In an article entitled Income Taxes in Financial Statements appearing in the April 1957 issue of The Accounting Review, Maurice Moonitz presents the case for the allocation of taxes on business income. The basic proposition is essentially that embodied in Accounting Research Bulletin Number 23 of December 1944. Moonitz's contribution lies in the orderly development of a supporting rationale. The object of this paper is to rebut these arguments and to develop from this rebuttal an alternate and opposing thesis. Although Moonitz considers the intra-period application of the accrual doctrine, attention will here be directed to the admittedly more important question of inter-period income tax allocation. There is no doubt that current practice defines the business income tax as a cost. However, the majority position is not invulnerable. In response to Moonitz's challenge, it can be asserted that a dollar of corporate income tax differs from a dollar of corporate wages in that the former is paid only if period revenues exceed period costs. In this respect, the tax dollar is suspiciously like the dividend dollar.

In the October 1951 issue, "The Accounting Review" published the text of Supplementary Statement No. 2 prepared by the American Accounting Association's committee on concepts and standards underlying corporate financial statements. That differences of opinion among members of the Committee relative to the utility of the historical dollar cost convention were not as extreme as those apparently existing among accountants generally is demonstrated by the emergence of unanimous and reasonably definite conclusions. That substantial differences in viewpoint did exist, however, is evidenced by the fact that achievement of unanimous agreement on a statement for publication required more than a year of effort, involving several meetings and very extensive correspondence. Agreement within the committee as to the dynamic nature of accounting practice did not, of course, lead automatically to a decision in favor of change. It was generally conceded that the widespread dependence of our now highly complex economy on accounting information presented a major barrier to radical revisions in accounting procedures.

Reviews the book "Effective Use of Statistics in Accounting and Business," by John B. O'Hara and Richard C. Clelland

Reviews the book "The Role of Inventories in Business Cycles," by Moses Abramovitz.

This article focuses on accounting in executive programs. Teaching of accounting in these management programs has required and will continue to require something of a redefinition of what it is that we are teaching and for what end. A partial solution to the problem of obtaining a balanced approach to the accounting segment of these programs seems to lie in the fact that management personnel bring real on-the-job experiences to the classroom. According to the author, much of the content of accounting can be effectively taught apart from marketing or personnel administration. But in a discussion of planning or control, accounting is only one of the many elements involved. Obtaining a working familiarity with accounting involves the absorption of a fairly substantial and reasonably well organized body of knowledge. The teaching of accounting should come from illustrations used in the marketing, production, and other areas. The author regards all accounting data as basically a reflection of a variety of business operations.

In connection with its continuing study of the concrete meaning of "business entity," the Committee on Concepts and Standards of the American Accounting Association has selected the area of consolidated financial statements as one of importance. The basic principles of consolidated financial statements include that firstly, in the absence of special circumstances, consolidated statements are useful representations of financial position and results of operations when a dominant central financial interest in two or more companies exists and is accompanied by administrative control of their activities and resources. Secondly, in so far as practicable, the consolidated data should reflect the underlying assumption that they represent the operations, resources, and equities of a single entity. The first principle is a statement of policy, of objective, defining broadly the entity or area of consolidation, the second principle sets forth a general guide to the procedures of consolidation.

This article discusses the information on the paragraph no. 5. The Paragraph No. 5 under "Expense" in the 1948 Revision of Accounting Concepts and Standards Underlying Corporate Financial Statements of the U.S. reads that An assignment of all or a portion of the cost of an asset to expense, made in good faith after considered judgment and after competent review, in accordance with the accounting concepts and standards of the time, is not subject to reversal in a later period. Errors of a mechanical and non-judgment nature should be corrected in the period of their discovery. The Committee on Concepts and Standards is in agreement with the apparent basic purpose of this statement to reduce the possibility of manipulation of the net income calculation through reversals, revisions and reaccounting of past depredation charges and other amortizations. At the same time it recognizes that a position unalterably opposed to the correction of errors of judgment is both arbitrary and difficult to defend.

This article comments on inventory pricing and changes in price levels. Ideally, the measurement of accounting profit involves the matching precisely of the identified costs of specific units of product with the sales revenues derived there from. Secondly, where conditions are such that precise matching of identified costs with revenues is impracticable, identified cost matching may be simulated by the adoption of an assumed flow of costs. Also, a flow assumption can be realistic, in that it reflects the dominant characteristics of the actual flow of goods; thus it may reflect an actual dominance of first-in, first-out, average, or last-in, first-out movement. A flow assumption can be artificial, on the other hand, in that it premises a flow of costs that is clearly in contrast with actual physical movement. However, the periodic income of a business enterprise is computed by deducting from the revenues of the period the costs which are properly associated with those revenues. In the case of certain costs, for example sales commissions, the relationship to the revenues of a period is quite direct and the matching process is accomplished with a minimum of uncertainty.

The article focuses on recommendations presented by the American Accounting Association's Committee on Concepts and Standards, regarding the use of term "reserve" in accounting. The committee recommended that the term reserve should not be employed in published financial statements of business corporations, appropriations of retained income should not be made or displayed in such a manner as to create misleading inferences, and the reserve section in corporate balance sheets should be eliminated and its elements exhibited as deduction-from-asset, or liability, or retained income amounts. In general usage, outside of accounting, a reserve is a fund of cash or other assets. In accounting the term has been used to caption a variety of balance sheet items including segregated retained income, segregated asset, asset valuation and asset amortization amounts, and liabilities. It has been recommended that the word reserve be restricted to captions describing appropriated retained income. The committee believes that the popular understanding of financial statements, and the thinking of the profession, would be promoted by abandoning the term.