A controlling account is an account which, contained in the general or some other superior ledger and posted usually in total, contains, in summary, information which is found concurrently, in detail, in ledger records of a subsidiary character. The chief functions of the controlling account are three, of which the first far outweighs the others: it greatly facilitates the process of double-entry bookkeeping by shortening the general ledger trial balance and thus segregating the possible sources of error, it furnishes summary information in cases where detailed information either is not immediately available or is of no importance and it furnishes a basis for maintaining a check upon the activities of the bookkeepers entrusted with subsidiary ledgers. The controlling account controls its subsidiaries simply in this sense: once its balance is established, through a trial balance of the ledger in which it is contained, a very strong presumption is created that the total of the subsidiaries, if they have been properly kept, must conform to its balance. Ultimately, of course, the control runs the other way. No entry in the control is justified except through a similar entry in a subsidiary account.

In spite of all that has been written in recent years with regard to depreciation, confusion still persists. A fairly recent article attempts to prove that owners of buildings are cheating themselves by charging depreciation at too high rates. Rates of two to five percent, varying according to the type of construction and other conditions, are too high, the writer argues, not because buildings of these types last, on the average, longer than the corresponding number of years, but, forsooth, because an annuity of the amount of the annual charges produced by using these rates will, when properly invested, amount to a greater sum than the cost of the building by the end of the given length of life. For example, $50,000 building whose estimated life is fifty years will give rise each year to a charge to depreciation of $1,000 on the straight-line method. An annuity of this amount invested at 5% will amount to no less than $209,348 in the same length of time. The annuity required to accumulate $50,000 under these conditions is only $238.89. "If the annual depreciation charge is set aside," says the writer, invested in interest-bearing deposits and the interest is annually reinvested, the investment is recovered within a much shorter period.

One who undertakes to audit the books of real estate concerns is apt to run afoul of situations as complicated and obscure as it is possible to imagine. The most ingenious inventor of Certified Public Accountant questions could furnish no worse tangles than are to be found in the accounts of this type of business. The examiner is under the handicap of having to produce most, at least, of the salient facts in plain black and white, whereas the details of much that goes on in a real estate office are hidden away in the terms of some lengthy contract, or, worse, lie buried in the memories of the several persons who took part in the transactions, each one of whom may have a different recollection of what took place. The process of determining the true history of the deal was so like fitting together the irregular sections of a picture puzzle that simile may conveniently be used. In two respects this puzzle was more difficult than the ordinary one. In this case the parts had first to be found before they could be placed in the proper juxtaposition. Furthermore, while the usual puzzle is accompanied by a completed picture showing what the result will be when the pieces are correctly placed, this feature was lacking in the present case. All that was to be had was the assurance that when the pieces were found and brought together in the proper manner a picture would result.

A number of difficulties of accounting analysis are presented by the building construction company. The kind of concern whose problems will be described enters into contracts for the erection of various types of buildings, has dealings with subcontractors, hires laborers, buys materials, makes plans and estimates on jobs contemplated, and perhaps owns a few lots and does a little building on its own account. All these activities require a precise and careful accounting, the success of which depends on a thorough understanding of the financial significance of the various operations. The principal problems have to do with the keeping of accounts with the jobs and with the customers. The proper handling of the jobs is largely a matter of cost accounting. Every job must be charged with all labor and materials, payments to subcontractors, and other costs which can be assigned to it. The customer's account in the case of a cost-plus contract is of fairly simple nature. The costs are transferred from the job account to the customer's account at appropriate times, and a further charge is made for the proper portion of the fee.

Accounting data and procedures impinge upon the National Reform Association (N.R.A.) codes and their administration at a number of points. There is for example, the matter of keeping the books and auditing the accounts of Code Authorities. These bodies, whose precise legal status is still a matter of considerable uncertainty, are permitted to collect in a compulsory manner funds from the members of industries under their guidance, and to spend those funds on the basis of budgets approved by the N.R.A. officials in Washington. Accounting data have been extremely useful in the making and amending of codes. The best example of such aid is the ascertainment of the effect of proposed wage and hour provisions on costs. The N.R.A. appears to the author as a challenge to industrial accounting practitioners to bring into play talents which will begin to act because of a recognition that all business transactions are in reality cost matters finding expression not only in the processes of making goods and marketing goods but also in the processes of capital investment and economic readjustments.