Purchase of this book includes free trial access to www.million-books.com where you can read more than a million books for free. This is an OCR edition with typos. Excerpt from book: CHAPTER II The Accountant's Problems The accountant must be able to obtain from the records of a company data that will answer three principal questions: (1) What were the sales or income and the expenses or outgo of the business in any particular period? (2) What were the specific costs of the different products handled or produced? and (3) How much capital was invested in the business and how can the present worth of the business be estimated? The Profit and Loss account, the Cost Statement, and the Balance Sheet are constructed by the accountant in order to answer these questions. These three statements can be used to answer questions other than those suggested and some of the additional questions, which are significant, will be treated in other places in this book. The Balance Sheet.—The Balance Sheet is sxip- posed by many accountants to give merely an accurate financial picture of the business at a particular time, but this belief is due to a misconception of the possibilities of determining such an accurate statement. It will be shown that the Balance Sheet should contain the original cost of the assets not their market valuation; but it is a question whether a statement of this kind could be used to give the stockholders or the creditors any idea of the marketvalue of the assets at the time the Balance Sheet is being used. (See Chapter XL) For whom is the Balance Sheet made? Obviously for those who own the business. To the common stockholders (or, as will be shown later, the entrepreneur), who own the business, the accountant is responsible; his statements are made for them. On the one side (according to American custom, the left side), the different assets are enumerated and some monetary evaluation is set beside each; legally these assets belong to the common... --This text refers to an alternate Paperback edition.