Accounting theory and practice, Volume 2 (of 3) - Roy B. Kester

12. What problem is involved in partnership liquidation by instalments?

13. How should it be solved theoretically? How is it often solved in practice?

INDEX

A
Accidents, Contingent Depreciation, [131]
Accounting,
branch house (See “Branch house accounting”)
department, organization, manufacturing business, [26]
difference between factory and financial, [49]
Accounts,
branch (See “Branch house accounting”)
current,
reconcilement of, consolidated balance sheet, [607]
deficiency, [633]
Forms, [635], [638]
doubtful, reserve for,
a suspense account, [558]
head office, [531]
impairment of capital, [633]
valuation of, [222]
manufacturing, [690]
numbered (See “Numbered accounts”)
open,
discounted, accounting for, [562]
discounting, [560]
operating expense, classification, [567]
operating revenue, classification, [566]
payable, [345]
consigned goods sold, [349]
definition, [347]
deposits, [348]
dividends not yet paid, [349]
future deliveries, [349]
long-term notes, [349]
“not due” and “past due,” [348]
realization and liquidation, [639-650]
Forms, [642]
receivable,
analysis of customers’ accounts as basis for estimate
of bad debts, [217]
basis of estimate of bad debts, [219]
discounted, [560]
discounted, accounting for, [562]
items included, [215]
objection to title, [215]
“trade debtors,” [216]
valuation of, [215]
receivers’ (See “Receivers”)
reserve (See “Reserves”)
salvage, [188]
showing of intercompany, [606]
surplus (See “Surplus”)
suspense (See “Suspense accounts”)
trustee (See “Trustee”)
valuation, [187]
bond investments, [267]
showing on the balance sheet, [77]
Accrual method, [250]
Accrued depreciation (See “Depreciation”)
Accrued expenses (See “Expenses”)
Accrued income (See “Income”)
Adaptation, appreciation due to, [207]
Adjustment,
fire losses (See “Fire losses”)
plant ledger, [193]
Administrative schedules, profit and loss summary, [491]
Advances,
to subsidiaries, [262]
rules for valuation, [263]
Advertising,
creation of good-will by, [334]
statistics, [584]
Agency,
accounts, [525]
branch and, differentiated, [522]
foreign purchasing, [555]
foreign sales, [552]
periodic conversion of results, [553]
Allowances,
purchase, under voucher system, [40]
Amortization,
bond discount and premium, [269]
schedule showing, [270]
leaseholds, [315]
Annuity,
compound interest, formulas, [164]
formulas, [272-276]
method of calculating depreciation,
Chart, [166]
appraisal of, [181]
compound interest method, [161], [163-167]
fixed periodic amount, [165]
interest, [165]
Appraisal method of calculating depreciation, [169], [170], [183]
Appraisal schedule,
sinking fund method of calculating depreciation, [162]
Appraisals (See “Valuation, principles of”)
Appreciation,
due to physical changes, [207]
adaptation, [207]
solidification and seasoning, [207]
land values, [304]
issue of bonds, [305]
sale of old and erection of plant on less valuable land, [305]
offset to depreciation, [206]
profits due to, [404]
unearned increment, [209]
Assessment, Stock,
creation of a margin, [409]
Assets,
contingent, [81]
current,
depreciation, [119]
transfer of, into fixed assets common cause of insolvency, [494]
disposal of, [295]
effect of losses on future profits, [393]
grouping on balance sheet, [70-74]
immovable tangible fixed,
buildings, land, and wasting assets, [297-315]
intangible, [316-338]
losses,
charged against current profits, [396]
charged to capital, [397]
legal decisions as to, [394]
treated as deferred expense charge, [396]
movable fixed,
machinery and tools, furniture and fixtures, and other
equipment, [279-296]
plant, grouping and classification of, [191]
profits due to appreciation of, [404]
subject to depreciation a deferred charge to operations, [93]
undervaluation, creating a secret reserve, [418]
valuation of,
current assets, [96]
deferred charges to operation, [96]
fixed assets, [96]
wasting (See “Wasting assets”)
Assignee,
accounting features same as for receiver and trustee, [621]
appointment of, [620]
function of, [620]
Average clause,
fire insurance contract, [574]
Averages,
theory of, repairs, [147]
B
Bad debts (See “Debts, bad”)
Balance sheet, [60-80]
account form of, [74-76]
accrued items, [250]
anticipation of profits or losses on stock-in-trade, [227]
bonds,
presentation of, [369]
valuation, [266]
business methods under the microscope, [60]
capital stock, [374], [383]
cash, [210-214]
classification, [70]
comparative, receiver’s report to the court, [627]
condensation of information in, [77]
condensed, [693]
consolidated (See “Consolidated balance sheet”)
content and valuation, [81]
contingent assets, [81]
contingent liabilities, [81]
contingent liabilities, kinds of, [352]
definition, [62]
depreciation reserve, [199]
accounts, [187]
English form,
double-account form, [68]
Form, [69]
origin of, [65]
variation of, [67]
form of, [63]
groups, [70]
arrangement of, [72]
distinction between current and working assets, [71]
main, of asset items, [95]
suggested scheme, [74]
titles, [71]
intangible assets, [316-338]
interrelation of profit and loss and, [466]
lack of clearness, [79]
estimates rather than facts, [80]
purposeful misrepresentation, [80]
vagueness of terminology, [79]
land, donated, contingent value of, [713]
liabilities, [339-342]
arrangement, [340]
cancellation of, against assets, [341]
items within groups, [341]
notes payable, classification of, [346], [347]
purposes and uses, [64], [77]
reading of, [61]
knowledge of accounts, [61]
knowledge of the principles of valuation, [61]
relation between, and trial balance, [62], [77]
report form of, [74-76]
sales discounts on, [415]
sinking fund, [457]
valuation of, [276]
statutory requirements as to frequency of, [77]
stock-in-trade, [225-240]
temporary investments; accrued and deferred items, [241-257]
titles, [70]
notes receivable, [223]
treasury stock, [383]
types of, [65]
Continental, [65]
English, [65]
use of supporting schedules, [79]
valuation accounts, [77]
valuation and content rather than form, the problem, [97]
Bank,
account, voucher checks given a new series of numbers to
facilitate reconciliation with, [37]
disposition of cash funds, [211], [213]
loans, [347]
Bankruptcy, [620-654]
appointment,
receiver, [621], [622]
trustee, [621], [622]
creditors’, first meeting of, [622]
deficiency account, [633]
Form, [635], [638]
disposing of property, [629]
duty of trustee, [502]
involuntary, [622]
liquidating dividends,
declaration of, in hands of referee, [630]
method of liquidating, [502]
proceedings, initial statements presented to the court, [627]
realization and liquidation account, [639-650]
Forms, [642]
receiver, reports to the court, [625]
relative standing of creditors, [630]
statement of affairs, [631]
Forms, [634-638]
basis of valuation, [633]
voluntary, [622]
Barrels, valuation of, [293]
Baskets, valuation of, [293]
Betterments, [89-93]
distinction between repairs and renewals, [113]
leased buildings, [300]
recording depreciation on the books, [189]
Bonds,
accounting for issue of, [363]
entry of interest payments on books, [366]
entry of premium or discount on books, [365]
entry on books, [364]
relation of interest to premiums or discount, [367]
amortization of discount and premium, [269]
authority for issue of, [361]
bonus, [13]
classification, [359-361]
character of issuing corporation, [359]
conditions incident upon payment of principal and interest, [360]
purpose of the issue, [359]
security underlying, [359]
difference between, and real estate mortgages, [358]
discount,
nature of, [266]
profit and loss summary, [474]
example of true interest cost, [368]
financial considerations involved in issue, [361]
fixed liability, [357]
interest rate, [267]
issue of, on appreciated land values, [305]
kinds of, [358]
methods of valuing,
annuities, formulas for, [272-276]
compound interest, formulas for, [271]
nature of, [357]
payment of dividends in, [438]
premium, [343]
nature of, [266]
presentation on balance sheet, [369]
priority of lien, [361]
record of investments, [267]
sinking fund, [447-465]
surety, signature to, contingent liability, [355]
valuation of, when held for temporary investment, [245]
values and market interest rates, [265]
versus stock issues, [362]
Bonus,
bonds, [13]
stock, [13], [16]
stock issued as, [383]
treated as entries to a margin account, [409]
Books (See “Records”)
private (See “Private books”)
Borrowing, to pay dividends, [436]
Bottles, valuation of, [293]
Boxes, valuation of, [293]
Branch house accounting, [521-555]
adjustment on branch and head office books, [535]
advantages of branch and agency system, [521]
agency accounts, [525]
agency and branch differentiated, [522]
agency, foreign sales, [552]
periodic conversion of results, [553]
books, [529]
degree of control desired, [523]
