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- Title
EDITORIAL.
- Abstract
The article presents properties of a good financial statement. The first requirement of a good financial statement is that it be reasonably detailed. Condensed balance sheets and statements of profit and loss are nearly always misleading. The modern industrial corporation or public utility is a complex economic structure. Its financial framework is a composite of many elements the correct joining of which gives strength or weakness to the whole. If the management has been competent, free to work out its problems, and farsighted, the financial framework has been maintained in a simple and understandable form. If the management lacks competence, has been subjected, for a variety of reasons, to pressure from persons having little concern for unprotected investors, or has had to adopt questionable expedients necessary to preserve the corporate existence, financial statements, particularly balance sheets, are likely to contain heavily valued items which the outsider may well despair of understanding or, even where he can understand them, of evaluating for himself.
- Subjects
UNITED States; FINANCIAL statements; CORPORATE accounting; ECONOMIC structure; MANAGEMENT; INVESTORS; EVALUATION
- Publication
Accounting Review, 1932, Vol 7, Issue 3, p214
- ISSN
0001-4826
- Publication type
Editorial