tem ation

eC O Ogy

A S ERI ES O F TE XT B OO KS F OR P ERSO N S E NC-AG E D I N E NG I NE E R

I N C PRO F ESSI O NS , T RAD ES , A N D VOCATI ONAL OCC U PATI ON S

O R F O R THOS E WHO DESIRE I N FO RMATI O N CO N C ER N
I NC T H E M. F U L LY I LLUSTRATED

YV t
‘
I -‘
YM F

CCOUNT I NG METHOD S OF BANKS

A
OPERAT I NG ON THE NEW Y OR K STOC K
!
EXCHA NGE
STOC K B ROKE RA G E A CCOU N TI NG
-

METHOD S
A CCOU NTS FOR ST EAM ROAD S
A CCOU NT S FOR M I N I NG COMPAN I ES
A CCOU NT S FOR I NSURA N C E CO MPAN I ES
MUN I C I PA L A CCOU NT I NG
G RA PHS
C . P A. .
QUEST I O N S AN D A N SW RS E

S CRAN TO N

I NTE RN ATI O NA L T E XT B OO K CO MPANY

1 92 I
 2 a . 5 5 6 5 8

tM Ag Y t
A cc ou n i n y gtMe h od s of B anks : Cop ri h , 1 92 0 , by I N TE RN ATI O N A L TE x r noox

tg t g y gt by
CO P N .

L
MA
O p e r a i n on t h e N e w Y o r k S oc k E x c han e: Cop ri h , 1 92 0 , I N TE RN ATI ON A

t gM A t g t y gt y
T E X TB OO K CO P N Y .

S oc k -
B r ok er a e A c c ou n i n Me h od s : Cop ri h , 1 92 0 , b I N TE RN A TI O N A L TE x T

tM Y t y t by
B OO K CO P NY .

A cc ou n s f or S ea m R oad s : Cop r ig h , 1 9 1 5, I N TE R N ATI ON A L T E x TE oo x

tM Y g y gt by
CO PA N .

Ac c ou n s f or Mi ni n Comp a ni es : Cop r i h , 1 9 1 5, I N TERN A TI O N AL TE X TB OO K

t A y gt by
CO PA N .

A ccou n s f or I ns u r a nce Comp ani es : Cop ri h , 1 9 1 5, I N TE R N ATI O N AL T E XT

t g y gt by Y
B OO K CO M P NY .

Mu ni ci p al L
y gt M Y
A cc ou n i n Cop ri h 1 920 , I N T E R N A TI O N A T E X T B OO K CO M PA N
‘

: , .

t y g t y
G r ap h s : Cop ri h , 1 9 1 5, b y I N TB RN A I
‘
‘‘
I O N AL TE x T E oo x CO PA N .

. .

CO M PA N Y
C P A Qu e s i on s.

.
a nd A ns w er s : Cop ri h , 1 9 1 5, b I N LE RN ATI O N AL TE X TB O O K

Cop y t
r i gh i n G r ea t t B ri ai n

All t
r i gh s r eser v ed

Pu ss or
I nTERNATI oN AL Tax i -
s oot CoM PAN Y
 PREFAC E

The v o lumes of t he Itrn e nat i ona l Lib r ry f T h

a o ec l
no ogy are

made up of I r
nst uc t i on Pape r
S ec t i ons, c omp i si ng t h e s, o r r
r
v a i ous c ou se s of i n r r
st uc t i on f or st udent s of t h e nt e nat i onal I r
rr
Co espondence Sc ool s h r
Th e o igi nal manusc i pt s are p re r
r rhr h q h
.

p a e d b yp e son s t o o ug y l u a l i fi ed b o t t ec h ni c all y and b y

r r hr
expe i enc e t o w i te w i t h aut o i t y, and i n many c ases t h ey ar e

r g l rly mpl y d l wh r i pr i l rk
e u a e o e e se e e n
p r ac t c a wo as ex e ts

rip h r f ll di d m k h m i
.

Th m e anu sc t s are t en ca e u y e te to a e t e su t
a bl fe or c o rr p d i r i Th I r i P p r
es on enc e nst uc t on e nst uc t on a e s

w ri l r ly d i h i mp l
.

a re t t en c ea an l g g p ib l
n t e S est an ua e oss e, so as

to m k h m r di l
a e t e ea d r y d b ll
un e st oo d N r y a st u ent s ece ssa y
h i l xp r i l r l y xpl i d h i r d
.

t ec n ca e ess ons are c ea e d a ne w en nt o uce

m j ri y f i h r r
.

Th g re eat a o t d o our st u ent s

p p h m w s to e a e t e

l
s e v es f d
or a v ance m i h ir ent i n t q lif f
e v oc at ons or to ua y or

m r o e con en ag i l p i
occu U ll
at ons h y m p l d
sua d y t e are e oye an

r d Th r f r
.

a bl e to d l
ev ot e on f hy a ew d ou s a ay to st u y e e o e

ry ff r m b m d gi h m pr i l d r
.

eve e o t ust e a e to ve t e ac t c a an ac c u at e

i f rm i
n o at oni l r d n c ea i f rm d m k h i i f
an conc se o an to a e t s n or

m i a t on i l d nc u e all f h o i l b t e f h
es sent a s ut none o t e non

e s sent a si l T m k o h a x l r i ll r i
e t e te t c ea d ust at ons a re u se

f r ly Th r i
.
,

ee i ll ese p i ll
ust at ons are es ec a m d b w y a e y our o n

I l l r i g D p r m i rd r d p h m f ll y h
.

u st at n e a t ent n o e to a a t t e u to t e
re uq ir m f h x
e ent s o t e te t
h imm di l f ll
.

I n th bl
e ta f e o c ont ent s t at g i e at e y o ow s are v en

th e i l
t t es o f h S i
t e i l d d i
ect ons hi l m
nc u e d d r n t s vo u e, an un e

eac h i l l i d h m i i di
t t e are st e t e d A h
a n t op d f
cs scu s se t t e en o

l m i ll b f h bj
.

th e vo u e w de mploun i d x a co et e n e so t at any su ect

r d b q i kly f d
,

t eat e can e u c oun

I
.

N T E R N A TI O N A L TE x TB O O K CO M PA N Y
 CO NTENTS

A CCOU N TI N G M ET H ODS O F B A N K S
B ank B
ookk eep i ng

B ookk eepi ng S yst em

T r
Receiv i ng ell e
T r
Payi ng ell e
r
Coll ect i on D epa t ment
T r
N ot e ell e

r fB r
P oo ook Cl e k -

I L r
nd i v i dual edge B ookk eepe r
r L rB r
-

Gene al edge ookk eepe

r
-

The Cl ea i ng H ou se
Bank S tat ement

Bank E xami nat i on

O PERATI N G ON THE NE W Y ORK STOCK E X CHAN GE

r H r
Ea l y h S
i sto y of E xc ange y st e ms 32
L r
i st i ng S ecu i t i es
Op r r h Ex h
e at o s on t e c ange

Tr di g h E x h
a n on t e c ange

U f Cr d i i
se o h S k M rk
e t n t e t oc a et

Cl f S
a sses o k toc
W ll S ra I rmt eet s
’
nst u ent s

L g g f h Sr
an u a e o t e t eet
R rd i g P r h
eco n d S l a u c a se an a e

Th C rb M rk
e u a et

S TOCK B-
A
RO K E RA GE M CCO U N T I N G E T HO D S

B k dM hd U d
oo s an et o s se

O rd r B k e oo

P rh d S l
u c ase an B k a es oo

Cust Om M rgi R rd
er s
’
a n eco
 CO N E N S T T
STOC K -
B RO K ERA GE A CCOU N TI N G M ETHODS
Con ti nued
Bl r
.

