Knowledge that Transforms

The article presents accounting problems prepared by the Board of Examiners of the American Institute of Accountants and presented as the first half of the November 1949, Certified Public Accountants Examination in accounting practice. The candidates were required to solve first problem and two of the remaining three problems in four and a half hours. he weights assigned to the problems were :problem 1, 14 points; problems 2, 3, and 4, 18 points each. The first problem is related to federal income tax. The second problem is related to adjustments for errors and omissions in capital accounts of partnership firms. The third problem is on the manufacturing firm. The third problem is related to computation of the amount of an insurance claim for fire loss of raw materials in a manufacturing firm. The fourth problem deals with revision of the balance sheet of the given city in accordance with acceptable methods of government accounting and provide and analysis of the changes in surplus funds of the given city. The answers to the given problems are provided at the end of the article.

As accountants, educators and executives, one is engaged almost continuously in the preparation of financial reports. One is convinced of the significance of financial reporting as a basis for intelligent executive action, and the importance of seeing that all reports contain the proper information and are designed to be of maximum use to the members of management who they are submitted. In this article the author reviews some of the principles and practices, which can be followed to render such reports as helpful and effective as possible. There are three levels of management to which financial reports must be made, top management, coordinating executives, and operating supervisors. The reports required by each vary in subject matter and in amount of detail, but the principles of reporting to each level are essentially the same. If the reports for top management should be comprehensive and concise, then so much the more should reports to operating supervisors be specific and concise, for the daily routines of production and selling demand that the supervisor be a man of action rather than an analyst.

Reviews the book "Audit Working Papers," by C. Oliver Wellington.

Reviews the book "Bookkeeping and Accounting," by Fayette H. Elwell, Vachael E. Breidenbaugh and Angeline G. Lins.

This article proposes to investigate, review, and analyze the data which have been compiled on the subject of profitability in relation to size to determine the foundation on which the statement of large corporations being unprofitable has been based, and to comment on the validity of the assertion as it relates to the relative profitableness of corporations of different size. Such an analysis must necessarily be limited to the objective material available and will not enter into the broader discussion of the social and economic evils usually associated with, and often attributed to, monopoly or big business. No attempt will be made to evaluate the proposition that large-scale business necessarily results in a power position which is so antisocial that a reduction in size would be warranted, regardless of the possible outcome for efficiency and profitability. Such matters can be settled satisfactorily only after long investigation and will involve complex analyses of broad social policy.

Reviews the book "Consolidated Financial Statements: Principles and Procedures," by William Herbert Childs.

Reviews the book "Accountant's Working Papers," by Leslie E. Palmer and William H. Bell.

Reviews the book "Social Accounts and the Business Enterprise Sector of the National Economy," by F. Sewell Bray.

Reviews the book "Audits and Examinations, Standards and Procedures," by Christian Oehler.

Reviews the book "Materials on Accounting," by Robert Amory.