Reviews the book "Cause and Control of the Business Cycle," by C.E. Harwood.

The classification of costs into constant and variable costs has likewise played a prominent role in price theory. If any particular element of cost be written as a function of volume of production for one enterprise, the function will not hold true in others. If one write the function to express an average relation for all enterprises in an industry for a given period, the function will not be true of an earlier or of a later period. Measurements of unused capacity, in other words, are unstable quantities both with respect to different concerns, different times, and different products. The proliferation of marginal theories both with respect to marginal producers and with respect to cost of producing marginal units have been developed also. But objective criteria whereby may know who are sub-marginal, who are marginal and who are supra-marginal producers are still wanting. Neither do one know whether or not any particular producer's volume stops short of the unit that would have been marginal, or just reaches that point or goes beyond it.

Both accounting and economics professions, deal with the conduct of men in gaining a livelihood. The accountant is concerned with those activities almost exclusively as they manifest themselves in those actual, particular institutions which they call enterprises. With individual human beings he is concerned chiefly to the extent to which they participate in the finances or the operations of the enterprise under review. Whether the accountant is dealing with an enterprise as an entirety or with the individual as a taxpayer both the enterprise and the taxpayer are real. The economist, on the contrary, devotes no attention at all to real individuals or to real enterprises. He may appear to be concerned with what laborers do, or what is done by the suppliers of monied funds or by those who exercise managerial powers. They are functional groupings invested by the economist with standard sets of motives, aims, interests and opportunities. Since both professions are interested in income in the most general sense of that term, both are interested in what is called production. But the interests of the two groups are widely divergent.

The article focuses on an interesting paradox pointed in a review by Henry Rand Hatfield, professor of accounting, which drew much attention. If two identical bonds are bought on the same day, one of them at 90 and one at 110, the aggregate cost is equal to the aggregate par and the yield rate on the holding is equal to the nominal rate on the bonds. Hatfield demonstrated that if the buyer separately amortizes the premium on one and the discount on the other by the conventional compound interest formula the aggregate interest earnings thus found in the several periods will diverge from the uniform coupon receipts. The author shows that the paradox can arise from the algebraic properties of the "average yield rate" or single compound interest rate implicit in the cost of an aggregate holding acquired in more than one purchase lot. The author also considers some of the properties of the mean yield rate and makes some comments on the meaning of bond premium and bond discount and puts some question about the theoretical accuracy and the consistency of Hatfield's accuracy.

Reviews the book "Auditing," by William H. Bell and John A. Powelson.