The otte s

R evenue T R gi r ax e st e

C ustom r L dg r e s
’
e e

C ustom r S e m ’
s tate ent

S ecur i i L dg r
t es e e

S k B rr
t oc s d d L
o d B k
ow e an oane oo

M oney B rr d d L
o d B k
ow e an oane oo

S k Tr
toc f r R gi r ans e e st e

P ri vateLedg r e

G r l Ledg r
ene a e

Cl i g h B k
os n t e oo s

A di f Br k r g Fi rm B k
u t o a o e a e
’
s oo s

Th Cl r i g H
e ea n ouse

ACCOU N TS S F OR R T EA M OAD S

I m i R d d Eq i m
nvest ent n oa an u p ent

N ew I m Cl ifi i
nv est ent ass cat on

P ri m r A a y ccount s

P r i m ry A a R q i ri g Sp i l S d
ccount s e u n ec a tu y
E q i pm
.

u ent

G r l E xp d i r
ene a en t u es
S d tu y o f Cl ifi i ass cat on

Op r i g R
e at n d Op r i g E
ev enues an e at n x

p enses

D pr i i
e ec at on

O p r i g E xp
e at n A f W enses on ccount o ages

Pai d E mpl oyes

St udy of Cl assi ficat i on
I nc o me Profit and L oss, and Gene rl
a

h A
- -
,

B alance S eet ccount s -

S t udy of Cl assi fi cat i on

A CCO U N TS FOR MI N I N G COM PA N I E S
A ccount i ng M et od s h
B ook s and ccount s A
A r
ct ual Repo t o f a M i ni ng Comp any
 CON E N S T T
A CCOU N TS FOR I N S U RA N CE CO M PA N I E S S ecti on P age
Li f I re nsu ance 38 1
I r C r
nsu ance ont act s 38 1
M h det f C d
o s i g Li f I
o r on uct n e
-
nsu ance

C mp i o an es

B i f C mp
us ness o a o any

Fir I e r nsu ance

MU N I CI PAL A CCO U N T I N G

G r l E xpl i
ene a anat ons

M i ip l C rp r i
un c a o o at ons

Th A e i Plccount ng an

B k U d
oo s se

Th A e ccount s

C rru A ent cc ount s

A m A
ssess ent ccount s

C pi l
a d S i ki g F d A
ta an n n un ccou nt s

Tr A u st ccount s

App di x ( A l R p r )
en nnua e o t

G RA P H S
Use Pr p r i f Gr ph
and e a at on o a s

S r igh Li
t a G r pht ne a s

B r k Li G r ph
-

o en ne a s

Ci r l G r ph
-

c e a
'
s

C P A Q A W
U E STI ON S A N D NS E RS

P r l imi y R m rk
. . .

e nar e a s

Q i d
u est ons anA r nswe s

Q i d
uest ons anA r ( C i nsw e s ont nued )
 A CC OU N T IN G M E T HO DS OF
BA N KS

M E TH O D OF WO R K

I N T R OD U CT I O N
1 B an k bookk eepi ng so ca lled c onsi st s
p ri nci pa lly of

r r
r r f r
.
, ,
'
mak i ng eco d s o f t ansact i ons on se a at e o s and the p m
r r hrfr
,

mai n pa t of t he w o k t e e o e i s oo ee ng only i n a b kk pi
fr i d r bl
, ,

l i mit ed sense The o ms used d i fi er cons e a y and t he

f r h
.

sy st em oll ow ed v a i es b u t t h e met od i n al l b ank s i s th e same

r r
,

i n p i nc i pl e Th e w o k o f a bank i s d i v i d ed among t h e d i f
r r h h r r
.

f e rent d epa t ment s t h e numbe o f w i c v a y acco d i ng t o

r
,

t h e i mport ance o f t h e bank and t he v ol ume o f bu si ness t ans

a c t ed r hrfr
I n t eat i ng O f bank bookk eep i ng t e e o e i t s eems
r ib h rk i ld b d i b k
.
, ,

ad i bl
v sa d e to esc e t e wo as t w ou e one n a an

o f rg i d ih r i i
av e a e s z e a n h i f
w t d i an o gan z at on suc as s oun n

on e o f m ll r i i
th e s f h a r e c t es o t e c ou nt y .

2 F h p rp or t f d rip i
e u h md h
ose o esc t on, w e av e assu e t at

d r id r i d i H r f rd C
.

h b k
t e an un e i l c ons e at on i s ocat e n a t o onnect

Eq
,

c u t , and h i i md
t at bl N i
t s na l B k I h e th e ui ta e at ona an t as

rpl f
.

a capi t a l k f st oc d o d d an a su us o an oe s

an rd i r mm r i l b i
o na y co I ri i l ffi r
e c a u s nes s ts p nc p a O ce s a re

M A Bi l r A r r
.

p i
gedow d J E ll d es i I i
ent , a n a ca sh e t s a

m mb r f h H r f rd Cl r i A i i di
, ,
. . . . .

e e o t H
e a t o ea ng ou se ssoc at on an ts
l ri
C ea h ng mb r i 6 Th f l l i
ou se nu i li e f h s e o o w ng s a st o t e

mb r f ll h H r f rd b k b l
.

na m d
es an nu e s o i g a t e a t o an s e ong n to
h
t e Cl ri H ea A i i
ng ( )
1 H
ou se r f r d N i lssoc at on a t o at ona

C O PY R HT
IG ED EY IN T R AT
E N IO N A T T-
L EX 0 0 K C O MA P NY . ALL R HT R
IG S ES E RV ED

I L T 234~—2
 ACCOUNTI N G M E T HO D S OF BAN KS § 3 1
B k (2 ) F m r d M h i N i l B k (3)
an ar e s an ec an c s at ona an

l Ex h g B k (4) S B k ( 5) F i r N i l
, ,

N i at ona c an e an t ate an st at ona

B k ( 6 ) E q i bl N i l B k
, ,

an u ta e at ona an

Th H r f rd b k m mb r f h Cl r i g H
.
,

e a t o an s not e e s o t e ea n ouse

A i i
ssoc at on are : M r h B k S ri y Tr C mp y e c ant s an ec u t u st o an

Th p r i i p l rr p d f h E q i bl N i l B k
.
,

e nc a co es on ent s o t e u ta e at ona an

ar e h E
t e r N i l B k f N Y rk d h Fi r
a st e n at ona an o ew o an t e st

N i at ona l B k f B an o ost on .

