NORTH CAROLINA LAW REVIEW

Volume 17 | Number 1 Article 6

12-1-1938

Law and Accounting

Willard J. Graham

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Willard J. Graham, Law and Accounting, 17 N.C. L. Rev. 19 (1938).
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 LAW AND ACCOUNTING
WILLARD J. GRAHAM*

The complex interrelationship between law and accounting reveals

itself in many forms and presents numerous questions which have been
provocative of long continued debate and discussion. Among the ques-
tions arising most frequently are these:
1. To what extent has the law developed from principles of ac-
counting?
2. To what extent have the law and the rulings of administrative
bodies operating under the law determined accounting principles?
3. How much law should an accountant know for purposes of pro-
fessional practice?
4. How much accounting should the lawyer know for his practice?
5. What are the bounds and limits of practice respectively of the
two professions? Can cooperation be substituted for the present un-
fortunate competition?
In the short space here available it is impossible to discuss fully
all of these questions. Attention is therefore centered primarily on the
fourth-that relating to the lawyer's training in accounting. However,
when necessary for a more complete discussion of this primary topic,
reference is made to the other questions mentioned. In the footnotes
are references to competent discussions of these other questions not fully
treated here.
There is practically universal agreement among practicing lawyers
that the services required of the lawyer today (outside of a very few
specialized fields) demand a certain amount of accounting training for
most competent performance.
A quotation from a letter received from a practicing attorney pre-
sents the case very clearly:
"The changing nature of the functions of an attorney have steadily
increased the importance of a knowledge of the subject (accounting).
I admit that when I was a boy and thought about becoming a lawyer,
I had in my mind's eye the picture of a robust gentleman in a Prince
Albert coat, who could thrust his hand between the first and second
buttons, counting from the north, and, shaking his hoary locks, could
shatter the circumambient atmosphere with glowing periods.
"It now develops, forgetting for the moment court work, that about
two-thirds of my time with clients is taken up in answering questions
which really should be put to a business man. While the knowledge of
law is useful, and indeed necessary, in drawing a contract, of equal
importance to the modern client is the ability to understand his business
necessities and the hazards which may arise.
*Associate Professor of Accounting, School of Business, University of
Chicago.
 THE NORTH CAROLINA LAW REVIEW
"The intricate national legislation in connection with income, inherit-
ance, and other forms of taxation, and the tendency of the states to
enter the same domain, emphasizes the importance of a clear conception
of accounting.
"...I might make the matter the subject of an article, in which I
could give some very interesting experiences with regard to blunders,
sometimes ludicrous and sometimes tragic, which I have seen lawyers
make in the trial of cases, and which would have been impossible had
the law schools included even a four months' course in the fundamentals
of accounting."
Other expressions by members of the bar read as follows:
"It has been my observation that training in the elements of book-
keeping and accountancy are very valuable to a trial attorney. For some
years prior to becoming a member of this court [a state supreme court]
I was one of the judges of a circuit court. While holding that position
I many times noticed that the lawyer who is familiar with books of
account has a great advantage over an opponent unfamiliar with such
matters. The advantage soon comes to the notice of the jurors, and they
place trust and confidence in the attorney who can quickly extract in-
formation from the account books. In fact, so much of the litigation,
which is profitable to the attorneys, requires the examination of account
books that all attorneys who expect to try cases ought to possess a
knowledge of accountancy."
"From my twelve years' experience at the bar and in various types
of legal work, particularly as pertains to railroad law and banking law,
and from the standpoint of the practicing attorney, I am convinced that
a knowledge of accounting is very, very important; not that the attorney
himself must always, of necessity, prepare the figures or statements, but
he certainly should be able to understand what they mean and how they
are computed."
To supplement the preceding quotations taken from personal letters
of practicing lawyers and judges, below are presented several brief
statements which are fairly typical of the opinions held by members of
the profession. Each one presents a slightly different angle of the
question:
"Accounting is especially valuable in the examination of witnesses in
the trial of cases; also for the intelligent understanding of a client's
business and business problems."
"In the field of the patent law: (1) deals of all kinds for the manu-
facture and for sale of articles, machines, etc., whether on a royalty
or other basis, require a thorough understanding of accounting, (a) for
the negotiation of the deals, and (b) for the drafting of definite, certain
and workable contracts; and (2) in connection with recoveries for
infringement, a large body of law has been built up, which is generally
referred to as 'the law of patent accounting.' The recovery is abso-
lutely dependent upon a knowledge of accounting, and such knowledge is
necessary to the application of the law itself. This has special reference
to 'cost accounting' and to such items as the proper classification of
 LAW AND ACCO UNTING
items of cost and the spreading of overheads, as well as such items as
depreciation and depletion."
"A better training along this line would cut down many uninten-
tional embezzlements and would better qualify lawyers to compete with
banks in the settlement of estates and also to become more prominent in
banking organization."
"The lawyer whose practice includes any substantial amount of ad-
visory work for business enterprises, whether corporations or partner-
ships, has frequent need for an ability to understand and analyze finan-
cial statements. In legal specialties such as income tax practice, utility
rate regulation, and corporate mergers and consolidations, a mastery of
accounting principles is almost indispensable. Here the lawyer will
often have an expert accountant associated with him and without some
knowledge of accounting methods and terminology, he finds it difficult
to utilize to the full the services of the expert.
"But, even apart from such specialized branches of the practice where
the need for accounting is obvious, lawyers very generally recognize
the value of an understanding of accounting in dealing with such ques-
tions as corporate dividends, income bonds, blue sky laws, corporate
franchise taxes, qualification of foreign corporations, and partnership
liquidations. Not least among the benefits resulting from such an under-
standing is the habit of visualizing business operations and financial
condition in the form of the financial statements in common use. This
habit very definitely facilitates the understanding of the legal rules
involved in some of the rather complicated aspects of these problems."
These statements clearly indicate the correlation between law and
accounting. One explanation of this interrelationship between these
two fundamentally dissimilar fields is presented by A. A. Berle, Jr. and
Frederick S. Fisher, Jr., after exhaustive research to determine the
extent to which the courts have undertaken to impose rules of account-
ing as rules of law:
I... day by day, lawyers and courts predicate legal effects on the
results of accounting. It may fairly be said that rules of accounting
are for many purposes rules of law; or, conversely, that rules of law
entail rules of accounting. The respective tasks of a lawyer and account-
ant here intermingle so closely that neither can proceed without the
other. To a much larger degree than perhaps either profession realizes,
this intermingling has already taken place. Courts have in fact and in
form laid down rules which bind the accountants, or they have them-
selves adopted accountants' conventions. The accountant, once his rules
have found their way into the body of law, becomes legally obliged
to follow them in his further work."'
Not only do the courts adopt and lend sanction to accounting prin-
ciples as exemplified in accounting practice, but also the reverse is
equally true-that the law, and administrative bodies created by the
'Berle and Fisher, Elements of the Law of Business Accountin.q (1932)
32 CoL. L. Rzv. 573, 578. Consult this article for a very competent discussion
of this interesting subject and for an appended digest of cases.
 THE NORTH CAROLINA LAW REVIEW

