Knowledge that Transforms

Abstract From the point of view of the methods of exchange, there were three main stages of economic development the prehistorical or early medieval stage of natural economy, where goods were exchanged against other goods; the later medieval stage of cash money economy, where goods were bought for ready money; and the modern stage of credit economy, where commercial exchange was based on credit. If credit has played its important role for so long, then surely the history of book-keeping should supply further evidence on the point. Credit without written reckoning is almost impossible; the first and most fundamental reason for keeping accounts is to aid in remembering what one has trusted to their debtors. Early bookkeeping records fall into two groups, namely, the accounts themselves, and textbooks on accounting. A bad monetary system was still no unusual thing-even England did not put her coinage onto a moderately sound basis until 1696. But the plight of the New England colonies was exceptional. Nominally, their money consisted of pounds, shillings, and pence, each of these units being (in Massachusetts) worth about three-quarters of its British namesake.

Abstract This article focuses on the classroom technique of teaching. A method of gaining the cooperation of the class was by following their lead to a certain extent in the development of the course. Any time a question was asked, even though irrelevant to the matter on hand, if that question pertained to accounting material which would normally be taken up at a later date in the course, the question was answered fully and completely at the time if the author felt the class had sufficient background to grasp the major portion of the explanation. The reason underlying this approach was to develop naturally and informally the subject matter and to make it seem less formidable and easier to understand. Then later on, in following the text, when teachers came upon the same subject the class was reminded that the reading assignment was merely a review of what had been taken up previously in class discussion. It might be mentioned that at the end of the first week, the nomenclature of all first semester terms was taken up and a brief explanation given.

Abstract In 1937 certain justices of a U.S. state supreme court were of the opinion that there is no greater justification from the standpoint of public welfare for a law regulating accountancy than there would be for laws regulating rivet-catchers, janitors, or drain-layers, that the title "certified public accountant" is a trade name and that manifestly it was intended to give a monopoly of the accounting business. Happily, and as irrefutable evidence that progress as well as time marches on, this legal opinion was a minority dissenting one. Nevertheless, the statement that accountancy is a profession can scarcely be said to have attained the freedom from attack enjoyed by the statement that two plus two is four. On the other hand, the statement is now accepted as fact among the enlightened everywhere. One of the most difficult and misunderstood phases of defining the term "profession" is that of distinguishing it from the term "business." This distinction does not imply any superiority of the professions as such over business as such. The two are simply different. As a matter of fact, each is complementary to the other, for the professions could not exist without business and business would surely perish without the professions.

Abstract The title of this paper, College Education As a Requirement for Public Accountants in New York State, is rather ambiguous. It suggests that all public accountants practicing in New York must meet certain scholastic requirements. Of course, this is not true. There is no law in New York State restricting the practice of public accounting to certified public accountants (CPA). The college education requirement mentioned in the title refers to the New York CPA law which became effective from January 1, 1938. This law specifies that candidates for the examination leading to certification must be graduates of colleges or schools of accountancy registered by the State Education Department as maintaining satisfactory standards. To meet satisfactory standards, a school must offer a four-year course, or its equivalent, in cultural and business subjects including 24 hours of accounting, 8 hours each of business law and finance, and 6 hours of economics. This law, which for the first time set minimum scholastic requirements at college level, did not become effective until January 1, 1938.

Abstract The article describes the detailed accounting procedures particularly those in effect in classifying and controlling expenditures in the U.S. Navy Department in general and the Navy Bureau of Ordnance in particular, as of January 1946. During the last two years, the Navy Department has been studying various phases of its accounting procedures with the intention of revising these procedures wherever it seemed appropriate. As a result of this study certain revisions in accounting for the expenditures of the Navy Department were placed in effect as of July 1945. No attempt will be made in this article to compare to any extent the old and the new procedures for expenditure accounting, but the procedures in effect since July 1945, will be described. The author informs that the expenditures of a federal department are subject to various controls outside the department itself. Such controls include those over the accounting classifications used to report money expended, as well as the usual control over the amount of money expended. Exclusive of the General Accounting Office, which is essentially an organization to audit expenditures of the U.S. government, the principal extra-agency controls for expenditures of the Navy Department arise from the U.S. Congress and from the U.S. Bureau of the Budget.

Abstract Reviews the book "Business Leadership in the Large Corporation," by Robert Aaron Gordon.

Abstract This article presents questions on accounting which were prepared by the Board of Examiners of the American Institute of Accountants. These questions were presented as the first half of the certified public accountant examination in accounting practice on November 7, 1943. Time limit and rating of each question is also given. In the first question, from the information given, examiners had to prepare income statements on the accrual basis for the fiscal year ended January 31, 1944, and for the seven months ended August 31, 1944. The second question asked the examiners to prepare working sheet showing balances of accounts of Municipal Garage Revolving Fund of Rhodes City as at February 28, 1945. The third question read that Johnson Meat Packing Co. desired to study its distribution costs which in the aggregate constitute 65% of the total cost of doing business. From the information given in the question, examiners had to prepare an exhibit showing the allocation of total distribution cost per hundredweight of meat products for each size-class of order. The article also provides solutions to these problems.

Abstract Reviews the book "Intangible Assets," by Walter A. Staub.

Abstract The following problems were prepared by the Board of Examiners of the American Institute of Accountants and were presented as the second half of the Certified Public Accountant (CPA)examination in accounting practice on November 8, 1945. One of the questions asked was to prepare a consolidated balance-sheet of Holding Co. and its wholly-owned subsidiary as at July 31, 1944. The response to this began as; on June 30, 1944, A &Co;, partnership (profits and losses shared equally), and X Corp. consummated a consolidation agreement pursuant to the terms of which Consolidated Co., newly organized and incorporated with an authorized capital of 20,000 shares of $100 par value common stock, acquired for its common stock issued in the amount of $950,000 to A &Co; and $550,000 to X Corp. certain net assets of the companies. A &Co; All net assets (including buildings at an appraised sound value of $1,100,000), excluding notes payable X Corp. All net assets excluding buildings. The article includes the balance sheet as response to the question.

Abstract The human side of the auditor is remembered by the client or the persons affected long after the detail of the audit is forgotten. One may not be the best auditor in the world, but he can try to be the most helpful. And, if he makes a sincere effort in this direction, his friendliness and his helpfulness will endear him to the persons involved regardless of the nature of the report he renders. When the author became an auditor, it became his duty to render a report which in effect severely criticized the head of a department because of deficiencies and irregularities existing within his organization. Almost immediately after the report had been submitted, a separate situation arose within his own department in which it was imperative that the help and favor of that same department head be secured. To a friend who knew the course of both events, the author could not refrain from voicing his belief that the two jobs were in utter conflict and that eventually he would be compelled to sacrifice one duty so as to fulfill the other. The case did not work out as he expected, however.