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After they saw the balance them that my statement
My own personal interest
of the existing capital was true. sheet I was never able to convince of what the capital was, was true. was hurt by this balance sheet. That inclined me rather to lean over backwards.
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Then again, by withdrawing this balance sheet it would unquestionably work a hurt to the firm a greater hurt than if the balance sheet had never been issued. So that, unless there were a real reason for its withdrawal, it should be allowed to stand. A real reason for its withdrawal would exist were the balance sheet untrue or misleading.
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I examined both questions. It was not untrue I of my own ability was able to read through and decide there was nothing literally untrue. The statement "Issued and Subscribed" was a perfectly accurate description of the capital it was not in fact untrue.
W
"Accounts Receivable" was an accurate statement in point of fact, because each one of these accounts were in fact accounts receivable, though the likelihood of their being received was remote. So that first point went by the board. There was nothing in the alterations that was directly untrue.
The next point was where it is misleading. I have already given in evidence that I would find such a balance sheet misleading, but the auditor who had prepared this balance sheet was Chinese. He was a man who audited the accounts of many Chinese firms.
He was a man better acquainted with the custom of the Chinese balance sheets than was I. He assured me it was the custom amongst Chinese book-keepers to set out capital in this manner, and moreover, produced other balance sheets which on the face of it, bore out his statement.
He likewise assured me that this balance sheet would not be misleading to anybody who was accustomed to receiving the balance sheets of Chinese firms in this Colony, and by Chinese firms I do not mean firms not registered under the Ordinance, but firms which although registered under the Ordinance yet the management is Chinese.
Having been assured by a man whom the Government had registered as competent to audit books, that this balance sheet is not in fact misleading, I concluded that I was not justified in taking active steps to recall it because that is customary cannot be misleading. I have an assurance that this is a customary method of doing it and if it be customary then it cannot be considered misleading, although a persen unacquainted with the custom might be misled but that applies to all legal documents, and balance sheets are on a somewhat similar footing. Now, the other point in the balance sheet. Having explained how I was not responsible for this balance sheet, I will give evidence only in respect to errors occurring in the balance
sheet which I did in fact approve.
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In this balance sheet signed by me, the two cross-entries i.e., two branch entries which could have cancelled out, appeared. In the one case it is a question of cash at Canton. I would like to give further evidence on that, because the questions left the situation in a very misleading state, as if our books had put down cash that did not exist or put it down twice other words that something had gone wrong with our cash. point of fact, there is nothing of that sort in the position at all. What the error, if error exist, is this.
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