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.

The excess profits credit based on record of earnings and the excess profits credit, based on invested capital are fraught with variations applicable to different circumstances as to require individual treatment according to the individual case. The basic questions being asked daily relate in great measure to the numerous corporations which will be free from excess profits tax under the 1950 act. However, management needs an understandable explanation of why a corporation must file an excess profits tax return even though it has no such tax to pay. It needs to know what keeps the corporation free of such tax, and how high its current earnings can climb before incurring a liability. The following description applies to the multifarious small corporations whose incomes in the base period 1946, 1947, 1948, and 1949 did not exceed $30,000.00 a year and whose equity and borrowed capital does not exceed $200,000.00. If such corporations come into the advantageous position of having current net income considerably in excess of the $25,000.00, then their officers may have some guidance from this article, but should rely on tax advice patterned to fit the actual circumstances, using the information herein contained for approximations only.