FOE BETTER BUSINESS

Evening Post, Volume CXXI, Issue 78, 1 April 1936, Page 21

FOE BETTER BUSINESS

UNIFORMITY IN ACCOUNTS

Some attention is being given by accountants to the possibility of achieving more uniformity in the presentation of financial statements, a natural corollary of which is the introduction of standardised methods of bookkeeping and recording (remarks a contributor to the "Commonweaitn Journal of Accountancy"). There also exists a fairly general desire on the, part of progressive accountants to improve on the somewhat stereotyped forms of accounts which are so prevalent. The conventional styles of manufacturing and trading accounts, and balance-sheets —with which every student of accountancy is so familiar—have long been deemed insufficient for modern business conditions. They do not in themselves furnish the complete data to the management, and others who desire to be apprised fully of' the financial position of the concern and the course of its trading operations. Some important facts and figures are to be discovered only from a dissection and rearrangement of the items in the accounts and by reference to the books and subsidiary records, from which supplementary statements, analyses, and schedules must be prepared before the required information is forthcoming.

Within any business it is not impossible, nor indeed a matter cf special difficulty, to contrive improvements in accounting methods that will prove perfectly satisfactory to all concerned. The operating accounts for any period, whether it be a year or a day or any interval between, can be so perfected as to supply complete, reliable, and up-to-date information. Similarly the statement of assets and liabilities can be classified and grouped in clear and logical sequence, so that the financial condition of the concern may be readily interpreted.

The placing of the accounts of a business on a sound footing does not necessarily imply a step towards uniformity. Two or more concerns conducting the same type of business, each with perfectly satisfactory accounting systems, may yet differ considerably between themselves in some important methods of the preparation of accounts. There may be diverging views as to the classification of accounts, or the apportionment of revenue and expenditure between the various divisions of the profit and loss account, and even as to the number and character of such divisions. If each has several departments of a similar nature, the apportionment of expenses to these departments may differ, particularly with regard to such items as depreciation, rent, interest, and other expenditure not directly chargeable to the department.

It is undoubted that many businesses would welcome some authoritative pronouncement which,' while serving as a guide for their accounting systems, would also ensure that their methods were uniform with others In the same kind of business.