The article focuses on creditor's protection and stockholder's responsibility. The extent and nature of the responsibility of stockholders is determined very largely by their own contractual agreements with the corporation and by the contracts between creditors and the corporation. Along with changes in the evolution of the corporation there have been equally significant changes in these contracts. Notable among these in recent years have been those accompanying the employment of no-par stock for both preferred and common securities. No-par stock with its greater flexibility has presented many new problems in stated capital and stockholder responsibility-creditor protection. These, too, reflect changes in the contractual relations of stockholders and corporations and whether agreeable to creditors or not, they affect creditors' margin of protection. Although no-par stocks may appear as a distinct phase in the evolution of corporation securities, this may well be doubted. As pointed out later, they simply carry out the natural trends.

A survey of the progress of accounting as a science quickly discloses that advancement in the field has been largely dependent upon an adequate differentiation among assets, expenses, liabilities, income, receipts, expenditures and the like. A correct separation of expenditures into assets and expenses on the one hand and of receipts into liabilities and income on the other hand, makes possible the attainment of modern accountancy and financial statements. The early systems of bookkeeping made no adequate distinction between expenses and assets and income and receipts. These items are intimately related and to differentiate among them means the correct calculation of profits and losses and financial conditions. A correct statement of assets cannot be made without a correct computation of expenses. Likewise, an accurate measure of income is not attainable without an adequate separation of income from receipts. If any one of these four items is incorrect, then either one or both of the two major financial statements must likewise be fallacious. Second only in importance to the recognition of the distinction among these items, is the determination of the moment when expense was separated from the assets and when the income arose in the assets.