Knowledge that Transforms

Abstract The problems mentioned in the paper were presented as the second half of the November 1939 C.P.A. examination prepared by the Board of Examiners of the American Institute of Accountants. The candidates were required to solve all problems in six hours. The weights were as follows: problem 1, 10 points; problem 2, 25 points; problem 3, 30 points, and problem 4, 33 points. The set of problems which, while far from an ideal C.P.A. examination, is superior to Part I of the same examination, which appeared in the December issue of the journal The Accounting Review. Unlike problem 3 of part 1, the problems of this set are clearly stated and lead to a solution without imposing on the candidate the added burden of reading the mind of the examiner.

Abstract It is the purpose of this paper to discuss some of the outstanding problems of organization and procedure in the conduct of the accounting functions of the national government above the departmental level, that is to say, of central accounting and control as distinguished from the fiscal administration of individual operating agencies. The theme of this paper is the development of improved practices, and while few citizens are interested in forms of government as such, abstracted from the results they tend to foster, significant progress toward essential improvements in practice in this field is inextricably bound up with changes in the machinery of central financial control. Present practices are the logical result of present organization. The starting point is, then, an analysis of that system. The reorganization bills before the U.S. Congress in 1938 contained sweeping proposals deigned to meet the kind of difficulties that have been noticed here: the divorce of control and audit, vesting the one in an executive agency and the other in an independent office safeguarded as the Comptroller General now is; and the establishment of a Congressional Joint Committee on Public Accounts.

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

Reviews the book "Land Economics," by Richard T. Ely and George S. Wehrwein.

Abstract The problems mentioned in the paper were prepared by the Board of Examiners of the American Institute of Accountants and were presented as the first half of the May 1940 C.P.A. examination in those states using the Institute questions. The candidates were allowed six hours to solve the five problems. A detailed list of problems is mentioned in the paper.

Reviews the book "Theory of Numerical Roots," by Charles E. Tumminello.

Abstract The article discusses about various issues related to fixed and variable costs. In considering the problem of the adoption of uniform accounting principles, it would seem that not enough attention is given to the matter of interpretative reporting. Once the bookkeeping principles have been established, the matter of preparing statements is of the utmost importance. An unwritten law in accounting is that the statements should report exactly what is in the ledger accounts. Under commonly observed accounting principles the resulting statements are useful not so much for what is contained in the body of the statement as for what is contained in the footnotes. It is suggested that it might be well to repeal the above-mentioned law, and concentrate upon the preparation of reports that are suited to the individual needs of the persons to whom they are directed. The division of operating expenses into fixed and variable categories is suggested here only as one step toward making the income statement more useful, and it involves very little change from the statement form which is now being used in three out of five cases according to the quotation from Financial Statements.

Reviews the book "Accounting Research Bulletins."

Abstract While other cases in the journal "The Accounting Review," have considered the matter of depletion policy, an entirely different viewpoint is expressed in a prospectus recently issued by the Inspiration Consolidated Copper Company. This company's case is about net income without deduction for depletion and control through minority stock ownership. The latter company was incorporated in Maine, on December 18, 1911, to own, operate, and develop mines, water rights, waterpower, mineral and other lands, and to own and operate mills, power plants, reduction works, and railways. The company started commercial operations in June, 1915, and continued such operations until May, 1932,when the depression necessitated a shutdown of slightly more than three years, although sales and deliveries of copper on hand were continued. On September 18, 1935, plant operations were resumed. The company produces electrolytic copper, cement copper, and copper concentrates. The ultimate smelting and refining of much of this copper is done in plants of the International Smelting and Refining Company, a subsidiary of the Anaconda Copper Mining Company.

Reviews the book "Federal Income Tax Accounting," by Stewart Y. McMuller.