Reviews the book "Public Finance," 2nd ed., by Alfred G. Buehler.

Reviews the book "Cost Accounting, Principles and Methods," 2nd ed., by Charles Reitell and C.E. Johnston.

Reviews the book "Accounting Manual for Small Cities," by Carl H. Chatters.

The article presents information on encumbrance accounting for industry. As soon as purchase orders or contracts are signed, the resulting obligations should be entered at once as encumbrances of the funds and appropriation affected. This is one of the principles laid down for municipal accounting by the National Committee. But it is just as appropriate for all organizations characteristics which make this kind of accounting desirable. The principle has been generally accepted both in theory and in practice, and has been recognized in laws governing this type of accounting. Inspection of published reports of municipalities shows that the principle is used in their accounts in many cases. The laws of several states show a recognition of the principle. For purposes of control and information, and to avoid possible personal liability, it is important that the records be left with full disclosure at all times of the free unexpended, unencumbered balance of appropriations. To assure that this information will be available, it should be made part of the permanent record. If industrial and commercial businesses had such information available as part of the permanent record it would be helpful and valuable in many instances to managers, directors, stockholders, bankers and others.

There is probably no field of accounting in which a greater opportunity for missionary work exists. The field of governmental accounting has received as little recognition as any, but the education of those who will keep the records cannot go far until those who arc to install and audit the records understand the proper procedures to follow. The governmental units have a larger dollar volume than any other industry but there is probably no industry in which less adequate accounting systems may be found. The increasing scope of public business in municipal, state, and Federal governments should be recognized. The accountant will be looked to as the one who can meet this situation, but if his training has included nothing on this special problem he will not be ready. It may be that the failure to give more importance to governmental accounting is attributable to the lack of a widespread offering in colleges and universities comparable to other accounting subjects. Education for the aspiring accountant should not be measured by what is available, but by the value and need of certain fields of study. The courses offered should fit the need of the student and not the desire of the school.

The article discusses the municipal accounting system in which fixed assets of a municipality are not used in utility operation. There are some practical reasons for the existence of this situation. These are discussed under the heads of municipal credit, depreciating value, and replacement. When a major fixed asset is acquired by a municipality it is usually financed through a bond issue. The security for these bonds is most often the general credit of the city. The financial condition of the city at the time of issuing the bonds, during the life of the bonds, and at the time of payment of the bonds, is not dependent upon the value of the fixed asset involved. In other words, from the financing point of view, there is nothing which causes the municipal officials, bondholders, or general public to need property accounts. Municipalities should keep fixed property accounts for the sake of control, historic value, and completeness, and these property accounts should be kept in a separate set of balanced accounts to preserve their unity, and to maintain the fundamental purpose of other funds already in existence.

It has been frequently contended that there is no such thing as prepaid interest. Cash is designated by amount only and any cash to the specified amount is as proper for business transactions as any other cash of the same amount. This is not true of other tangible assets. Usually Rent Expense would be debited and Cash credited but in this situation a building is being borrowed and its use is being paid for by what is called rent. However, when money is borrowed an entry is made debiting Cash and crediting Notes Payable. The fact that cash is fungible, that any cash the same in amount may be returned at loan maturity and the fact that buildings are not fangible and may be returned only in exactly the same properties, cloud the issue but do not change it. When payment in kind is indicated it refers to the payment for the use of an asset in the same form as the asset used, as the payment for money borrowed with money, or the payment of rent for a building used in the form of another building. If rent has been paid in advance and the prepaid rent account has been debited and if the lease is broken by agreement, the rent may be reduced as easily as the interest may. This is no more consistent than the other arguments.