Abstract This article points out briefly the aspect of the theoretical relationship between total depreciation allowances and the fixed property accounts. It is assumed that the assets are carried on the books at historical cost and at the end of their life cycle are to be replaced by similar assets having a much higher cost figure because of a sustained period of rising prices. The decision when to replace the asset is one for management to make. Obsolescence may have taken place as a result of technological improvements, and the asset should be retired even before the eight year period, or even at the end of five years. The asset, on the other hand, may be performing its task well and need not be replaced for several years after it becomes fully depreciated on the books. In the former case the depreciation charge has been understated and in the latter over-stated. Depreciation, whatever method may be applied, is nothing more than an estimate. Today, however, it is recommended as a conservative policy to write off the asset as quickly as possible because technological advances are being made at such a rapid rate that obsolescence is regarded as a more important factor than the physical character of the property.

Abstract The purpose of this article is to review some of the accounting principles effecting the equitable distribution and allocation of costs of a public utility corporation that furnishes electric, gas and steam services within the same general area. Its rate regulation comes under the jurisdiction of a State Public Service Commission, as all of its revenues and costs arise from within the borders of the state. In order to establish fair and reasonable rates for both utility and consumer alike, accounting principles pertaining to the distribution of costs must also be fair and reasonable. Total revenues in the long run must cover total costs. Costs must be matched against the revenues of the company for a particular period of time, usually on a monthly, quarterly or annual basis. The aim of the utility is to furnish service to its customers in the most efficient and economical manner possible and at the same time to earn a fair rate of return on its capital investment. Considerable judgment and care must be employed to choose the proper data and to select the best method of allocation in order to justify a cost distribution which will meet the standard of being fair and reasonable.

Abstract The formal accounting laboratory in elementary accounting should be eliminated as a part of the curriculum for college credit toward graduation. The trend in the past has been to eliminate the formal laboratory in such classes as advanced and cost accounting, statistics, and economic research in special fields of business administration. The laboratory should be voluntary; in place of a required session each week there should be a recitation or discussion period. Such a policy will raise the standards of the elementary accounting program at the university level. The plan also will provide more efficient use of the laboratory facility and the faculty member's tune. The effectiveness of the accounting program is not impaired by the adoption of such a plan. It is impossible to judge the difference in the student's acquisition of elementary accounting knowledge, whether the laboratory is formal or voluntary. The students prefer the voluntary basis of study rather than the supervised and scheduled period because it gives them more flexibility in the budgeting of their study time. It also gives the student the feeling that the standard is comparable to that for other courses in his program, and that elementary accounting on the university level has one training characteristic which differs from that of the high school or the business college.

Abstract Unbilled revenues may be accrued or not accrued according to the policy adopted by the utility. The recording of unbilled revenues-if not recorded before- hand-does not constitute an accounting change for income tax purposes; also, if unbilled revenues are included as a part of the accounting record they will have no effect on the working capital rate base. The statement of assets and liabilities in a balance sheet does not purport to represent the financial position of the company upon a liquidated basis, but rather that of a going concern. The accounts of utilities are customarily maintained in accordance with generally accepted accounting principles, and one of these principles is that income is not taken into the accounts until realized. Most electric and gas utilities consider that point of realization of income as the date the bill is rendered to the customer.

Abstract The objective results obtained from this comparative study reveal that from 1936 to 1954 (a) the percentage of net fixed assets to total assets has decreased in relative importance; (b) the annual depreciation and depletion charge in relation to gross fixed assets has increased; and (c) the annual depreciation and depletion charge as a percentage of net sales has decreased. These phenomena perhaps have no general explanation because of the many variable factors which enter into the growth and changing relationship of the asset accounts. One outstanding reason which seems to account for the changes in fixed asset relationships is the increase in prices (decrease in the purchasing power of the dollar) during the time of the study. This is certainly not the sole explanation. A relative increase in the amount of working capital and investments to total assets occurs as the percentage of net fixed assets to total assets decreases. Present credit restrictions and bank lending practices are different from those in 1936, and probably account for larger amounts of assets being tied up in receivables. The diversification of operations will have an inclination to increase inventories and receivables. Fund accounts, consisting of cash and marketable securities, established for pension and sinking funds, are being enlarged. Mergers and consolidations also have their effect on fixed asset relationships in the accounting records. All of these factors and their relation to fixed asset accounts will shift from time to time depending upon the phase of the business cycle, the stability of the price structure, the degree of employment, and the stage of technology in our economy.