3 Th rk f h b k i di i d d m g
e wo o t e d p r
an s v e a on sev en e a t
hi h r r
.

m ent s, w c ( )
1 R i i
are : g ll ( 2 p y gi ll
ece v n te e a n te e

r r r f
, ,

( )
3 llco i l k
ec t on c e 4
( ) d i l k 5
( ) p not e, o r scou nt , c e oo

b k l rk ( 6 ) i d i i d l l dg r b kk p r ( 7 ) g rl
, ,

oo c e n v ua e e oo ee e ; ene a

l dg r b kk p r Thi di i i f h rk r pr
-

e e oo ee e s v s on o t e wo e esent s

m r ly h i id r d rryi g h
.

e e w at b
s c ons i i e e to e conv en ent n ca n on t e

wo rk f hi p r i l r b k Th mpl
O t s a t cu a f h b k r kan e e oyes o t e an an

rdi g h imp r f h ir p i i f ll w
.
,

to t e o t anc e t os t ons,
’

acc o n o e as o o s

P i g ll r r i i g ll r d i
ay n te e ece v n l r k g r l l dg rte e scount c e ene a e e

b kk p r i d i i d l l dg r b kk p r l rk
-

, , ,

oo ee e n v ua ll i e e oo ee e co ect on c e

r f r
-

, , ,

p oo b k-
l ook c e .

4 I h n t
rk f eh b wok ll h k od h
t e r i m an
p y a c ec s an ot e te s a

m mb r f h H r f rd Cl ri g H
.

a bl b k h
e at an s t at a r e e e s o t e a t o ea n ou se

A i issoc at on a re c a sse l d l ri g I m p y bl b k a s c ea n s te s a a e at an s

m mb r f h A l ri g
.

not e e s o i i l
t d
e ssoc at on a re c asse as non c ea n s

E h m mb r f h l r i g h rri
-
.

ac non -
e e o t e C ea n ou se ca es an account

w t i h b k h
a an i m mb r
t at d hi b k l r f
s a e eh an t s an c ea s or suc

d p i r b k ll i h k dr l ri g h m mb r
,

e os t o an a t s c ec s aw n on c ea n ou se e e s

S p i l rr g m m d b h Cl r i g H A
-
.

ec a a an e ent s a r e a e y t e ea n ou se sso

i i
c at on l r to h f r
c ea eacg i i m a i m d r
t e noon at a v en t e te s aw n on

b k i
an s r by
n nea k f reig l ri g h b k
t ow n s , now n as o n c ea n ou se an s

hi rr g m ll i m d r
- -
.

B y t s a an e ent a h b k i te p l s aw n on t e an s n one ac e

a re sent di r ect i tol r I m dr w b k

a t ow n n one et t e te s a n on an s

rr
.

i di
n st ant
p l h
aces ar e sent p d b k i N
to t e w co es on ent an s n e

Y rk o B or ost on .
 ACCOUN TI N G M ET HO D S OF BANKS
B OOK K E E PI N G S Y STE M

5 The bookk eep i ng syst em oll ow ed e e i s know n as t he f hr

f r h r r
.

loose l ea st i k e s eet syst em B y t h i s syst em the eco d s of

r r r r
- -
.

th e ecei v i ng tell e , payi ng t ell e , note tell e , and coll ecti on

c e l k r are made on i ndi vi dual s h eet s desi gnated as stri k e

s h e et s , and rk f h b pr d by i
t he w o lf o eac one can e ove t se and

a sol b h fig r i h p r f b k
y t e u es n t e oo oo

A ll i m d h k fr m h diff r d p r m
.

t e s an c ec s o t e e ent e a t ent s a re

sent p l h
tor h y oner d i h i
ace, ll dw e e t e are ente e n w at s ca e t he

FI G 1
.

p r oo f b oo k unde rh ead i ngs f or eac h d epa t ment r As an

q l d bi r d i i m d f h i m r i d h g r l
.

e ua e t or c e t s a e or eac te ece ve t e ene a

ri k f h l m f h d i ff r
,

st e o t d h
e m
t ota a ount an t e a ount s o t e e ent

d p m
e art h ld gr ent s s ou a ee

ri k p r f i m d f h r k d i i f d
.

Wh en a st e, or oo s a e o t e wo an t s oun

h h d bi d r di id f h pr f b k gr h
,

t at t e e t an c e t s es o t e oo oo a ee, t e
i m te di rib
s ared h i di i d l l dg r b kk p r
st ut e to t e n v ua e e oo ee e

r r r f r r h
-

g l
ene a l d g b kk ep l el d oo i l i
ee e
g oca an o e gn c ea n ou ses,

rr p d l rk Th l f h i m p d by
-

an d h t e co es on ent c e . e t ota o t e te s ost e

 ACCOUNTI N G M E T HOD S OF B ANKS § 3 1
th b kk p r m
e oo g r
ee e s i h h fi g r h w
u st b y h a ee w t t e u es s o n t e

p r oo f b k oo

rk f b k i b l d h h l m
.

Th d y
’
e a s wo o a an s a ance w en t e t ota a ount s

d p r m r i h h fi r h
'

o f ll h d ifl
a t e g werent ge a t ent s a ee t t e u es s ow n

by h p r f b k
t e d h d bi
oo d r di
oo idan f h pr f t e e t an c e t s es O t e oo

b k gr
oo a ee .

6 Th r i f h d p r m f b k h hr '

e el at on o t e e a t ent s o a an t o eac ot e

rfr h r h i Fi g 1 I
.

w i ll b bye seen h a e e ence to t e c a t s ow n n t

fr m hi h h pr f b k d p r m i h
. .

w i ll b e seen o t s t at t e oo oo e a t ent s t e
r l p i i b k r k ll i m g h i d p r m
-

cent a o nt n an wo as a te s o to t s e a t ent

h i r w y h l dg r d h l ri g h Of h
,

on t e a to t e e e s an t e c ea n ou se t e

h l f i h d l d by
.

t ota l m a k i by b k b
ount ta en n a an a out one a s an e

h r ll r f r h by h p yi g ll r d
-

t e i i g
ece v n te e one ou t t e a n te e an one

i gh h h by h d i ll r l r dy
-
, ,

e t eac d ll i t e A
scount an co ect on te e s s a ea

ll r o h pr f b k d p r m
.

st at e d ai t an sac t ons a re sent t t e oo oo e a t ent

d i rib d fr m h r i q l m
-

an d are st b ut e o h t e e n a out e u a a ount s to t e

i di i d l l dg r h g
n v ua r l l dg r d h l ri g h
e e , t e ene a e e , an t e c ea n ou se .

R E C E I VI N G T E LLE R

7 Th e r ec ei v i ng t ell e rr ank s i n i mpo t anc e r a f r

te t h e payi ng
r r i r
.

t ell e I t i s h i s d u ty t o ece v e t he dep osi t s o f c u sto me s and

r
.

to ent e t he amount and t he d at e i n t he pass book o f each one .

FI G 2 .

r rd
Th e eco of the dai ly w o rk of the r i i g ll r i m d
ec e v n te e s a e

h r i ec e v i ng t ell e r ri h d d il b l
’
on t e s st ke s eet an a h a y a ance s eet

Th h f r h d y rk i
.

