Knowledge that Transforms

This article presents a discussion on the current and future research plans of participants about their organization. Author discusses the Securities and Exchange Commission's interest in the research that is being done in accounting and the extent of participation in it. The Commission's interest in accounting principles and their application, auditing standards, and financial reporting needs no elaboration as effective administration of the Securities Acts demands attention to these subjects. In working at the Commission author encounter various degrees of competence in accounting as in other professional work. Registrants and professional experts look to our prescribed forms and regulations for guidance. The Commission's report form for brokers and dealers is in the form of a financial questionnaire and conforms to the requirements of the New York Stock Exchange. Except for a revision in the minimum audit requirements applicable to monthly investment plans, this form has not been changed since 1942. Any revision of this form requires collaboration with special committees of the American Institute of Certified Public Accountants and representatives of the New York Stock Exchange.

In Holland and West Germany, accounting as practiced is of good quality as confirmed by American and British Accountants. On the other hand in various countries of western continental Europe accounting has developed rather erratically. This article focuses on the accounting training procedures, which enabled Holland and West Germany to forge well ahead of their neighbors in quality of accounting practice? In comparing the training of accountants in Holland and West Germany with American and British systems, several important differences appeared. The considerable emphasis on Economics, Law and Statistics in the course work of those two countries was obvious. Another difference is supplementing the written examinations with oral examinations. A final major difference is that the training period in the two European countries is longer than the U.S. and England. By studying the accounting systems of these two countries the author questions the validity of hurrying the American trainees into certification.

Reviews the book "Accounting Manual for Export-Import Companies," by Jack Goldner.

The article presents several problems related to accounting, which were prepared by the Board of Examiners of the American Institute of Certified Public Accountants and were presented as the second half of the C.P.A. examination in accounting theory on May 19, 1961. Some of the questions were based on the topic of consolidated statements of any company, like, whose financial position is represented by consolidated statements; consolidated statements and beneficiaries; proper consolidated statements of companies, etc. One of the problem states that a company P had 300,000 shares of stock outstanding. It owned 75% of the outstanding stock of T. T owned 20,000 shares of P's stock. The figure of P's outstanding stocks in the consolidated balance sheet has been asked. A question has been asked that is it acceptable accounting treatment to carry investments in subsidiaries not consolidated at cost. A question focuses on the issue of the profit increment of any company, but no valid reasons in support of this growth has been presented to the president by the accountant, as everything seems as stable as it looked when the company started.

This article focuses on a report on the accounting research activities of the American Institute of Certified Public Accountants. The Institute's current approach to accounting research is something new. It originated in a suggestion made by Alvin R. Jennings in October 1957, following which a special committee was appointed to consider the matter. The special committee submitted a report in September 1958, proposing a plan for the organization and operation of the accounting research program and related activities of the Institute. The organization for carrying out research work is made up of two bodies. The first is the Accounting Principles Board. It consists of twenty-one members of the Institute, of whom thirteen are practitioners, three are teachers, three are business men, one is in government service, and one is the director of research of the Institute, Carman G. Blough. The Board is the sole group in the Institute having authority to make or authorize public pronouncements on accounting principles. The Board may make pronouncements on accounting principles which are not based on previously published accounting research studies. If it considers action on a particular matter urgent, it may instruct the Director of Accounting Research to have his staff prepare material for its consideration.

Reviews the book "Accounting in Business Decisions," by Homer A. Black and John E. Champion.

Income can be measured properly only when every attempt is made to segregate and allocate overhead costs to units of output so that costs of products may be matched or associated with the revenues derived from the sale of merchandise. To accomplish this task the generally accepted fixed-variable cost breakdown should be discarded for income measurement purposes. The straight-line amortization of costs associated with fixed assets should also be discarded. In place of straight-line amortization, a unit-of-output amortization plan or an approximation thereto should be used. The approximation would be the cycle overhead concept. The fixed cost portion of semi-variable cost inputs should be reassociated with their variable counterparts and then allocated to the output for which they were absolutely necessary elements of production. Finally, unit costs should be allowed to fluctuate with volume within the range for which semi-variable cost inputs are absolutely necessary costs of production.

Reviews the book "Municipal and Governmental Accounting," 4th ed., by Irving Tenner and Edward S. Lynn.

Reviews the book "Linear Programming and the Theory of the Firm," by Kenneth E. Boulding and W. Allen Spivey.

Reviews the book "National Income and Flow-of-Funds Analysis," by John P. Powelson.