example of adjusting entries, [537]
factors of successful management, [523]
foreign branch
accounts opened on books, [544]
conversion of branch results, [546]
example of a London control account, [550]
example of journal entries to adjust
New York books, [549], [550]
example of trial balance, [548], [549]
handling fluctuations in exchange, [545]
illustrative bookkeeping problem, [548]
local supervision of, [552]
problem of, [543]
foreign exchange, [542]
handling fluctuations in, [545]
foreign purchasing agency, [555]
head office accounts, [531]
illustration of complex accounts, [529]
illustration of simple accounts, [526]
main principles of, [524]
purchases, [533]
records, [526]
reports from branch, [539]
customers’ accounts collected, [541]
examples of, [540]
periodic cash summary, [540]
sales, [534]
Brokers,
stocks and bonds as stock-in-trade, valuation of, [245]
Buildings,
cost of, [298]
issue of stocks or bonds, [298]
purchased outright for cash, [298]
put up by the concern itself, [299]
depreciation,
application of, [301]
rates, [301]
uses and construction determine life, [301]
expense and income,
allocation of, [596]
methods of bookkeeping, [598]
workmen’s dwellings and social betterment work, [599]
leased betterments on, [300]
owned as freehold for life, [302]
ownership versus renting, [597]
real property, [297]
valuation of, [300]
Burden, definition of, [50]
C
Capital,
deficiency, false good-will to cover, [336]
expenditures (See “Capital expenditures” below)
liquidating dividends, [445]
losses,
charged to, [397]
relation to dividends, [443]
profits, [405]
return of, in form of dividends when property is subject
to depletion, [311]
working, donated, disposition of, [475]
Capital expenditures, [87]
asset subject to depreciation a deferred
charge to operations, [93]
authorization for booking, [94]
construction costs, [94]
defined, [87]
distinction between, and revenue, [95]
repairs on second-hand plant, [94]
treatment of cost-cutting changes, [92]
Capitalization,
combinations and consolidation, [516]
cost, [376]
earnings, [375]
increase of book, [375]
of profits, valuation of good-will based on, [335]
Capital receipts, [87]
Capital stock (See “Stock”)
Carriers, valuation of, [293]
Cash, [210-214]
disposition of funds, [213]
bank, [213]
petty cash, [213]
safe or drawer, [213]
various working funds, [213]
held abroad, [214]
petty, [211]
imprest system, [211]
principles of valuation, [210]
realization and liquidation statement, [643]
sale of capital stock or bond issues, [213]
stamps remitted as, [212]
statistics, [584]
temporary disbursements, [213]
tying up, in stocks of material, cause of insolvency, [494]
unwise use of, for paying dividends, [495]
what the term includes, [210]
working funds, [211]
imprest system, [211]
Cash book,
separate, for special bank account, [670]
Casks, valuation of, [293]
Certificate of stock, [9], [10]
Charts (See “Graphs”)
Check,
voucher, [32]
canceled, [32]
distribution of charges, [32]
folded, [32]
Forms, [33]
given a new series of numbers to facilitate reconciliation
with bank account, [37]
single, [32]
Forms, [34]
Classification,
accounting, of depreciation on patents, [322]
accounts (See “Numbered accounts”)
plant assets, [191]
alphabetic numeric system, [191]
combined alphabetical and decimal numerical system, [191]
numerical, [191]
Climatic conditions, factor in determining depreciation rate, [143]
“Close” corporations, [2]
Coinsurance clause, [574]
Collateral, loans on, [370]
Collections costs,
allocation of, [414]
statistics, [584]
valuation of trade debtors, [221]
Combinations and consolidations, [507-520]
capitalization, [516]
closing the books of the merged concerns, [518]
consolidations,
distinction between, and merger, [510]
formation of, [511]
earning capacity, [515]
equalization of conditions, [513]
good-will, [515]
merger,
formation of, [511]
opening the books, of, [519]
payment of amalgamated interests, [517]
principles of valuation of the constituent companies, [512]
reasons for, [507]
types of, [507]
valuation of, principle, [514]
Commercial corporations, [2]
Common stock (See “Stock”)
Comparative statement of profit and loss
(See “Profit and loss summary”)
Composite life method,
calculating depreciation, [155]
appraisement of, [177]
Compound interest,
formulas for, [271]
Condensation, balance sheet, 77
Condition per cent, [172]
test of, [195]
Consigned goods sold, current liability, [349]
Consolidated balance sheet, [261], [600-619]
capital stock, [611]
conditions under which used, [602]
current accounts, reconciliation of, [607]
deficit, [612]
function, [600]
holding company, [602]
illustration of, [616-619]
intercompany accounts, [606]
notes discounted, [607]
partial ownership, [601]
profit and loss summary, [612-615]
purpose, [600]
setting up of, [603]
surplus, [611]
valuation of inventory, [607]
minority interests, [610]
valuation of liabilities, [611]
Consolidated profit and loss summary, [612-615]
Consolidations (See “Combinations and consolidations”)
Construction costs, [94]
Containers, valuation of, [293]
Contingent depreciation (See “Depreciation”)
Contingent liabilities (See “Liabilities”)
Contracts,
length of cost period, [236]
long-term, profits on, [401]
redemption, covering preferred stock, [384]
uncompleted, valuation of, [234]
valuation of, [234]
Control, permanent investment for, [261]
Convertible preferred stock, 6
Copyrights, [325]
valuation of, [325]
Corporations, [1-25]
bonds (See “Bonds”)
classification, [1]
commercial or trading, [2]
de facto, [2]
de jure, [2]
domestic, [2]
financial, [2]
foreign, [2]
industrial or manufacturing, [2]
private corporations, [2]
public corporations, [1]
public utility or quasi-public, [2]
stock and non-stock private corporations, [2]
combinations and consolidations, [507-520]
definition, [1]
dividends (See “Dividends”)
holding companies, accounting for, [500]
liquidation (See “Liquidation, corporations”)
organization, working, [3]
board of directors, [3]
committees, [3]
officers, [3]
ownership, method of, [2]
advantages, [3]
“close,” [2]
“open,” [2]
“sole,” [3]
profits (See “Profits”)
records,
dividend book, [20]
instalment book, [20]
minute book, [20]
register of transfers, [20]
stock certificate book, [20]
stock ledger, [20], [21]
Form, [22]
stock register, [21]
stock transfer book, [20]
subscription book, [20]
subscription ledger, [20]
transfer book,
Form, [21]
stock (See “Stock”)
Costs,
accrued, operating reserves for, [413]
buildings, [298]
bought by issue of stocks or bonds, [298]
purchased outright for cash, [298]
put up by the concern itself, [299]
capitalization on basis of, [376]
collection,
allocation of, [414]
valuation of trade debtors, [221]
construction, capital expenditures, [94]
factory (See “Costs, factory,” below)
goods sold,
manufacturing concern, [478]
trading concern, [479]
land, [303]
original, factor in calculating depreciation, [150]
statistics, [584]
stock-in-trade, [230]
cash discount, [230]
distribution of, [231]
objections to valuation at less than, [226]
summary argument for valuing at, [228]
valuation at, [225]
temporary investments, [245]
Costs, factory, [49-59]
contracts and length of cost period, [236]
cost-cutting changes, treatment of, [92]
definitions of terms, [49]
direct costs, [50]
factory expense, overhead or burden, [50]
full cost, [50]
indirect cost, [50]
prime cost, [50]
total manufacturing cost, [50]
depreciation and plant efficiency, [113]
difference between factory and financial
accounting, [49]
expense,
basis of distribution, [58]
elements entering into, [58]
inventory-taking, [237]
methods, [238]
perpetual, [239]
rules, [238]
labor,
accrued wages, [57]
direct and indirect, [53]
distribution of charges, [57]
materials,
accounting for, [52]
auxiliary, [51]
nature of, [51]
perpetual inventory system, [53]
record of purchases and periodical inventory, [52]
operation of machine accounts, [282]
patents, effect of rate of depreciation, [324]
pay-roll, [55]
methods of payment, [56]
safeguarding, [55]
prime costs,
direct and indirect labor, [53]
materials, [52]
special purposes of cost records, [50]
predetermination of selling price, [51]
stores department,
function of, [52]
summary of manufacturing cost, [59]
supplies,
manufacturing, [52]
nature of, [51]
operating, [52]
time-keeping records, [54]
cards, [54]
valuation of manufacturing inventory, [233-236]
contracts, [234]
finished goods, [233]
goods in process, [234]
raw material, [234]
valuation of scrap, [236]
Credit, mercantile, [216-224]
application for, balance sheet as basis for, [79]
bad debts,
analysis of customers’ accounts as basis for estimate of, [217]
basis for estimate of, [219]
classification of accounts according to time overdue, [218]
estimating, [216]
length of credit period, [217]
