Reviews the book "Manual of Water Works Accounting."

Abstract This article presents information on capital gains and losses in accounting. Capital gain has been defined as "profit upon realization of assets otherwise than in the ordinary course of business, this profit being the excess of the proceeds of realization over the cost of the property realized." Accounting makes a careful distinction between realized and unrealized capital increments, the latter generally being designated "appreciation." No matter how capital gain is defined the most significant feature of the transaction is that it does not occur in the ordinary course of business. Another peculiarity of capital gain from the accounting point of view is that it is not recognized until actually realized. The conditions and circumstances which bring about capital losses (realized or unrealized) are various. A change in price levels may be a cause. Obsolescence is frequently associated with capital losses. In the case of security investments, factors related solely to market conditions may be primarily influential. To say that capital losses are always non-recurring and outside the regular fulfillment of the particular function of a business enterprise is hardly accurate because obsolescence and many of the other risks which might result in loss of capital are always present and cannot be disassociated from the purposes of an enterprise.

Abstract In the article, the author discusses on the progress made in the balance sheet practices. There is still a good deal of confusion, however, due largely to the lack of uniformity and definition in balance sheet terminology and to the use of narrow or "specialized" methods of approach in our efforts to solve the problem. This is particularly true for the moment designate as the "net asset" section of the corporate balance sheet. The influence of the double entry method on the reasoning of accountants has long been a suspicious issue. The quality of accountant's logic has on occasion been impaired by their passion for balance. Therefore, the author starts with the corporate balance sheet in statement form, a showing based on the formula of assets minus liabilities as representing net assets. The "three layers" of balance sheet have been characterized as the gross economic capital, itemized and individual liabilities and their total, and the net economic capital of the enterprise. The author submits that the subdivision of net economic capital is to be made on the basis of origins, restrictions on withdrawal, and administrative control.

Reviews the book "Financial Organization and the Economic System," by Harold G. Moulton.

Reviews the book "Business Law, Principles and Cases," by Harold F. Lusk.

Abstract The report of the Committee on Auditing Procedure of the American Institute of Accountants has been revised. The changes have to do with the alteration of the proposed procedures relating to receivables and inventories, whereby physical tests and verification by correspondence have been cut down to practically the same level as called for by previous practice. It might not be unexpected, following the McKesson and Robbins disclosures, that accountants, seeking protection, should amplify their responsibilities in an unnatural degree and reach a somewhat hysterical conclusion from which time alone would have made them recede. The professional criticism was that participating in inventory counts might give the accountant the appearance of appraiser; that tests, fully as acceptable as circularization, are available for determining the existence and propriety of receivables. Except for inserting the reference to a detailed audit, the changes were textual and the same remarks can be applied to the new certificate. The certificate is defective in that it is designed to protect the accountant rather than to give information to those who rely on the information which financial statements are supposed to reveal.