AUDIT OP BOOKS «» 



and bond dealers should see that they are fur- 

 nished without request. 



Tlie particular audit on the books and ac- 

 counts of an operation for the purpose of learn- 

 ing if the operator is entitled to a bond loan is 

 made to determine the assets, the liabilities and 

 the profits. This examination will show the 

 purchase price of timber land, equipment and 

 mills. It will show the figure they are being 

 carried for on the books at present. The audit 

 will exhibit every detail of manufacturing cost, 

 taxes, interest, insurance and overhead charges. 

 Many operators think they are making a profit 

 when in reality they are running at a loss. 

 These men omit charging up the cost of stump- 

 age, the interest on the investment, the taxes 

 or the money tliej^ loan the business from time 

 to time. When operating without a bond issue 

 it may be well enough to overlook interest, but 

 with a bond issue it is the most insistent and 

 imperative item to handle. 



The audit will show the collections and weed 

 out the bad accounts. The audit will prove the 

 exact cost of lumber on cars, the volume of 

 sales, the actual selling price and the percent- 

 age to be written off for bad debts. With this 

 data before him the analyst can figure with a 

 good degree of accuracy how large a loan it 

 is safe to make on the enterprise. The auditor 

 should go back over the books and get the oper- 

 ations for five years and compare each year. If 

 the books are not so old he should go back as 



