ABSTRACT
Probably the accounting documents most widely studied are the profit statements and balance-sheets of commercial and industrial undertakings. It may be of general interest to attempt a short analysis of some of the principles underlying these documents. Speaking as a practitioner, it has been the author's experience that while people deal with many balance-sheets and profit statements, the nature of our practical work does not compel us to think in terms of principles. In this chapter, the author adopts a negative method of approach by first considering some of limitations of profit statements and balance-sheets as sources of information. This method is chosen as it is difficult to construct a positive analysis owing to lack of uniform treatment by accountants of information which materially influences the final answers. The growing co-operation between separate units in many different trades and industries has increased pooling of information for variety of purposes, such as production quotas, wages ascertainment, price fixing, and trade statistics.
