Accounting Problems in Corporate Distributions

Abstract

DTURING the past ten years substantial progress has been made in the development of the relations between accounting and corporation law.1 Lawyers in increasing numbers have recognized the value of familiarity with accounting techniques, and this recognition has been reflected in law school programs.2 A number of important states have made comprehensive revisions of their general corporation laws in terms which show the influence of accounting analysis. Writers on accounting have shown increased understanding of the legal aspects of their problems, and great strides have been made in clarifying the function of the accountant in the face of the extreme diversity of state corporation laws. This diversity has been particularly troublesome in the most rapidly developing field of accounting, that of accounting for investors. In presenting the results of corporate operations in a form suitable for investors, present and prospective, accountants have striven for uniformity and have thus attempted to facilitate the comparative use of financial statements. They have been faced, however, with the necessity of showing also the varying legal results of certain types of transactions. This necessity has forced a fuller analysis of the accountants' task and has promoted recent efforts to formulate accounting principles.3