Knowledge that Transforms

Abstract The first question an accounting student should put to himself or herself, is, why he is thinking of preparing for and of engaging in the practice of public accountancy? Not many years ago some may have decided upon public accountancy because of the idea that its rewards in money were above the average, in some cases quite exceptional. But a professional life is not the most promising occupation to one imbued with the ambition of acquiring great wealth. There are notable exceptions in law and medicine, and some other professions. In accountancy fewer than 25,000 certificates have been issued. Probably there are less than 20,000 certified public accountants (CPAs) in practice and perhaps two or three times as many who are not certified. The number of those who have accumulated what could be considered as even approximating wealth is very few. Others may have thought of accounting as offering opportunities for reaching positions of distinction in the community. In politics, at least one CPA has gone to U.S. Congress and several have reached the legislatures. Perhaps there have been instances of accountants being elected or appointed to other important governmental positions. But for the positions for which accountants would seem to be especially fitted, the treasureships, the auditorships and the heads of departments of taxation, banking, insurance and the like, the selections of accountants have been very infrequent.

Reviews the book "Auditing— Theory and Procedure," by J.F. Sherwood and Roy T. Culey.

Abstract This article aims to select from the everyday business of the U.S. Securities and Exchange Commission some frequently recurring situations not as yet controlled by well-defined accounting principles. A very simple example of the problem is the case of a recovery of bad debts and balances in closed banks written off at the date of the reorganization. The registrant had credited these items to earned surplus and profit and loss while our examiners of the statements felt that the credits should have been to capital surplus. A much more important case involving several problems was that of a large investment company holding substantial blocks of stock of several companies. This company restated its capital and wrote down the values of its securities to market, first eliminating earned surplus and charging the balance partly to capital surplus and partly to reserve for investments which had been created from capital surplus. If investments representing control are held by the reorganized company, a question is raised as to the proper treatment of the surplus of the subsidiaries existing at the date of the quasi-reorganization.

Abstract The principal characteristic which distinguishes standard cost systems of ac- counting from older cost systems is the use of standard costs in addition to actual costs. The introduction of standard costs is but another step in the process of establishing complete control over all factors which are subject to the influence of management. A current standard is one which is intended to be representative of what cost actually should be under the prevailing circumstances. It is generally regarded as a real cost to be carried through the books of account and into the financial statements. A basic standard is, on the other hand, intended to serve only as a yardstick with which both expected and actual performance can be compared. When basic standards are applied, it is necessary to use current standards also, but current standards can be used without basic standards. The reason for this is that a basic standard by itself does not necessarily represent what performance ought to be in a given period but serves only as a base from which to measure changes. In order to realize the principal benefits from standards, it is essential that the standards be reasonably attainable goals.

Reviews the book "Social Security Taxation and Records," by Calvin E. Favinger and Daniel A. Wilcox.

Abstract This article highlights the problems concerning accounting education in U.S. colleges. There is a feeling that college accounting courses are too ambiguous, too much of a confusion, and too theoretical. Too many college graduates feel an accounting position is theirs by right of their degree in accounting without requiring them to do any detail work. Too many people without any natural aptitude for accounting are encouraged in colleges. The first criticism, centering around class-room "theory," has been broadcast ever since the advent of the school of business administration. The second criticism is a reflection upon the type of instruction found in most schools in creating a mental attitude in the student which is not particularly beneficial. It has been found that men receive highest compensation from public accountants and metal manufacturers and the lowest salaries are paid to them by transportation companies and motion-picture exchanges. Municipalities pay the best salaries to women accountants, with public accountants second; while hospitals are the least remunerative of all.

Reviews the books "Federal Income Tax Handbook, 1938-39," by Robert H.Montgomery and "Federal Taxes on Estates, Gifts and Trusts, 1938-39," by Robert H.Montgomery.

Reviews the book "Cost Accounting," by Clarence L. VanSickle.

Reviews the book "Cost Accounting: Principles and Procedures," by Charles H. Langer.

Reviews the book "Manual of Water Works Accounting."