Making it easier;[News items];

              88 HASKINS & SELLS November
)
Making It Easier
WHAT in the past has been one of
the perplexing problems which pub­lic
accountants have had to meet in Loui­siana
has been solved by the new consti­tution
of that State, which became effec­tive
January 1, 1922. Under the previous
law, business concerns were taxed on
values at December 31 of each year, based
on stock in trade plus accounts receivable
minus accounts and notes payable. Cash
was exempt. It was therefore desirable,
from a point of view of state taxes, to
have as little value as possible in accounts
receivable and a maximum of cash. In
order to accomplish this, business con­cerns
frequently resorted to the practice,
during the last days of December, either
of borrowing from banks, in order to in­crease
cash and notes payable, thereby
creating an offset to stock in trade and
accounts receivable, or selling outright
their accounts receivable. With the com­ing
of the new year such notes payable
were liquidated, or such accounts receiv­able
were purchased from the parties to
whom they had been sold, thus restoring
the original position of the concern with
respect to the cash and accounts receivable.
This situation has always been a thorn
in the side of public accountants. It is
obviously almost incredible that account­ants
examining the records for the early
part of the month following the period
under examination should fail to observe
the reversing entries. There was no dis­puting
the purpose of the transactions
prior to the close of the year. On the
other hand, the transactions were in every
way legal, and they resulted in a financial
status at the end of the year which might
not be denied.
The problem confronting the accountant
was whether to accept what at December
31 was a fact, although subsequent in­formation
gave it the color of fiction, or
to be governed by the intent and ignore,
as it were, the false motions of post-Christ­mas
manoeuvres. It was, therefore, a
source of considerable joy to public ac­countants
that the situation was corrected
by the new constitution, Section 4 of
Article 10 thereof reading thus:
"The following property, and no other,
shall be exempt from taxation: All public
property, places of religious worship; * * *
places of burial; * * * cash on hand or on
deposit; * * * debts due for merchandise or
other articles of commerce, or for serv­ices;
* * * "
By including accounts receivable among
the items now exempt from taxation, the
incentive for manipulation has been re­moved.
Whatever the effect upon state
tax receipts may be, the new law should
in this respect be very acceptable to pub­lic
accountants.
Colonel Arthur H. Carter has recently
obtained the C. P. A. certificate of the
States of New York and Missouri, respec­tively.
Mr. W. L. Chaffee, manager of the
Atlanta office, was elected a member of
the City Air Board of Atlanta, subject to
appointment by the Mayor, and duly
appointed to the Board on October 10,
1922.
Mr. Page Lawrence served as toast-master
at the banquet incident to the
regional meeting of the American Institute
of Accountants at St. Louis, November 10,
1922.
PRESS OF WILLIAM GREEN, NEW YORK