Reviews the book "Cost Finding for Hospitals."

Reviews the book "A Dictionary for Accountants," 2nd ed., by Eric L. Kohler

The article explains net operating loss with the help of examples. The article asserts that taxable income is determined annually on the basis of a year's operations. Section 172 of the Internal Revenue Code permits the taxpayer a degree of relief when loss years are intermingled with profit years, provided that any such loss year is due to a loss incurred in trade or business, is the result of a casualty loss, or is occasioned by a loss on the sale of real or depreciable property used in trade or business. The need for explaining how a tax return loss is converted into a net operating loss is felt. While it is relatively easy to explain to a student the various technical steps involved in calculating a net operating loss under the code, it is rather difficult to convince him of the logic involved. Though the instructor may emphasize initially that the purpose of the various adjustments required to convert an income tax loss into a net operating loss is to arrive at an economic or out-of-pocket loss, the student can quickly lose sight of the ultimate objective if he mechanically applies the provisions of the code to a given set of facts. Thus, the article tries to explain logically the calculation of net operating loss.

The potential advantages of the market-value approach have long been appreciated; yet analytical results have been meager. What appears to be keeping this line of development from achieving its promise is largely the lack of an adequate theory of the effect of financial structure on market valuations, and of how these effects can be inferred from objective market data. It is with the development of such a theory and of its implications for the cost-of-capital problem that we shall be concerned in this paper. Our procedure will be to develop in Section I the basic theory itself and to give some brief account of its empirical relevance. In Section II we show how the theory can be used to answer the cost-of-capital questions and how it permits us to develop a theory of investment of the firm under conditions of uncertainty. Throughout these sections the approach is essentially a partial-equilibrium one focusing on the firm and industry. Accordingly, the of certain income streams will be treated as constant and given from outside the model, just as in the standard Marshallian analysis of the firm and industry the prices of all inputs and of all other products are taken as given. We have chosen to focus at this level rather than on the economy as a whole because it is at firm and the industry that the interests of the various specialists concerned with the cost-of-capital problem come most closely together. Although the emphasis has thus been placed on partial-equilibrium analysis, the results obtained also provide the essential building block for a general equilibrium model which shows how those prices which are here taken as given, are themselves determined. For reasons of space, however, and because the material is of interest in its own right, the presentation of the general equilibrium model which rounds out the analysis must be deferred to a subsequent paper.

The article discusses the content of a training program in internal auditing. An internal auditor is an employee of a particular firm. The internal auditor helps assure the accuracy of financial reports. He functions as an element of management control, reviewing and appraising other management controls to make sure they are operating according to plan and in an effective manner. Textbooks, case problems, and other materials with which to teach a course in internal auditing have been prepared over the years by The Institute of Internal Auditors and its members. Current practices are reported in the Institute's quarterly journal, The Internal Auditor, and in the published proceedings of its annual conferences. The available material is more than adequate to provide a challenging course in internal auditing. Moreover, many teachers who recognize the desirability of the accounting student learning something about internal auditing are convinced that the required amount of knowledge can be presented in a lecture or two in the basic auditing course. Such coverage may possibly be sufficient to alert the prospective public accountant to the existence of the internal auditor and the necessity of reviewing his program on an audit assignment. But it is insufficient to present the philosophy and responsibilities of the growing field in internal auditing.

Reviews the book "Internal Auditing," 2nd ed., by Victor Z. Brink and James A. Cashin.

In the sporadic references to accountancy and the accountant in literature one can glean only one particular impression of the living image that they are little men in the clutches of the computer, the over ambitious, scheming executive, or the men with a kink are rather pathetic. Though one can perceive their actions, they are not calculated to bestow on them any sort of fulfillment in the larger purpose of life those, which euphemistically, or otherwise, one may refer to as "daring" or "noble." Yet, the most ordinary and ephemeral can invoke sympathy and fire the imagination if their roots are in the living matrix. Thus, literature has not ennobled the accountant so far, not one should add, because it looks upon him as perverse, but because it considers him dull. It is this very respectability that swept the profession, individually and collectively, into that category which makes its adherents so unlikely a people for the title roles of romance. At least, such are outward appearances. They are the result not so much of design but of circumstance.