Music Trade Review
Issue: 1951 Vol. 110 N. 10 - Page 26
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
ACCOUNTING
(Continued from Page 24)
business activity and help to make the
decisions which will facilitate progress
and growth. To consider it otherwise
would be to say that the horse and buggy
which was good enough for your grand-
father is good enough for you today.
One thing which probably should be
emphasized here is that sound account-
ing principles are not established by
accountants solely for academic pur-
poses. I believe that I can say without
danger of contradiction that good busi-
ness practice will ordinarily result in
good accounting principles. However,
since the human element enters into the
determination of what is good business
judgment, there is always the possibility
of a difference of opinion in this area.
Where a business circumstance is pe-
culiar to a particular trade group, that
group can often establish the trade prac-
tice which will serve as the basis for its
acceptance in connection with good ac-
counting as well as for tax purposes.
Cooperation in the solution of changing
business and accounting problems can
be seen, therefore, to have particular
significance to any industry group such
as yours.
Trained Personnel Important
I have not mentioned any of the spe-
cific accounting items or areas in which
you are experiencing difficulties. Size, or
lack of it, often presents problems. Nat-
urally, the existence or absence of ac-
counting problems reflects a combina-
tion of the complexities in your business.
The presence or absence of competent
trained personnel also is important. I do
not limit the requirement for trained per-
sonnel to the accounting side of the busi-
ness. I omit any such limitation because
it is as important for the sales person or
department head to be well trained in
the accounting steps in which he partici-
pates as it is for the bookkeeper who
maintains the general ledger. After all,
accounting for your business begins with
the purchase of the goods to be sold by
you. It continues through the sales to
your customers and is completed only
when you have paid your taxes on the
accumulated profits for the year's opera-
tions.
Those of you who give lessons, rent
instruments, provide the service of copy-
ing manuscripts, etc. have problems not
encountered by others who do not fur-
nish these services. Some of you have
added merchandise lines such as refrig-
erators, which are completely unrelated
to the music field; yet because these
items are purchased through regular
sources and sold to regular customers,
there are few new accounting problems
encountered. In other words, accounting
difficulties do not vary in direct ratio to
the increases and decreases in merchan-
dise lines or to the size of the business.
At the risk of generalizing, however,
I believe I can say that sound accounting
procedures, even day-to-day accounting
requirements, are a problem with many
of you. At least that is a common com-
plaint with many other groups like yours.
In recognition of this problem there
has been a growing tendency for trade
organizations to sponsor preparation of
accounting manuals which include charts
of accounts and basic instructions for
use by their members. Examples are the
Cotton Tufted Textile Mills, the Electri-
cal Manufacturing Industry, the Associa-
tion of Advertising Agencies, and many
others. Of course, the N.R.D.G.A. has
had a standard expense accounting man-
ual for years. All of these have been pre-
pared with the particular problems and
practices of the industry as the govern-
ing factors. I feel confident that none of
these manuals are considered so complete
that they cover every ramification of the
business, yet they form the required
framework upon which the extras can
be added by any concern. Certainly no
manual which might be prepared for
Music Merchants would fail to include
provision for the accounting for stu-
dents' lessons, rental of instruments, etc.
If anyone wanted to know how much
rental income came from each different
type of instrument, he would be able to
expand easily on the basic records to give
him that information.
GRANDS (as is) from $150 up
STUDIOS (as is) from $225 up
UPRIGHTS (as is) from $25 up
A choice selection always available
In cooperative reporting such as this,
the value of Uniform accounting by
Music Merchants becomes evident. With
everyone using similar language to de-
scribe particular items and, more impor-
tant, with everyone including the same
types of items in a particular classifica-
tion, the composite results become use-
ful. Without such consistency, any com-
posite developed would be worse than
meaningless — it would be potentially
dangerous.
Let us allow our imagination to run
for a moment to an illustration or two
where dissimilarity could result in con-
fusion. If half of the companies report-
ing stated their sales made by outside
salesmen as the net amount of the selling
price less the commission paid, whereas
the other half followed the practice that
I believe to be proper, namely, showing
the .sales and commissions gross, each
group might possibly be misled as to
CARILLONETTE CHIMES
TOWER BELL REPRODUCER
and the
MINI-CHIMES
WRITE — WIRE —
OR — PHONE — CHELSEA 2-4350
BRODWIN PIANO CO., Inc.
26
Value of Uniform Accounting
BEACH
USED PIANOS —
Est. 1914 — HARRY BRODWIN. Pres.
246 WEST 23rd STREET
A very important outgrowth of coop-
eration within an entire industry occurs
when there is uniform reporting of finan-
cial and operating data either quarterly,
semi-annually or annually to a central
agency for compilation according to the
size and type of business. This informa-
tion can then be disseminated on a com-
posite basis to the members of the asso-
ciation. Such a practice presupposes that
the central agency will protect the con-
fidential nature of the individual reports
by not making information about a par-
ticular store available to others. In some
cases, this compilation project is handled
by the Headquarters of the trade associa-
tion ; in other cases it is done by Uni-
versities or other outside organizations.
I understand that your organization has
conducted two "Cost of Business Sur-
veys" in recent years, with the assistance
of Professor Harrell of Indiana Univer-
sity. I also understand that a small num-
ber of your members are currently co-
operating on a regular basis with another
outside organization not related to your
trade organization.
NEW YORK, N. Y.
"Nothing But a Bell Rings Like a Bell"
SEND FOR CATALOGS
BEACH INSTRUMENT CORP.
165 Oraton St.
Newark 4, N. J.
