In the article, the available literature of the eighteenth and nineteenth centuries has been examined to discover when the idea of controlling costs was first rather clearly expressed and to trace the steps which were subsequently taken in developing the function of cost control. This article is noteworthy because it presents two new ideas relating to the purpose of keeping cost records. These objects are to examine and explain past results and to form a guide for future trading. The first object is based upon historical cost analysis which is of minor importance in controlling costs, but the second object indicate a forward looking purpose for keeping cost records which is of primary importance today in planning and controlling business activities. Furthermore, it emphasizes the importance of preparing statements that contains useful data and also attempts to explain a remedy for the justifiable lack of interest on the part of management in accounting reports, as they are usually prepared.

The many costs of operating a manufacturing enterprise, or of any business, have a tendency to increase faster than income unless a positive cost control program is functioning effectively. An effective cost control program is usually built around the cost accountant's reports and summaries of operating data, and management's corrective action taken as a result of studying these reports and summaries. Thus, in a broad sense, cost control is the responsibility both of the cost accountant and of management. The former is responsible for the recording and reporting phase of cost control, the latter for the taking of corrective action. The general responsibilities of the cost accountant in the function of cost control are (1) to plan and supervise the work in his department to the end that reliable and accurate cost data will be available for preparing reports, and (2) to prepare and submit reports, properly analyzed and interpreted, at such times and of such types as will make them of the greatest value to management for use as bases for controlling costs. The final responsibility rests with members of the management group who are line executives and who are responsible for directing the work of others. When reports are received, management should study them and make such investigations as may be necessary of deviations from planned performance. The responsible executives should then take whatever action is necessary to remove or correct the cause of reported deviations.

Management Accounting is not an entirely new development in the broad field of accounting but rather one of added emphasis on the recording and reporting of operating data to meet the needs of a new group, the hired managers of large corporations. Management accounting functions largely through operating reports based upon standard costs and budgets compared with actual expenditures, through internal auditing, and through special studies and reports pertaining to the probable effect of proposed plans and programs. Undoubtedly, management accounting with its many opportunities for rendering additional and more valuable services to management has opened new and challenging frontiers to the accountant. To the practitioner it means adjusting himself to new methods of collecting and recording operating data, new demands for additional services, and new concepts of reporting. To the teacher it means added emphasis upon the uses of accounting data as well as staunch adherence to the teaching of basic theory and principles.

Reviews the book "Cost Accounting," 2nd ed., by Adolph Matz, Othel J. Curry and George W. Frank.

In January 1957, the Executive Committee of the American Accounting Association appointed the first committee on management accounting; the primary charge being "to clarify just what is meant by the term management accounting. In recent years there has been a growing awareness of the potential utilization of accounting data by management for internal purposes. At the same time there has been an increasing recognition of the limitations of accounting as it exists today in meeting these needs. Management accounting is the application of appropriate techniques and concepts in processing the historical and projected economic data of an entity to assist management in establishing a plan for reasonable economic objectives and in the making of rational decisions with a view toward achieving these objectives. It includes the methods and concepts necessary for effective planning, for choosing among alternative business actions and for control through the evaluation and interpretation of performance. Management accounting concepts are especially important in that they deal with the fundamentals of maximizing return on investment, a primary objective of the business entity. This is especially true in the field of marketing where the broad and complex problems of pricing, methods of distribution, marginal cost and product mix must be met and solved.