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- Title
DEPRESSION BALANCE SHEETS AND PRESENT DAY VALUES.
- Authors
Hasenack, W.
- Abstract
This article discusses the theories of market crisis and the depression of balance sheets. The period of deflation should be a means of testing scientific opinions regarding the balance sheet. The replacement costs are approved on the basis of establishing price policies that is considered on two viewpoints, depending upon the objectives desired - as to the price calculations, and as to operating results in the accounts. In respect of price calculations, the majority of theoretical economists recognize the correctness of the theory today, even by those who consider the acquisition cost as the only true and real cost factor in the accounting computation of operating results. The advocate of the cost price theory keeps as an asset the 500 units of merchandise, the balance sheet value of which has no bearing on this question of price calculation. A full consideration of the causes of the depression would make it clear that the sting of the present crisis is in no way decreased by merely applying economist Fritz Schmidt's economic theory and the use of index numbers to show the present financial condition of businesses. The application of Schmidt's theory would of course improve the accounting procedure and the preparation of financial statements, and would help to clear up the managerial and economic condition of businesses when inventories are high and changes in capital structure take place suddenly.
- Subjects
FINANCIAL statements; FINANCE; PRICE deflation; CAPITAL structure; SCHMIDT, Fritz; ACCOUNTING; DEPRESSIONS (Economics); PRICING
- Publication
Accounting Review, 1933, Vol 8, Issue 3, p239
- ISSN
0001-4826
- Publication type
Article