trade debtors as basis of estimate of, [219]
classification of accounts according to length of time overdue, [218]
deferred, [351]
discounts and collection costs, [221]
notes receivable,
balance sheet titles for, [223]
interest on, [223]
loss on, [222]
risk and length of credit period, [217]
risk from losses, [216]
valuation of receivable items on open account, [221]
Creditors,
bankruptcy proceedings, final meeting, [629]
first meeting of, in bankruptcy proceedings, [622]
relative standing of, receiver in equity, [630]
status of, in liquidation, [504]
voucher index of, [38]
Crystallization, cause of depreciation, [133]
Cumulative preferred stock, [5]
Current assets,
depreciation, [119]
valuation of, [96]
Current liabilities (See “Liabilities”)
Cuts, valuation of, [294]
D
Debenture stock, [4], [8]
Debts,
bad (See “Debts, bad,” below)
settled by—
conversion of an asset, [453]
creation of another liability, [453]
increase in net worth, [453]
sinking fund, effect of, [448], [452]
Debts, bad,
basis for estimate of, [216], [219]
analysis of customers’ accounts, [217]
classification of accounts according to length of
time overdue, [218]
sales as, [220]
summary, [220]
trade debtors as, [219]
loss of notes receivable, [222]
reserve for, [411]
risk and length of credit period, [21]
Decrepitude, [173]
De facto corporations, [2]
Deferred—
charges,
accounting for, [256]
danger of overvaluation, [255]
definitions, [253]
kinds of, [253]
to operation, valuation of, [96]
valuation of, [254]
credits, [351]
income, [343]
misuse of term, [417]
maintenance, [109]
Deficiency, shares of,
liquidation of partnership by instalments, [652]
Deficit, shown on consolidated balance sheet, [612]
De jure corporations, [2]
Delivery equipment (See “Equipment”)
Depletion,
application of income tax law to, [312]
assets subject to (See also “Wasting assets”)
basis of charge, [312]
contingent cause of depreciation, [134]
distinction between depreciation and, [117]
leaseholds, [314]
reserves, [413]
return of capital in form of dividends, [311]
unusual risks, [313]
wasting assets (See “Wasting assets”)
Deposits, Current liabilities, [348]
Depreciation,
“accounting” and “fair,” [107]
accrued, [109]
a cost of operation, [137]
actual or absolute, [104]
a means of financing, [140]
danger of viewpoint, [141]
appraisement of methods, [173-186]
annuity method, [181]
appraisal method, [183]
arbitrary methods, [179]
composite life method, [177]
compound interest methods, [179]
effect on return on investment, [185]
fifty per cent method, [183]
fixed per cent of diminishing value method, [178]
general considerations, [173], [174]
insurance method, [184]
maintenance method, [182]
percentage of gross earnings method, [184]
proportional methods, [175-178]
replacement method, [183]
service output method, [177]
sinking fund method, [181]
straight line method, [175]
sum of expected life-periods method, [179]
unit cost method, [182]
variable percentage methods, [178-179]
working hours method, [176]
appreciation,
as an offset to, [206]
due to adaptation to use, [207]
due to physical changes, [207]
unearned increment, [209]
aspects and definitions, [99-119]
asset subject to, a deferred charge to operations, 93
attitude of law, [110]
authoritative opinions, [101]
buildings, [301]
freehold for life, [301]
rates, [301]
buildings and machinery of a wasting asset, [313]
calculating, [150-172]
annuity, [161], [163-167]
formulas, [164]
appraisal method, [169], [170]
arbitrary interest rate, [150]
arbitrary with decreasing amounts, [157], [160]
arbitrary with increasing amounts, [157], [160]
changing percentages of cost less scrap method, [157], [159]
composite life, [152], [155]
compound interest methods, [150], [160]
condition per cent, [171]
estimated service life, [150]
factors to be considered, [150]
fifty per cent method, [169], [170]
fixed percentage of diminishing value method, [157]
chart, [158]
gross earnings method, [169], [171]
insurance method, [169], [170]
maintenance method, [169]
methods of, [150]
original cost of asset, [150]
proportional methods, [150]
replacement method, [169]
scrap or residual value, [150]
service output, [152], [156]
sinking fund, [161]
straight line method, [152]
symbols to be used, [151]
unit cost method, [161], [167-169]
variable percentage methods, [150]
working hours, [152-155]
causes, [120-135]
accidents, [122]
age, [120]
analysis of, [120]
chart showing, [121]
contingent depreciation, [130-134]
decrepitude, [122]
depletion, [134]
effective depreciation, [135]
functional depreciation, [123]
inadequacy as a factor, [123]
inadequacy due to unforeseen development, [125]
inadequacy imposed from without, [126]
inadequacy through change of policy, [124]
inadequacy through motives of economy, [125]
obsolescence, [127-130]
terminable rights, [134]
wear and tear of use, [122]
chart showing relation of efficiency to uniform depreciation, [115]
comparison of actual and theoretical, [105]
complete and incomplete, [108]
complication of short fiscal periods, [138]
contingent,
accidents, [131]
depletion, [134]
disease, [133]
electrolysis, [134]
current assets, [119]
decision of Supreme Court, [111]
deferred maintenance, [109]
distinction between, and depletion, [117]
distinction between repairs and renewals, [113]
distribution of charge, [174]
effective, [135]
estimate of charges due to obsolescence, [129]
fire losses, [579]
fluctuations in market value, [116], [117]
franchises, [328]
ruling of Public Service Commission, [329]
furniture and fixtures, [291]
good-will, [337]
hand tools, [289]
individual and composite, [108]
inefficiency a factor of, [116]
journal vouchers, [595]
land, [304], [306]
leaseholds, [314], [315]
machinery,
estimate of, [283]
methods of applying, [286]
merchandise, [119]
methods (See “Depreciation, appraisement of methods” and
“Depreciation, calculating,” above)
patents, [319], [320]
accounting classification, [322]
booking, [322]
effect on costs of manufacture, [324]
obsolescence, [320]
supersession, [320]
time lapse, [319]
physical and functional, [109]
plant efficiency, [113]
purpose of, fundamental, [136]
rates, [136-149]
accounting viewpoint, [141]
attitude of regulatory bodies, [147]
based only on normal factors at time
of installation, [144]
basis of normal, [144]
buildings, [301]
change in ownership and policy, [144]
change in requirements of the market, [144]
climatic conditions, [143]
complication of short fiscal periods, [138]
composite and group, [197]
contingent factors, [142], [144]
cost of operation, [137]
danger of financing viewpoint, [141]
effect of local conditions, [142]
engineering problem, [142], [146]
engineering viewpoint, [141]
exterior or movable apparatus, [144]
factors in determining, [143]
financing viewpoint, [140], [141]
fixed equipment including boilers and piping, [145]
frequency of revision of, [194]
fundamental purpose, [136]
idle time a factor, [139]
installed operating and generating machinery, [144]
insufficient charge, [205]
load or normal intensity of operation, [143]
means of financing, [140]
methods of handling repairs, [147]
misuse and neglect brought about by the demands of the trade, [144]
normal climatic conditions, [143]
operating conditions, [143]
periodic revision of, [194]
repairs policy, [143]
results achieved as the basis, [139]
service life as the basis, [139]
“stable or normal” factors, [142], [143]
standardization of, [142]
recognition of the depreciation factor, [112]
Federal Income Tax Law, [112]
Federal Trade Commission, [112]
Interstate Commerce Commission, [112]
Treasury decisions, [112]
recording, [187-209]
adjustment of value, on plant ledger, [193]
asset record, [192]
balance sheet, [187]
cases when no determination of betterment values is made, [189]
composite or group rates, [197]
credit balance in the reserve, [189]
debit balance in the reserve, [189]
plant ledger, [191]
Form, [193]
frequency of revision of rates, [194]
grouping and classification of plant assets, [191]
mean age, direct method, [198]
mean life, direct method, [197]
mean life, dollar-year, or weighted ratio method, [198]
methods commonly employed, [187]
periodic adjusting entry, [187]
periodic revision of rates, [194]
renewals and replacements, [188]
reserve account, [187]
reserves, [199-204]
subsidiary records, [190]
table of expectancy, [196]
test of condition per cent, [195]
valuation account, [187]
relation between, and sinking fund, [463]
reserves,
decreasing, [200]
distinction from reserve for doubtful accounts, [411]
financing of replacements, [203]
fluctuating, [199]
increasing, [200]
index of financial condition, [199]
insufficient charge, [205]
methods of financing replacements, [203]
not leased on cost of replacement, [202]
relation to efficiency, [201]
relation to expanding plant, [201]
secret, [204]