’
ese s eet s ar e dated and fi l ed a te t e a s wo s

bal anced .
 A CCOUNTI N G M E T HO D S OF BANKS
8 Th r i f h r i i g ll r i l h
e t ansact ons o t e ece v n te e nv o v e t e u se

f h f ll i g f rm
.

o t e o ow n o s:

O p i
n o en n
g b k h m r
an acc ount at a i r q i r d an eac cu st o e s e u e

i mi l r
,

to fi ll ou t a si h
g n at u r e h i ca r d s a to t e one s ow n n

F ig 2 Th m r w ri hi
e c usto m h i r d i x ly
e t es s na e on t s ca n e a ct

h h
. .

t h m
e sa y i w i ll b
e i g d
wa t k g i h i m e s ne on c ec s, v es s o e or

b i us ness a dd r h r f hi b i ess, t d he nat u e om f s u s ness, an t e na e o

t h p r e by w h m h w
e son i r d d oh b k If h e as nt o uc e to t e an t e

d p i ri rp r i h rd h h m f
.

e os fi mto s a r or c o o at on, t e ca S ow s t e na es o

th p e r r a h f
t ne h r
s or p r i ffi
t ose or h r i d t e co o at on o c e s aut o ze to
s ig h k
n c ec s A f r h rd i . te t e ca s

fi ll ed out , t he dat e th e account

w as op ened , and t he name o f t h e
c ust o me r
i s typew i t t en at t h e r .

t op by t h e bank and t he ca d i s r
h h
,

t en fi l ed al p abet i cally i n a case

locat ed c onv eni ent ly f or t he t ell
ers and b ookk eepe r s t o compa r e

s i gnat u es on c r h ec ks .

9 D ep o s i t t i c k e t s, t he
f rm h i h i
.

o Of w ic h s s ow n n

Fi g 3 f rihd f h
a re u n s e or t e

f d p i r
.
,

u se o h
e os to s, w o a r e ex

p ect e d m k h m
to a Thi e t e out s

ll r b i
.

sa v es th im f h
e t e o t e te e ut t
has a gr r d eat e
g f f a v ant a e o a

c i li t at n i g h ki g f h i m
a c ec n o t e te s
FI G 3
.

by h i m . In mak i ng out a depos i t t i ck et , t he d ep osi t o w i t es r r

t h e dat e and his name i n t h e spaces at t he top and l i st s
t h e i t ems of a d eposi t i n t h e l i nes bel ow Cu rr ency, ld
go

r h r h
.
,

si v e
l and c ec k s a r e l i st ed sepa at el a s s ow n Ch ec k s
y
r hr h dp i i
, .

d aw n on t he bank w e e t e e os t s made a re u sua lly d es i g

name o f h dr r h r hrl
.

h at ed by t h e t e aw e t ose d aw n on ot e oca l
h r
,

b anks by t he name o f t he bank and t ose d aw n on out O f ,

-

t ow n bank s by t h e name O f t h e bank and t he ci ty o r t ow n and

st at e in w ic h hi t is l ocat ed or mo r fr q
e e uent ly on ly by t he name
of t he c i ty o r t ow n .
 A CCOUNTI N G M E T HOD S OF BANKS § 3 1
Wh d p i i r i d h
en a ll r rifi h i Em b
e os t s ece ve t e te e ve es t e t s

h d mp ri g h m y
,

count n i g h t e cas h h k an co a n t e a ount s on t e C ec s

wit h h m l i d h d p i l ip E h h k m
t e a ount s ste on t e e os t s ac c ec ust
x mi d r f lly h i i m d i pr r f rm
.

b e e a ne ca e u to see t at t s a e out n op e o
—
h i h i i d d h h m gi i fig r d
t at s, t at t s at e t at t e a ount v en n u es an

rd gr h i i ig d b r p ibl p r
,

i n wo s a ee, t atd t s s ne y a es ons e e son, an

t h i i pr p rly i d r d If h m
at t s f
o e h ki n o se t e a ount o a c ec s not

xp r m i fig r rd h m ri
.

e d h es se d i t e sa e n u es an n wo s, t ea ount w tten
i rd i k
n wo rr A f r h i m f h d p i
s s ta en as c o ect te t e te s o t e e os t
h kd h l
.

li p s are c ec e t e co

f fig r
,

m i dd d u n o u es s a e

d h l rd i an t e t ot a ent e e n
h d p i r p
’
b k t e e os to s ass oo .

10 A p a s s b o o k , t he
f rm
h hi h i
.

o of w ic s s ow n n

F ig 4 i b k f r i h d s a oo u n s e

h d p i r h hi
.
,

t o eac e os to w en s

i
accou nt
p d I s o ene t
r r ip b k d
.

s e ves as a ec e t oo an

i p r ds h i m esent e eac t e a

d p i i m d e Ios mk t s a e n a

r h d f
.

i g n an ent y, t e at e o
FI G 5
h d p i i gi
t e h t
.

e os s ven on t e
le fh t -
and S i d e of t he p age an d h t m e a h r i gh h d
ount on t e t an

r r d fr m
-

si de . P oceeds o f d i scount s
‘
d
an ll i co ect ons are ent e e o
 31 ACCO UN TI N G M E T HO D S OF B AN KS
c r di
e made out by t he not e or coll ect on c e
t sl ips n w c i l rk i hi h
r rd
,

c ase t h e i ni t i a l s o f t h e c l e k w h o mad e out t e s a re ent e e h l ip

i n t he col umn bet w een t h e d at e and t h e amount col umns
If r
-

t h e pass book i s not p esent ed w i t h a deposi t t he r ecei v

r r r h h
,

i ng t ell e makes out a c ed i t sl ip simila t o t at s ow n i n F i g 5 . .

1 1 Th e recei v i ng t ell e r ’
s st ri k e s h e et is of t he f rmo

h r
.

s own i n Fig 6 O nl y t h e cash t ansact i ons o f t h e t ell er a re

h rr
. .

s h ow n on t he s eet , t he t ot al a mount of cu ency, gold , an d

FI G 6 .

s il ve r of eac r hdp i m Ch k l i
e osit d bei ng ent e ed a s one te ec s st e

id r d rd
.

on d p i l ip
e os t s h d
s a re not cons e e as ca s an a r e not ent e e

on t h h b i g d i r r d d i b l i g h d i ly r k f
e S eet , e n s ega e n a anc n t e a wo o

th r e i i g ll r Wh
ece v n m r h te r i i g ll r i
e en o e t an one ece v n te e s

rk f h i d i i g i h d b p i l f
.

em l pd h oye t e wo o eac s st n u s e y a enc o a

r i l r A f r h h p r f d i i r rd d
,

ce ta n co o te t e ca s a t o a ep os t s eco e on

ll r h h d i lip d h
.

h h
’
t e te e s s eet , t e epos t s an c ec k s a re sent to t e

p r fb k d p rm A h l f h d
oo oo e a rk
t ent t t e c ose o t e ay s
’
wo the
r i i g ll r h i f d h l h i g h m
-
.

