Reviews the book "Accounting-- A Survey of Principles and Practical Record Keeping Techniques," by Robert H. van Voorhis.

Reviews the book "Elementary Accounting," by Arnold W. Johnson.

Abstract The curriculum for prospective industrial accountants might begin from either of two viewpoints. One is that of taking a conventional body of subject matter which is organized into textbooks and inadvertently presenting this material as an end in itself. Almost needless to say this approach takes the more difficult part of curriculum building for granted. Thus, the curriculum builder would only select and prescribe course titles; the instructor would follow up the routine task of presenting the "tried and the true" while keeping student interest alive and enhancing it as much as possible. The aim of each course in such a curriculum is to "give the student a good understanding of" something or other which is rarely well defined. The principal defect of this approach is its poor adaptability to the needs of a changing world. A different approach would place less emphasis on conventional course content as pertains to both subject matter and method of teaching. In the beginning there would be little apparent presumption of a fixed body of subject matter to be covered or learned, but the instructor, of course, would have an abundance of subject matter at hand. This is based partly on the belief that the candidate to a major profession cannot know long in advance much about what the later requirements of his profession will be. The student must discover these objectives as his educational development unfolds, and his opinions will not be held for long. Most of this curriculum would be prescribed with but few elective courses. Instead of subject matter to be taught, the learning process would be the focus of attention.

Reviews the book "Principles of Engineering Economy," by 3rd ed., by Eugene L. Grant.

Abstract In a private enterprise economy with profit as the primary rational motive for production the correct reporting of profit is as important as a free market economy itself. The difference between nominal wages and real wages and nominal income and real income is an adjustment for change in price level measured by some general index. But similar distinction between nominal and real profits has not been widely accepted. This article illustrates quantitatively a distinction between real and nominal profit and shows some of its economic implications. In accounting for business income persistent use of the legal dollar at all times to measure cost and revenue has led to many unfortunate comparisons. The amount of money paid is usually considered to constitute cost as well as to measure cost. Real cost is, the value of economic resources over which money paid gives command. It is the general purchasing power of money paid which constitutes economic real cost and not the legal money itself. With a change in purchasing power of the dollar historical real costs become distorted unless corrected by an index of change in the general purchasing power of the dollar.

Abstract Following the general price inflation rafter World War I there was much discussion about accounting errors in the measurement of business profit when conventional or legal dollars were used in reporting historical costs. This discussion reached a climax in 1936 with the appearance of Sweeney's Stabilized Accounting. Now that another wave of general price increase has swept over the country, the discussion has been resumed. The valid objections to the application of index numbers to accounting data for purposes of reporting profits and losses are few. Unless the general price level remains constant, better index numbers should be constructed. An index designed to measure the change in general purchasing power of the dollar is superior for this purpose to any more special index. The index ideally might be one based on all commodities, or it might be one based on the prices of consumer's goods. The use of index numbers gives recognition to the economic realities of a business situation in place of mere legal formality where legal dollars are assumed to have a constant purchasing power.

Abstract In accounting as in almost no other field can the extremes of good and bad education be illustrated. Education in accounting should be subjected to the test of a critical theory. Former theories of education stresses the classical in the sense of the literary, linguistic and the so-called cultural disciplines. Education was conceived as specific training for the work to be undertaken after graduation from school. Great danger lies in this educational philosophy. For purposes of professional education the subject matter should be classed in two categories. While the difference may be one of degree, the distinction at some level is not only sound, it is indispensable. First, there is the skill or knowledge which the student can postpone learning, in the interest of total cost and economy in learning, until he needs to use it. Most of this training is more specific and extensive than colleges can reasonably hope to undertake. Second, there is the skill or knowledge which the student can learn with profit long in advance of his need to use it. Great economy in education can be attained generally if education on the higher professional level is confined to the latter.

Abstract Economics is concerned with the economy of a major unit of society, one which extends beyond the limits of any individual firm. Business accounting, on the other hand, deals with the economy of subordinate parts of a larger unit of society. The unit used by the accountant is typically the productive business firm. Economy is meaningless unless de fined in relation to the point of view of somebody or some group taken as a collective unit. Recognition of three distinct "levels" or types of context for any discussion about economic problems are that the problem of the individual or natural person as a consumer. The business firm as a producer. It is with the firm, often in the form of a corporate enterprise operating as a trading unit within a money economy, that accounting is concerned. The last level is that of national, or, better, total economy. The economy of the business firm can be expressed adequately in accounting terms. The economy of the individual also may be expressed in similar terms if exception is made for that segment of an individual's economy which is not expressed in money, that is, the individual may economize in the exercise of alternative modes of use of his non-monetary resources, as when he performs a service for himself.

Abstract The article presents information on the general-purpose terminology and form which should contribute to the effectiveness of annual reports. The question, therefore, is not what income statements actually mean as they are now published, but what they can be made to signify. Consideration of the content of the report is here omitted so far as the important problem of valuation is concerned. The title "Profit and Loss" does not describe the nature of this report as it has been developed in recent years. The name does not suggest the very important accounting category of expense. Moreover, the report contains many elements other than losses. The term profit is somewhat antiquated in comparison with income as a general descriptive term. Profit is definite and meaningful only in the sense of transaction profit; but transaction profit is only a small part of what the report is designed to display. Some income, as well as many kinds of expense, is and must be apportioned as a function of time or other bases, and accordingly the result is not strictly profit based upon a completed transaction or a number of transactions.

Abstract The article presents information on the fact that the Sixteenth Amendment 1913 was formulated to delegate power to the U.S. federal government to levy a tax on the income of natural persons. An income tax on corporations had been effective four years before the amendment. It was decided as early as 1904 that an excise tax could be measured by gross income and a corporate income tax was construed to be an excise tax for the privilege of doing business as a corporate entity. Whatever might have been the intent of the amendment or the popular belief, the income tax has not developed into a personal tax in a strict sense either in law or in other respects. The present Federal income tax is unique in the sense that it cannot be classed with any other known form. From a legal standpoint the tax does not follow the person. From an economic standpoint it does not fall on persons in proportion to their respective economic circumstances. It is neither legally nor otherwise a personal tax based on ability to pay.