suspense account, [558]
stockholders’ relation to policy pursued, [209]
stock-in-trade, [119], [229]
terminable rights, [134]
theoretical, [104]
unit efficiency, [114]
unusual risks, [313]
“wasting” assets, [118]
effect on different kinds of business, [118]
why factor arises, [103]
Deterioration, [140]
rate of, [145]
stock-in-trade, [229]
Dewey decimal system, [564]
advantages of the mnemonic over, [565]
combined with mnemonic, [566]
Dies, valuation of, [294]
Direct cost, definition of, [50]
Directors,
control over profits, [429]
liability of, in the matter of dividends, [433]
Disbursements, cash, temporary, [213]
Discounts,
accounts receivable, [560-563]
bond,
amortization of, [269]
entry on books, [365]
nature of, [266]
profit and loss summary, [474]
relation to interest, [367]
schedule showing amortization of, [270]
cash,
inclusion of, in cost of stock-in-trade, [230]
on purchases, voucher system, [44]
permanent investments, treatment of, [257]
sales,
on the balance sheet, [415]
proper allocation of estimated, [413]
stock, [13]
charging to organization expense, not approved, [14]
requirements of Interstate Commerce Commission, [13]
treatment of, [378]
valuation of trade debtors, [221]
Disease, contingent depreciation, [133]
Dissolution,
valuation for purposes of, [83]
voluntary, [501]
liquidation under, [503]
Distribution of depreciation charge, [174]
Dividends, [428-446]
accounting record, [442]
book, [20]
corporation profits,
directors’ control over, [429]
disposition of, [428]
shareholders’ rights as to, [429]
declaration of, [432]
provisos as to, [430]
definition, [428]
ex-dividend, [442]
in stock, [382]
effect of, [382]
liability of directors, [433]
liquidating, [445], [506], [629]
booking, [446]
declaration of, in hands of referee, in bankruptcy, [630]
method of payment, [434], [436]
borrowing, [436]
borrowing on property, [438]
in bonds, [438]
in property, [438]
paid in form of salaries, [435]
scrip, [438]
not yet paid, current liability, [349]
paid but not yet charged against surplus, [688]
payment, to whom payable, [441]
profit and loss summary, [474]
proportional to holdings, [441]
relation of capital losses to, [443]
resolution declaring, [441]
return of capital included in, [311]
revocation of, [434]
shareholders’ rights to, [431]
stock, [439]
estate accounting, [440]
unwise use of cash for paying, [495]
Domestic corporations, 2
Donated—
land, [308]
stock, [11], [15]
creation of a surplus, [409]
Doubtful accounts,
reserve for, as a suspense account, [558]
Drafts,
negotiated, contingent liability, [352]
sight, treated as cash transactions when honored, [673]
Drawings, valuation of, [294]
Drayage, cost of stock-in-trade, [230]
E
Earnings, value of stock dependent upon, [374]
Efficiency,
chart showing progress of uniform depreciation and of
diminishing efficiency, [115]
employees’, statistics, [584]
plant, depreciation, [113]
relation of depreciation reserve to, [201]
unit, [114]
Electrolysis, cause of depreciation, [133]
Electrotypes, valuation of, [294]
Engineering,
rate of depreciation a problem of, [142], [146]
Equipment,
average, normal use, [139]
basis of normal rate, [144]
delivery,
carriers, valuation of, [293]
containers, valuation, [293]
definition, [292]
valuation, [292]
disposal of assets, [295]
distinction between personalty and real property, [279]
furniture and fixtures,
definition of, [291]
depreciation, [291]
valuation of, [291]
general considerations, [279]
idle time, [139]
machine accounts, operation of, [282]
machinery,
abnormal operation, [285]
basis of valuation, [287]
estimate of depreciation, [283]
expenditure for rearrangement, [290]
history of, [284]
home-made, valuation of, [289]
map of location, [286]
methods of application of depreciation, [286]
scrap, [287]
standards of operation, [285]
valuation of, [283]
machinery and tools, [281]
accounting records, [281]
molds, valuation of, [294]
patterns, valuation of, [294]
service, [139]
tools,
accounting for, [288]
hand, depreciation on, [289]
home-made, valuation of, [289]
issue on requisition, [289]
valuation of, [279-296]
Estate accounting, stock dividends, [440]
Estimates, principles of valuation, 97
Expectancy,
mean age, direct method, [198]
mean life,
direct method, [197]
dollar-year, or weighted ratio method, [198]
table of, [196]
Expenditures,
capital (See “Capital expenditures”)
revenue (See “Revenue expenditures”)
Expenses,
accrued, [343]
booking of, [350]
current liabilities, [350]
capital, [87]
factory,
basis of distribution, [58]
definition of, [50]
elements entering into, [58]
organization, [88]
F
Factory costs (See “Costs, factory”)
Federal Reserve Board,
statement required of contingent liability, [352]
Financial accounting, difference between factory and, [49]
Financing,
depreciation a means of, [140]
danger of viewpoint, [141]
Finished goods, valuation of, [233]
Fire losses, adjustment of, [570-580]
adjusting entries, [578]
depreciation, [579]
bases of settlement, [573]
coinsurance clause, [574]
examples of, how applied, [575], [576]
determination of value, [572]
insurance contract, [570]
cancellation of, [571]
inventory of stock-in-trade, [580]
method of record-keeping to facilitate ready adjustments, [577]
options of the insurance company as to settlement, [576]
pro rata or contributing clause, [574]
rates, [574]
requirement in case of loss, [571]
settlement of points in dispute, [573]
valuations for, [83]
Fiscal periods,
complication of short, in the case of depreciation, [138]
Fixed assets, valuation of, [96]
Fixed liabilities (See “Liabilities”)
Fixtures (See “Equipment”)
Fluctuations, reserve for investment, [243]
Foreign branch (See “Branch house accounting”)
Foreign corporations, [2]
Foreign countries, cash held in, [214]
Foreign exchange, [542]
handling fluctuations in, [545]
Foreign purchasing agency, [555]
Foreign sales agency, [552]
periodic conversion of results, [553]
Forfeited stock, [12], [19]
Forms (See list in table of contents, page xxiii)
Founders’ shares, [4], [7]
Franchises, [326-330]
definition, [326]
depreciation on, [328]
ruling of Public Service Commission, [329]
indeterminate, [328]
kinds, [326]
limited, [327]
perpetual, [327]
valuation, [328]
Freight,
cost of stock-in-trade, [230]
distributed over stock-in-trade, [231]
Functional depreciation, [123]
Furniture (See “Equipment”)
Future deliveries, liability, [349]
G
Goods,
consigned, sold, current liability, [349]
finished, valuation of, [233]
in process, valuation of, [234]
profits on,
awaiting delivery, [402]
made for stock but not sold, [399]
made to order, [400]
work in progress, [399]
returned, statistics, [584]
sold, cost of,
manufacturing concern, [478]
trading concern, [479]
Good-will, [331-338]
combination and consolidation, [515]
creation of, by advertising, [334]
definition of, [331]
“going value,” [338]
local and personal character of, [333]
merger, [332]
nature of, [331]
valuation of, [333]
based on capitalization of profits, [335]
based on excess profits, [335]
based on normal profits, [334]
depreciation, [337]
false, to cover capital deficiency, [336]
periodic revaluation, [337]
Graphs,
advantages of, [586]
principles of construction, [587]
use of, in presentation of statistics, [585]
Gross earnings,
method of calculating depreciation, [169], [171]
Guaranteed stock, [4], [7]
Guarantees,
as contingent liability, [353]
quality and performance, [348]
H
Holding company, [508] (See also “Combinations
and consolidations”)
accounting for, [509]
advances to subsidiaries, [262]
rules for valuation, [263]
consolidated balance sheet, [600-619]
consolidated profit and loss summary, [612-615]
permanent investments of, [261]
Housing workmen, and social betterment work, [599]
Hypothecation accounts receivable, accounting for, [560]
I
Idle time, factor in depreciation, [139]
Impairment of capital account, [634]
Imprest system, petty cash operated under, [211]
Inadequacy, [173]
factor in depreciation, [123-127]
Income,
accrued,
accounting for, [251]
correct method of handling, [250]
illustration of different methods of recording, [251]
inadequacy of cash method of handling accruals, [249]
nature of, [248-253]
showing on balance sheet, [250]
valuation of items, [250]
deferred, [343]
misuse of term, [417]
Income and expenditures (See “Profit and loss summary”)
Income statement (See “Profit and loss summary”)
Income tax law of 1916, application of, to wasting assets, [312]
Increment, unearned, [209]
Identification (See “Classification”)
Index,
journal vouchers, [594]
Forms, [594], [595]
voucher, of creditors, [38]
Indirect cost, definition of, [50]
Industrial corporations, [2]
Insolvency, causes of,
current assets transferred into fixed assets, [494]
inability to secure cash for refunding operations, [496]
tying up cash in stocks of material, [494]
