Knowledge that Transforms

Reviews the book "Konjunktur Unternehmung," by Paul Deutsch.

Abstract This paper deals with only that part of the broad subject of depreciation which relates to the method of accumulating adequate reserves through which to retire property that ceases to be useful. The discussion is further restricted to the field of public utilities as they exist in the United States because of the special conditions under which their operations are conducted. Nearly all public utilities are subject to regulation by governmental bodies, usually state commissions. Theoretically, their operations are monopolistic, and one of the primary functions of regulation is to fix rates which will yield a return to investors consistent with that which they could obtain from investments in other industries with similar risks. Refinement in such accounting is in many respects more important than in other industries operating on a competitive basis with prices determined by the law of supply and demand. The early years of public utility history were devoted to pioneering and development work, with comparatively little attention to accounting.

Reviews the book "Investment Trusts: American Experience," by William H. Steiner.

Abstract If one were called upon to express in general terms and briefly the essential nature of the accounting problem, one could hardly improve upon the statement that, in its largest aspects, it is the problem of distinguishing between charges to income and charges to capital. The problem of depreciation, with its economic and accounting implications, has not always received the attention which it receive today. It is because of the relationship between these two problems-the theory and practice of current depreciation accounting and the treatment of depreciation in public utility valuation that the present thinkers suggested the arrangement of a program for their discussion. While accounting theory and practice give preference to the periodical allowance method, the retirement method is not to be wholly condemned. The propriety of a method of accounting for depreciation is to be tested by the general accuracy and precision with which it allocates costs to the proper product units or productive periods and expresses, for general balance sheet purposes, asset valuations.

Abstract The object of depreciation accounting and the object of accounting generally, is to show costs. With this view, the accounts would supply the financial records of a business. Materials which are purchased and used in a particular accounting period, go entirely with their full cost into the operating account for that period. A machine with a life of ten years is purchased no less for operating purposes, and ultimately must be included entirely in the operating costs. If the purpose of accounting is to show costs, then the original cost of the machine must be charged originally to capital account and then distributed or allocated by periods to show the cost of operation for each period of the ten years. The object of public utility regulation is largely rate control. The significance of the accounting, including all provisions for depreciation, depends upon ratemaking policies, how and upon what basis rates are made. The common conception, however, is that rates shall be based on costs. Reasonable rates are rates that cover the cost of service. The rates in the aggregate provide for the aggregate costs. This applies to operating expenses, to maintenance, taxes and to all the ordinary operating items.

Reviews the book "New York Laws Affecting Business Corporations, ed. 10."

Reviews the book "Handbook of Financial Mathematics," by Justin H. Moore.

Reviews the book "The Principles of Money, Banking, and Foreign Exchange and their applications to Australia," by R.C. Mills and F.C. Benham.

Reviews the book "Material Control and Storeskeeping In Machine Shops and Foundries," by Willis Hissler.

Abstract The purposes and methods of cost analysis which may be applied to hospitals are similar to those which are encountered in business enterprise. It is sometimes assumed that the output of a hospital is homogeneous, that all patients receive essentially the same type of service except for the external features, such as room furnishings, selection of food, amounting of nursing acre, and type of medical or surgical attention. But the activities of a modern hospital are varied in character, even in the care of in-patients. In-patients may receive three general classes of service which ordinarily are charged against the patient's account as separate items. These three classes of revenue producing services are board and room, diagnosis, and treatment. Board and room includes the use of a bedroom, three meals per day, and a reasonable amount of bedside nursing care. Diagnosis includes the services of X-ray photography, basal metabolism, laboratory tests, etc. Medical treatment includes the use of such facilities as the operating room, physiotherapy delivery room, etc. None of these services include, of course, the advice and treatment by a private physician or surgeon.