law, themselves in turn influence materially the development of account-

ing principles and practice. Most of the states have passed recently
one of several types of so-called unfair trade practice acts. While these
laws vary greatly among themselves in many respects, most of them
have one element in common-a provision for a "fair" price which is
related in some respect or other to a (frequently unstated) concept of
cost. Accountants, and accounting-trained lawyers, should know that
"cost" is a very complex and intricate term, that no definition of cost
is possible except in terms of a specific purpose, and that even for a
single purpose a satisfactory definition is most difficult to achieve. To
empower an administrative board or commission to enforce an unfair
trade practice act which does not define cost carefully and at great
length, and from the point of view of a single specific objective, is to
grant this commission the authority to "make law" on accounting mat-
ters, whether or not this be the intent of the original act.
The layman would assume-would have a right to expect-that the
corporation statutes of the respective states would have a determining
influence upon the principles and practices of corporation accounting.
Unfortunately this is not entirely true, for: (a) orthodox legal con-
cepts of accounting matters as they appear in many state corporation
acts do not conform closely to generally accepted accounting principles
and practices; (b) in the corporation acts of the several states there are
many different treatments of accounting matters; and (c) often the
use of accounting terminology is 'so loose and varied that the exact
meaning and intent of the law remains uncertain. Even in the Illinois
Act, in the formation of which there was a definite attempt to conform
to good accounting practice, there is a substantial amount of ambiguity
and uncertainty, and according to some authorities, at least one case
of contradictory clauses. 2
Today there are several dozen important administrative agencies,
federal and state, which render final decisions, and therefore "make
law" on accounting matters. One of these, the Securities and Exchange
Commission, operating under the Securities and Exchange Act, has set
forth formally and informally a number of "requirements" for regis-
trants and is daily rendering "decisions" on disputed points of accounting
practice. Normally these requirements and decisions are based on gen-
erally accepted accounting principles insofar as it is possible to de-
termine what (if any) accounting principles are generally accepted.
In any case, however, without review by any competent authority, they
become authoritative, and for all practical purposes are written into
2See Frese, Property Rights of Stockholders under the 1933 Illinois Business
CorporationAct (1935) 10 AccOUNwTiNG Rav. 136; Payne, The Effect of Recent
Laws on Accountancy (1935) 10 ACCOUNTING REv. 84, 89.
 LAW AND ACCOUNTING

