Reviews the book "Management Principles and Practices," by Dalton E. McFarland.

In 1825, famous "trust fund theory" was given which states that the capital stock of a corporation constitutes a trust fund for the payment of its debts to creditors. This theory has had important implications for accounting. The accounting treatments accorded the payment of dividends and the purchases by the corporation of its own outstanding stock are representative ones. Others are the accounting for premiums and discounts on the issuance of stock and the presentation of all types of surplus on the balance sheet. The purpose of the trust fund theory of capital stock was to cause the assets originally paid in by the stockholders to remain in the corporation as a buffer for the protection of the creditors' interests. Actually, capital stock itself cannot be a trust or a fund held in trust. Neither can the assets represented by the capital stock account constitute a trust. The corporation is not a formal trustee of the contributions made by shareholders, and the creditors are not beneficiaries. It was never intended that the assets contributed by the stockholders should remain in the corporation in their original physical character.

The article focuses on various problems, which were prepared by the Board of Examiners of the American Institute of Certified Public Accountants (CPA) and were presented as the second half of the CPA examination in accounting practice on May 14, 1959. The suggested time allowance for each question is also given in the article. In one question, details of a Washington D.C.-based hypothetical company namely Y & P Music Co., which operates two retail music stores, one located in Seattle, Washington State and the other in Tacoma, Washington State is provided. The examinee is required to adjust entries to be recorded on each set of books correcting the account balances in the question. In another question, the estimated balance sheet of a hypothetical company the Claxton Machine Co. Inc. is provided. Claxton Machine Co. Inc. maintains and supplies the raw materials for machines, which it rents out on one-year contracts. The charge for service and supplies is billed monthly and is based on usage, $8 for each 100 units as measured by meters with a minimum monthly charge of $160 per machine.

The article presents a list of problems that were prepared by the Board of Examiners of the American Institute of Certified Public Accountants (CPA) and were presented as the second half of the CPA examination in accounting practice on November 6, 1958. The candidates were required to solve problems 1, 2, 3 and 4 and either problem 5 or problem 6. The total weight assigned to this section of the examination in accounting practice was 50 points and the examiners point out that the suggested time allowances given below was approximately proportional to the point value of the various problems.

This article presents accounting problems which were prepared by the Board of Examiners of the American Institute of Certified Public Accountants (C.P.A.) and were presented as the first half of the C.P.A. examination in accounting practice on November 5, 1958. One of the problems says that Lynn and Kay, architectural designers and interior decorators, combined May 1, 1958, agreeing to share profits, Lynn, two-thirds, Kay, one-third. Lynn contributed furniture and fixtures, $3,000, and cash $2,000, Kay contributed cash, $500. They plan to submit monthly bills and make the following arrangements with their clients, the salaries of draftsmen and shopper who are paid on an hourly basis, shall be billed to clients at the hourly rate for time spent on each job, plus 125% for overhead and profit and plus ft% for all payroll taxes. Partners' time on jobs shall be billed at $10 an hour. A 10% service fee shall be charged on purchases of furniture, drapes, etc., installed on the jobs. There will be no service fee on taxis, telephone and other expenses identifiable to jobs and charged to clients.

Featured here are problems that were prepared by the Board of Examiners of the American Institute of Certified Public Accountants (CPA) and were presented as the first half of the CPA examination in accounting practice on May 13, 1959. Examination pattern involves the division of the whole duration of the paper among three divisions. The first division of questions involve objective type of questions aimed at measuring the skills of the examinee related to federal income taxes under the U.S. Internal Revenue Code, 1954. The second division is aimed to test the examinees skills in the maintenance of check book and cash book of a law firm whose owners have decided to dissolve their partnership. Information regarding capital investments, profits and expenditures have been provided. Another question requires the examinee to calculate inventory costs transferred from different product lines; for a company manufacturing different industrial products. Questions demanding the preparation of a balance sheet and working capital fund are also presented.