Knowledge that Transforms

Reviews the book "C.P.A. Problems and Questions in Theory and Auditing," by Jacob B.Taylor and Hermann C.Miller.

Abstract Apologists for stock exchanges have advanced various arguments to justify the maintenance of the exchange machinery. Many of these arguments have been carefully analyzed, but the contention of exchange officials that stock exchanges provide industry with capital has not been thoroughly explored. In some instances the argument is stated in just this form; in other instances the connection between prospective capital funds in the hands of investors and industrial investment is traced through the active markets made possible by the operations of speculators. Implicit in the writings and testimony of stock exchange officials is the thought that without the operations of stock exchanges, industry would have difficulty in securing new capital funds. Financing cannot ordinarily be effected directly through the stock exchanges since the listing rules of these exchanges call for seasoned and widely distributed issues. Therefore the financing function can only operate indirectly through the play of economic forces which are mirrored on the stock exchanges and which thereby facilitate the selection of successful companies by purchasers of securities.

Reviews the book "Social Research," by Manuel C. Elmer.

Reviews the book "Making the Annual Report Speak for Industry," compiled by James P. Selvage and Morris M. Lee.

Reviews the book "International Combines in Modern Industry," 2nd ed., by Alfred Plummer.

Abstract During the past decade the American Accounting Association has given attention to the status of accounting and the objectives of different accounting courses in various types of educational institutions of collegiate rank such as the liberal-arts college, the school of engineering, and the school of law. Throughout this same period there has been a rapid development of another type of collegiate institution, the Junior College. In the present discussion of this topic, the nature and the objectives of the junior college, and second, some of the specific problems of organizing accounting in the junior college has been considered. in the higher institutions. A large number of students in junior colleges will terminate their formal education when they complete the two-year unit. This study of accounting in the junior college has been made to point out the nature and the functions of this educational unit, and to discuss some of the problems of one of the popular subjects offered in it, the most important problem being the provision of an introductory course that will meet the needs of a very heterogeneous student body. An effort was also made to show that this problem might be met not by introducing special types of courses but by revising the usual first-year course in such a way that only principles which are necessary for all would be taught.

Reviews the book "Pick Your Job and Land It," by S.W.Edlund and M.G.Edlund.

Abstract This article focuses on research in cost-price relationships. In forwarding research in the field of cost-price relationships it is necessary first to determine what studies are most important from the standpoint of their practical usefulness to business and their significance to the science of economics. As hypotheses in studying cost-price relationships the recently developed neo- classical theoretical analysis of imperfect competition has been used as a means of organizing research problems, and bringing into sharp contrast the viewpoint of the theorist and the business man. Cost concepts are too restricted for many practical purposes. Marginal cost, for example, must for some purposes be expanded to a concept of opportunity costs of several alternatives, such as shutting down, selling other products, etc. Under conditions of multiple production, moreover, necessarily arbitrary allocations of some cost items make it difficult to determine costs of individual products. A realistic concept of price must be complex because pricing practices differ from firm to firm and industry to industry.

Abstract In the last generation there has been a decided change in the position and responsibilities of the accounting profession. This change is not an isolated phenomenon. It ties in with both the current changing relations between business and government and the long-run development of the accounting profession. It is part of a disturbed and unstable economic and social situation which has led accountants and many other groups to seek guidance in the formulation of basic principles. In order to appraise the present position in any respect, the most effective background for the task is a survey of past developments or an account of how the present position was arrived at. Such a survey for accounting would reach far beyond the limits of one brief discussion. Nevertheless a background is needed and if a complete one is not possible, an incomplete treatment is better than none at all. The process of evolution in accounts as an accounting for the costs of business operations is still going on at an unabated pace. Current changes are to be viewed in the light of a development which reaches back through the whole history of modern accounting. The process of evolution in accounts as an accounting for the costs of business operations is still going on at an unabated pace. Current changes are to be viewed in the light of a development which reaches back through the whole history of modern accounting.

Abstract A number of texts and reference books on accounting were examined for the purpose of learning the correct method of computing the value of a nonparticipating life-insurance policy, for presentation on the balance sheet of a going concern. Most of the books examined omitted all mention of the subject. In the five books that mentioned it, four different methods were recommended. In the case which the author had under consideration, the four methods produced four different answers. The variation between the high and low answers was substantial. A study of the four recommended methods convinced the author of this paper that the variations were not due to differences of opinion on the relative merits of the various methods, but to several causes. One is that accuracy has not been earnestly sought. The proper valuation of life-insurance policies owned is relatively unimportant, because the asset value is not large, and a misstatement does not seriously distort the balance sheet. Another cause is that a life-insurance policy is a unique combination of investment and expense. Accounting principles applicable to investments and accounting principles applicable to expense are alike involved in determining the asset value.