Knowledge that Transforms

Professional speaker Dean Marshall made a notable contribution to business literature in the "Journal of Political Economy" for June, 1926, entitled "The Collegiate School of Business at Erehwon." In a somewhat allegorical form Dean Marshall traces the development of collegiate business education in the United States during the last ten years. He is correct in his statement that nowhere is found exactly such courses as he proposes. But the general trend of collegiate commercial education has followed his plan. His conclusions are evolutionary rather than revolutionary. The evolution of business education is stated in the following words: "The organization of material is now being modified, not because it was a failure, it was a distinct success, but because conditions seem to justify taking the next step. For one thing, in the last decade there has been a great increase in the amount of factual economic material available for use in the high schools and there will certainly be a still greater increase in the future. This seems to justify looking forward to a somewhat more mature and generalized presentation of our economic organization at the junior college level. For another thing, the materials of Instruction which Erehwon has developed in the various subdivisions of this field can now rather readily be arranged so as to give in a single course a more organic presentation of economic organization than was possible in the half-dozen somewhat specialized courses."

Reviews two books related to accounting. "Accounting for the Petroleum Industry," by David F. Moeland and Raymond W. Mckee; "Bituminous Coal Mine Accounting," by W. B. Reed.

This article presents developments related to accounting departments and teachers in universities in the U.S. Charles Leveson, a former Instructor at University of California at Los Angeles, California, has recently paned the California C. P. A. examination and will receive his C. P. A. certificate when he has satisfied the experience requirements. Howard S. Noble, chairman of the accounting department of the same university, is leaving the department in February to spend the balance of the academic year in London, England in study of cost accounting and the public accounting profession in England. The enrolment in the second-year course in advanced accounting has shown a one hundred per cent increase this year. Paul P. Cooper, who has been an assistant in the School of Commerce and Administration in University of Chicago for the past two years, has been placed in charge of the accounting work in the extension department of the University of Pittsburgh. W. F. Graham, formerly professor of economics at Knox College and also teaching assistant at Chicago, has been appointed instructor in accounting.

Accounting and statistics, are similar in their uses, for both are used as tools of control. They are also similar in their method, bearing, so to speak, a family resemblance, for accounting and statistics may be regarded as offspring of the single parent, quantitative method of analysis. The quantitative method of analysis has been very successful in the natural sciences, because most natural phenomena can be easily segregated and measured. This method has been the basis of many of the important scientific discoveries of recent years. In fact, it has been asserted that progress in the natural sciences has always waited upon the development of adequate quantitative technique. In the social sciences also it has been maintained that adequate control can only be obtained from better quantitative treatment of the phenomena. It is, of course, often difficult to measure economic phenomena accurately, nevertheless the measurement is necessary. The business enterprise organized for private profit has accordingly developed a technique of measuring and recording it. Facts, and business policies are now formed primarily on the basis of the quantitative data available in accounting and statistical report.

This article presents two fables to illustrate some principles of accounting. A natural series of events described in one fable put into the hands of a character, called T, the characteristic elements of real double-entry book- keeping. This man, intelligent and observant by hypothesis, could not have been long in finding out that every transaction gave rise to a double recording, that every sum written in the debit of one of the two accounts figured also in the credit of the other, and that as a consequence, the total of the debits were equal to the total of the credits, and finally, that the debit balance of one of the two accounts was in reality, and of necessity, equal to the credit balance of the other. The principles of double-entry were thus clearly formulated at first without the men who conceived them comprehending their significance. The other fable tells that there was in the old Roman law, a very definite procedure of contracting a binding debt and a set form of preliminary conversation. There was an equally definite procedure for transferring a debt to a third party.

Reviews the book "How to Read a Financial Statement," by Herbert G. Stockwell.

The article presents information on the concept of developing a relation between economics and accounting. According to the author, the precipice on the economic side is the concept of consumers' cost, whereas the considerably lower precipice on the accounting side is the present limited concept of inventoriable values. Profit has been defined as that increment of consumers' cost value which is ordinarily in excess of the conversion value created for consumers' needs by the merchant or manufacturer. It has been assumed that only those merchants and manufacturers who do create, through their operations, consumers' cost values will remain in business, because business cannot continue without profit. The theory of marginal utility finds its application and, sooner or later, produce a proper balance between the demands for economic goods and the activities that satisfy the demands. The article summarize that finished inventories, or merchandise for sale, should Include all the values created by the business process, except the profit which is the additional value created by the consumer's act of purchase.

The article presents information related to students preparing for the Certified Professional Accountants examination in the U.S. It has been viewed that the ideal accounting problem should be free from vague, obscure, and ambiguous statement; it should not be too lengthy; and it should permit of solution within the allotted time. Problems prepared by university instructors usually meet these requirements and are, therefore, excellent teaching material for the preparation of students for the accounting profession. But, because of their very virtues such problems are often not suitable as preparatory material for the professional examination; for, on such examinations, the candidate is usually confronted with problems which contain vague and contradictory statements, or mathematical errors, or are so lengthy as to be impossible of solution within the specified time. In a course In accounting problems planned to meet the needs of students, equal emphasis should be placed upon the application of accounting principles as applied to various businesses and upon the art of solving problems. It is not the function of a university to prepare its students for examinations into such professions as law, accounting, or medicine. The aim of the collegiate school of business is usually to prepare its students for business or for some special field of business.

Reviews the book "Auditing Procedure," by William B. Castenholz.

The accounting course is distinctive in four respect. Probably the least important of these lies in the nature of the departmental organization. The business courses are divided into two departments, based on operating and non-operating business functions. The former include marketing, purchasing, and production, the latter, accounting, statistics, and finance. One have found that the general subject matter in the department of accounting and finance harmonizes with excellent effect, aid that courses are given with a minimum of overlapping material. Internal statistics are the product of the system of records in any given business. External statistics are largely the product of records of other companies. In discussing problems in business finance, therefore, such things as financial conditions, ratios and application of funds, and bond issues, are studied without the usual handicap of distinguishing between accounting method and financial policy. In the introductory course of the department the students get training in the preparation of a budget, the keeping of accounts, and the use of banking facilities.