83 15 Sept 127 657.05 The JOURNAL of ACCOUNTANCY Official Organ of the AMERICAN INSTITUTE OF ACCOUNTANTS Vol. 43 JANUARY, 1927 No. I Some Phases of Accounting Investigations for PART I-BALANCE-SHEET AND PROFIT-AND-LOSS ACCOUNT BY J. P. FRIEDMAN A discussion of accounting investigations for refinancings, consolidations and mergers which would cover the many phases of this subject would take a long time. In fact, a good many hours are often necessary for the consideration of a single new phase. In the brief time alloted to my part of the discussion it will be possible to bring out only a few of the high spots. As our president has told you, I will deal with the verification and adjustment of earnings as well as of the assets and liabilities. The two phases of the subject are so closely interrelated, as you know, that a great many of the points discussed will affect both of them. The discussion will be primarily from the point of view of earnings, as in most cases their verification and adjustment are the more important considerations in investigations of this character, as securities are usually sold on the basis of earning power even though book value does have considerable weight. In the verification of earnings, if adjustments are necessary they will usually fall under two headings which may be designated as accounting adjustments and refinancing adjustments. Accounting adjustments are those which are necessary to show the Ntrue financial condition of the business at the approximate date of the refinancing as well as the earnings for the period of years on a uniform basis. In other words, they are the changes which probSably should have been made by the company itself had a uniform basis been used throughout. Refinancing adjustments are those which result from changes in the company's financial structure Econ EF 12 1927 WERTZ •Address delivered at a meeting of the New York State Society of Certified Public Accountants, New York, November 8, 1926. It was intended by means of this paper and the following one by Mr. W. A. Staub to cover the entire field of the subject discussed. 271880 |