Abstract The article presents an analysis of Missouri's utility earnings and rate base formulae. The matter of General Order No. 38A of the Missouri Public Service Commission relating to its rate making policies and practices needs further interpretation and review in answer to an analysis. Although concluding that the Missouri rate base and earnings formula is definitely a step in the right direction, because, at present, it permits a needed increase in permitted earnings of utilities. The Commission's order merits a more pragmatic and less hypothetical treatment in order to set forth the issues in the case. It is also believed that the formula is definitely a step in the right direction, not because it recognizes the need for increased earnings, but because it more actually reflects the facts relative to depreciation accountability. The purpose of this paper is to outline briefly some of the economic and accounting principles that were observed by the Missouri Commission in order to arrive at their announced policy relating to the establishment of the utility rate base in future proceedings.

Abstract The study of this article purports to show how the annual report of a company can be analyzed in order to determine the sources of additions to net worth and the disposition of these additions in a general way. It is necessary that the company will include in its annual report a comparative balance sheet and statement showing changes in retained earnings or surplus, either contained as a part of the balance sheet or as a separate statement. The principle of accounting for the change in net worth to show the income increments over a period of time is used as a basis for analyzing the annual reports. This study departs from the idea of attempting to determine the source and application of funds or the change in net working capital, as it is assumed that these statements require access to accounting records of the firm for the purpose of analyzing changes in depreciation reserves and adjustments to surplus. Furthermore, as the size of the firm increases, the individual stockholder becomes more and more discouraged in trying to understand the annual reports.

Abstract The article focuses on public accounting. The contention that generally accepted accounting principles are recognized and applied by public utilities is supported, although the utility industry must maintain a uniform system of accounts as prescribed by state and federal regulatory commissions. The field of public utilities consists of electric light and power; gas and steam heating, telephone, telegraph, and others. This utility from hereon will be referred to as the Company. The Company classifies its accounts in accordance with the prescribed system of accounts issued by the public service commissions. It files with the commission a copy of its manual of accounts and any changes that are made in the account classification. Certain account classifications are established to facilitate the allocation of costs. These classifications include the accrued and deferred accounts, work in progress, joint expenses and clearing accounts. Clearing accounts contain the accumulation of costs under similar account titles during the fiscal period, the amounts of which are transferred currently to the particular permanent account on some predetermined cost distribution basis.

Abstract There seems to be some question whether the vocabulary of the accountant has reached such a degree of understanding that accounting per se can be considered an art or a department of scientific knowledge. Before accounting can be recognized as a language it must develop a positive system of communicating ideas and a sound means of expressing its symbolic doctrine. Many errors and much confusion in accounting are a result of the misapprehension of the language; and one means of correcting this fault lies in a better understanding of a common mode of expression. What are the requisites of a language? Are these precepts followed in the construction of a foundation for the language of the accountant? Wherein does accounting fail to meet the requirements of a common language in its particular field of record keeping? Can these faults be corrected? The purpose of this paper is to throw some light on the problem, to endeavor to answer these questions briefly, and to make suggestions wherein accounting as a language will have a much greater significance. Accounting language must recognize the following characteristics: (1) Accounting is a specialized field of philosophy and mathematics; (2) Accounting is a means of measuring the functions of business enterprise, both profit and nonprofit organizations, in dollar-and-cents expressions; (3) Accounting measures the growth of capital, or the expression of property and property rights, in value terms; (4) Accounting has only the limitations of any other abstract science, namely, the ability of the human mind to grasp and solve the problems resulting from the discovery of the facts or arrived at by reasonable presuppositions based upon arbitrary premises.

Abstract One must finally conclude that the problem of allocating joint costs per se is unsolvable from a theoretical point of view. It is impossible to determine what costs should be matched against the income resulting from the manufacture of by-products and joint products. Procedures for allocating joint costs are based on certain standards of reasonableness; and the results are justified in the light of present-day market values, productive technology, and business experience. The techniques for the allocation of joint costs must be improved; otherwise, the conclusions obtained from various methods of joint cost distribution have no foundation of proof. Accountants will then have to resort to the basic criterion of all successful business enterprise, namely, that total revenue of the organization-in the long run-must cover the total costs of production.