Abstract The statement of funds is a time-honored statement, undergoing a metamorphosis from the simple Where Got Where Gone statement of William Morse Cole to the sophisticated variable statements of today. This variability in statements is seen in the following different objectives corresponding to the two major forms of statement presently in use to show the change in working capital for the year and to show the change in cash for the year. The statement accomplishing the second objective is merely an extension of the first, whereby the change in working capital is modified to express the change in cash. This modification is expressed in two forms; the balance sheet form and income statement form. Depreciation and amortization may be listed as sources of cash in the balance sheet form, but invariably are eliminated in arriving at the net income or net loss in the income statement form. The statement should show enough information parenthetically so as to permit a reconciliation of the balance sheet at the beginning of the period with the balance sheet at the end of the period, category by category.

Abstract In this article, the basic characteristics of assets are examined for the purpose of arriving at meaningful balance sheet groupings and appropriate valuations of the classified items. Such a study and approach results in a unitary principle for classification and valuation. It is concluded that regarding (last in first out) LIFO, the principle of cash realizable value requires, as a minimum, footnote disclosure of the higher cash realizable value, with an indication of the estimated income tax applicable to the excess of cash realizable value over LIFO cost, payable at such times as the inventory increment is realized. The principle requires, as a maximum, that the body of the balance sheet reflect (1) an adjustment of LIFO cost to the higher cash realizable value, (2) a long-term tax liability for the estimated income taxes applicable to the inventory adjustment, and (3) a special retained earnings component for the difference between the inventory increase and the related tax.

Abstract The American Institute of Certified Public Accountants, in Chapter 7 of Bulletin 43, has issued what is to date the definitive statement on working capital. This statement has been endorsed by the American Accounting Association. This article looks afresh at the problem of determining working capital, and proposes a simple yet comprehensive restatement of principles with respect to current assets and current liabilities. The working capital section of the balance sheet is the measure of liquidity of a concern. Working capital is important to management as a measure of the fluidity of capital and as an indicator of balance in the asset and liability structure of the company. Banks and other short-term creditors are vitally interested in the amount of working capital from the standpoint of evaluating the prospect of repayment of their claims against the company. The foregoing restatement of current assets and current liabilities simplifies and reduces to the barest essentials the criteria for admitting items under working capital. Use of the principles set forth will result in a meaningful working capital amount, the asset and liability components of which are developed on a consistent and comparable basis. The inclusion under current assets of fixed assets realizable through consumption in the next fiscal period may occasion problems in estimating and measurement. The theory stated, however, is sound. In balance sheet presentation, such fixed asset portion would appear below a sub-total for the other current asset items listed.

Reviews the book "Fundamentals of Accounting," 4th ed., by Perry Mason, Sidney Davidson and James S. Schindler.

Reviews the book "Managerial Accounting, an Introduction," by Harold Bierman.

Abstract The article focuses on how managerial concepts and views are reflected in the accounting principles, quasi-principles, and conventions which are implicit in the term, current accounting standards. The responsibility of accounting to management is a primary one, and in fact is considered by most accounting authorities to be paramount. The objectives of management are, first, to conserve the capital of the enterprise and second, to add to such capital by earning income. These two objectives govern the data with which accounting deals. Accounting is fundamentally concerned with the distinctions between capital and income, as these elements are expressed in the balance sheet and the income statement as accounting end-products. The distinction between capital and income is preserved even in accounting for that which is basically capital. Accounting has recognized the significance of earnings as the second primary managerial objective. In striving to attain the dual objectives of preserving capital and maximizing earnings, management makes use of certain assumptions and modes of thinking which profoundly affect the accounting.

Abstract The article highlights that books of original entry, in the form of journals, express the two-fold effect of each transaction through debit and credit accounts presented as complementaries. The books of final entry, in the form of ledgers, then divorce the complementary elements by classifying the debits and credits by account titles as separate units. However, considerable benefit can be derived by management and auditors if the complementary elements set forth in the journals are retained in the ledger. This objective is accomplished simply by changing the ruling of the accounts in the general ledger. The single debit and credit columns currently in use will be replaced by a series of debit and credit columns to accommodate each related complementary account. The columns on the debit side will show the credit complementary accounts common to the account in question. The columns on the credit side will show the related debit complementary accounts. Since the number of complementary accounts pertaining to a particular account vane, two sizes of account sheets can be used. A single page-spread will suffice for accounts with few complementaries. A two-page-spread will be used for accounts with numerous complementaries.

Reviews the book "Survey of Accounting," by Leonard W. Ascher.