unwise use of cash for dividends, [495]
Instalment accounts, valuation of, [22]
Instalments,
book, [20]
liquidation of a partnership by, [650]
illustration of, [653], [654]
Insurance,
buildings and equipment, leasehold, [688]
cost of stock-in-trade, [230]
fire (See “Fire losses, adjustment of”)
Insurance method,
calculating depreciation, [169], [170]
appraisal of, [184]
Interdepartmental profits, [404]
Interest,
accrued, recording of, [268]
annuity method of calculating depreciation, [165]
arbitrary rate of,
methods of calculating depreciation, [150]
as a cost of manufacture, [468]
arguments against, [470-472]
bonds,
example of true interest cost, [368]
fixing the rate, [267]
relation of, to premium or discount, [367]
compound,
formulas for, [271]
methods of calculating depreciation, [160], [179]
notes receivable, [223]
on money invested in stock-in-trade, [231]
payments on bonds, entry on books, [366]
problem of charging, on books, [471]
rates, market, bond values and, [265]
Interstate Commerce Commission,
method of handling depreciation reserve at the time of
replacement, [189]
requirements as to discounts and premiums, [13]
Inventory,
adjustment of, profit and loss summary, [490]
contracts and length of cost period, [236]
finished goods, [690]
goods in process, bringing on the books, [690]
of liabilities, [342]
periodical, [52]
perpetual, [52], [238]
necessity for physical count, [240]
pricing of, [232]
weighted average, [232]
statistics, [584]
stock-in-trade, fire loss, [580]
taking, [237]
methods, [238]
rules, [238]
valuation of,
consolidated balance sheet, [607]
minority interests, [610]
valuation of manufacturing, [233-236]
contracts, [234]
finished goods, [233]
goods in process, [234]
raw material, [234]
scrap, [236]
Investments,
effect on return on, under various methods of calculating
depreciation, [185]
land, valuation of, [307]
permanent, [258-278]
accrued interest on bonds, [268]
advances to subsidiaries, [262]
advances to subsidiaries, rules for valuation, [263]
amortization of bond discount and premium, [269]
amortization of bond discount and premium, schedule showing, [270]
annuities, formulas for, [272-276]
as an aid to operation, [259]
bond values and market interest rates, [265]
controlling investment, [261]
holding company and subsidiary enterprises, [261]
in partial holdings, [264]
interest, compound, formulas for, [271]
land, valuation of, [278]
nature of, [258]
nature of bond discount or premium, [266]
producing no income, [265]
record of bond investments, [267]
sinking funds, methods of employing, [276], [277]
sinking funds, valuation of, [276]
valuation account, [267]
valuation of, [259]
temporary, [241-248]
cost of, [245]
nature of, [241]
reserve for fluctuations, [243]
“stock rights,” [244]
summary of valuation formula, [248]
treasury stock, valuation of, [247]
unissued stock, valuation of, [246]
valuation of, [242]
valuation of bonds, [245]
Invoices,
voucher system, [26-48]
distribution, [34]
J
Journal,
methods of authorizing entries, [596]
purchase, expansion, [27]
Journal vouchers (See “Voucher system”)
L
Labor,
charges,
accrued wages, [57]
distribution of, [57]
direct and indirect, [53]
Land, [302-310]
accounting, [302]
plots, [302]
appreciation, [304]
issue of bonds, [305]
sale of old, and erection of new plant on less valuable land, [305]
as stock-in-trade, [310]
depreciation, [304]
of values, [306]
donated, [308]
reserve of surplus covering, [713]
mortgages on, [308]
real property, [297]
valuation of, [303]
valuation of investments in, [278], [307]
inflation of values, [307]
Lasts, valuation of, [294]
Law, stock issues, [377]
Lawsuits, pending, contingent liability, [354]
Leaseholds, [314], [315]
appreciation in value, [315]
depreciation and amortization, [315]
distribution of depreciation on buildings, [688]
insurance, distribution of, [688]
length of leases, [314]
long-term, contingent liability, [354]
sale of, [314]
Ledger,
classification of accounts, [568]
methods of recording depreciation in, [187]
plant, [191]
Form, [193]
purchase, used with voucher system, [46]
stock, [20], [21]
Forms, [21]
stores, [53]
subsidiary records, [190]
suspense, use of, [559]
trial balance, [62]
Liabilities, [339-371]
balance sheet, [339-371]
arrangements on, [340]
cancellation of liabilities against assets, [341]
items within groups, [341]
contingent, [81], [344], [351-355]
accumulated dividends on preferred
stock, [355]
drafts negotiated, [352]
guarantees as, [353]
kinds of, [352]
long-term leases, [354]
notes discounted, sold, or otherwise transferred, [352]
pending lawsuits, [354]
purchases for future delivery, [354]
signature to surety bond, [355]
statement of, [351]
stock not fully paid, [354]
current, [345-351]
accounts payable, [345], [347]
accrued expenses, [350]
accrued expenses, booking of, [350]
consigned goods sold, [349]
deferred credits, [351]
deposits, [348]
dividends not yet paid, [349]
future deliveries, [349]
guarantees, [348]
loans from bank, [347]
notes payable, [345]
notes payable, classification of, [346], [347]
fixed, [356-371]
accounting for bond issue, [363-369]
bonds, kinds of, [358]
bonds, priority of liens, [361]
corporation bonds, [357]
difference between bond and real
estate mortgages, [358]
loans on collateral, [370]
nature of, [356]
purpose of, [356]
real estate mortgages, [369]
short-term securities, [370]
grouping on the balance sheet, [70-74]
inventory of, [342]
accrued expenses, [343]
contingent, [344]
deferred expenses, [344]
deferred income, [343]
premium on bonds, [343]
overvaluation for purpose of creating secret reserve, [418]
valuation of, [97]
consolidated balance sheet, [611]
Liquidating dividends, [445]
Liquidation and realization account, [639-650]
Forms, [642]
Liquidation, corporations, [493-506]
accounting for, [505]
bankruptcy, [502]
causes of insolvency, [494]
current assets transferred into fixed assets, [494]
inability to secure cash for refunding operations, [496]
tying up cash in stocks of materials, [494]
unwise use of cash for paying dividends, [495]
complete, [493]
dividends, [506]
partial, [493]
reasons for, [493]
receivership, [501], [503]
status of creditors in, [503]
valuation for purpose of, [83]
voluntary dissolution, [501], [503]
Liquidation, partnership,
by instalment, [650]
deduction from capital, [651]
illustration of, [653], [654]
Load,
normal factor in determining depreciation rate, [143]
Loans,
bank,[347]
borrowing to pay dividends, [436-438]
on collateral, [370]
Location, map of machine, [286]
Losses,
anticipation of, undesirable, [227]
asset,
charged against current profits, [396]
charged to capital, [397]
effect on future profits, [393]
legal decisions as to, [394]
treated as deferred expense charge, [396]
capital, relation of, to dividends, [443]
credit, risk from, [216]
fire (See “Fire losses, adjustment of”)
notes receivable, [222]
M
Machinery (See “Equipment”)
Maintenance,
accrued, [123]
cost of, standardized, [122]
deferred, [109], [123]
definition of, [89]
distinction between repairs and renewals, [113]
method of calculating depreciation, [169]
policies as to, effect on rates of depreciation, [145]
Maintenance method,
calculating depreciation, appraisement of, [182]
Manufacturing account, handling of, [690]
Manufacturing corporations, [2]
Manufacturing inventory (See “Inventory”)
Manufacturing, purchasing for, [26]
Map, machine location, [286]
Margin (See “Surplus”)
Market value,
capital stock, [373]
depreciation and fluctuations in, [116], [117]
valuation of stock-in-trade at, [225], [228]
Materials,
factory costs, [51]
raw, valuation of, [234]
stores department, [52]
Mean age,
plant expectancy, direct method, [198]
Mean life of depreciation,
direct method, [197]
dollar-year or weighted ratio method, [198]
Mercantile credits (See “Credit, mercantile”)
Merchandise (See “Stock-in-trade”)
Mergers,
capitalization, [516]
closing the books, [518]
closing the books of the old companies, [518]
distinction between consolidation and, [510]
formation of, [511]
opening the books, [519]
Minute book, [20], [24]
Mnemonic system, [564]
advantage, [565]
combined with Dewey decimal system [566]
example of application to a machine, [566]
Models, valuation of, [294]
Molds, valuation of, [294]
Monopoly patents, [317]
Mortgages,
difference between, and bond, [358]
on land, [308]
real estate, fixed liabilities, [369]
N
Non-cumulative preferred stock, [5]
Non-participating preferred stock, [6]
Non-stock corporations (See “Corporations”)
No par value stock, [9], [20]
Notes,
discounted,
consolidated balance sheet, [607]
sold or otherwise transferred, contingent liability, [352]
long-term, [349]
payable, [345]
classification of, [346], [347]
handling of, under voucher system, [43]
statistics, [584]
receivable,
balance sheet titles for, [223]
