenever no physical verification of inventories has been made, the auditor's report will contain an appropriate qualification. Furthermore, it is not an unreasonable prediction that auditors will become more and more insistent upon physical verifications. Inventories are the life-blood of an enterprise organized for profit; but this is not the case in an organization devoted to the task of furnishing public services. In the field of municipal government the primary revenue source is from taxes levied on property valuations. Inventory verification has a peculiar application in municipal post audits. Procedures outlined in the article should not be unduly expensive. And if the result of this addition to the municipal audit is to help obtain assessments reasonably close to full value, the outlay should be returned to the municipal treasury many times over. If gross inequities and low-ratio assessments go hand-in-hand, the social values of this auditing addendum should be given due weight in determining its usefulness. Of course, whether or not full-value results can be obtained is a moot question. There can be little doubt, however, that the additional auditing procedure would be a step in this direction.

Reviews the book "Papers on Auditing Procedure and Other Accounting Subjects."

Reviews the book "Organization and Management of Production," by William N. Mitchell.

Abstract The article presents information about various activities taking place in various universities in the U.S. Professor R.D. Swick, R.E. Strohelm and D. Thompson are leaving the staff committee of the Indiana University. Professor John G. Blocker of the University of Kansas has taken a year's leave of absence in order to teach at the University of California, Berkeley, as visiting professor of accounting. Associate professor of accounting R.D.M. Bauer in the University of Missouri is absent on leave for one year. Professor H.K Olson of the University of South Dakota has received his Certified Public Accountants (CPA) certificate recently. Professor T.W. Leland of Agricultural and Mechanical College of Texas was re-elected as secretary-treasurer of the Texas Society of CPA's. Leland will continue as editor of the journal The Texas Accountant. Professor J.R. Taylor has accepted a position at the University of Tennessee. Professor R.K. Mautz passed the Illinois CPA examination in November 1939.

Reviews the book "Business Arithmetic for College Students," by William S. Schlauch.

Abstract Time was when accountants looked upon the balance sheet as a presentation of the current financial position of a business enterprise. They thought of the left side of the statement, when it was presented in account form, as a summary of the assets of the enterprise. It is true that they avoided the inclusion of intangibles whenever possible but they made a virtue of that just as banking institutions made a virtue of writing their buildings and physical equipment down to one dollar. In the taking of inventories the accountant insisted upon a lower-of-cost-and-market valuation and he made a virtue of that too. In an earlier period of business enterprise, balance sheets prepared upon the basis of traditional principles and techniques did show assets and liabilities and proprietorship within the limits of accuracy demanded by the business management of that time. This general character of the valuation process is not peculiar to economic valuation. The present article is not the place for a general discourse on value but it may be said in passing that all valuation involves a reconciliation, integration or adjustment of different interests.

Reviews the book "Practical Bank Credit," by Herbert V. Prochnow and Roy A. Foulke.

Reviews the book "Money and Banking," by Charles L. Prather.

Abstract The article presents accounting cases of Akron Brass Manufacturing Co. Inc. The history of the Akron Brass Manufacturing Co. Inc. presents some rather interesting features in conjunction with a very simple reorganization, the appreciation of fixed assets and a brief experience with a single, unprofitable subsidiary. The company was organized in Ohio on July 6, 1935, to take over the business of The Akron Brass Manufacturing Co. The latter had been incorporated on December 26, 1919 and continued as a going concern until July 8, 1935, when all of its assets were transferred to; and all of its liabilities assumed by, the Akron Brass Manufacturing Co. Inc. The Akron Brass Manufacturing Co. Inc. is principally engaged in the manufacture, sale and assembly of brass and alloy goods for fire and mill equipment. The company's products include nozzles, hose couplings, siphons, coupling expanders; fire hose test pumps and other fire fighting equipment. An abortive attempt to expand its activities through a wholly owned subsidiary was made in 1937. The balance sheet of the company prior to the reorganization is presented in the article.

Reviews the book "Principles of Auditing," by F.R.M. de Paula.