THE MUSIC TRADE REVIEW, OCTOBER, 1951
ACCOUNTING
(Continued from Page 24)
business activity and help to make the
decisions which will facilitate progress
and growth. To consider it otherwise
would be to say that the horse and buggy
which was good enough for your grand-
father is good enough for you today.
One thing which probably should be
emphasized here is that sound account-
ing principles are not established by
accountants solely for academic pur-
poses. I believe that I can say without
danger of contradiction that good busi-
ness practice will ordinarily result in
good accounting principles. However,
since the human element enters into the
determination of what is good business
judgment, there is always the possibility
of a difference of opinion in this area.
Where a business circumstance is pe-
culiar to a particular trade group, that
group can often establish the trade prac-
tice which will serve as the basis for its
acceptance in connection with good ac-
counting as well as for tax purposes.
Cooperation in the solution of changing
business and accounting problems can
be seen, therefore, to have particular
significance to any industry group such
as yours.
Trained Personnel Important
I have not mentioned any of the spe-
cific accounting items or areas in which
you are experiencing difficulties. Size, or
lack of it, often presents problems. Nat-
urally, the existence or absence of ac-
counting problems reflects a combina-
tion of the complexities in your business.
The presence or absence of competent
trained personnel also is important. I do
not limit the requirement for trained per-
sonnel to the accounting side of the busi-
ness. I omit any such limitation because
it is as important for the sales person or
department head to be well trained in
the accounting steps in which he partici-
pates as it is for the bookkeeper who
maintains the general ledger. After all,
accounting for your business begins with
the purchase of the goods to be sold by
you. It continues through the sales to
your customers and is completed only
when you have paid your taxes on the
accumulated profits for the year's opera-
tions.
Those of you who give lessons, rent
instruments, provide the service of copy-
ing manuscripts, etc. have problems not
encountered by others who do not fur-
nish these services. Some of you have
added merchandise lines such as refrig-
erators, which are completely unrelated
to the music field; yet because these
items are purchased through regular
sources and sold to regular customers,
there are few new accounting problems
encountered. In other words, accounting
difficulties do not vary in direct ratio to
the increases and decreases in merchan-
dise lines or to the size of the business.
At the risk of generalizing, however,
I believe I can say that sound accounting
procedures, even day-to-day accounting
requirements, are a problem with many
of you. At least that is a common com-
plaint with many other groups like yours.
In recognition of this problem there
has been a growing tendency for trade
organizations to sponsor preparation of
accounting manuals which include charts
of accounts and basic instructions for
use by their members. Examples are the
Cotton Tufted Textile Mills, the Electri-
cal Manufacturing Industry, the Associa-
tion of Advertising Agencies, and many
others. Of course, the N.R.D.G.A. has
had a standard expense accounting man-
ual for years. All of these have been pre-
pared with the particular problems and
practices of the industry as the govern-
ing factors. I feel confident that none of
these manuals are considered so complete
that they cover every ramification of the
business, yet they form the required
framework upon which the extras can
be added by any concern. Certainly no
manual which might be prepared for
Music Merchants would fail to include
provision for the accounting for stu-
dents' lessons, rental of instruments, etc.
If anyone wanted to know how much
rental income came from each different
type of instrument, he would be able to
expand easily on the basic records to give
him that information.
GRANDS (as is) from $150 up
STUDIOS (as is) from $225 up
UPRIGHTS (as is) from $25 up
A choice selection always available
In cooperative reporting such as this,
the value of Uniform accounting by
Music Merchants becomes evident. With
everyone using similar language to de-
scribe particular items and, more impor-
tant, with everyone including the same
types of items in a particular classifica-
tion, the composite results become use-
ful. Without such consistency, any com-
posite developed would be worse than
meaningless — it would be potentially
dangerous.
Let us allow our imagination to run
for a moment to an illustration or two
where dissimilarity could result in con-
fusion. If half of the companies report-
ing stated their sales made by outside
salesmen as the net amount of the selling
price less the commission paid, whereas
the other half followed the practice that
I believe to be proper, namely, showing
the .sales and commissions gross, each
group might possibly be misled as to
CARILLONETTE CHIMES
TOWER BELL REPRODUCER
and the
MINI-CHIMES
WRITE — WIRE —
OR — PHONE — CHELSEA 2-4350
BRODWIN PIANO CO., Inc.
26
Value of Uniform Accounting
BEACH
USED PIANOS —
Est. 1914 — HARRY BRODWIN. Pres.
246 WEST 23rd STREET
A very important outgrowth of coop-
eration within an entire industry occurs
when there is uniform reporting of finan-
cial and operating data either quarterly,
semi-annually or annually to a central
agency for compilation according to the
size and type of business. This informa-
tion can then be disseminated on a com-
posite basis to the members of the asso-
ciation. Such a practice presupposes that
the central agency will protect the con-
fidential nature of the individual reports
by not making information about a par-
ticular store available to others. In some
cases, this compilation project is handled
by the Headquarters of the trade associa-
tion ; in other cases it is done by Uni-
versities or other outside organizations.
I understand that your organization has
conducted two "Cost of Business Sur-
veys" in recent years, with the assistance
of Professor Harrell of Indiana Univer-
sity. I also understand that a small num-
ber of your members are currently co-
operating on a regular basis with another
outside organization not related to your
trade organization.
NEW YORK, N. Y.
"Nothing But a Bell Rings Like a Bell"
SEND FOR CATALOGS
BEACH INSTRUMENT CORP.
165 Oraton St.
Newark 4, N. J.
THE MUSIC TRADE REVIEW, OCTOBER, 1951
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