’
ec e v n te e s s eet s oot e t e t ot a s ow n t e a ount

r i d d ri g h d
,

ece v e u n t e ay .
§ 31 A CC O U N TI N G M E T HO D S O F B A N KS

1 2 Th r i i g ll r d i l h i ’
e ec e v n te e s a y b a l a n c e s h e et s ow n n

f rm d f r rdi g h m hi h
.
,

Fig 7 i s a o u se f or eco n t e a ou nt o cas n t e

ll r
,
.

h d f h h l f h d y b i Th
’
at t
’

an s o t e te e e C o se o t e a s u s ness e

ri d mi i
.

va ou s eno d d h
nat ons a re count e m f h an t e a ount o eac

r d i h l m d r h pr p r h di g I h l m
e nt e e nt e co u n un e t e o e ea n n t e co u n

rd h m i p i d dri
.

h d d Ni k l i
ea e c e s ent e e t e a ou nt n enn es an un e t
t h m
e a i fi ou nt p i n I h S i l
v e c ent r l m eces n t e ve co u n a re

r d i rd r d r h hr h m i
-
.

e nt e e n o e , one u n e t e ot e , t e a ou nt s n t en c ent -

p i eces, y fi t w ent p i d fi f
v e c ent p i d fi ll
ec es, an
y ty cent ec es, an na

i l r d ll r rd
- -

t h m
e a i ount n s I h G ld ve l m o a s n t e o co u n ar e ent e e

ri d mi i f g ld i
.

t h m
e a i h
ount s n t e va ou s d eno nat ons O o co ns ; an

i h B i ll
n t e l m s co u rd h m f
n are ent e e h f h t e a ount s O eac o t e

va ri d mi i f bill A f r h h i h li d
ou s eno nat ons O s te t e ca s s t us st e

rri d h pi
.
,

t h l m
e co u l d d h
ns ar e t ot a e l an t e t ota s ca e to t e reca tu
l i a t on l m co uh r i gh h d i d
n on t f h e h Th t l an s e o t e s eet e t ota
rd r
-
.

o f hi t l m h s co u h l m
n s ow s t h d b i
e ac t ua a ou nt on an ut n o e

mp r h i ll r r i k h Fig 6
,

i h h l f h ’
to co a e t s w t t e t ota o t e te e s st e s eet ,

b r gh r fr m h pr i d y b i m
.
,

t h me a ou nt ou t ov e o t e ev ou s a
’
s u s ness u st

b d d
e d A
e uct e h i F ig 7 h m s s ow n n d t e a ount w as an

rg
. .
,

t h b l e a anc e i h h a m i
ees Fi g 6 w t Th t e a ount n e

h fr h
. .

i i
s a a n a
g dd d g i h e m to d ve d m
t i
e a m ount on an an o t s su

r r r h
,

i d d
s d
e uct e y m an d a h p i
ou nt
g ll t u nehi ov e to t e ay n te e w c

rri d r h x d y b i
,

l e av esh m t e ab ount to e ca e ov e to t e ne t a
’
s us ness .

T R A N S A CT I O N S

1 3 The f o ow i ng
ll we r e the t r ansact i ons at th e r ecei v i ng

r T r8
.

t e ll e
’
s w i ndow on uesday, S ept embe ,
l9
D epo si t o f n ew c u st o mer
'

J m My
a es er s,

B i ll s
Coi n
Ch eck s
J . H S t eel e
.

Fi r st, B o st on
Co

Fi r st N ati onal
H art f o rd

S p ri ng fi eld, Mass .
1 0 A CCOUNTI N G M E T HO D S OF B AN K S § 31

D eposi t s oi -
r egul ar c ust o mer s
W . H Gi l lette
. CO .
,

B i ll s

Ch eck s
Far mers Mechani cs
Chattanoo g a

Merchant s

F T Peabod
. . y ,

B i ll s

Ch eck s
W H G i ll et te CO
Jm
. .

a es My er s
N at i onal E x ch ange
S ecur i t y Trust

Luc y B Fo st ell e,
.

B ill s
Ch eck s
F i rst N at i onal
N at i onal E x c h ang e
F T Peabod
. . y
Cash on hand i n det ai l at t h e c l o se o f b usi ness
Gol d coi n
B ank not es

F ract i onal si l ver

N i ckel s and c ent s

P A Y I NG TE LL E R

1 4 r
Th e payi ng t ell e o f a bank ank s i n i mpo t anc e nex t r r
r
.

t o t he Offic i al s H e has Ch a ge o f t h e bank s money, and i t i s

’

h h rp m
.

hi s d uty t o c a sh C ec ks and mak e all ot e ay ll d f

ent s c a e or

b y t he b u si ness of t h e bank , i nc l ud i ng t h e l msett ef h ent O t e

l
c ea ri g h b l
n I iou se a ances t s nec essa r f
y or i ll r
t h e p ay ng t e e

h ih h i r
-
.

to b i
e l n c ose t ouc w t t e account s O f d epos dh m
to s an e u st

be t h r ghl f mili r i h h i r
o ou y a a w t t e r
si gnat u es .
g 3 1 ACCO UN TI NG M E T HOD S O F BANKS 11

1 5 P ym a f d p i r i
ent on account o lly m d a e os to s usua a e on

r rd r k h f rm f w h i h
.

p esentat on o i f an o e ,
now n as a c h e c k , t e o o c

FI G 8 .

is show n
i n F ig 8 When a chec k of a d eposi t o r i pr s esent ed

r f ll r i i d by h p i g ll r
. .

f or p y
a me nt i t i s c a e u y sc u t n z e t e ay n te e to
h i i i p r p r f rm h i h i i d d h h '

s ee t at t s n o e o — t at s, t at t s at e t at t e
xpr d i fig r rd i h m h
,

a m ount a s e d i e s se n u es an n wo s s t e sa e, t at

th i
e s r i
gn at uie h h h k i pr p rl y i d r d
s genu ne t at t e c ec s o e n o se

d h
, ,

an h
t m at d
t e i i a ffi i m
o u nt oni Wh epos t s su c ent to eet t en

h k dr h r b k i pr ll r d
.

a c ec aw n on anot d d h e an s esent e an t e te e oes

n ot k h h r h i d r r i fi
now w et i lly r p
e i bl
t e h n o se s nanc a es ons e, e

u sua ll ll by l ph
y ca h b k
s wh i h h
te eh ki one t e an on c t e C ec s

d ra w nfi d h h r i i g d
to n ou t w et e t s oo .

1 6 Ch k fd p i r ec f pr d b r ifi d
s o e os t o s ar e o t en esent e to e ce t e

hi h i g r by h b k h i i ll b p id r
.
,

w c s a ua ant ee t e an t at t w e a on p esen

FI G 9 .

f at i ou A h c ec k is c er t i f i e d by st a mpi ng on its f ac e, u sua ll y

r r r
.

”
in red i nk, t h e w o d Ce t i fi ed
“
an d t h e d at e , the ce t i fi c at i on
 A CCOUN TI NG M E T HO D S OF BANKS
b i g ig d by h p yi g
e n s ne ll r h
t hi r Th f rm f
e a n te e or t e cas e e o o

r i fi i i i l l r d h h k h i Fig 8
.

ce t c at on s u st at e on t e c ec s ow n n

r ifi i f h k m k h b k r p ibl f
. .

