A full understanding of the pattern of responsibilities and authorities for accounting by business enterprises in the United States requires knowledge of the political and economic history since the establishment of this nation. While such knowledge is presupposed for the purposes of the inventory, it is pertinent to observe that both governmental and economic institutions reflect systems of checks and balances against abuses of power and other human weaknesses. In line with this pattern, the responsibilities and authorities for accounting and financial reporting of business enterprises constitute a mosaic in which the primary responsibility and authority of the board of directors is supplemented by secondary responsibilities and authorities of stock exchanges, regulatory commissions, the U.S. Securities and Exchange Commission and independent Certified Public Accountants (CPA). The nature of the responsibility and correlative authority of each of these groups is described in considerable detail in the inventory. The responsibility and authority of the CPA are dealt with both in respect to the individual practitioner or firm and with respect to the Accounting Principles Board of the Institute.

This record constitutes a splendid testimonial that the manufacturing chemicals industry in the United States has fully met its responsibilities by utilizing its personnel and capital resources to create a more fruitful world. The major unresolved issues are in regard to the basis to be used in charging current manufacturing costs for inventories utilized, which were purchased or produced in a preceding period, and for the exhaustion applicable to the current period of plant and equipment acquired in prior years when the purchasing power of the dollar was much greater than it is today. In the case of inventories, the last-in, first-out method of costing has been recognized for several years as an accept-able accounting method for costing goods sold. Therefore, managements of enterprises have the option of using either cur-rent or historical inventory costs or some combination of the two in computing the costs of goods sold during the year. In any event, there is no accounting road block to the accomplishment of this objective if managements of business enterprises in America conclude that it is sound business practice to do so.

The article focuses on accounting for fixed asset and their amortization. Accounting for the acquisition and construction of the fixed assets required in the production and distribution of goods and services is important to business managements and to the accounting profession. There have been changes in the past fifty years of kaleidoscopic economic and political events and social movements. Since the fixed assets and the related amortization accounts are continuing historical accounts, the present balances have obviously been affected by any changes made in accounting practice over the years resulting from changes in business conditions, in the purposes of the accounts and in mode of thought of various managements and their accounting advisors. The principal accounting points discussed regarding fixed assets and their amortization includes accounting entity, monetary basis for carrying fixed assets, cost, close relationship between tangible and intangible fixed assets and their amortization.

Against the extensive background of history it is of great interest to note the comparatively recent origins of two phenomena which people regard as outstanding characteristics of Western Civilization. The author refer to the establishment of responsible parliamentary government since the last quarter of the Seventeenth Century, less than three hundred years ago, and to the development of the industrial system of economy since the last quarter of the Eighteenth Century, less than two hundred years ago. The author is certain that accounting, even though elementary in method, served useful purposes in the governmental and economic undertakings through all the millenniums encompassed by the identifiable civilizations. However, an art or science cannot become a social force until the economic and governmental conditions permit an independent professional development which may then use its talent in making a contribution to the public welfare. These favorable conditions for the field of accounting did not arise until after the establishment of responsible representative government and an industrialized economy. As industrialization progressed business enterprises attained much wider scope and transactions became more and more complex. Under these conditions the proprietors found it necessary to divide duties among personnel in accord with the logical phases of the activities and to base judgment to a greater and greater extent upon facts and interpretations furnished by the accounting process.

In placing contracts for tremendous quantities of equipment and materials needed to meet requirements of war, the United States Navy Department, as well as other government departments, used the cost-plus-fixed-fee type of contract extensively. This type of contract requires continuous audit of costs incurred by the contractor as a necessary part of the procurement and payment procedures. The performance of this audit work for all Navy cost-plus-fixed-fee contracts constituted the major portion of the work-load of the Cost Inspection Division. In organizing to meet this responsibility three primary phases required attention, the development of a sound plan of organization structure for the Washington office and for the field offices in the various Naval Districts of the country. It also required the recruiting of experienced and unqualified accounting personnel and the preparation of a codified and understandable manual of instructions for the guidance of cost inspection personnel.