Abstract Although cost accounting became fully absorbed into the formal accounts, it has nevertheless retained over the years something of its original and esoteric nature. Data incorporated into the cost accounts receive a transforming action sometimes not clearly encompassed in guidelines set forth for the practice of financial accounting. Thus, there arises a dilemma of both description and theory formulation. Cost accounting, when well developed, represents a highly specialized segment of the accounts. At the same time, however, its data become an important aspect of many problems facing the general accountant. Broadly speaking, what apparently is needed in accounting theory formulation is a study leading to a comprehensive and unified statement concerning accounting theory as a whole. Such a statement should integrate a presentation of purposes, a coherent general theory rationale, and guiding standards, which would apply to the broad outlines of the accounts. Theory expressions made in this statement must be capable of extension to all accounting processes. Finally, as regards the subject of this article, steps need to be taken to extend accounting theory formulation to specific problems encountered in the area of cost accounting.

Abstract Difficulty in utilizing cost control devices in the small business lies in a misunderstanding of the nature of cost control. Too often thinking on cost control is interwoven with some rather elaborate historical or standard cost system. Further, those who take the view that the income statement does not purport to and cannot present a picture of operating efficiency becloud the problem. Cost control has but one object and that is assisting management to attain its goals. It is axiomatic that an organization has control over its costs only when its management wants to control costs. Conversely, when management lacks interest in cost control, costs remain uncontrolled. It is management's function, among a great many others, to establish a profit goal. A wide awake management will look ahead and attempt to come to some conclusion as to what it is after and what it can reasonably hope to obtain. To achieve its profit goal, management must inaugurate a systematic plan of assuring proper expenditure and must establish upper and lower limits of expenditure. Finally, it will need to put its plan into effect at all levels of management from the top to the bottom of the organization.

Reviews the book "Cost Accounting and Costing Methods," by Harold J. Wheldon.

Abstract This article presents the role of the American Accounting Association's Committee on Cost Accounting Concepts and Standards. The Committee on Cost Accounting Concepts and Standards has a somewhat different position in the Association hierarchy than has the Committee on Accounting Concepts and Standards. The latter committee has received from the Association essentially what amounts to a charter. Once the general committee has arrived at certain conclusions, the Committee's work will receive rather automatic approval for publication. On the other hand, the Cost Committee has never had any such understanding with the Executive Committee. The Executive Committee may, at its discretion, publish or not publish its findings. The Committee on Cost Accounting Concepts and Standards will retain its position as an exploratory and experimental committee. Since this Committee works with data that is, for the most part, a step removed from the firing line of law and tradition, it should have a freer and less official position within the Association.

Reviews the book "Theory and Technique of Cost Accounting," by Lawrence L. Vance.

Abstract This is an era of experimentation and exploration in accounting. It parallels and is a portion of the same process which has given rise to innovations and developments in the social science of economics. Accounting like its sister science economics has belatedly begun to recognize that although the solution to each problem in the economic scene is limited and bounded by action taken relative to the solution of large problems, nevertheless, great potentialities for increase in economic well-being are possible through objective, piece-meal attacks on problems concerning the economy's units of activity, i.e., problems of individual business entities. To accomplish the many objectives of modern accounting-provision of data for financial statements, control, and special decisions of management-the art and science of accounts must be made more flexible, must be broadened, and must be deepened to accept within its ken increasing responsibilities for analysis and interpretation. The inordinate emphasis that has been placed upon single-purpose accounts and principles relating to such accounts must be replaced by a more scientific attempt to utilize accounts constructed so as to be of varied usefulness. Financial accounting as a device leading to the preparation of a questionable income statement and a more questionable balance sheet had its heyday in the first half of the present century. Accounting as a tool which embraces techniques of the statistician, the objective experimentalism of the engineer, and the concepts of the economist has great potentialities for serving the forward-looking purposes of management and investors beset on every hand by change in the social and economic scene. To be of greatest assistance in the solution of problems of private and public enterprise, there is a need for a broadened concept of the role of the accountant and accounts.

Reviews the book "Essentials of Cost Accounting," 2nd ed., by John G. Blocker.

Abstract During periods of comparatively stable prices, it is possible that the advantages of the standard pricing plan for materials, in terms of ease of costing, would outweigh the loss of a more current cost obtainable by a replacement cost method of pricing. However, if standard costs are utilized during a year of sharply rising or sharply declining prices, cost of materials used and sales will not be stated in terms of dollars of equivalent purchasing power. Cost, from a current cost standpoint, may be at variance with standard costs. It is probable that the advantage of having the replacement cost of goods at standard quantity usage both in the finished goods account and the cost of sales account would transcend the loss of keeping these accounts completely at standard cost. From the point of view of comparing cost of sales and profits, either on a product or period basis, ratios of cost to sales and profits to sales would be more readily comparable, since costs and sales will be expressed approximately in terms of dollars of the same purchasing power.

Abstract Standard cost accounting began as a specialized branch of accounting, in a large degree divorced from the main roots, the general accounts. Gradually, over the years, accountants have endeavored to utilize the benefits of standard costing within the traditional debit-credit system. In the process of integrating this new tool with the methods and aims of financial and cost accounting, the attempt has been to retain the aims originally set forth for standard costing and the aims originally established for financial accounting, unchanged, on a parallel or complementary footing. The principal goal of this paper is to place standard cost accounting, its aims and methods, in proper perspective within the scheme of accounts. The attempt is to show how maximum benefits from standard costing may be achieved by a process of integration with financial accounting, an integration particularly of aims. A further goal is to indicate the usefulness of standard costing to the newly accepted objective of cost accountants, the accomplishment of special cost studies.

Abstract The conventional accountant's attitude toward imputed costs emphasizes his tendency to adopt a disbursements or outlay concept of cost. The traditional accountant would claim, for example, that imputed interest as a cost is purely hypothetical and arbitrary. If investment on owned capital is subdivided between those portions invested in machinery and equipment and inventories as contrasted to an investment in land, the traditional accountant would, furthermore, be unwilling to recognize implicit rent. Finally, he does not consistently recommend the inclusion of a charge among the operating accounts for proprietor's salary. Thus the emphasis of traditional accounting revolves about sums of money paid out for goods and services in the accumulation of costs. The cost accounting concept of cost represents a development from period costing to the matching of costs to products. This concept is today still in process of evolution. It does not reject the period concept of cost; rather, it seeks to modify such a concept in order to associate costs with product. It further extends the recognition that period accounting gave to the idea of a going concern.