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1034 W . P . S . H A R D I N G , GOVERNOR E x OFFICIO MEMBERS E D M U N D PLATT, VICE GOVERNOR DAVID F. HOUSTON SECRETARY O F T H E T R E A S U R Y CHAIRMAN JOHN SKELTON WILLIAMS COMPTROLLER O F THE C U R R E N C Y FEDERAL RESERVE BOARD ADOLPH C. MILLER CHARLES S . HAMLIN HENRY A. MOEHLENPAH W . T . C H A P M A N , SECRETARY R . G . E M E R S O N . A S S I S T A N T SECRETARY ADDRESS REPLY TO FEDERAL RESERVE BOARD WASHINGTON W. M. INLAY, FISCAL AGENT November 15,1920. Subject: X-205S Division of "Accounts Receivable" Items Shown on Credit Statements Submitted to Federal Reserve Banks. Dear Sir: Your a t t e n t i o n i s invited to the following extract from a l e t t e r from the senior partner of a well-known firm of public accountants. "With the changed conditions, a tendency to improve the appearance of f i n a n c i a l statements of commercial concerns i n dubious ways i s becoming more noticeable and as the Federal Reserve Board has exercised such a b e n e f i c i a l influence i n the past on the form of f i n a n c i a l statements I venture to c a l l your a t t e n t i o n to one point upon which I think i t s influence would be helpful i f i t f e e l s able to exert i t . "For many years the phrase 'Accounts Receivable 1 has been an accepted balance sheet heading and l i t e r a l l y i t i s , of course, wide enough to cover many things besides customers 1 accounts, i n cluding borne which are on quite & different plane from the standpoint of l i q u i d a t i o n . I think the time i s now opportune for a movement to do away with t h i s wide heading and to i n s i s t on customers' accounts receivable being shown as ond item, any other1 accounts being shown separately and clearly and adequately described. The point i s met i n the standard forms of credit statements but those forms are not always followed even i n statements presented as a basis for c r e d i t . " It i s the Board's understanding that i n most cases credit s t a t e ments submitted to Federal Reserve Banks show "Accounts Receivable"in some d e t a i l , "Current Accounts Receivable from Customers" being separated from suspended items or from amounts due by members of the firm. In the event, however, that balance sheets submitted to your bank a s a basis for credit do not show t h i s subdivision, the Board would strongly urge that you c a l l the a t t e n t i o n of a l l concerned to the importance of making these d i s t i n c t i o n s . Very truly yours. Governor. Chairmen of a l l F.R. Banks.
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