the doubtful assets, the balance-sheet will be drawn up thus:
| Capital | £200,000 | Cash | £35,000 |
| Profit | 20,250 | Stock | 47,500 |
| Buildings and Plant | 137,750 | ||
| £220,250 | £220,250 |
If no writing down is decided on, the profit will remain at the original £30,000; if 10 per cent. is taken off the doubtful items, it will come down to £10,500.
This simplified example shows us that the profits shown as earned by all profit-earning concerns, depend ultimately on what the directors think about the figure to be set upon those assets in the balance-sheet, the value of which cannot from their nature be definitely ascertained, without the expensive and tedious process of expert valuation which also is liable to error. The opinion of the directors is subject to comment by the auditors and criticisms by the shareholders, but, as a general rule, their decision is final. As has been shown, the problem that they have to consider lends itself to argument, and is open to wide differences of opinion on the part of people who are honestly trying to do the right thing; and the conclusion of these honest, but fallible, gentlemen decides the profit that is earned.
