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