interest on, [223]
losses on, [222]
valuation of, [215], [223]
short-term securities, [370]
Numbered accounts, [563-570]
advantages, [564]
allotment of numbers, [563]
classification, [564]
general ledger accounts, [568]
main points, [570]
manufacturing plant, [566]
operating expense accounts, [567]
operating revenue accounts, [566]
primary accounts, [567]
combination of mnemonic and Dewey decimal systems, [566]
Dewey decimal system, [564]
advantage of mnemonic over, [565]
mnemonic system, [564]
advantages over Dewey decimal system, [565]
example of application to a machine, [565]
symbols, [564]
O
Obsolescence, [173]
cause of depreciation, [127]
treatment of, [128]
estimate of depreciation charge due to [129]
patents, [320]
under Federal Income Tax of 1916, [130]
“Open” corporations, [2]
Operation,
abnormal machine, [285]
asset subject to depreciation a deferred charge to, [93]
depreciation a cost of, [157]
load on normal intensity of determining depreciation rate, [143]
normal conditions of, determining depreciation rate, [143]
permanent investments as an aid to, [259]
standards of machine, [285]
statistics, [584]
Ordinary stock, [4]
Organization,
accounting department, manufacturing business, [26]
corporate,
board of directors, [3]
committees, [3]
officers, [3]
expenses, [14], [18]
treatment of, [330]
Original cost,
factor in calculating depreciation, [150]
Overhead, definition of, [50]
Ownership (See also “Stock”)
Ownership, corporate,
advantages, [3]
“close,” [2]
“open,” [2]
partial, consolidated balance sheet, [601]
“sole,” [3]
P
Parasites, cause of depreciation, [133]
Partial payments, handling of, under voucher system, [42]
Participating preferred stock, [6]
Partnership,
liquidation of, by instalments, [650]
deduction from capital, [651]
illustration of, [653], [654]
shares of deficiency, [652]
valuation of, in a combination and consolidation, [514]
Par value,
capital stock, [373]
sale of stock at less than, [11]
stock of no, [9], [20]
Patents, [316-324]
and costs of manufacture, [324]
depreciation,
accounting classification of, [322]
booking, [322]
developed within the plant, [318]
elements of depreciation, [319]
obsolescence, [320]
supersession, [320]
time lapse, [319]
infringement costs, [321]
monopoly grant, [317]
purchased and not used, [319]
purchase of, [317]
royalties, [323]
sale price of, [324]
service life of, [320]
writing off the value, [321]
Patterns, valuation of, [294], [317]
Payments,
part, handling of, under voucher system, [42]
Pay-roll, [55]
checks drawn to order of treasurer of company, [671]
distribution of labor charges, [57]
methods of payment, [56]
safeguarding, [55]
Percentage,
variable, methods of calculating depreciation, [150]
Perpetual inventory, [239]
necessity for physical count, [240]
Personalty, distinction between, and real property, [279]
Petty cash, [211]
imprest system, [211]
Plant,
assets, grouping and classification of, [191]
efficiency, depreciation and, [113]
ledger, [191]
Form, [193]
Posting, summary totals, voucher system, [36]
Preferred stock (See “Stock”)
Premium,
bond, [343]
amortization of, [269]
entry on books, [365]
nature of, [266]
relation to interest, [367]
schedule showing amortization of, [270]
permanent investments, treatment of, [257]
stock, [14]
creation of surplus, [408]
requirements of Interstate Commerce Commission, [13]
treatment of, [378]
Prepaid items,
accounting for debit and other items, [256]
danger of overvaluation, [255]
definitions and kinds, [253]
valuation of, [254]
Price,
cost, valuation of stock-in-trade at, [225]
market, valuation of stock-in-trade at, [225]
Prime cost,
definition of, [50]
direct and indirect labor, [53]
raw materials, [52]
Private books,
closing, [591]
content, [589]
operation, [590]
illustration of, [590]
purpose, [589]
Private corporations, [2]
non-stock, [2]
stock, [2]
Problems,
branch accounts,
complex, [529]
foreign branch, [548]
simple, [527]
consolidated balance sheet, [616]
different methods of recording accrued items, 252-[253]
liquidation by instalments, [653]
realization and liquidation statement, [645]
statement of affairs and deficiency account, [635]
Production, statistics, [584]
Profit and loss summary, [466-492]
adjustment of inventories, [490]
closing the records of a corporation, for the fiscal year, [474]
consolidated balance sheet, [612-615]
content and manner of showing, [489]
correction of closing errors, [476]
cost of goods sold,
manufacturing concern, [478]
trading concern, [479]
discount on bonds, [474]
dividend declaration, [474]
form,
account form, [483]
comparative statement of, [488]
examples of two forms of presentation, [485]
manufacturers and merchants, [487]
non-technical or report form, [484]
standardization of, [477]
interest as a cost of manufacture, [468]
arguments against, [470-472]
problem of charging on books, [471]
interrelation of, and balance sheet, [466]
periodical adjustments, [467]
profit, method of showing, [482]
profits between departments, [473]
schedules for special need, [492]
selling expense and administrative schedules, [491]
sinking fund, [475]
statement, [410]
supporting schedules, [489]
terms,
desirability of uniformity in, [481]
differentiation of, [480]
synonymous, [478]
unrealized profits, [472]
working capital, [475]
Profits, [387-406] (See also “Profit and loss summary,” above)
anticipation of, undesirable, [227]
asset losses,
charged against current profits, [396]
charged to capital, [397]
effect of, on future profits, [393]
legal decisions as to, [394]
treated as deferred expense charge, [396]
capital, [405]
margin account, [409]
capitalization of,
valuation of good-will based on, [335]
corporation,
directors’ control over, [429]
disposition of, [428]
shareholders’ rights as to, [429]
definition,
accounting, [390]
economics, [387]
legal, [389]
determining,
difficulty of, [387]
double entry, [391]
goods awaiting delivery, [402]
goods made for stock but not sold, [399]
goods made to order, [400]
long-term contracts, [401]
methods of, [391]
single entry, [391]
summary of principles governing, [405]
work in progress, [399]
disposition of, [410]
due to appreciation of assets, [404]
excess, valuation of good-will based on, [335]
intercompany, reserve for, [610]
interdepartment, [404]
method of showing on profit and loss summary, [482]
normal, valuation of good-will based on, [334]
problem a question of valuation, [392]
relation of sinking fund to, [454]
reserves of, secret, [418]
statistics, [584]
unrealized, [472]
Property,
payment of dividends in, [438]
real,
definition of, [297]
distinction between personalty and, [279]
stock issued for, [14]
valuation of stock issued for, [380]
Proportional methods (See “Depreciation”)
Proprietorship, reserves for, [417]
Pro rata clause, [574]
Public corporations, [1]
quasi-public, [2]
Public utility corporations, [2]
valuation for rate regulation, [82]
Purchases,
branch house, [533]
foreign purchasing agency, [555]
future delivery, contingent liability, [354]
journal, expansion of, [27]
manufacturing business, [26]
returns and allowances, under voucher system, [40]
valuation for, [83]
voucher system (See “Voucher system”)
cash discount, [44]
Q
Quasi-public corporations, [2]
R
Railroad statistics, [582]
Rate regulation, valuation for, [82]
Rates, fire insurance, [574]
Rates of depreciation (See “Depreciation”)
Raw material, valuation of, [234]
Real estate (See “Buildings” and “Land”)
Realization and liquidation account, [639-650]
Forms, [642]
cash account, [643]
evolution of, [640]
handling of valuation reserves, [644]
illustration of, [645]
receiver’s cash account, [648]
supporting schedules, [643]
theory underlying, [640]
uses to which statement may be put, [644]
Real property (See also “Buildings” and “Land”)
definition of, [297]
distinction between personalty and, [279]
Receipts and disbursements (See “Profit and loss summary”)
Receipts, capital, [87]
Receivers, [620-654]
accounts, [628]
initial statements presented to the court in
bankruptcy proceedings, [627]
appointment, [620]
deficiency account, [633]
Form, [635], [638]
in bankruptcy, [620], [621]
in equity, [621]
accounts of, [623-625]
relative standing of creditors, [630]
reports of, [623-628]
procedure, [622]
realization and liquidation account,
cash account, [648]
example of balance sheet, [645]
illustration of statement, [646]
realization and liquidation statement, [644]
Forms, [646]
reports, [628]
“charge and discharge” form, [626]
initial statements presented to court in
bankruptcy proceedings, [627]
reports to the court, [625]
comparative balance sheet, [627]
items covered, [626]
statement of affairs, [631]
Forms, [634-638]
basis of valuation, [632]
Receivership,
method of liquidating, [501], [503]
Records,
accounting,
dividends, [442]
machinery and tools, [281]
