Edward P. Moxey

Edward Preston Moxey Jr. (October 2, 1881 – April 6, 1943 ) was an American accountant, and the first Professor of Accounting at the Wharton School of Finance and Commerce at the University of Pennsylvania. He is known for his early works on cost-keeping in factories, which describe the elementary principles of cost accounting.

Biography Born in Philadelphia to Edward P. and Mary Ann, Moxey was named after his father. He was a banker, broker, businessman and accountant, had founded the Edward P. Moxey accountancy firm, and had published the 1881 book, entitled "Fluctuations of the New York stock market, 1870–1880." Moxey obtained his BS in economics in 1904, his MA in 1906, and his PhD at the University of Pennsylvania in 1909. Subsequently, he obtained his Certified Public Accountants license in 1913 for the state of Pennsylvania.

After his graduation Moxey joined the accountancy firm Edward P. Moxey & Co, where he became a partner in 1911. After his father's death in 1915, he took over the prestigious accounting firm. The firm would eventually merge into Coopers & Lybrand in 1962. Moxey had started at the University of Pennsylvania as an Assistant Instructor in 1904, became an instructor in 1907, Assistant Professor in 1910, and Full Professor in 1915. At the Wharton School of Finance and Commerce he was the first to be appointed Professor of Accounting, and the first chairman of its Accounting department.

Moxey was co-founder of the National Association of Cost Accountants, board member and co-founder of its Philadelphia chapter and its president in 1929–31.

The teaching in accounting had been organized within the Wharton School since its initiation. Joseph Wharton had agreed upon this in its initial plan, which had stated that "one professor or instructor of accounting or bookkeeping [should] teach the simplest and most practical forms of bookkeeping for housekeepers, for private individuals, for commercial and banking firms, for manufacturing establishments, and for banks; also, the modes of keeping accounts by executors, trustees, and assignees, by the officials of towns and cities, as well as by the several departments of a State or National Government; also, the routine of business between a bank and a customer."

In his second year at the Wharton School (1905–06) Moxey taught three regular accounting courses, entitled "Elementary Accounting", "Accounting Systems", and "C.P.A. Problems."

In a 1912 review by Henry Rand Hatfield in Journal of Political Economy, Hatfield explained, that "for such it would seem an almost indispensable feature that there be furnished a convenient, yet fairly comprehensive, list of collateral references. Even in the college classroom, where text can readily be amplified by suggestions or criticisms of the instructor, the use of collateral references is well-nigh universal. Much more important is it that the isolated student should be encouraged to compare other, perhaps conflicting, views. Furthermore, the interested student constantly desires to branch out and make a more intensive study of some topic, touched upon in a general treatise but in such a work necessarily given but scant attention." Charles Waldo Haskins had said: "The literature of accounting is virtually in its infancy, awaiting the fostering care of cultured authorship."

Haskins' statement was particularly applicable to the subject of cost accounting. Although many valuable articles had been written on different phases of this subject, and while excellent books on costs had appeared from time to time, it was a notable fact that such articles and such books have been either of a highly technical character, or otherwise treating of special systems of costs as actually installed and used by certain manufacturing plants. 1) Cost keeping furnishes the manufacturer with accurate and reliable information concerning the costs incurred in production, enabling him to fix prices and bid intelligently against others in the same field. 2) Through his cost accounting department the manufacturer is enabled to detect, locate, and eliminate waste or leakage in materials, labor, and other expenses incident to production.

Analysis of General Ledger A system of accounting, according to Moxey, should go beyond the elementary presentation of facts to furnish information sufficient and accurate enough for the requirements of modern business. Some classes of expense are not of a temporary nature. The use of certain articles in production such as machinery extends over a series of years. It is not right to charge the original cost of such purchases to profit and loss in the period in which they are made, for they will figure in the manufacture of hundreds of subsequent lots of goods. In his Principles of Factory Cost Keeping (1913) Moxey proposes a system, which is based on the following basic distinctions:

Temporary and Permanent Expenditures : For cost accounting purposes, therefore, a first distinction considering expenditures only for the present must be made between expenditures for assets of a more permanent type generally known as fixed assets, and comprehended in the term "Plant" and those of a more or less temporary character, known as "Profit and Loss" items, or those comprehended in the general class of "Nominal Accounts."