Th e Ce t c a t on o a C ec a es t e an es ons e or

i ts
p y m a i d fent h d r r
n st ea T h r f r o r i fti g e aw e e e o e, on c e t y n a

fi r b O K d by h b kk p r h p y
.

h k hi h m
’
c ec w c u st st e t e oo ee e t e a

i g ll r m k h rg l ip F i g 9 fr m h i h h rg
, . .
,

n te e a es out a c a e s o w c to c a e

mr i h h d a r di
.
, ,

h c m
’
t e u st o e s accou nt ifi d
w t t e a ount , an c e t c e rt e

c h k l ip Fig 1 0 fr m hi h r di h i fi d h k
ec s o w c to c e t t e cert e c ec

r l l dg r
-

, .
,

acc ou nt i h g n t e ene a e e .

1 7 Wh h ll r p en h k h
t e mp
te i e f ays a C ec e st a s on ts ace

h r
.
,

t h d e f p ym
at e o h a ent i d m k
to S h ow a c a s t ansac t o n an a es t e

r
p p r
o e r y h i ent r i k h on h i h i
s st r r d f l l
e s eet , w c c ont a n s a ec o o a

Cr ed i t Cer t if i e
d Check A ccou nt

FI G 1 0
.

p a
yment s m ad e by h i m and is of the f rm h i
o s ow n n F ig 1 1
If h r h i h i i pr
. .

t e Ch ec k is d aw n on th e b a nk at w c t s esent ed , the
nam e Of the mak e ri s ent e ed r i n t he fir l m
st co u n u nd e r t he
h diea ng N ame, and the a mou nt i s ent e e rdi h x n t e ne t co u l mn
If h r rb
.

t e c h ec k is d a w n on anot h e ank i n t he sa me or so me
oth r e c i ty o r t ow n, t h e name o f t h e bank and t h e c i t y or t ow n
and st at e r
i s w i t t en i n t h e fi r st c o u l mn i nst ead of t h e na me of

t he make r r
Ce t i fi cat es of dep osi t w h en p ai d a re r
t eat ed as

h
.
, ,

c ec ks
f r i f d i r bl
.

At the l
c ose o f t h e d ay bu si ness,
’
s or o t ene es a e,

t h e t ell e rm k a es a n add i ng mac h i ne l i st of h i m i

t e te h rd rs n t e o e

r rr d
-

i n w hi c h t h e t an sact i ons oc c u e not es t h e l m

t ot a a ount on

d d li r
,

t h e bac k Of th e l ast Ch ec k of each l ot , an h l

e ve s t e ot
§ 31 A CC O U N TI N G M E T HO D S O F B A N KS 1 3

to t h p r f b k l rk
e ooTh i m oo h c e rdi h e te s a re t en ent e e n t e

r f f I f r
-
.

p oob k d h oo l m ian d t h
e co u m g n s oot e t e a ou nt a ees

r r
.

w t i h h tl g i e by h
t ot a ll as h i m v en d i i b d t e te e t e te s a re st ut e

h pr p r
,

to t e o e acc ount s .

1 8 A h l f h d y b i
t t e c ose h p i g o ll rt e a
’
s u s ness t e ay n te e

f rm h w i
.

m k a es out a d f
ai ly b al an c e s h e et o a o s o n n

F i g 1 2 i mi l r h s f h r a i i g ll r T h i
t o t at o h h t e ec e v n te e ; s s eet s ow s

rr y
.
,

‘
t h e am h d i
ou nt on h d ifi d mi
an i n t f e e rent eno nat ons o cu enc

l f d r h h di g f B ill i
.

I n h l m
t e co u h n at t e e t un e t e ea n o s s

FI G 1 1.

l i st ed fi r st , the a mount i n t w enty d olla r bi ll s ; sec ond , t he

r r r
-
,

a mount i n t en d ol la b i ll s ; t h i d t h e amou nt i n fi v e d oll a b i ll s ;

f rh r f
- -

ou t t h e amou nt i n t w o d oll a b i ll s ; fi t h t h e amount i n

r h r
-
, ,

o n e d oll a
-
bi ll s ; si xt t h e amount i n b i ll s O f l a ge d enomi na
r
,

t i o ns ; and sev ent h t he amount i n st apped b i ll s i f any In

r
, , .

t h e sec ond c ol umn i s l i st ed t h e a mount s i n t h e sev e a l d enomi

n a t i ons o i begi nni ng w i t t he igh est i n v al ue I n
go ld coi ns, h h
hr r
.

t h e t i d col umn i s l i st ed t h e amount s i n t he v a i ou s d enomi

r
na t i ons o i si l v e c oi ns ; and i n t h e ou t c ol u mn t h e amount s f rh
f h h h
,

i n ni ckel s and penni es Th e fi t h col u mn w i c i s ead ed

I h h k pr d b
.
,

t ems, i s f or l i st i ng lat e c ec k s —
t h at i s, c ec s esent e y
§ 31 A CCOUN TI NG M E T HOD S O F BANKS 1 5

m r f r h r g l r b ki g h r w
c u st o e s a te t ehi h m y b p i d
e u a an n ou s, c a e a

as a s p i l mm d
ec a i S
ac co h i m i d r
o at ond h uc te s are cons e e as ca s

hi rd
. .

Wh ll h en a td d h
e ca s m s c ount e an t e a ount s are ent e e

in t h pr p r
e l m h
o e l m co u f d d h l ns, t e co u ns a re oot e an t e t ot a s

FI G 1 3.

ca rri d e to t he co u l mn h ead ed T ot a righ h d d f

l on the t an si e o

h f f hi l m h
-

t he s eet , a nd the oot i ng O t s h

co u l n s ow s t e t ot a
a mou nt o f ca s h on h and
’

I n th e fi r li f h T
st l l m
ne o t e ot a co u n

h ri r l d li i r d h m
.

b el ow t h e o z ont a l d oub l e -
u e ne s ent e e t e a ount

FI G 1 4.

ca rri d e ove r fr m h pr i d
o t e ev ou s ay, a s s h ow n by t h e b al anc e
s h e et for t h d y d fr m hi
at a an o t s amount i s ded uct ed t he
d ri h h
,

a mou nt p a id out h d u ng t e ay, the bal ance s ow i ng t h e cas

on h and . Thi b l i f mi k
s a ance, no st a e h as been made ,
w i ll r
ag ee
16 ACCOUN TI N G M E T HOD S OF BAN KS § 3 1
w it h t h e l f h
t ot a h h d h
o t b e T hi
c as on an s ow n a ov e o t s

r d r by h r i i g
.

bal anc e m b dd d h
u st m
e a e t e a ou nt t u ne ov e t e ec e v n

FI G 1 5

r rri d rf
.

t el l e , and t h e t ot al sh ow s t h e amou nt ca e ov e or t h e next

d ay bu siness
’
s .