asset, [192]
bond investments, [267]
distinctive, of corporation, [20]
dividend book, [20]
instalment book, [20]
minute book, [20], [24]
private (See “Private books”)
register of transfers, [20]
special purposes of cost, [50]
predetermination of selling price, [51]
stock book,
Forms, [22], [23]
stock certificate book, [20]
stock ledger, [20], [21]
Form, [21]
stock register, [21]
stock transfer book, [20]
Forms, [22]
subscription book, [20]
subscription ledger, [20]
time-keeping, [54]
Redeemable preferred stock, [6]
Redemption,
capital stock, [381]
preferred stock, [19], [384]
Referee,
in bankruptcy, liquidating dividends, [630]
Refunding, inability to secure cash for, [496]
Register,
accounts payable, [34]
plant, form of, [191]
stock, [21]
transfer, [20]
voucher,
form of, [34], [35]
posting of summary totals, [36]
proof of distribution, [37]
purchase discount column, [44]
status of when purchase ledger is used, [46]
Renewals,
definition of, [89], [90]
distinction between, and repairs, [113]
methods of handling, [147]
of parts, treatment of, [91]
recording depreciation on the books, [188]
first method, [188]
second method, [189]
Repairs,
cost of, included in depreciation charge, [148]
estimates, [149]
definition of, [89], [90]
distinction between, and renewals, [113]
methods of handling, [147]
on second-hand plant, [94]
policy, determining depreciation rate, [143], [145]
preliminary estimates, [147]
reserve for, [148]
theory of averages, [147]
Replacements,
definition of, [89]
distinction between repairs and renewals, [113]
financing of, [203]
borrowed funds, [203]
increase of capital stock, [203]
profits of the past reserved in the business, [203]
method of calculating depreciation, [169]
appraisement of, [183]
Interstate Commerce Commission’s instructions, [189]
methods, [188]
recording depreciation on the books, [188]
Reports, (See also “Statements”)
branch,
customers’ accounts collected, [541]
examples of, [540]
periodic cash summary, [540]
receivers (See “Receivers”)
trustees (See “Trustee”)
Requisitions, stores, [53]
Reserves, [410-424]
bad debts, [411]
classification of, [423]
proprietorship reserves, [424]
valuation reserves, [424]
collection costs not under contract, [414]
contingent, [416]
continuity of policy, [421]
covered, [422]
“reserve fund,” [422]
deferred income, misuse of term, [417]
depletion, [413]
depreciation,
accounts, [187]
decreasing, [200]
financing of replacements, [203]
increasing, [200]
index of financial condition, [199]
insufficient charge, [205]
methods of financing replacements, [203]
not based on cost of replacement, [202]
on balance sheet, [199]
relation to efficiency, [201]
relation to expanding plant, [201]
secret, [204]
suspense account, [558]
different meanings of, [411]
distinction between, and accrued items, [415]
doubtful accounts as a suspense account, [558]
earmarking of, [420]
for investment fluctuations, [243]
intercompany profits, [610]
market fluctuations in merchandise, [228]
operating, for accrued costs, [413]
estimated sales discounts, [413]
proper allocation of taxes, [413]
proprietorship, [417]
repairs, [148]
sales discounts on the balance sheet, [415]
secret, [418]
argument against, [419]
argument for, [419]
overvaluation of liabilities, [418]
undervaluation of assets, [418]
sinking fund, treatment of, [463]
under- and over-estimate of, [412]
valuation,
handling of, realization and liquidation account, [644]
Returns,
purchase, under voucher system, [40]
Revaluation,
periodic, of good-will, [337]
Revenue expenditures,
defined, [87]
distinction between, and capital, [95]
Rights,
stock, received while stocks are held for temporary investment, [244]
terminable or limited, depreciation, [134]
Residual value,
factor in calculating depreciation, [150]
Risks, unusual, in connection with estimate for depreciation
and depletion, [313]
Royalties, patents, [323]
S
Salaries, dividends paid in form of, [435]
Sales,
basis of estimate of bad debts, [220]
discounts,
on the balance sheet, [415]
proper allocation of estimated, [413]
instalment basis, valuation of accounts, [222]
statistics, [584]
to branch house, [534]
valuation for purpose of, [83]
Salvage account, [188]
Schedules,
for special needs, profit and loss summary, [492]
selling expense and administration, [491]
supporting,
profit and loss summary, [489]
realization and liquidation account, [643]
use of, as a means of condensing balance sheet, [79]
Scrap,
machinery, [287]
valuation of, [236]
Scrap value,
factor in calculating depreciation, [150]
Scrip, payment of dividends in, [438]
Seasoning, appreciation due to, [207]
Secret depreciation reserve, [204]
Secrets, trade, [325]
Selling expense,
schedules, profit and loss summary, [491]
Selling price (See “Market value”)
Service,
life, estimated, factor in calculating depreciation, [150]
Service output method,
calculating depreciation, [156]
appraisement of, [177]
Shares (See “Stock”)
Sinking fund, [447-465]
accounting for, [456]
appear only among assets, [456]
balance sheet, [457]
booking the trustees’ report, [460]
entries, [459]
accumulation based on agreement, [451]
bond redemption, [458]
compound interest method of calculating depreciation,
appraisal schedule, [162]
Chart, [162]
formula, [161]
debts, effect of settlement of, [452]
schedule of debit and credit, [452]
definitions, [447]
final disposition of, [462]
mathematical principles on which based, [449]
method of calculating depreciation, appraisement of, [181]
origin and use, [448]
policy of investment, [276]
outside securities, [276], [277]
own bonds, [276], [277]
profit and loss summary, [475]
relation between depreciation and, [463]
relation to profits, [454]
treatment of income and expense, [461]
treatment of reserve account, [463]
valuation of, [276]
Solidification, appreciation due to, [207]
Stamps, remitted as cash, [212]
Standardization, depreciation rates, [142]
Standards, machine operation, [285]
State,
report to, balance sheet as, [79]
Statement,
assets and liabilities, [70]
balance sheet, [63], [64]
contingent liabilities, [351]
financial, [70]
of affairs, bankruptcy proceedings, [631]
Forms, [634-638]
profit and loss (See “Profit and loss summary”)
realization and liquidation
(See “Realization and liquidation account”)
resources and liabilities, [70]
surplus, [425]
Statistics, 581-[589]
application of, [584]
graphs,
advantages, [586]
principles of construction, [587]
use of, in presentation, [585]
manufacturing, [583]
mercantile, [583]
railroad, [582]
classification, [582]
operating details, [582]
results of operation, [582]
value of, [581]
Stock, [372-386]
accounting for, [13]
bonus stock, [16]
discount, [13]
forfeited stock, [19]
no par value, [20]
premium, [14]
property exchanged for, [14]
redemption of preferred stock, [19]
treasury stock donated, [15]
treasury stock purchased, [18]
assessment, creation of a margin, [409]
bonus, [13], [16]
capital and treasury stock on the balance sheet, [383]
capitalization,
cost, [376]
earning capacity, [375]
increase in book, [375]
capital, showing of, on consolidated balance sheet, [611]
certificate book, [20]
certificate of, [9], [10]
common, [4]
no par value, [9]
debenture, [4], [8]
discount on, [13]
dividend book, [20]
dividends in, [382], [439]
effect of, [382]
estate accounting, [440]
donated, [11]
creation of surplus, [408]
exchanged for property, [14]
ex-dividend, [442]
forfeited, [12], [19]
founders’, [4], [7]
fully paid and non-assessable, [11]
guaranteed, [4], [7]
instalment book, [20]
issued as a bonus, [383]
issue of, bonds versus, [362]
kinds of, [372]
law and issues of, [377]
ledger, [20]
Form, [21]
no par value, [9], [20] not fully paid, contingent liability, [354]
ordinary, [4]
preferred, [4], [5]
accumulated dividends on, contingent liability, [355]
convertible, [6]
covered by redemption contract, [384]
cumulative, [5]
non-cumulative, [5]
non-participating, [6]
participating, [6]
redeemable, [6]
redemption of, [19]
premium, [14]
creation of surplus, [408]
property purchases, [14]
records, stock book, [22], [23]
redemption and reduction of capital stock, [381]
at book value, [381]
surplus adjustment, [381]
register, [20], [21]
rights, received while stocks are held for purposes
of temporary investments, [244]
sale of, at less than par, [11]
sinking fund, [448]
subscription book, [20]
subscription ledger, [20]
transfer book, [20]
Form, [22]
treasury, [10], [247]
balance sheet, [383]
bonus, [16]
donated, [11], [15]
purchased, [18]
valuation of, [380]
unissued,
distinction between treasury stock and, [11]
valuation of, [246]
used to pay organization expense, [14]
valuation,
balance sheet, [374]
book value, [373]
dependent upon earning capacity, [374]
market, [373]
of property, [11]
par, [373]
problems of, [372]
real, [373]
treasury stock, [380]
