Reviewed by G. Stevenson Smith West Virginia University
The Complete Cost-Keeper describes cost systems, not general ledger accounts, found in factories in the late 19th century. The cost-keeper is the bookkeeper whose primary function is maintaining the job cost records for a factory. The book describes actual cost systems in such detail that the cost-keeper position could have been staffed by someone with very little accounting experience.
The book’s initial chapters deal with the merits of capitalism in rather lofty phrases such as the following: “possibilities of gain for the day are abbreviated by every tick of the clock as it marks the changeless flight of time from the unborn future to the dead past.” Once past these initial chapters, the material deals in minute detail with job cost systems in actual use. The chapters develop these systems from a very simple operation with one factory up to a corporation with several branches. As the cost systems are described in their entirety, some repetition develops particularly in explanations of recording labor time on jobs.
Each factory system makes extensive use of cards upon which the costs of the job are recorded as the job proceeds through the factory. Standard costing is not used in any of these accounting systems, and only actual costs are tabulated. The overhead costs are distinguished from direct labor and direct materials. Although overhead allocation on direct labor is accepted, in one system overhead costs were allocated to machines used in production based on a proportion of the factory’s entire machine costs.
An area of accounting theory not strongly developed in this period is the differentiation between assets and expenses. As an example, repair expense of a machine was added to the cost of that machine. Although it was stated that assets benefit future operations, it was not considered important as to whether charges were made against assets or expenses because eventually the results were the same.
The cost accounting systems described in these chapters are mainly oriented at making product pricing decisions. A ledger ac-count with an inventory balance is a secondary consideration, and the ledger described would not necessarily provide inventory information. In such cases, inventory values were determined by a physical count.
Throughout the chapters there are extensive illustrations of the forms that are used in these factory accounting systems. The detail on these forms is extensive, i.e., size of the form in inches to color in some cases. In reviewing the numerous forms, it is interesting to see a payroll register without deductions for income taxes or FICA taxes. It makes one realize, although not remember, that there was a period when these taxes were not paid.
The book provides a vivid description of cost accounting systems that were used in the late 19th century. This description is valuable because of the numerous specifics provided about the systems. This value is enhanced because the material does deal with specifics and not the generalities of any theory.
