This article informs that in financial reporting center primarily around failure to disclose the aggregate effects of both price-level changes and "footnote" liabilities. Accounting literature has treated problems arising from price-level changes extensively in recent years, but has neglected those arising from the incomplete recognition of liabilities. It is with the idea of redressing this disproportionate emphasis that the following comments pertaining to "footnote" liabilities are offered. In a sense, the full disclosure of liabilities is more definitely the accountant's responsibility than is the adjustment for price-level changes. It may be that price stabilization policies, clearly beyond the scope of accounting, are the only satisfactory solution to the problem of price-level changes. It may also be that some readers of financial statements prefer money, as opposed to deflated or real, values. For immaterial items, the consensus appears to be that application of the full disclosure and uniform treatment requirements is discretionary.

The article highlights that the tax notes were presumably purchased with the intent that they be used for the payment of federal income and excess profits taxes, it is also good accounting practice that they are shown as a deduction from the accrued liability for such taxes in the current liability section of the balance sheet. The purpose of this article is to investigate the current popularity of this alternative treatment of U.S. government securities in corporate balance sheets and to reexamine the argument for allowing Treasury Tax notes as deductions from accrued tax liabilities. The data required for this study are derived primarily from the 1950 balance sheets of 107 large non-financial corporations. From the information furnished by this sample, some idea can be obtained as to the extent to which government securities are employed as liability offsets and the effects this practice may have on financial ratios, particularly the current ratio. In the opinion of the writer, this way of handling tax notes runs counter to the much publicized accounting doctrines of full disclosure and consistency or comparability.

The article focuses on the determination of the most efficacious way of valuing assets on a consistent basis in accounting. A primary function of accounting is to provide entrepreneurs and other interested persons with useful data upon which to base their decisions. This objective can logically be attained best by valuing assets in real terms by adjusting their monetary expressions to changes in the general price level. The shift of emphasis from the balance sheet to the income statement during the preceding two decades has spotlighted the inherent fallaciousness of the doctrine of conservatism. The understatement of an asset in the balance sheet of one account big period means an overstatement of profit in another period when the asset is physically consumed in the process of production. One way of retaining conservatism in the balance sheet, and of avoiding the perils of profit overstatement, has been suggested by the proponents of the base-stock method and of Last-in, First-out method.