the body of the law. Two divergent views as to the desirability of this
sort of "law-making", and its probable effect on accounting practice
and on the law of business accounting, are presented below-the first
by a lawyer and the other by an accountant; both discussions refer to
the Securities and Exchange Commission. Strangely enough, it is the
lawyer who expresses concern for accounting doctrine.
".... There is always danger, where accounting rules are made by
specialized administrative tribunals, that the resulting body of doctrine
may be lop-sided, if not positively dangerous; however conscientiously
the rulings have been made from the point of view of the administrators
making them.
"Even more of a problem is the process by which these decisions
-now become authoritative-are made.
.... Now, this, it is submitted, is not a satisfactory state of affairs.
Specifically,
1. Decisions so made are not recorded or available to others as a
guide of conduct or a basis of informed criticism and comment;
2. They are by no means necessarily uniform, reasoned, systematic,
or grounded on anything other than the feeling of the examining staff;
3. They are not reviewed by any competent authority, nor sus-
ceptible of being so; and
4. There is no procedure leading to the conclusion that such decisions
are valid precedent rather than purely arbitrary determination, depend-
ing on the capability and integrity of the commission staff at any
given moment.
"Yet there, at the present writing, is the mechanism by which rules
of accounting are determined, and for all practical purposes, written
into the living law, by the administrative agency having the greatest de-
gree of control over the accounting profession save in a few specialized
fields. Had the common law been developed in any such fashion, its
major glory-the constant self-criticism which it engendered, and
which has at all times been its safe-guard, its forward light, and its
intellectual fertility-would never have come into existence. The criti-
cism of process is fundamental.... The plain fact remains that effective
accounting rules are made in camera, without system, without effective
submission to criticism, with little guaranty against arbitrary determina-
tion, and without the continuous and open self-examination which much
go into rulings which attain to the sanction and dignity of law."
On the other hand, the accountant quoted below anticipates beneficial
rather than ill effects on accounting principles and practice:
"The general effect of these regulations will undoubtedly be to
strengthen the hands of all who are concerned in good accounting. Com-
pany accountants and public accountants will be able to point to these
requirements in support of what they regard as necessary for accurate
statement and full disclosure. While the Commission has endeavored
to make its regulations liberal, practical, and adaptable to the greatly
varied conditions of business, yet it is reasonable to believe that account-
'Berle, Accounting and the Law (1938) 13 ACaOUNTING REv. 9.
 THE NORTH CAROLINA LAW REVIEW

