Abstract There has been considerable public criticism of what appeared to be unduly high costs for the administration of public assistance and relief. Administration expenses have generally been contrasted by legislators and the public with the cash payments made directly to public assistance beneficiaries. Grouping and contrasting expenditures for assistance, on the one hand, and administration, on the other, have encouraged the assumption that costs of administration represent merely the cost of distributing the money expended for assistance. Persons familiar with public assistance operations realize that other functions are also performed. They realize further that the cost incurred for investigating cases, which never receive relief, may be more in the interests of the taxpayer than haphazard and inappropriate disbursements to individuals not entitled to benefits under the public assistance program. The standard classification of public assistance costs is a joint recommendation of the American Public Welfare Association and the Social Security Board. Official participation by staff members of the Social Security Board made it possible to incorporate the thinking and recommendations of the experts concerned with national phases of public welfare administration and accounting.

Abstract The executive committee of the American Accounting Association prepared and distributed in June 1936, a Tentative Statement of Accounting Principles underlying corporate financial statements. The committee attempted to set forth some of the bases upon which accounting statements rest. It was hoped that their publication would arise discussion and that a more comprehensive formulation will develop. The statement is an attempt to formulate theory, which will explain facts of accounting practice. The committee did not attempt to cover every phase of accounting theory. They limited themselves to special problems of the preparation of financial statements of the private corporation. Moreover they treated only three aspects of corporation accounting, which they classify as: the determination of costs and values; the measurement of income and the differentiation of capital and surplus. The entire statement consists of twenty propositions. Many accounting practitioners and writers have argued that it was illogical to use discounted future income as the basis of accounting valuation.

Abstract The article highlights that the general advantages of uniform accounting among hospitals are the same as for business enterprises, namely, comparison of operating efficiency between hospitals and periods of time, and establishment of effective relations with the public served by the institutions. Hospitals are a combination of commercial enterprise and social agency. As a commercial enterprise a hospital may provide services to customers, that is, patients, at prices presumably based upon the costs of the services rendered. As a social agency a hospital may serve a client or customer, regardless of his ability to pay, the costs being met by some other individual or group. This dual aspect of hospital service pervades every problem of administrative practice or public relations. Governmental hospitals are, for the most part, conducted strictly as social agencies with the direct beneficiaries paying none of the costs. Privately owned hospitals, on the other hand, are conducted strictly as commercial enterprises, with the patients paying the full costs including the fixed charges, and with charity provided only by compulsion through the uncollectibility of accounts receivable. The incorporated non-profit hospitals combine both the commercial and social aspects.

Abstract The costs of medical care have been the object of study for several years by a research staff engaged by the Committee on the Costs of Medical Care. The Committee is composed of fifty members, including physicians, dentists, nurses, educators, social workers, social scientists, labor leaders, and industrialists. The purpose of the study has been to determine the amount and distribution of the present costs of medical care, with a view to suggesting methods by which costs of production could be reduced, or by which the financial burden of sickness could be more equitably distributed. Many other individuals and agencies also have been concerned with studying the costs of medical care during the last several years, and the committee has drawn upon their research in the attempt to deal with the problem. Monographs on special subjects have been presented from time to time, and the publication schedule of the committee includes twenty-six titles. Sometime during the year 1932 there will be issued a final report composed of an analysis and interpretation of the findings, with recommendations for the correction of undesirable conditions.

Abstract The purposes and methods of cost analysis which may be applied to hospitals are similar to those which are encountered in business enterprise. It is sometimes assumed that the output of a hospital is homogeneous, that all patients receive essentially the same type of service except for the external features, such as room furnishings, selection of food, amounting of nursing acre, and type of medical or surgical attention. But the activities of a modern hospital are varied in character, even in the care of in-patients. In-patients may receive three general classes of service which ordinarily are charged against the patient's account as separate items. These three classes of revenue producing services are board and room, diagnosis, and treatment. Board and room includes the use of a bedroom, three meals per day, and a reasonable amount of bedside nursing care. Diagnosis includes the services of X-ray photography, basal metabolism, laboratory tests, etc. Medical treatment includes the use of such facilities as the operating room, physiotherapy delivery room, etc. None of these services include, of course, the advice and treatment by a private physician or surgeon.

Abstract Replacement-cost is the basic value which properly expresses business capital and income. It is not always easily determined, at times can only be approximated. But even the arguments in favor of other bases of valuation are predicated on the assumption that they are very near to replacement-cost. The replacement-cost of an asset is the estimated expenditure necessary to secure another similar in nature and equivalent in economic value. It frequently is more or less than original cost, usually it varies from sale-price, which is the amount realizable through disposal. The importance of replacement-cost in the balance sheet and the statements of business operations will be illustrated with respect to the accounting entities namely merchandise inventories, fixed assets, trading profit and fixed charges. The replacement-cost of merchandise is the price for which merchandise of similar kind and sales value could be brought into the stock rooms of an enterprise. It is the so-called market-value contemplated in the widely quoted and applied cost-or-market rule of evaluating merchandise inventories.

Abstract The determining factor in the establishment of any given business policy is a comparison of the additional income and the additional cost expected to result therefrom. If the former exceeds the latter, the action based on the policy is profitable to an enterprise, regardless of the costs which have been incurred previous to any single business decision. The foregoing principle applies to any given business decision, ranging from a produce dealer's problem of accepting an additional order for 100 pounds of butter at a given price, to a capitalist's problem of whether to build and operate an automobile factory. Differential costs may be defined as the costs which must be incurred if an additional unit of business activity is undertaken, and which seed would be incurred if this additional unit of business activity is not undertaken. All other costs may be designated as residual costs, from the standpoint of that particular portion of output or group of operation, the differential cost of which is being calculated.

Reviews the book "Budgeting and Cost Analysis for Hospital Management," by Leon E. Hay.