Abstract The article focuses on importance of clarity in balance sheet display. One of the most important pieces of work which a public accountant is called upon to perform is the preparation and analysis of balance sheets and financial conditions. By no means is this the mere listing of certain assets and liabilities. It resolves itself into a matter of judgment in arrangement and valuation, and judgment is often a matter of one's experience in judging and noting the results in previous situations. The matter of prime importance to consider is the type of person who will be called upon to read the balance sheet. In a recent examination, it was discovered that the management had been giving itself some systematize, but serious-minded kidding by working on the assumption that installment accounts receivable were not subject to the need forbad debt reserves. This is a matter of problem of valuation. According to the author, balance sheets must be prepared for the benefit of the reader and must be grouped to give him the benefit of the most accurate information available, in the most readable form. It should give him all of the facts and the facts should be stated clearly.

Abstract The principal effect of a corporation law on financial statements is in the presentation of the net worth accounts. This effect arises from the definitions, sometimes implied, of capital and surplus, and from prescribed methods of establishing, and of increasing or decreasing capital and surplus. It is essential that an accountant, properly to serve and protect the interests of his client, interpret for that client and for the public which relies on the client's financial statements, the effect produced by law on such statements. Only by making a study of the law of the states of incorporation and residence may he determine how the facts may be best displayed. Certain requirements of the Michigan and Delaware Corporation Acts with regard to the capital and surplus accounts of corporations are worthy of special note. By a study of certain sections, and by amplifying and clarifying, the accountant may display the facts in a manner which will more clearly inform clients on important matters, and enable them properly to chart their future course. The discussion in the article deals only with the net worth section of financial statements, such as the display of information showing changes in capital and surplus, and the effect on the balance sheet of a corporation by the purchase of its own capital stock.