1 9 r r
D u i ng t h e c ou se o f t h e day s bu si ness i t may b e
’

r r h r rfr
.

necessa y f or t h e i
p y g
a n t ell e t o a nd l e s ev e a l ot h e o ms

d rib d f ll i
esc e o ow ng :

I Fig 1 3 i
n h s s ow n a ca rd
h
.

u sed mw en p y
a ent on a not e

or c h ec k i s t o be st opp ed . If
p y
a ment on a c h ec k i s t o be
s t opp ed , r r f rr d
t he mat t e i s e e e

to th p i e ll r h r
ay ng te e w o c osses

rd N
,

ou t h t e wo d fi ll ot e a n s out

h
t e ca rd k h or mr as s t e c u st o e

to d d h
o so, an m r i t e c u st o e s gns

it Th b k f h
e rd i
ac O t e ca s

Thi id i
.

sh i Fi
ow n 14 n g s s e s

m r if h
. .

si d b
gne h y t e c u st o e t e
st op m a
p y rd r i r k d ent o e s ev o e

rd fil d
-
.

S p to m -
a
p y ent c a ,
s a re e

l h b i ll i
'

a p a et ca l y d n a c ase ocat e

i
c onv en ent l f h ll r y d or t e te e s an

b kkoo r d eep e s,
p y an a st o p a

l ip f h f r m h
-

FI G 1 6
.

m ent s o i t e o s ow n n
F ig 1 5 i s post ed o r fi l ed i n t h e cages O t f h l r r mi d r
e t e le s as a e n e

r
.

t o be on t he l ook out f or t h e p esent at i on Of t h e c h eck .

§ 31 A CC O U N TI N G M ET HO D S OF B A N KS 7 1

20 A f rm f r q i i i f r h d fr by b k
o o e u s t on u ni s e ee an s to
m r i h m r p ifi
.

c u sto i F ig 1 6 Th
e s s s ow n hin e c u st o e s ec es on t s

f rm h d mi i f rr y r q i r d f p y r ll d
. .

o t e eno nat ons o cu enc e u e or a o s an

p r i
esent s i h hi h k f
t w th t l m Th i r
s c q i ec or t e ot a a ou nt s e u

lly h d d h p yi g ll r h d y b f r
.

s i i
t on i s u su a an e h to t e a n te e t e a e o e t e
cas h i r q i r d i rd r gi him im p i p w i h
s e u e n o e to ve t e to ut t u t out
rf ri g i h h r r i
,

int e e n w t ot e t ansact on s .

T R A NSA CT I O NS

21 Th e f l
ol ow i ng we r e t h e t ransact i ons at t h e p ayi ng
r T r8
.

t ell e
’
s w i nd ow on u esd ay, S ep t emb e , 19
Ch eck s p ai d
W H Gi ll ette Co , on E ui tabl e q
y
. . .

Luc B Postell e, on E q ui tabl e

.

Fi r st N at i onal B ank , B ost on . .

Ch ase N at i onal B ank, N ew Y o rk

S tat e B ank, Ci t y
Certi fied t h e ol l o w i ng ch eck f
W H Gil lette CO t o C Mc Cormack
. .

Recei ved $500 i n cu rr ency rom t h e r ec ei vi ng t el l er

.
Jf . .

f
.

Cash on h and rom y est er day,

D etail ed stat ement o f c ash on h and at t h e c lose o f b u si nes s

Gol d c oi n
S il ver
N i ck el s and c ent s

CO L L E C T I O N D E P A R T ME NT

22 ll ec t i on c l e k ank s i n i mpo tance next t o t he

Th e co r r r
r hr
.

l ast o f t h e bank c l e k s I t i s h i s d uty to t ak e C a ge o f t he

rf hr r
.

d a t s and ot e i t ems ec ei v ed by t he b ank f o r c oll ect i on and

t o mak e t h e c oll ect i ons at t h e p op e t i mes r r
r r r r
.

A d r a f t i s an o d e gene ally mad e by one pe son on h i s

f und s i n the h d f hrpr I
an s o anot e e s on t may how eve r be
r h dr rh f d i
.
, ,

d aw n w h en t e aw e as no un s n t he h and s Of t he
dr aw ee i f he h r as h
ea son i to suppo se t at t w i ll b e h ono rd Ae

dr f dr Dr f
.

a t may be d m d
aw n on i h e an , at s g t , o r on t i me . a ts
I L T 23 4 -
3
 ACCO UNTI N G M E TH OD S OF BANKS § 31

dr aw n at s i gh t an d on t i me a re sh ow n in F i gs 17 and 18
A rf r
. .

c cep ta nc e O f a d a t mak es t h e accept o l i abl e f or i t s p ay

ment on t he d ue dat e .

23. Wh en a d raf t i s re c ei v ed by a bank f or co ll ect i on om fr

one o f i ts c u st o me r s, he i s not i fi ed of i t on a fr
o m si mi l a to r

FI G 1 7
.

th e one sh ow n i n F ig 1 9 If
a b i ll o f l ad i ng i s at t ach ed t o t h e

rf fr
. .

d a t , a not i ce o f t he o m sh ow n i n F i g 2 0 i s sent . .

24 A s i tems ar e r i ec e v ed f or co ll ect i on t h ey a re ent e rdi e n

h f rm f h h
.

a book k now n as the c ol l ec t i o n r eg i s t er , t e o o w ic

is s h i n Fi g 2 1
ow n Th e i ll u st r at io n sh ow s wh i f rm i
at n o at on

r h r x p
. .

is ecord ed, so t at no e xplanat i on i s necessa y e ce t t o st at e

t h at t h e ent y r i n the h
l ast col umn eaded D i sposi ti on i s not

FI G 1 8 .

mad e unt i l a f r
te t h e i tem h as been p f or payment r esent ed

h F T
.

I n t is c ase i t i s assumed t h at Peabody has paid t he

by h fr r rf
. .

a m ount c ec k b e o e t h e p esent at i on o f t h e d a t and t h at

t e h dr f r r dh md
a t w as etu ne t e sa e ay u npa i d A r di
cco ng ly th e
ry i h l m h d d D i i i
.

ent nt e co u n ea e sp os t on w i ll b e as sh ow n .
§ 31 A CCO U N TI N G M E T HO D S OF B A N KS 1 9

Wh dr f en ah r i mi r a rn d p id h d r
t o r ot e te s et u e un a to t e sen e

h r h r
,

t e feason p y m i o r nond i d al f
ent s at t ac e to t an a ett e o

f h f rm h
-

a d i v ce o i Fi g 22
t e o mp i i s ow n n . acco an es t .

25 I b k h h dl n g r
an n m b
s r t f atll i i anm e a eat u e o co ect on te s

m r h f ll
.

f
o n out O b k f
- -
t ow n an i g y
s mi
or cu st o e s, t e o ow n s st e s

FI G 1 9
.

u se d : As i t ems ar e r ec ei v ed , t h ey a re ent e ed on a c o r ll ect ion

r egi st e rmd a e up O f fi v e sh eet s of p p
a e r of d i ff e r ent. c o o s and
l r
b ou nd toget h e at t h e top r Th e fi st , or ont , s h eet conta i ns r fr
h rf
.

fi v e d i v i si ons l i k e t at S h ow n i n Fi g 2 3 and i s not pe orat ed .