treatment of discount or premium, [374]
when issued for property, [380]
watered, [10]
Stock corporations (See “Corporations”)
Stockholders,
balance sheet as formal report to, [79]
depreciation policy and, [209]
rights as to profits, [429]
rights to dividends, [431]
status of, in liquidation, [504]
Stock-in-trade, [225-240]
anticipation of profits or losses undesirable, [227]
balance sheet, [227]
brokerage firms,
valuation of stocks and bonds held, [245]
definition and scope of term, [225]
depreciation, [119], [229]
deterioration, [229]
distribution of costs over, [231]
fluctuations in market price, [228]
reserve for, [228]
full costs of, [230]
cash discount, [230]
drayage, [230]
duty, [230]
freight, [230]
insurance, [230]
interest on money invested, [231]
seasoning, [230]
warehouse charges, [230]
inventory-taking, [237]
methods, [238]
perpetual, [239]
rules, [238]
land as, [310]
method of treatment, [228]
objections to valuation at less than cost, [226]
pricing of the inventory, [232]
weighted average, [232]
valuation of, consolidated balance sheet, [607]
valuation of, cost or market price, [225]
summary arguments, [228]
valuation of manufacturing inventory, [233], [234]
finished goods, [233]
goods in process, [234]
raw materials, [234]
scrap, [236]
Stores department,
accounting for materials, [52]
ledger, [53]
requisitions, [53]
Straight line method,
calculating depreciation, [152]
appraisement of, [175]
formula, [152]
graphic chart, [153]
Subscription,
book, [20]
ledger, [20]
rights, received while stocks are held for temporary investment, [244]
Subsidiaries,
advances to,
by holding company, [262]
rules for valuation, [263]
permanent investments in, by holding company, [261]
Subsidiary records, recording depreciation on the books, [190]
Supersession, patents, [320]
Supplies, factory costs, [51]
Surety bond,
signature to, contingent liability, [355]
Surplus, [407-410]
account, legitimate use of, [424]
adjustment of, through redemption or reduction of capital stock, [381]
definition, [407]
disposition of profits, [410]
margin, [407]
capital profits and bonuses, [409]
capital stock premiums, [408]
creation of, [408]
stock assessments, [409]
stock donation, [408]
showing on consolidated balance sheet, [611]
statement of, [425]
Suspense accounts, [556-563]
accounts receivable hypothecated, [560]
definition, [556]
general purposes, [556]
reserve for depreciation, [558]
reserve for doubtful accounts, [558]
use of suspense ledger, [559]
Symbol system applied to accounts
(See “Numbered accounts”)
Symbols, used in calculating depreciation, [151]
T
Taxation, valuation for, [83]
Taxes, proper allocation of, [413]
Time,
idle, factor in depreciation, [139]
units of, [139]
Time cards, analysis of, [57]
Time-keeping,
records, cards, [54]
Tools (See “Equipment”)
Trade debtors,
accounts receivable, [216]
discounts and collection costs, [221]
Trade-marks, [326]
valuation of, [326]
Trade secrets, [325]
Trading corporations, [2]
Transfer book, stock, [20]
Forms, [22]
Transfers, register of, [20]
Treasury stock (See “Stock”)
Trial balance,
conversion of, foreign branch, example of, [548], [549]
relation between balance sheet and, [62], [77]
tested as to equality of debits and credits, [695]
Trustee, [620-654]
accounts, [628]
bankruptcy, [502]
deficiency account, [633]
Form, [635], [638]
disposing of bankrupts’ property, [629]
liquidating dividends, [629]
declaration of, in hands of referee, [630]
realization and liquidation account, [639-650]
Forms, [642]
cash, [643]
evolution of, [640]
handling of valuation reserves, [644]
illustration of, [646]
supporting schedules, [643]
theory underlying, [640]
uses to which statement may be put, [644]
records, [629]
relative standing of creditors, [630]
reports, [628]
sinking fund, booking report, [460]
statement of affairs, [631]
basis of valuation, [632]
Forms, [634-638]
Turnover, statistics, [584]
U
Unearned increment, [209]
Unissued stock, valuation of, [246]
Unit,
cost method, calculating depreciation, [161], [167-169], [182]
efficiency, [114]
product, [139]
time, [139]
Utility, public corporations, [2]
V
Valuation accounts, showing on the balance sheet, [77]
Valuation, principles of, [81-93]
accounts receivable, [215]
accrued items, [250]
advances to subsidiaries, [263]
asset subject to depreciation, a deferred charge to operations, [93]
authorization for booking capital expenditures, [94]
balance sheet concerned with, and content, rather than form, [97]
balance sheet, content of, [81]
contingent assets, [81]
contingent liabilities, [81]
buildings, [300]
capital stock, [372-386]
carriers and containers, [293]
cash, [210-214]
combinations and consolidations, [512]
cost-cutting changes, [92]
cost value usual basis, [86]
definition,
capital and revenue expenditure, [87]
maintenance, [89]
renewals, [89]
replacement, [89]
delivery equipment, [292]
depreciation, [99], [101]
depreciation and fluctuations in market value, [116], [117]
estimates, [97]
fire loss adjustments, [83]
franchises, [328]
furniture and equipment, [291]
going concern, [83]
good-will, [333-338]
home-made machinery and tools, [289]
inventory, [232], [233]
kinds of value, [84]
land, [303]
investments, [307]
liability items, [97]
liquidation, [83]
machinery, [287]
main groups of asset items, [95]
current assets, [96]
deferred charges to operation, [96]
fixed assets, [96]
mercantile credits, [215-224]
necessary to read the balance sheet, [6]
notes receivable, [215]
organization expenses, [88]
over- and undervaluation, [97]
patents, [317]
patterns, molds, etc., [294]
permanent investments, [259]
present value of property, [86]
profits, [392]
purchase, [83]
rate regulation, [82]
repairs on second-hand plant, [94]
sale, [83]
sinking funds, [276]
source of data as to value, [85]
stock-in-trade, [225-240]
taxation, [83]
temporary investments; accrued and deferred items, [241-257]
treatment of renewal of parts, [91]
Value,
cost, [85], [86]
kinds of, [84]
market, [85]
depreciation and fluctuations in, [116], [117]
no par, stock of, [20]
“normal” or “average,” [109]
par and no par, of stock, [9]
present, [86]
source of data as to, [85]
Variable percentage methods (See “Depreciation”)
Voluntary dissolution, [501]
liquidation under, [503]
Voucher system, [26-48]
“Accounts Payable Register,” [34]
advantages, summary of, [47]
canceled checks, [32]
cash discount on purchases, [44]
adjustment of difference between discount columns
in voucher register and cash book, at the close
of fiscal period, [45]
customary method, [46]
supplementary voucher, [45]
checks, given a new series of numbers to facilitate
reconciliation with bank account, [37]
control of vouchers payable, [39]
definition, [28]
description of, [28]
development of, [27]
disadvantages, summary of, [48]
distribution of charges, [31]
distribution of vouchers, [34]
effect on cash book and bank account, [37]
expansion of the purchase journal, [27]
form of voucher register, [34]
index of creditors, [38]
introduction of, [39]
journal vouchers, [592-596]
Forms, [592], [593]
content, [595]
index, [594]
Forms, [594], [595]
method of use, [593]
methods of authorizing journal entries, [596]
need for, [592]
modifications, [46]
house vouchers, [47]
purchase ledger sometimes used, [46]
notes payable, handling of, [43]
operation, [31]
summary of, [47]
organization of an accounting department of a
manufacturing business, [26]
partial payments, [42]
payment of vouchers, [37]
purchase returns and allowances, [40]
purchasing for the manufacturing business, [26]
register,
posting of summary totals, [36]
proof of distribution, [37]
purchase discount column, [44]
status of, when purchase ledger is used, [46]
voucher check, [32]
distribution of charges, [32]
folded, [32]
Forms, [33]
single, [32]
Forms, [34]
voucher forms, [29], [30]
voucher register, [34]
Forms, [35]
W
Wages, accrued, [57]
Warehouse charges, cost of stock-in-trade, [230]
Wasting assets (See also “Depletion”)
application of income tax to, [312]
basis of depletion charge, [312]
characteristics, [311]
definition, [311]
depreciation on buildings and machinery of, [313]
dividends may include return of capital, [311]
effect on different kinds of business, [118]
leaseholds, [314], [315]
unusual risks, [313]
water rights, [313]
Watered stock, [10]
Water pollution, cause of depreciation, [133]
Water rights,
acquired along with a wasting asset, [313]
Working capital, profit and loss summary, [475]
Working hours method,
calculating depreciation, [153]
Chart, [155]
appraisement of, [176]
Workmen’s dwellings, [599]

Footnotes:

[1] “Business Finance” by Lough.

[2] “Stocks and Shares” by Hartley Withers.

[3] From “Corporate Organization and Management,” by Thomas Conyngton.

[4] In “Accounting in Theory and Practice.”

[5] In “Accounting Practice and Procedure.”