In order to understand the diagram and illustrate the operation of the books, it can be presumed that a certain sum of money is disbursed for the purchase of materials, labor, and other supplies and services connected with the production of the goods. This, in the ordinary journal form, would be represented by an entry, whereby materials, labor, and/or indirect expense are directed to cash. By this entry the accounts costing the business value are debited, and the account which has produced value, viz., cash, is credited.

Moxey further explained that the manufacturer, who has his factory cost system arranged on this general plan is in a position enabling him to adjust his selling prices so as to bring to him the largest amount of profit. He possesses a cost system organized along the same lines as his system of factory management; a system economical of operation, accurate in its results as to current operations, and one from which estimates or bids on future work can be accurately and quickly made. By a subdivision of his sales account into the different classes or grades of goods manufactured, and by carrying corresponding cost accounts, he can accurately determine the cost of producing each line of goods and the profit or loss on each grade sold. The methods of recording time that had started in many factories relied on a watchman or gatekeeper, stationed at the entrance to the factory, kept a record of the employees as they arrived in the morning and departed at night, each workman being known to him personally. Under this system, if an employee were late, even if only as much as a minute, he was docked a half hour's time. Any labor cost less than half an hour did not figure in production costs. The gatekeeper's record was amply sufficient for payroll purposes, as well as for the determination of costs of production in the aggregate. Under another system of timekeeping each laborer was assigned a number. A series of brass checks, numbered to correspond to the workmen's numbers, were hung on a board at the gatekeeper's lodge or outside the watchman's office, and as the men entered in the morning each one would take his own check off its hook and drop it into a box kept for that purpose at the watchman's office. The board on which the checks were hung, being arranged on a pivot, was turned around when the beginning whistle blew so that the side containing the checks faced into the office. Any man who was late must then pass through the watchman's office before he would receive credit for having been at the plant. This scheme worked well as long as the watchman was careful not to let any man drop the check of a comrade at the time that he dropped his own. The weakness of both these systems lay in the fact that there was no check whatever on the time the men actually spent at work. A man might register for an absent comrade, or he might record his own arrival and then take his departure from the plant by climbing over the back fence, returning by the same route at noon in order to pass out through the gate. By this means he would receive credit for having worked a full half day, when as a matter of fact he had rendered no service whatever to his employer.

In his 1972 article, Adolph Matz summarized that Moxey's elementary work on cost accounting was taught at the university, and in Evening School, and was part of the State's C.P.A. examination. His work was taught over four decades, but after World War II the "new trends in teaching accounting and the move away from the practical approach led in the early 1950s to the discontinuation of the course."

Even more, according to Segelod & Carlsson (2011), the "scientific management and the introduction of variance accounts, developed by Moxey (1913), paved the way for the rapid development of standard costing in the US between 1910 and 1920."

Selected publications Moxey, Edward Preston. Accounting Systems: A Description of Systems Appropriate to Different Kinds of Business. New York City, Alexander Hamilton Institute, 1911. Grundman, Otto A., Howard McNayr Jefferson, Harold Dudley Greeley & Edward Preston Moxey. Practical accounting methods: a description of systems appropriate to various kinds of business. New York, Key publishing company, 1913. Moxey, Edward Preston. Principles of factory cost keeping. Ronald Press Company, 1913; 1920.

Articles, a selection Moxey, Edward Preston. "Bank Defalcations-Their Causes and Cures." Annals of the American Academy of Political and Social Science 25 (1905): 32–42. Moxey Jr., Edward P. "Ethics of Accountancy", in: Annals of the American Academy of Political and Social Science. Vol. 101, The Ethics of the Professions and of Business (May, 1922), pp. 196–202