Reviews the book "Business Budgeting and Control," by J. Brooks Heckert.

The purpose of this article is to describe the U.S. War Department account classification and to show the use made of each element of the code, as of July 1947. It must be remembered that the War Department comprises only one component of the U.S. government and, consequently, must necessarily follow accounting procedures prescribed by the U.S. Bureau of the Budget and the U.S. Treasury Department. At the same time it must prepare its accounts to suit the eagle eye of the U.S. General Accounting Office which is to audit the accounts of the approximately twelve hundred army disbursing officers. Consequently, War Department account classification is a result of normal federal procedure plus additions required by operating conditions within the department. The complete classification explained in this article is designed to provide a basis for budgeting, accounting and reporting, designating accountability and responsibility, and exercising managerial control over finances. Each transaction of the U.S. government is related to some one fund of which there are three major categories, namely, the general fund, special funds and trust funds.

Many accountants have long been dissatisfied with the valuation hypothesis. It has not only resulted in wide variations in actual practice but has failed to provide principles from which we can reason logically and arrive at conclusions that correspond with observable facts. As the accountant faces unfamiliar problems, he cannot meet them by applying principles of valuation; he has to learn how to handle these individually. His first ideas on accounting are conveyed to him in terms of valuation; but he soon learns that accountants do not usually practice valuation but account for a certain type of costs. The valuation hypothesis can be proved to be false by demonstrating that it does not correspond with observable facts. All one need do is consider his own experience, and he will realize that accountants practice valuation only in exceptional instances. The Executive Committee of the American Accounting Association has for many years been working on the unsatisfactory situation in accounting theory, and as is well known has produced two reports, both considered tentative. In these reports the Committee has adopted, among others, two hypotheses: (1) that accounting is primarily a process of accounting for monetary outlay costs; and (2) that it is a process of matching costs with revenue.