The article discusses some of the current developments in business, that have tended to increase the importance of accounting and throw down new challenges to the profession. Industry is enjoying high dollar profits resulting not so much from its traditio
Recent developments in auditing receive considerable attention from accountants. The literature and other information available, which relates to auditing in the U.S. up to about the beginning of the twentieth century, seem to indicate that auditing was then completing its first major phase of development. It is generally recognized that auditing in Great Britain had been instituted to a great extent by specific statutory requirements. The principal function of an audit was considered to be an examination of the report of stewardship of corporation directors and the most important duty of the auditor was to detect fraud. Although the adoption of sampling procedures probably represented the most important development in auditing, other changes were beginning to appear, as indicated in the preceding references. This development also seems to represent no departure from the point of view of the detailed auditors, for it seems to represent originally a substitute for the enormous quantity of detailed audit work formerly done in audits.
This article focuses on the working capital. The amount of working capital of a business is not simply a passably interesting item, font is a figure which can be put to dynamic use in the bands of capable management. When an attempt is made to relate current items to the operating cycle of a business, working capital becomes a vital financial guidepost. The utility to management of the working capital concept lies in analysis of working capital and in interpretation of the reasons/or changes in each of its component parts. The effect of each factor in the composite working capital figure is reflected in the whole so that the implications of individual debits can be considered of view. The initial working capital of a business is the fund of free capital placed in the hands of management by investors. It is the responsibility of management to commit these funds to the productive purposes for which the business was formed, and, at the end of the operating cycle, to disinvest the funds originally committed into new free capital available for recommitment to new productive purposes. Fund disinvestment is accomplished through sale of the end product of a business firm and settlement of the receivable then created by cash payment by the customer.
The justification for the adoption of standard cost should include the point that a proper or objective cost, however defined, can exist independent of subjective or incurred cost, at least temporarily. Standard cost for control purposes usually takes into account, or at least rationalizes, all expected expenditures and charges related to the manufacturing process. If competent factory engineers and superintendents are given a free hand in designing a factory for a stated rate of output of a product, there will be one combination of production factors which will be the most economical combination. Any deviation from this combination will yield a higher unit cost of output. Presumably the word objective can be used to describe such a unit cost. The isolation of this non-essential element from manufacturing cost, as ordinarily arrived at, might not be a difficult matter under all circumstances. If production is fairly standardized, it is likely that the rate of production is increased by exactly duplicating previously acquired combinations of factors of production, assuming stable conditions, and that it is decreased by ignoring similar combinations of factors of production.
The purpose of this article is to apply modifications of Newton's method for approximating the root of an equation to the solution of bond problems which require very accurate determination of the interest rate. Repeated applications of Newton's formula will give any desired degree of accuracy. However, it is not practical to apply Newton's formula more than once since the value obtained by the first application will usually give a value of the interest rate for which the corresponding function can not be found in the table. It is desirable to find a formula which will give in a single application greater accuracy than Newton's formula and which has the advantage of using tabular values obtained from the original estimation of the interest rate. has been developed in several papers in mathematical journals but its value in solving bond problems has not received sufficient attention. The use of Newton's method is explained in an article by N. Lecher.
This article focuses on fixed assets replacement as of October 1951. The inflationary influences that are rampant just now have caused the relationship between current depreciation charges and replacement costs of fixed assets to become a subject of particular concern to accountants and to management of the business enterprise. Corporate officers in industry are vitally interested in this matter because the subject of profits is discussed so much and from so many points of view. Accountants are concerned because new responsibilities have been suggested for accounting methodology. The many articles on the subject appearing in current accounting literature indicate that accountants are aware of the challenge they face. This open discussion of conflicting ideas is likely to bring satisfactory results, a study of history reveals that much of accounting's growth in the past has come in this manner. Accounting has developed slowly as men of successive generations have sought under changing legal and economic conditions to meet the needs of business of their day. It is not unreasonable, therefore, to believe that a helpful perspective on today's problem may be gained by a brief survey of the problem of fixed asset replacement as it existed fifty years ago and of the responses made to the problem by men of that day. A realization of the ideas that existed fifty years ago in regard to fixed asset replacement could perhaps help accountants to resolve this issue which is before them today.
Reviews several books about basic concepts of accounting by Frederick Wells Woodbridge. "Accounting Basic Concepts--Fundamentals"; "Accounting Basic Concepts--Accounts, Proprietorship, Analysis"; "Accounting Basic Concepts--Manufacturing and Costs."
The elementary course in accounting, as it is taught in most instances today, is specifically designed to provide a base upon which to build a structure of accounting knowledge. This base consists to some extent of the broad principles of accounting, but often, to a much larger extent, of detailed methods of technique and procedure. At the outset several questions are bound to arise concerning any changes in the elementary course. It has been the writer's experience that sixty to eighty per cent of the first year accounting students are merely fulfilling requirements for a degree and have no intention of taking additional accounting courses. If such is the case, the needs of so large a majority cannot be reasonably ignored. Students often have no intention of taking more than the minimum of accounting until they have completed the first year course. Thus, students taking the non-accounting major course frequently find an interest kindled which leads them on to the advanced accounting courses. The elementary course, however taught, is not sufficient to make the student an expert accountant. It does provide him with the basic mechanics of recording, classifying and summarizing the usual transactions of business. It does not provide him with an adequate basis for interpreting and analyzing the accountant's work.