Knowledge that Transforms

Abstract This article focuses on the managerial emphasis in elementary accounting. Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof. Individuals interested in the accounts and financial statements of a business enterprise stress the creditors or prospective creditors, investors or prospective investors, credit agencies, governmental agencies, etc. Management is usually relegated to the end of the list. Very few texts stress the fact that the accountant's first duty is to management, and the results of his work play an important role in the decisions of management. Emphasis is placed on the fact that administrative accounting deals with those matters which are the basis of managerial decisions, business policies and administrative actions. It deals with the significant factors from which important constructive accomplishments are brought to a successful conclusion. The students completing such a course will not all become good managers or good administrators overnight or by means of one course. However, with a better administrative background even at a very elementary level perhaps we, the educators, will give the business world a better product.

Reviews the book "Engineering Economy," by H.G.Thuesen.

Reviews the book "Accounts and Taxes--A Partial Record of the First Kentucky Institute on Accounting and Tax Practitioners' Forum."

Reviews two book on Accounting. "An Introduction to Budgetary Control, Standard Costing, Material Control, and Production Control" and "The Presentation of Information to Management."

Reviews the book "Fundamentals of Governmental Accounting," 2nd ed., by Lloyd Morey and Robert P.Hackett.

Abstract Many of the experienced teachers, as well as some of the new ones, have developed devices and techniques for the presentation of certain knotty aspects of accounting. This article presents suggestions that might well be made available to other members of the teaching profession through publication in the magazine "Accounting Review." This article presents a method of elementary presentation of volume, cost and profit relationships. The material that follows is designed to be used in the classroom as a simple but highly effective method of explaining and illustrating (a) the concept of unit costs, and practical managerial uses of unit costs (b) the mild enigma that a reduction of unit sales price can result on occasion in an increase of aggregate net profits, and(c) the concepts of marginal costs, break-even point, and optimum profits. A class period of one hour is usually sufficient for presentation and discussion of the subject. The material should be presented in a sequence of steps.

Abstract Since the inception of the double entry bookkeeping system, the treatment of inventories has always been a rather perplexing problem. Even today accountants disagree, not merely on methods and procedures of treatment, but even on fundamental principles on inventory position and interpretation. This is a challenge to the accounting profession to which a satisfactory response is still missing, despite the flood of literature on inventory questions during the last decade. The main difficulty for a realistic contemplation of the problem stems, in the author's opinion, from the dualism inherent in the inventory account which influences both the balance sheet and the income statement. Withdrawn from the manufacturing costs on the income statement as closing inventory, it is added to the current assets on the balance sheet. In the light of the dualistic approach to the inventory problem, the exclusion argument for fixed costs seems to gain considerable ground. It seems now obvious that fixed charges, being mainly functions of time, have no place in an account of such diversified influences. Left partially in the inventory, fixed costs increase the gross and net profit, and, on the balance sheet, the working capital. This is hardly compatible with business logic. Fixed costs in the inventory are not a profit increasing factor; neither do they improve the working capital position. However, the traditional treatment must lead ultimately to such distortions of values and the possible benefit of the tax collector.

Abstract Any person who has served as a member of a state board of public accountancy can attest that an appalling number of people engaged in business do not distinguish any difference between a public accountant and a certified public accountant. The certified man has demonstrated through legally prescribed methods that he is properly and suitably prepared to serve the public in important accounting matters. The public accountant may be a capable person but he has not demonstrated such capability through the legally prescribed methods. In comparing the certified public accountant with the lawyer, it should be borne in mind that in nearly every state in the union, before taking the bar examination, a person must first complete a satisfactory course in law, usually carrying no less than four years of college work on a full time basis in some recognized college. With the growth of business enterprises, the public accountant makes a vital contribution in meeting the need for independent, impartial and expert opinions on the financial position and the results of operation. This is his unique contribution, a service which no one else offers or is qualified to perform.

Reviews the book "Advanced Accounting," 2nd ed., by R.Keith Yorston, E.Bryan Smith and S.R.Brown.

Reviews the book "Essentials of Cost Accounting," 2nd ed., by John G. Blocker.