Knowledge that Transforms

Abstract A professional qualifying examination such as a state bar examination for lawyers or the Certified Public Accountant (CPA) examination for accountants, can have one, or both, of two purposes. The examination can be designed for the purpose of determining those whose basic technical knowledge and ability are adequate to warrant their being qualified as members of their chosen profession and held out by that profession as: members; or the examination can be designed arbitrarily to restrict membership. Few, if any, professional examinations are deliberately planned for the latter purpose, but in so far as the form or content of any qualifying examination is such that the resuits do not give a fair evaluation of the real professional abilities of the candidates, to that extent it is serving no purpose other than to restrict membership. The CPA examinations have been honest, in good faith, attempts to qualify as Certified Public Accountants only those candidates having a thorough knowledge and grasp of approved concepts, techniques, and procedures of their profession.

Abstract In accounting as in almost no other field can the extremes of good and bad education be illustrated. Education in accounting should be subjected to the test of a critical theory. Former theories of education stresses the classical in the sense of the literary, linguistic and the so-called cultural disciplines. Education was conceived as specific training for the work to be undertaken after graduation from school. Great danger lies in this educational philosophy. For purposes of professional education the subject matter should be classed in two categories. While the difference may be one of degree, the distinction at some level is not only sound, it is indispensable. First, there is the skill or knowledge which the student can postpone learning, in the interest of total cost and economy in learning, until he needs to use it. Most of this training is more specific and extensive than colleges can reasonably hope to undertake. Second, there is the skill or knowledge which the student can learn with profit long in advance of his need to use it. Great economy in education can be attained generally if education on the higher professional level is confined to the latter.

Abstract Reviews the book "Management of the Federal Debt," by Charles C. Abbott.

Abstract The question of the accountant's responsibility was discussed in an article titled "What is the Accountant's Proper Responsibility?," which was published in the November 1946 issue of "Journal of Accountancy." In that article attention was directed to the fact that up to the present an accountant may dodge the responsibility of stating that his examination lacked some of the standard auditing procedures carefully developed over the past fifty years. He may state that he did this and that in the way of verification and omitted something else, but, how is the layman to know whether what he did constitutes an audit on which reliance may be placed. The expression of an opinion by an accountant in connection with financial statements means that it is a financial picture upon which management and third parties may rely. Punishment may be inflicted if he gives this opinion without an adequate examination. But the accountant who makes a superficial examination and who wishes to dodge responsibility for it may hide in a fog of words.

Abstract This brief survey will serve to indicate that cost accounting is not a newly developed off- spring from its parent, the accounting process, but rather has been going through its "growing pains" for many decades. In view of its long and interesting evolution, the Committee feels that cost accounting now occupies such a prominent place in the business community that it is opportune and highly desirable for its principles and concepts to be stated in tentative form. Or, to express it differently, the Committee believes that cost accounting has now "grown up" sufficiently to warrant the serious attention which the Committee has given to its area and purposes. The present paper, therefore, will attempt to set the stage for those to follow, and show that many of the cost accounting developments which are often considered to be modern have their genesis in many past decades. It should be emphasized, however, that only the highlights of this evolutionary aspect of cost accounting can be presented in the brief time available. Elaboration on these highlights must be postponed to some future time.

Abstract Reviews the book "Management of the Federal Debt," by Charles C. Abbott.

Abstract The increased adoption of employee bonus plans by business corporations and the increased amounts paid out under such plans warrant consideration of the nature of these payments and the proper method of reporting them in the income statement. The possible variety of employee bonus plans is almost endless, and it is therefore difficult to consider them in the abstract. Hence the following assumed bonus program, patterned somewhat after an actual case, is presented as a more concrete basis for analysis. This program calls for four separate bonuses paid to four different, but in one case overlapping, employee groups as follows: (1) Factory Workers' Bonus:-a semi-annual bonus to all qualified factory workers (the qualification requirement under all four plans is six months of uninterrupted service) based upon ability and length of service. (2) General Employee Bonus:-an annual bonus to all employees including factory workers but excluding employees covered under the general staff and executive bonus plans. (3) General Staff Bonus:-an annual bonus to all executive officers and department heads except the president and the chairman of the board of directors. (4) Executive Bonus:-an annual bonus to the president and the chairman of the board of directors.

Abstract There is no doubt but that the importance of the services which professional accountants are capable of rendering to the community is not fully appreciated in the United States. While there has been substantial improvement in this connection during the last twenty years, much remains to be done. The paper argues that one important reason why accountants are not better recognized is that they have not been rendering all the public service of which they are capable. In particular, they have as a profession, and as individual members of it, been backward in advising the public of facts of which our practitioners should be more cognizant than any other segment of the population. The remarks up to this point relate to the kind of additional activities which might be undertaken to increase the accountant's standing in the community-and hence their prestige with young men about to choose a career. This sort of thing can help accounting only over the long future. For the immediate objective, it is necessary to give additional publicity to the importance of the work which accountants now do. It is particularly necessary that it should be done in terms that will add some atmosphere of glamour to the work of the profession.

Abstract Reviews the book "Elements of Economics," by Edmund Whittaker.

Abstract Reviews the book "Elementary Statistics," by Hyman Levy and E.E. Preidel.