Issued by the Committee on Accounting
Procedure, American Institute of Accountants,
13 East 41st Street, New York, N. Y.
Copyright 1939 by American Institute of Accountants
Rules Formerly Adopted
I N PRESENTING its first statements of the results of studies of accounting
questions, it seems desirable that the committee indicate the stand-point
from which it has approached the subject. Its present and future
pronouncements should be read in the light of these remarks.
Accounting and the Social System
The committee regards corporation accounting as one phase of
the working of the corporate organization of business, which in turn
it views as a machinery created by the people in the belief that,
broadly speaking, it will serve a useful social purpose. The test of the
corporate system and of the special phase of it represented by corporate
accounting ultimately lies in the results which are produced. These
results must be judged from the standpoint of society as a whole—
not from that of any one group of interested parties.
The uses to which the corporate system is put and the controls to
which it is subject change from time to time, and all parts of the
machinery must be adapted to meet such changes as they occur.
In the last forty years the outstanding change in the working of the
corporate system has been an increasing use of it for the purpose of
converting into liquid and readily transferable form the ownership
of large, complex, and more or less permanent business enterprises.
This development brought in its train certain uses of the processes
of law and accounting, which have led to the creation of new con-trols,
revisions of the law, and a reconsideration of accounting
Accounting Information for Transitory Owners of Securities
As a result of this development in the field of accounting, problems
have come to be considered more from the standpoint of the current
buyer or seller in the market of an interest in the enterprise than from
the standpoint of a continuing owner. The significance of this change
Accounting Research No. 1