Credit balance as a liability in the balance sheet has recently become a question of greater interest. The following discussion is concerned primarily with future expenditures that are related to operations. One characteristic of liabilities to be emphasized is their relationship with assets already recognized. For proper reporting of financial position, liabilities must be matched properly with assets recognized. In many ways this matching on the balance sheet runs parallel to the matching of expenses with revenues in the income statement. Secondly, where installment sales are recognized as revenue when made, but become taxable revenue only as collected, the full amount of assets to be received from given installment sales is recognized at the time of the sales. Since the future income taxes to be paid at the time of collection are directly related to and payable out of assets already recognized, there is no question but what the deferred income tax on such receivables is a liability in the broad sense of the term.

Readers of current accounting literature may have noticed of late the reappearance of a malady which seems to spring up every so often. Past experience indicates that it is contagious and may develop into an epidemic. For want of a better name it will be called "Value-ITIS" because it causes its victims to become enthralled with the importance of objective proof of subjective values. For example, it causes an investor to pay an unwarranted price for a share of stock because others with the same disease have purchased enough of the same stock to force the market price up. In the accountant, and particularly the academic theorist, this condition seems to be brought on by overexposure, malnutrition and neglect, exposure to economic theory, malnutrition from a diet lacking in economic realities, and neglect of the lessons taught by history. It seems to be most virulent among the relatively young, but will also attack the oldsters who have lost the immunity they developed in the early 1930's.

Reviews the book "Security Analysis: Principles and Technique," 4th ed., by Benjamin Graham, David L. Dodd and Sidney Cottle.