Knowledge that Transforms

Abstract Reviews the book "Accounting Developments During the Present Century," by Walter A. Staub.

Abstract Reviews the book "Accounting Fundamentals," by Richard E. Strahlem.

Abstract The purpose of this article is to statistically reflect some important elements of auditing. According to the author, the selection of suitable classification subdivisions for complex data always presents a difficult problem. Here the author separated the data to segregate auditing and non-auditing problems. The auditing questions were subdivided on the basis of two distinct methods of approach. One type of question dealt with questions involving definition, purpose, judgment, evaluation, selection, and explanation. The second type pertained mainly to matters of auditing procedure, program, and method. It has been insisted in the article that since auditing is a critical scrutiny of the facts which underlie the accounting statements under study, it is natural that professional examinations should give a prominent place to questions designed to reveal the candidate's knowledge of the traditional ways of making such study. The auditing questions are classified and summarized in the tables presented in the article.

Abstract The term "cartel" is used here to include all kinds of horizontal associations of independent firms with the purpose of influencing market conditions through common action. As long as cartels limit their activities to term-fixing or price-fixing they do not have any accounting problems of their own. The situation is different when they begin to regulate production or sales directly. Although the law does not permit such organizations in the U.S., shortage of materials and the need for allocating their use create problems which in some respect resemble those confronting cartels. A discussion of some cartel accounting questions may, therefore, have more than academic interest. The cartels under consideration may be conveniently grouped into those which merely fix output or sales of their individual members, and those which in addition act as central distributing or selling agencies. For all of them a threefold task in involved, first, to determine the relative participation of the individual member, the quota; second, to decide upon the total volume to be produced within a given period; third, to control production or sales of the members, to take care of deviations from the scheduled volume, and, for syndicates, to distribute the collected receipts among the partners. It is particularly this last function which calls for an elaborate cartel accounting system. Estimates of future demand based on present market conditions and businessmen's experience are the main factors involved.

Abstract This article focuses on inventory valuation in profit and loss accounting. Some limitations of the proposed change in inventory treatment should be made clear. It is apparent that the process of charging opening inventory to cost of sales at market price and pulling out closing inventory at cost eliminates only those fluctuations in value which properly apply to previous periods. Changes in the market value of goods occurring between either the opening inventory date or the date of purchase and the date of sale are not isolated. They are allowed to affect operating results, since they could not be separated satisfactorily from normal operations for the period. The purpose is to isolate the results of operations for this period. In times like the present, when prices are shifting rather rapidly, the proposed change in inventory accounting would offer its greatest service. The balance sheet would be made to give a truer picture of the current position, and the current ratio would be more significant. Furthermore, the operations for each accounting period would be set forth more nearly divorced from those of other periods. The operating statement would thus become a truer index of current operating efficiency.

Abstract Almost all the states at present require examination in the subjects of accounting theory, accounting practice, auditing, and law. In some states separate examinations are given in each subject. In many others accounting theory and practice are combined as one for grading purposes even though the examination is given in two parts. In still other states, subject matter from all these fields is included in the examination given, although not separately listed in the same four divisions. A few states give examinations in these subjects and additional examinations in other subjects. Since forty-six of the fifty-two states and territories use the American Institute of Accountants' examination questions, it may be said that the stated objective with reference to subject matter is now substantially reached. Laws and regulations, however, do not reveal the extent to which uniformity actually exists. Reference to the four general subjects is made either by law or regulation (mainly in the law itself) in forty-six states. Many refer to the combination of accounting theory and practice as one subject; a few refer to the use of American Institute examination questions; some list the four major subjects and also state that other subjects will be covered if deemed necessary or desirable by the board.

Abstract The following problems are the second half of the November, 1942, C.P.A. examination prepared by the Board of Examiners of the American Institute of Accountants. The examinee was given six hours to solve all problems. The problems were weighted as follows; problem 1, 14 points; problem 2, 16 points; problem 3, 20 points. Samuel Gifford died on July 18, 1941. The executor, having paid all debts, bequests and expenses and expecting no more transactions after June 30, 1942, desired to ask the court for his discharge and for an order to turn the remaining assets of the estate over to the trustee named in the will. On June 15, 1942, the executor sold one half of the AB Company preferred stock for $13,500 and the Parkhurst Transit Company common for $200. Other receipts during the executor's administration consisted of rents, $4,526; dividends, including those declared before the testator's death, $4,025; collection on deposit in closed bank, $465. All receipts were de posited by the executor in the First National Bank. Property taxes, accrued at date of death, were $1,575.20; and household debts on that date amounted to $2,111.00. The executor paid $20,000 bequests and $1,000 executor's fee as specified in the will; also $18,262.50 estate tax, $3,336.95 property taxes including those accrued at date of death, $750 funeral expenses, $88.50 court costs, as well as the household debts. The widow received allowances to the aggregate sum of $4,800 as directed by the court.

Abstract Reviews the book "Introduction to Accounting," by Louis O Foster.

Abstract Reviews the book "Intermediate Accounting," by E. I. Fjeld and Lawrence W. Sherritt.

Abstract In this article, the moot question revolves around the correct spelling of accounting scholar Paciolo's name. The author says that his own interest in Paciolo is purely culturally historic and linguistic and the attempt is entirely due to the request and desire of Edward Peragallo to write the spelling of the name of a great figure in the history of accounting from the jungle like forest of confusion into which it has fallen. It is interesting to note that those scholars who bothered most with the name, not on the basis of linguistic analysis but on written evidence alone, came to the same conclusion. The other variant spellings, Paccivoli, Pacinolo, Pacimolo, etc., are all evident mistakes of careless secondhand transcription, of misreading, or of phonetic misapprehension. One must accordingly leave as the correct spelling of the name the Latin "Paciolus" and the Italian variants, "Paciuolo" and "Paciolo." Of these latter two, the spelling "Paciolo," used by Paciolo himself and by his contemporaries and in direct accord with the development of the Italian language, is by far the more preferable.