Accounting theory and practice (Volume 2): a textbook for colleges and schools of business administration

PREFACE

A knowledge of the subject matter of Volume I is a
prerequisite to the profitable study of the present work.
Therefore, it may be well to review briefly the contents of
the latter as an introduction to this book. In Volume I
the attempt was made to formulate and illustrate the basic
principles upon which the practice of accounting is founded.
The principles of debit and credit were developed and their
application explained — as related ultimately to the balance
sheet and statement of profit and loss. The chief books
of original entry (the voucher register excepted) and the
various ledgers were described and illustrated. Columnar
books, controlling accounts, methods and devices for pre-
venting and detecting errors, methods for the proper hand-
ling of purchases, sales, cash, and trade discounts, and
some phases of proportion and interest were discussed in
detail.

Some special applications of accounting principles, as
viewed in relation to the accounting problems involved
therein, were also explained and illustrated under such
heads as: notes receivable discounted and dishonored;
consignments and approval sales; single and joint venture
accounts; accounts current, their reconciliation and ad-
justment; instalrqent sales; sales for future delivery; single
entry, its methods and the results attainable under it; etc.

From the standpoint of business organization, the ac-
counting problems peculiar to the single proprietorship and
the partnership were given full treatment. The advantages
and disadvantages of the various types of organization, the
rights and duties of owners among themselves and to out-




siders, the accounting procedure necessary under different
conditions for changing from one form of organization to
another, and other Hke items were set forth. Underlying the
entire treatment of the subject was the guiding principle
that accounting is never an end in itself, that its right to
existence depends solely on the service it can render from
the standpoint of administrative and financial management.

In content, the present volume is primarily a study of
the corporation, its accounting and financial problems,
although most of the material, in so far as it consists of a
statement of general principles, is equally applicable to
other types of organization. The emphasis of the volume
is laid upon the problem of valuation as met in the commercial
balance sheet. Chapters IV to XXVII inclusive comprise
this portion of the subject matter. The other chapters
treat miscellaneous matters, a knowledge of which is essen-
tial to the student of accounting. These latter form parts
of the work of the second year as mapped out in the author's
scheme of instruction, whereby the whole field of account-
ing is covered by a well-graded three-year course of study.
In this scheme cost accounting should be studied concur-
rently and as a parallel course with the work of this second
volume. Only a bare outline of some of the problems and
methods of cost accounting is presented in this volume.

As to the division of the text and its use in the general
scheme, it is suggested that the first twenty-seven chapters
should comprise the text material for the first semester,
leaving the remainder for the second semester in which
the chief emphasis should be placed on the solution of
problems rather than on the formal classroom lecture.
Hence the text material is lessened for this semester's
work, and the student's main effort is directed towards
the application to the problems of business of the principles
already established.