Bookkeeping Method Research Articles

Book-Keeping Method of the House of Nakai

Book-Keeping Method of the House of Nakai

Nineteenth Century Accounting Error

Only fleeting attention has been given to the possibility of persistent error or bias in the calculations on which investment, output, and/or pricing decisions were based in the nineteenth century. This is an indirect tribute to the influence of Max Weber and other rationalists who stressed the concept of a rational capitalistic establishment employs capital accounting, that is, an establishment which determines its income yielding power by calculation according to methods of modern bookkeeping and the striking of a balance. 1 Schumpeter's views are even more exalting.

Nineteenth Century Accounting Error

Only fleeting attention has been given to the possibility of persistent error or bias in the calculations on which investment, output, and/or pricing decisions were based in the nineteenth century. This is an indirect tribute to the influence of Max Weber and other "rationalists" who stressed the concept of a rational capitalistic establishment that employs capital accounting, "that is, an establishment which determines its income yielding power by calculation according to methods of modern bookkeeping and the striking of a balance." 1 Schumpeter's views are even more exalting.

International Experience with Uniform Accounting

Seen internationally, the desire to achieve greater uniformity in accounting has been with us for a long time. In the early I92os, the German Professor Eugen Schmalenbach was frustrated again and again by the failure of his own efforts and those of his students to compare meaningfully the financial data made available by different companies. This led to concentrated research on the problem and resulted in the publication of a book by Schmalenbach entitled The Model Chart of Accounts.l With this book Schmalenbach laid the foundation for all subsequent developments in uniform accounting in Germany. It also became the basis for corresponding efforts in other European countries.2 Thus Schmalenbach is without doubt the intellectual father of organized thought on behalf of uniform accounting. Prior to these German academic endeavors, many procedural schemes had come into existence with the purpose of unifying and standardizing bookkeeping methods. Trade associations and industrial branch groups spearheaded this activity. For example, a uniform accounting system was developed by the British Federation of Master Printers and put into satisfactory operation by I9I9.3 In the United States, the American Water Works Association compiled a uniform chart of accounts in I9IO and urged its use by its members.4 Other similar references abound. Lengyel quotes a I930 resolution adopted at the sixteenth annual meeting of the Chamber of Commerce of the United States:

THE FOLEY PARTNERSHIPS: THE IRON INDUSTRY AT THE END OF THE CHARCOAL ERA

T 1HROUGH the courtesy of a descendant of the Foley family, which for several generations in the seventeenth and early eighteenth centuries shared in the control of a not inconsiderable part of the charcoal-iron industry in Britain, a number of ironworks' account books have been made available for study by the present writer.' Taken together with the Cartwright Hall MSS. (dealt with in an earlier paper in this journal)2, which overlap to a small degree with the Foley MSS., they help to provide a wide coverage of the late seventeenth-century industry. The extent of this coverage can be measured from the earliest known list of furnaces and forges in Britain, compiled in I7I7.3 All but three of the ironworks for which the Foley MSS. provide accounts, are shown in Fig. i, which also includes works referred to in the accounts and in other contemporary MSS. prior to 1717. The table on pp. 324-5 lists the ironworks by regions, with the periods for which accounts have been examined.4 The output of many of these works is summarized in an appendix. It will be appreciated that these account books contain a formidable amount of information, only a fraction of which can be incorporated in a short paper. At least five different methods of book-keeping are represented, which vary widely in the detail recorded. Some accounts are mere summaries of the year's output and the balances of materials remaining in stock; others particularize every farthing of expenditure with an embarrassing wealth of detail, but with little attempt at classifying the information. A further difficulty encountered is due to the different periods covered by the accounts of the various works. As the list shows,

Bibliography on Methods of Teaching Bookkeeping

Bibliography on Methods of Teaching Bookkeeping

Methods of Advanced Bookkeeping

Methods of Advanced Bookkeeping

What are the Advantages of Stub Accounting?

During the last few years the system of customers accounting, generally referred to as the Accounting has been steadily gaining in favor in all types of public utilities. In the telephone accounting field it is almost the universal system. Among gas and electric utilities it has been adopted by the majority of companies billing over 7500 accounts per month. Recent surveys among water utilities have shown a definite trend toward the adoption of this plan during the past three years in preference to other methods of handling the customer accounting work. Of course, this is more generally true among companies which have changed from their former hand method to mechanical methods of bookkeeping and billing, although many have changed to Stub Plan from other plans which utilized mechanical equipment. Although the stub plan has been successfully used on the hand method, the development and application of mechanical equipment to the customer billing work has no doubt been responsible for the increased use of this plan. Several types of machines have been developed which can more economically handle the complete billing and debit posting job, using stub plan, than if other plans were adopted. The following figures are of interest in showing the extraordinary growth of the number of stub plans in use among water utilities for the period prior to December 31, 1927, and the last three years. A survey of 221 water utilities using mechanical methods of billing showed that 76 percent were using Bill and Ledger Plan as of December 31, 1927; 22 percent used Stub Plan, and 4 percent used Register Sheet Plan. During the period from 1927 to 1930 inclusive, 192 water utilities adopting mechanical methods of billing for the first time, 45 percent of the installations were the Bill and Ledger Plan, 54 percent the Stub Plan and 1 percent the Register Sheet Plan. Therefore out of a grand total of 415 companies we find that 61 per-

A System of Cost Keeping

The description of itemized costs of contract work always attracts some attention; unfortunately, the greatest amount of publicity has been given to the actual costs of unit items on construction work rather than to the bookkeeping methods used in obtaining those quantities. It seems hardly necessary to call attention to the very small value that cost records may have to others than to those who gathered them and who realized and understood fully every local condition at the point of construction. There are some, however, who believe that all cost records have value, and that their publication, no matter in what form, will be a benefit. There is no doubt that the records of cost of completed work are useful to some slight extent to others than their compilers, but the greatest value of such records is derived during the time of their collection by the men who are doing the work.