Accounting theory and practice, Volume 2 (of 3) : a textbook for colleges and…

of bonds, preferred stock, etc. When used for some of these purposes, oftentimes condensation is made a convenient method of bringing about a misrepresentation of true condition. Of course, no justification can be found for this. Emphasis has already been placed on the necessity of choosing titles and captions which shall indicate clearly the nature and content of the transactions or data recorded thereunder. Statements of condition which are misleading, whether with intent or by chance, are to be condemned. As H. R. Hatfield[10] so well summarizes, the lack of clearness and consequent misunderstanding of the balance sheet are due in the main to three causes: (1) vagueness of terminology; (2) purposeful misrepresentation; and (3) the very nature of accounting itself which so largely rests on estimates rather than on facts of definite determination. Some of these troubles have their origin in the form of the balance sheet, the manner of showing the items; while the others inhere in its content. It is to a study of the content of the balance sheet from the standpoint of the statement of values, with the emphasis on quantitative analysis, that we now turn. [10] In “Modern Accounting.”