Reviews the book "The Federal Tax Course."

There are many questions asked related to information reported to stockholders. There is no generally accepted answer to these questions. Activity on the part of the United States Securities and Exchange Commission in promulgating rules for registration of new issues and for permanent registration of "listed" securities is directing attention to this vital question. Stockholders may be divided into two classes: "controlling" and "investing." Controlling stockholders are in a position to know what is happening. Such stockholders combine personal ability and judgment with their capital investment, thereby becoming entrepreneurs. Other stockholders are more nearly pure investors though legally they are owners. They possess the legal right to vote on certain matters, but practically, theirs is solely a function of the decision to "buy, hold, or sell." In order to make a sound decision to buy, hold, or sell, an investor must have a comprehensive knowledge of the forces at work tending to expand or contract general business. He needs to have an opinion also of the trend of interest rates.

Definition in its popular sense is the process of delimiting a concept or thing with the object of establishing that usage for a word or phrase, which has significance common to all persons. Definition is also popularly understood to be the expression through which the limits of the concept or thing are set up. Without definition, or with more than a single definition in common use, situations frequently arise where no exact medium of communication exists. Probably every person has had the experience of participating in protracted disputatious only to discover in the end that he and his opponent had been talking different languages. Within the realm of logic, definition has as its purpose the determination of the qualities of universals. Hence it may be said that the necessity of a common language and the necessity of building up an adequate background for the introduction of logical principles place upon one as accountants the burden of exploring thoroughly the requirements of good definition.

The payment of taxes is an obvious and insistent duty. It must be equally obvious that with increasing governmental activities there will be an increase in the tax burden. Legislative bodies in their efforts to balance budgets, will have to look to all available sources for revenue. It is to be expected that they will rely more and more upon the income tax which has proved so successful in a large and rapidly increasing number of states. There are special problems involved in the taxation of incomes by states which are not encountered in the Federal income tax. One of these is the allocation of income from business crossing state lines to the different states having an interest in that business for taxing purposes. In an address by Ogden Mills, Secretary of the Treasury, before the Association of the Bar of the City of New York in April 929, 19392, it was stated that this was perhaps the most important problem involved in the use of an income tax by the states.

The article focuses on standards for accounting. A good deal has been said recently about standards for accountants. The book Financial Reports for Colleges and Universities reflects probably the first attempt in the history of accounting to produce a coordinated, closely integrated textbook of standards, not withstanding the fact that it covers a specialized field. But what about the hundreds of uniform systems of accounts that have been produced since pioneering in railway accounting? That's a fair question. There have been many uniform systems of accounts put out by our public-service commissions, the I. C. C., and a pretty good number of trade associations. Most of them have dwelt extensively on account classifications and how and what to debit and credit. Most of them include provisions for some sort of financial statements. At this stage in the development of accounting, it would be difficult to frame definitions that everybody would agree to. It's the courageous effort to lay down a reasonable set of standards that is needed.