ing principles, as embodied in the published statements of corporations,

will look more like the accounting principles taught in colleges than
ever before. And this will be true whether or not the statements are
filed with the Commission; it would be absurd to suppose that in the
circumstances reports' to stockholders, or any other publications by
business corporations, could show any material divergences from state-
ments filed with the Commission. Company and public accountants all
over the country have that idea clearly in mind' ' 4
Conclusions that follow from the foregoing discussion are that prac-
tically all business legislation and regulation should "tie in" at some
point with accounting principles and practice; and, therefore, that it
behooves the lawyer who contemplates any substantial amount of busi-
ness practice to become familiar, to some degree, with business
accounting.
The accounting profession is much younger than the legal profession,
but it has grown very rapidly during the forty or fifty years of its
active history. The interrelationship between law and accounting has
become constantly more complex during this whole period. In spite
of the fact that the two professions are fundamentally dissimilar there
are many situations which involve mixed questions of law and account-
ing fact. Of necessity, therefore, the activities of lawyers and account-
ants must overlap at many points.
In a report presented in 1933 to the Essex County (New Jersey)
Bar Association by a joint committee of lawyers and accountants, the
following were noted as examples of activities requiring the services of
both accountants and lawyers:
1. Planning the type of legal entity to conduct a new business,
having in mind the subject of Federal, State, and Municipal taxes.
2. Upon incorporation of businesses, the opening of books of account
and installation of accounting systems.
3. Problems involved in the dissolution of partnerships and cor-
porations.
4. Problems involved in the consolidation, merger, and reorganiza-
tion of corporations.
5. Preparing accounting and cost systems in connection with the
Federal Securities Act and with the National Industrial Recovery Act. 5
6. Determination of extent of damages and profits in patent and
other infringement suits.
7. Public Utility rate cases.
8. Determining losses covered by fire insurance policies and prepara-
tion of proof of claim.
'Sanders, Influence of the Securities and Exchange Comn;issionupon Account-
ing Principles (1936) 11 AccoUNTING Rav. 66.
'Note that the reference to N.I.R.A. is no longer pertinent and that reference
to the Securities and Exchange Act might now be added.
 LAW AND ACCOUNTING
9. Matters arising in receivership and bankruptcy cases, including
examination of books and records of the bankrupt and an analysis of
financial statements.
10. Determination of rights of life tenant and remainderman, espe-
dally with regard to distribution of corporate dividends.
11. Income tax matters, including presentation of cases before the
Commissioner of Internal Revenue and before the United States Board
of Tax Appeals.
To the foregoing list of "coperative" activities may be added others
suggested by lawyers and public accountants who have expressed opin-
ions on this matter. Their suggestions include the following:
1. The preparation or interpretation of lease contracts, particdilarly
where valuation of property or the determination of income is involved,
or where there are lease security deposits.
2. Problems relating to the declaration of dividends.
3. The preparation of documents creating trusts, either living or
testamentary.
4. Preparation of evidence for presentation in court where account-
ing records constitute an important part of the evidence.
5. The preparation of uniform legislation, particularly where it af-
fects the interpretation of such terms as surplus, earned surplus, capital
surplus, stated capital, dividends, insolvency, and many other matters
which relate to both accounting and law.
6. Preparation of registration statements for the Securities and
Exchange Commission.
There are undoubtedly many other points at which lawyers and
accountants should unite their activities in the endeavor to render to
clients a service which is complete and adequate for the specific pur-
pose at hand. However, the examples listed above constitute a fair
sample, and in themselves offer substantial proof of the necessity of
co6peration between these two professions. Furthermore, they give
some indication of the type of accounting training useful to a lawyer.
A natural result of this overlapping is that lawyers feel that account-
ants are encroaching upon their practice. For several years committees
representing the American Bar Association and the American Institute
of Accountants have been discussing, at joint meetings and by corre-
spondence, the bounds and limits of practice of the two professions which
these associations represent.6 They have endeavored to agree upon a
joint statement regarding the relationship between the practice of the
lawyer and of the accountant in the fields where they meet. Some prog-
ress has been made, but they have not yet been able to come to an agree-
ment upon certain sections of this statement, particularly that section
6 Byerly, Relationship between the Practice of Law and of Accounting (1938) 66
JOURNAL OF ACCOUNTANCY. 154.
 THE NORTH CAROLINA LAW REVIEW

dealing with tax practice. On this phase of the problem the American
Bar Association committee on unauthorized practice of the law has
stated definitely its opinion that it is within the practice of the law, rather
than accounting, to engage in any of the following activities:
1. To give advice regarding the validity of tax statutes or regula-
tions or the effect thereof in respect of matters outside of accounting
procedure.
2. To determine legal questions preliminary or prerequisite to the
making of a lawful return in a lawful manner.
3. To prepare protests against tax adjustments, deficiencies, or as-
sessments.
4. To represent a taxpayer at a conference with administrative au-
thorities in relation to matters outside of accounting procedure.
5. To prepare claims for refund of taxes.
6. To prepafe petitions, stipulations, or orders incident to the review
of assessments by the United States Board of Tax Appeals or any like
administrative tribunal.
7. To conduct the trial of issues before the United States Board of
Tax Appeals or any like administrative tribunal.
Accountants have voiced strong objections to the views presented
above. The committee of the American Institute of Accountants has
expressed the opinion that it is impossible to set forth broad rules estab-
lishing a dividing line between the practice of law and the practice of
accounting, particularly in tax cases,-for there is a complex interrelation-
ship between law and accounting in this field. This committee has sug-
gested as an alternative procedure the adoption of a "case method"
of dealing with the problem. It suggests that the Bar Association
refer to the Institute, or to state accounting societies, cases in which
accountants have engaged in alleged improper practices. The account-
ing organizations might then investigate these cases and prevent a recur-
rence of the offense. The bar committee, apparently, has received this
proposal favorably, and it is probable that some such co6perative machin-
ery will be attempted, first in the State of New York.
Thus, it appears that several years of negotiation between the repre-
sentatives of these two professions have produced only a tentative agree-
ment to "co6perate" in a "case method" of dealing with "improper"
accounting practice. In the opinion of the writer, this constitutes some
evidence that the fields of law and of accounting are not exactly sepa-
rable, that there is a "no man's land" of practice which will always be a
field for: (a) lawyers and accountants co6perating in joint practice,
or (b) practitioners with adequate training in both professions, armed
with admission to the bar and with a C. P. A. certificate, or (c) lawyers
with some accounting training, or accountants with some legal training,
 LAW AND ACCOUNTING

