Sound budgeting, sound accounting and sound auditing are important for any governmental or institutional accounting. Governmental and institutional accounting deals with the principles and practices of accounting in connection with groups of people in society who are united in non-profit undertakings for the purpose of rendering services of particular kinds to their groups specifically and to society generally. The principal accounting problems of governments and institutions include accounting for revenues in accordance with restrictions placed thereon by legislative bodies, donors or governing boards, accounting for the appropriation, encumbrance and accrual of expenditure items in each of various funds. Many municipalities in the U.S., particularly the smaller ones, are finding it impractical to accrue revenue items and, hence, are accounting for revenues on a cash basis. Many problems relating to system installation, internal accounting control, external auditing, etc. have not been solved by governmental and institutional bodies in a manner acceptable to accountants generally.

The question of the distinction between operating income and capital gains was raised at the recent meetings of the American Accounting Association. Capital gains or losses are a manifestation of imperfect income measurement and result because of the requirement of modern business for periodic computation of net profit or loss. Capital gains or losses are composites of imperfect estimates of depreciation, imperfect allocations of costs, imperfect separation of capital and revenue expenditures, disregard of or imperfect adjustment for price level changes. While there is no distinction in theory between capital gains and operating income, there is a legal distinction for income tax purposes. The legal distinction is important since the tax on capital gains is less. The maintenance of the real capital of an enterprise in the face of a rising price level requires the continual upward adjustment of owners' permanent equity accounts as long term assets are consumed. This is necessary in order to restore to the business real purchasing power equivalent to that used up.

Fixed assets are, in a sense, deferred charges to operations. It is from this viewpoint that they should be valued on the balance sheet of a "going concern."Recently there has been a change in emphasis on the part of accountants from the balance sheet to the income statement. In line with this change of emphasis, fixed assets should be given balance-sheet values in line with their efficiency as producing agents. The efficiency of each fixed asset has to be determined by its comparison with other available assets that could be utilized to perform the same service. The sacrifice of depreciation and interest having been made at the outset, an asset value is set up on the balance sheet. It is thus evident that the balance sheet amount is the present value of future periodic charges on account of depreciation and interest. If it is desired that the periodic charges for depreciation and interest total the same for each period, the compound interest or annuity method of computing depreciation and interest should be used.

Accounting is involved in practically every stage of termination. This must necessarily be so, since accounting is the science of income determination and capital valuation. Whenever profits or values are involved accounting is a must. In termination settlements, the government has adopted a liberal and practical attitude. Accounting principles need not always be rigidly applied in the final settlement. Cost principles governing termination settlements are not applied in the same manner as in settling claims under cost-plus-fixed-fee contracts or facilities contracts. The settlements are more liberal. Furthermore, termination settlements are not complicated like income tax and renegotiation. It is the desire of the government in the U.S. that war contractors, receive speedy and equitable final settlement of claims under terminated war contracts. This desire is expressed by the U.S. Congress in the Contract Settlement Act of 1944 which became effective on July 21, 1944. Provisions in the Act indicate the determination of the government to be fair and square in the settlement of terminated war contracts.

A course in accounting systems is usually offered by a university which permits students to specialize in accounting. The subject, "Accounting Systems," is at the same time one of the most difficult and the most valuable that the student specializing in accounting is called upon to master. Its difficulty and also its value lies not so much in its content as in its method. A good course in accounting systems is perhaps the most rigorous and comprehensive test to which a student's knowledge of accounting principles may be subjected. From the standpoint of methods followed in teaching accounting systems, there are no doubt many approaches in present use. No study has been made, in so far as is known, of the methods pursued in teaching courses in accounting systems in the various schools of business. In the opinion of the author, however, there are at least three possible approaches. In the first place, one may present the subject as a course in methodology. That is, from the standpoint of the method which should be followed by an accountant in undertaking the preliminary investigation and subsequent installation of an accounting system.

The article focuses on the Clark Plan of retail accounting. In March, 1934, the Board of Directors of the National Retail Dry Goods Association voted favorably on the adoption of the Clark Plan, embodying what have been called radical changes in Retail Accounting. The plan as finally adopted is not as radical a departure from present methods as was the original plan proposed by a controller, Carlos B. Clark. While the Clark Plan is optional, every inducement will be made to have stores adopt it. Since the Clark Plan is thought by some to be a revolution in retail accounting, comparing in importance with the adoption of the retail inventory system some years ago, accountants and particularly teachers of accounting should be somewhat familiar with it. The following comments, while not an exhaustive treatment of the subject should serve to clear up some misconceptions and also to define some of the issues involved. The effect upon business generally of recent laws and administrative policies of the government at Washington D.C. has been far-reaching.