Knowledge that Transforms

Abstract Reviews the book "Economics," by John Ise.

Abstract The Revenue Act of 1942 established legislation regulating the manner of taking war losses. The right to deduct such losses in computing taxable income had already existed under the casualty-loss provisions of the income tax law. After the World War I, property losses were difficult to establish, because there was a lack of specific provisions in the law and regulations, and this gave rise to delays, complications, and numerous inequities. Section 127 of the 1942 Act was provided to avoid a repetition of the previous experience. The taking of deductions was facilitated by allowing them on the presumption that the property had been destroyed or seized. The major point to be observed is that the new provisions made it possible for taxpayers to get the benefit of the loss deemed sustained in an enemy country at the approximate time deemed sustained, without actually proving the destruction or seizure of the property involved. At the time of writing the 1942 Act, it was recognized that after the war many properties deemed destroyed would be recovered in whole or in part.

Abstract Reviews the book "Practical Management Research," by A.R. Wiren and Carl Heyel.

Abstract Reviews the book "The Fundamentals of Accounting," by Donald H. Mackenzie.

Abstract To the theorist, the subject of surplus, particularly that of paid-in surplus, is a fertile field of study, and during the past ten years much of value has been written on the subject, as of January 1946. It is not the intention of the author, however, to explore the realms of theory or the implications of theory. Rather the author is merely interested in satisfying his curiosity as to the precepts or dicta of the laws of the various U.S. states in regard to such net worth items as no-par stock, paid-in surplus, cash dividends from paid-in surplus, and discount on stock. Pennsylvania and Colorado permit the allocation of a portion of amounts received only in the case of no-par common stock, any allocation of no-par preferred being prohibited. Thirty-two states deny the right of corporations to issue either preferred or common stock at a discount. States in which the subject of the sale of par value stock at a discount was not touched upon in the statutes are Connecticut, the District of Columbia, Hawaii, Maine, Mississippi, Nevada, New Mexico, North Carolina, Puerto Rico and Wyoming. As a conjecture, it would seem that in these states the common law rule would follow that the stock could be sold below par, but that the buyer would be liable for any unpaid balance in case of insolvency.

Abstract Two papers in the July 1946 issue of the journal The Accounting Review were originally presented before the May meeting of the American Association of Collegiate Schools of Business in the U.S. They were, The Public Accountant of Today and Tomorrow, by John W. Queenan, and Education for Public Accounting on the Collegiate Level, by Dean H.T. Scovill. In the discussion that followed the presentation of the papers, Professor W.A. Paton considered the topic treated by Dean Scovill and later made his remarks available for use in this article. The history of cost accounting has not yet been written. But when it is, its roots will be found reaching a long way back in time. And the wonder will be that, with such a start, it could take so long to evolve into the still uncoordinated cost accounting procedures that were typical of the nineteenth century. It is easier to recognize the factors which in the twentieth century produced an extraordinary acceleration in the development of accounting systems in general and cost accounting in particular, than it is to understand why a good start was so slow in gathering momentum.

Abstract Economic theories, however interesting, and however learned the economists who advance them, do not become economic laws, change economic factors, or create economic results. Economic laws, factors, and results arise under, and are influenced and determined by established economic systems. Economic systems, in a democracy, are established or are initiated by the will or choice of the people who are affected thereby, and because of this fact they exist within and are protected by a legal framework consisting of established law as to property and property rights. Economists cannot change these established laws as to property or property rights by merely ignoring economic factors created as a result thereof. Original cost is discussed as a rate base, or as a measure of the present value of the property rights of the private owners of utility properties dedicated to public service. In any discussion of "original cost" it must be remembered that the term "original cost," as used in regulatory matters and as defined in the uniform system of accounts which provides for its segregation does not mean actual cost, but that it is, instead, a descriptive title applied to a mere subdivision of the actual arms-length cost.

Abstract Reviews the book "Contemporary Accounting."

Abstract Reviews the book "Excess Profits Taxation," by Kenneth James Curran.

Abstract The article presents a brief history of how loose-leaf records of today originated. The year 1946 may be said to mark the fiftieth anniversary of loose-leaf bookkeeping although the first recognized loose-leaf system, the Page-McCleery Order System, had been sold in Chicago, Illinois, at least ten years before in 1896. For many years it had been standard bookkeeping practice to enter orders in a book, fill the orders, and then post the ledger from the order book. Edward C. Page and J. B. McCleery conceived a basic idea whereby salesmen's original orders, recorded on uniform multiple sheets, were inserted in a sheet-holder as received, and, without transcription, were used for selecting, shipping, and billing the order. With the introduction of the new type of ledger, manufacturers who sold their services and loose-leaf systems direct to businessmen sprang up like mushrooms. Competition was keen and often became bitter. Later on, a ruled ledger form and an index were introduced, both on order blank paper which were placed in a transfer binder sold with the company's order system outfit.