whichever "get there first". It is doubtful that there is any way of

solving satisfactorily this problem of so-called "improper practices" of
either lawyers or accountants.
In a few specialized fields there are distinct opportunities for simul-
taneous practice of law and accounting. The best of these opportunities
lie in various fields of taxation and in the handling of trusts and re-
ceiverships. There are several outstanding examples of this type of
practice. In many cases the individual engaging in joint practice has
been admitted to the bar and also holds a C. P. A. certificate; in other
cases one or the other of these formal qualifications is lacking. It would
seem that law students who display a special interest in and aptitude
for the accounting and financial aspects of legal business problems
should be encouraged to consider the opportunities in this dual field and
to secure the necessary accounting and business training to engage in
it. In such joint practice, however, even in these highly specialized
fields, there is the distinct probability that one or the other of the two
professions will become the major one.
The discussion to this point should be sufficient to show that it is
no longer necessary to "sell" the lawyer on the need for some knowledge
of accounting. Only a few years ago this point of view was not gen-
erally accepted; traditionally the training of lawyers did not include
accounting-nor does it yet, universally, but largely because facilities
for providing this training economically (from the point of view of
time requirements) have not been easily available. There are so many
fields in which the lawyer should be proficient, and there is so little
time available in his few years in the law school, that not everything
can be included.' Small wonder, then, that accounting, which in the
usual school of business course requires perhaps twenty or more
semester hours, has not always been included as an essential course.
The change in the attitude of lawyers toward accounting training is
seen to arise from several causes:
First,the increasing complexity of the modem business and economic
situation has brought about an evolutionary change in the nature of
services required of the lawyers. This trend is evidenced by the lawyers'
opinions already quoted.
Second, the lawyers' lack of accounting training has been a prime
factor in the loss of certain types of practice to accountants, and in the
growth of public accounting services of a nature approximating legal
services. This condition, now so greatly deplored by lawyers, would
not have developed, in all probability, had lawyers been thoroughly
trained in accounting.
Third, with the development of accounting into a recognized profes-
sion, there has been a corresponding improvement in accounting train-
 THE NORTH CAROLINA LAW REVIEW
ing. There is now a sharp distinction between bookkeeping, as taught
in most high schools and business colleges-designed to give vocational
*training for minor clerical positions-and accounting as taught at a
collegiate and professional level.
Fourth, the time required for such training has been greatly reduced.
The need for general accounting training 'for students of business, of
law, and of engineering, etc., has caused the development of specialized
courses for each of these student groups. For example, in one major
educational institution, there are four accounting programs: one for
accounting specialists, including a total of eight or ten or even more
accounting courses; one for general business students, composed of three
courses; a single course for the students of economics in the social
science division; still another single course for students in the law
school. While all of these programs start at the same point-with an
explanation of the fundamental principles of double entry accounting-
they differ vastly in point of view, amount of emphasis on technique
and procedure, kind and amount of case and problem material, number
of topics discussed, speed and inclusiveness of "coverage", and in many
other respects.
In the course for law students, the only one pertinent to this dis-
cussion, the so-called accounting process-the principles of double entry
and basic accounting procedures-is disposed of in about four to six
class sessions, about one-fourth the time required for the general busi-
ness students and perhaps only one-tenth of the time required by the
accounting specialists. In this course for lawyers practically no atten-
tion is given to the various types of journals, ledgers, and other books
of entry. On the other hand greater emphasis is given to partnership
and corporation accounting, to statement analysis, and to certain other
topics than in the other courses.
In short, the law student is given a different kind of an accounting
course from that offered to other groups of students-one that lays
emphasis on principles and problems pertinent to the study and practice
of the law. And not the least important feature of such a course is
the relatively short time required for a comprehensive survey of those
parts of the whole accounting field which are most essential for the
lawyer. A single course of perhaps four or five semester hours has
been found to be adequate for the purpose. This development has done
much to remove one major obstacle to accounting training for lawyers-
the excessive time requirements of non-specialized accounting courses.
There is no complete agreement among lawyers as to how much
knowledge of the various phases of accounting is desirable for law prac-
tice. The majority of lawyers seem to agree that "the more knowledge
the better", but there is the question of marginal utility. Just how much
 LAW AND ACCOUNTING 29
time can a law student afford to take from other pre-legal and legal
subjects to devote to accounting? A few lawyers are definitely in favor
of a complete accounting training: "as much as a C. P. A."; "thoroughly
well informed"; "he can't have too much"; "there is no limit"; etc. At
the other extreme are many who insist on only a "knowledge of the
fundamentals", "a general working knowledge", "enough to know what
it is all about", etc. The predominating opinion is to the effect that a
lawyer should be able not to do, but to understand, what is done; he
should be able to analyze and interpret statements, and have sufficient
knowledge to work intelligently with accountants who perform the
actual accounting work. More training is required, of course, for
specialized corporate or other commercial work.

