Oswald Nielsen STANFORD UNIVERSITY (EMERITUS)
IN ALL MY YEARS
Our present economic system displays a vital interest in the financial structure of business firms and the causes of changes occurring over time. Significant contributions toward analysis of such developments, stem from both the academic and practicing sectors of the accounting profession. Certain conspicuous aspects of these transitions will be reviewed here, more in terms of the broad facets without strict recognition of the overlaps in their chronology.
The "Where-Got—Where-Gone" Statement
With respect to analyzing financial changes, the earliest landmark coming to mind is the one described by Cole in his discussion of the "where-got—where-gone" statement.1 His portrayal was phrased to include the changes in all balance sheet items, although his illustrations dealt primarily with working capital. He said, "Some-times the conversion of one type of asset or liability into another is of great importance, for it may affect general solvency."2 Further-more, he cautions,
It must be remembered that such a study of the balance sheet gives no indication of the amount of earnings, for earnings which have been distributed as dividends cannot possibly affect a balance sheet; they appear on the income sheet only. The only indication that the balance sheet can give is of the earnings undistributed, as shown in the Profit and Loss or some similar account.3
He indicates that "one or more railroads" began making the re-ports he described around 1903 and designated them under a title similar to "Summary of Financial Transactions for the Year."4
Anton comments appropriately on the lack of refinement of the statement that Cole described relative to those developed later.5 Still, Cole's statement was comprehensive in that it was not limited to changes in working capital, as has been the main thrust of such reporting for many years.