Book Reviews; Additions to the Library, April, 1919;Index;

              38 HASKINS & SELLS May
Book Reviews
Basset, W. R. Accounting as an Aid to
Business Profits. (Chicago, A. W. Shaw
Company, 1918. 316 p.)
Authors for some time have been shoot­ing
at a bull's eye which may be expressed
in the terms "accounting as a basis for
business administration." Many of them
have shot wide of the mark. Few have
approached it. A number of accounting
treatises have chapters or paragraphs
which touch on the subject but the treat­ment
has all been very superficial. The
present volume contains much more on the
subject than anything which previously has
been written. It, however, like the others,
gets somewhat off the track in what is ap­parently
an attempt to fill out the volume
and make it a book of good size.
The book is written in a popular style.
It contains many interesting illustrations
and a number of inserts which are useful.
The treatment of the subject is loose in
places. This fault, however, is likely to go
undiscovered because of the smoothness of
the composition. Note, for example, the
following: "By rate of turnover is gener­ally
meant the activity of that portion of
the capital invested which is contained in
the value of the inventory. This repre­sents
but a part of the enterprise's assets
and not the entire wealth or resources en­gaged
in the given business. It is neces­sary,
therefore, to go beyond the rate of
turnover and to consider the relation which
gross sales bear to capital investment in a
well-conducted and normal manufacturing
business. To illustrate the point, the fol­lowing
tabulations have been prepared
from available statistics which indicate for
various industries—first, the margin of
profit on sales; second, the ratio of gross
sales to capital investment; and, third, the
equivalent of the profit expressed in rate
of return on the capital."
The reader is likely to become so inter­ested
in the statistics which follow and
which relate to a number of leading indus­tries
as to overlook the fact that the author
has passed glibly by the matter of capital
invested in the inventory. It may further
be remarked that no reference is made to
the method of ascertaining the turnover on
goods. Since there is considerable differ­ence
of opinion on this matter, it seems that
the author should at least have stated how,
in his opinion, the turnover on goods is to
be determined.
The book, taken as a whole, should be
regarded as a welcome addition to the
literature of the subject. It will appeal to
the popular taste for which it was written.
It should be read with this thought in mind.
It goes further than any other book within
the knowledge of the reviewer in the direc­tion
of making the accounting an effective
means in facilitating administration, the
object of which is to guide the organization
to a strong financial condition coincident
with large dividends.