CONCLUSION

Frequent reference has been made to the increasing complexity of

business and to the additional legislation and governmental regulation
which in recent years have still further complicated the problem of
business activity. In many cases there are few or no guiding precedents,
and forward steps must be very carefully planned and executed. Mis-
takes can be avoided only if advantage is taken of all available sources
of information. The combined judgments of accountant, lawyer, and
client afford little enough assurance against errors of policy or proce-
dure. The value of the lawyer in connection with these joint decisions
will be materially increased if he has been trained to appreciate theit
financial as well as the legal implications.
An analysis from an accounting point of view not only aids in the
understanding and statement of rules of law, but also would probably
have saved the courts from laying down certain rules now recognized as
unfortunate. Especially in the case of partnerships and corporations
there are many instances of decisions which have resulted apparently
from an inability or failure on the part of counsel and court to analyze
the problem as an accountant would. And there are many instances
also, of problems with which the courts have apparently had great
difficulty and upon which the reasoning in their opinions is obscure
and unsatisfactory, but which become much easier of satisfactory solu-
tion in the light of accounting principles. To be sure, the courts have
had to work out many of these problems before accounting had reached
anywhere near its present state of development, but today not only
may many old rules of law be profitably restated, but whole groups of
new problems may be solved more readily and confidently if counsel are
equipped with an understanding of the fundamental techniques of ac-
counting and if the courts are able and willing to follow counsel in
such analyses. Recent opinions suggest that judges in increasing num-
30 THE NORTH CAROLINA LAW REVIEW
bers are welcoming this type of assistance. And the fact that law
students who have had training in accounting usually master the diffi-
cult problems of corporation law more easily than do students without
such training is further evidence that an understanding of accounting
principles is of value in the analysis and solution of many legal problems.
It has been noted that accounting principles have long served as
non-legal precedents for legislation and court decisions on financial and
business matters. The accounting-trained lawyer is in a peculiarly stra-
tegic position to exercise his influence in hastening this evolutionary
process. By so doing he performs a distinctive social service, for many
glaring inequities should disappear as still more of our fundamental
accounting principles are embodied in formal legislation and legal
precedent.
The suggestion is not intended that the accountant's approach
would facilitate the handling of all the legal problems with which the
lawyer and the accountant are both concerned. There are many points
at which the accountant has little light to throw on the problem, as in
the case of the apportionment of "income" between life tenant and
remainderman. Here, as frequently, the only help the accountant call
offer is to point out practical advantages or disadvantages of alterna-
tive rules with respect to the relative complexity of the computations
and bookkeeping which they entail. In such matters the law must
govern the accounting practice. And on the other hand, the simultane-
ous consideration of the legal and accounting aspects of certain prob-
lems may suggest the necessity of important modification of accounting
practice in order to reflect the results of the legal rules.