A TEXT-BOOK FOR COLLEGES AND
SCHOOLS OF BUSINESS ADMINISTRATION
BY
ROY B. KESTER, Ph.D., C. P. A.
PROFESSOR OF ACCOUNTING, SCHOOL OF BUSINESS,
COLUMBIA UNIVERSITY
VOLUME II
(SECOND YEAR)
Twelfth Printing
NEW YORK
THE RONALD PRESS COMPANY
1922
Copyright, 1918, by
The Ronald Press Company
To Nancy
As a Tribute of Love and Tender
Memory to Her Mother
[Pg v]
A knowledge of the subject matter of Volume I is a prerequisiteto the profitable study of the present work. Therefore, it may bewell to review briefly the contents of the latter as an introductionto this book. In Volume I the attempt was made to formulate andillustrate the basic principles upon which the practice of accountingis founded. The principles of debit and credit were developed and theirapplication explained—as related ultimately to the balance sheet andstatement of profit and loss. The chief books of original entry (thevoucher register excepted) and the various ledgers were described andillustrated. Columnar books, controlling accounts, methods and devicesfor preventing and detecting errors, methods for the proper handlingof purchases, sales, cash, and trade discounts, and some phases ofproportion and interest were discussed in detail.
Some special applications of accounting principles, as viewed inrelation to the accounting problems involved therein, were alsoexplained and illustrated under such heads as: notes receivablediscounted and dishonored; consignments and approval sales; single andjoint venture accounts; accounts current, their reconciliation andadjustment; instalment sales; sales for future delivery; single entry,its methods and the results attainable under it; etc.
From the standpoint of business organization, the accounting problemspeculiar to the single proprietorship and the partnership were givenfull treatment. The advantages and disadvantages of the various typesof organization, the rights and duties of owners among themselves[Pg vi]and to outsiders, the accounting procedure necessary under differentconditions for changing from one form of organization to another, andother like items were set forth. Underlying the entire treatment ofthe subject was the guiding principle that accounting is never an endin itself, that its right to existence depends solely on the serviceit can render from the standpoint of administrative and financialmanagement.
In content, the present volume is primarily a study of the corporation,its accounting and financial problems, although most of the material,in so far as it consists of a statement of general principles, isequally applicable to other types of organization. The emphasis of thevolume is laid upon the problem of valuation as met in the commercialbalance sheet. Chapters IV to XXVII inclusive comprise this portion ofthe subject matter. The other chapters treat miscellaneous matters, aknowledge of which is essential to the stud