F I G Z)
.

b et w een the d i vi si ons Th e s eet s h u nd e neatr h cont ai n si mi l a r

rf r h
.

d i v i si ons and are pe o at ed so t at eac h d i v i si on can be read i ly

hd
d e t ac e

Wh r h r
.

en an ent y i s t o b e m a d e t h e se t o f s e et s w i t h c a bo n s

r r
, ,

b et w een, i s pu t i n t o a t ype w i t e , a nd t h e fi v e c op i e s o f t h e
 ACCOUN TI N G M E T HO D S OF B ANKS
e nt r
y a re p r d d o uce r i i g h r
at oney b i g h w t n t e ent e n t e sa me on

h r f r r r
,

al l , t h ou g h p i
t e d m h d
nt e i ff h o s on t e e ent s eet s va y

FI G 22
.

s l i ght ly Th e fi r st ent r i mdy s a e on t he bot tom d i v i si on of

r gi r d h fr fir
.

the e ste an h i
t e h ont , or st s eet c onst tut es t e p e r

r rd h r d bi md r Cr di d
,

”
m anent ec o , R t e ent
y
“
e te or
“
et u ne e ng a e

w h h i m i fi ll di p
en t e te d f Th s
y na h o d y s o se o e c op on t e sec n

h h
.

s eet , s Fi 24 fil d
ow n I n b d d p i
g l ip is e to e u se as a e os t s to
r di h m r h h m h b
.
,
’
c e t t e c u st o e s ac c ount w en t e a ount as een

i d
r ece ve Th p h
. h i r d h e co h i Fyig 2 5 i
on t e t s eet , s ow n n .
, s

FI G 23
.

fi l ed t o be s ent a s a l ette r o f ad v i ce t o th e c u stome r h w en hi s

a c c ount is r
c ed i t ed . Th e copy on th e f rhou t sh eet , s h ow n in
§ 31 A CC O U N TI N G M E T HO D S O F B A N KS 23

F i g 26 i h i kl r s py w h i
t e t c h i fi l d e d r h d
co d c s e un e t e ue at e

f
.
, ,

o f h i m Th
t e te py h fi h h
e co h i F i g 2 7
on t e t s eet , s ow n n is
r f di hi h h dr f i
. .
,

s ent as al h b k
et t e o a v ce to t e an to w c t e a t s sent

Th f r d r h b i g p rf r d b d h d
.

e ou un e s eet s , e n e o at e , can e etac e as

F I G 27.

soon a s a r ecord is made Th e fr ont , o r o ri i l

g na sh eet , t h h ou g

rf r d b rf r
.
,

not pe o at e h di i
e t w een t e v i si ons, s p e o at ed at t h e t op ,
so t h at w h h fi di i i
en t e fi l d h ve v s ons a re l e t r
e ent i e sh eet can

h d d fil d r f r rd
,

b e d etac e an
p m l e as a e anent oose -
l ea ec o of

t ransacti ons .

T R A N S A CT I O N S

26 . Th e f ll ow ing i t ems
o we r r
e ec ei v ed T u esd ay, S eptem
ber 8 1 9 f or coll ect i on
yr r
,

James M e s, l O day draft on John Ha ri s Co , B ost on,

-
. Mass .
, dat ed
S ept 8 1 9 l i st ed N O Prot est amount $50
f
.
, , , .

From E ast ern N at i onal B ank, N ew Y o rk s ig h t d ra t Of Wi ll i am E

y y
, .

Fost er, d raw n on F T Peab o d , dat ed S ept 5 pa

. . .
, abl e at t h e E q u i t abl e
N at i onal B ank, li st ed N o Prot est , amount,

NO T E TE LL E R

27 Th e note t el l e r or d i scount l k
C e r r k h i rd an s t i n i mpo r
f r h m ki
. , ,

t ance i n a bank I t i s h i s d uty t o l ook a te t e a ng O f a l l

r
.

d i scount s and l oans to co mput e d i scou nt d i an nt e e st , and t o

r
,

ecei v e p y
a ment f or all not es .
24 ACCOUN TI N G M E T HO D S OF A N KS
B § 31

B an k not es ar e o f t w o k i nd s one an o rdi r na y not e and t h e

r r rd i
,

ot h e w hat i s d esi gnat ed a s a co l lat e al not e Th e o nary

f rm r
.

not e, t he o of w h ich i s sh o w n i n Fig 28 i s a w i tten

r mi r r
.
,

p o se t o pay t o a ce t ai n p e son a st at ed amou nt at a gi v en

F I G 28
.

t i me and p l ac e , and it i s the rfr

e o e a t i m e , or p r o m i s s o r y ,
n ot e . Wh en a not e O f t h i s k i ndi s d i sc ou nt ed by a b ank , t he
i nt e r f est or r
t h e p e i od i t i s t o run i s d ed u ct ed i n a dv anc e A
f rm
.

c ol l a t e r al n o t e , t h e o of w h ich i s sh ow n i n F i g 29, i s
r r rdb r
.

a p mi o sso y not e secu e y t h e d eposi t O f sec u i t i es w i t h t he

F I G 29
.

bank I r nt e est on a not e o f t hi s k i nd i s pa i d mont l y or at h

r r
.

t h e t i me o f t h e payment o f t h e not e, acc o d i ng t o ag eement .

28 Wh en d ue a not e i n t he h and s of a b ank may be

r r
.
,

make t he me a s a Ch ec k b e pai d
’
c ha ged to the s ac c ou nt , sa , or
§ 31 ACCO UN TI N G M E T HO D S OF BAN KS 25

by cas h h k i myb r d i h l i
or c ec or t a e enew e n w o e or n p a r
t
dr w h r b k i m l ri g h
~
.
,

N ot es a h
n on ot e an s n t e sa e c ea n ou se ar e

F I G 30
.

u sua lly p r esent ed by t he b ank s messenge t h e fi st t i ng i n

’
r r h
t he mo r ni ng on t h e d ay d ue and i f t ey a re O K d b y t h e b ook
’
h
r d p i d hr h
. .

k eepe o f t he payi ng b ank t h ey a r e sent to an a t ou g

t h e cl ea i ng ou se r h
a not e i s If not good in t h m r i g i i
e o n n t s

r
.
,

p esen t ed aga i n at Cl o s i ng t i me ,

a ndi f good t h en i t i s the

O E P O S IT E D B Y

a mou nt not ed a ga i n s t the

make r ’
s accou nt , and is sent

r h
t h oug t h e Cl ea i ng ou se t h e r h
next day N ot es not good i n t h e
f r r r
.

a t e noon are t u ned ov e to a

nota r p y ub l ic ,
w ho p r esent s t h em
f or t h e last t i me, and if not goo d
t h ey are r p ot est ed by t h e not a r y
a nd r r et u ned the f ol l ow i ng
mo r ni ng t o t h e p r ot est i ng bank .

29 f rm f g The o O not e re

r d di ff r
.

ist e use m x e s to so e e t ent

r y r h r m
.

I n ec ent ea s , ow ev e any

h d d h
,

b k an s av e a opt e t e on e
F I G 31
c op y n o d i d b
t e r e g i s t e r ev se y
.

M J Ph i l bi b k r f Ol h n, a an e O yp ant , P ennsy v ani a

l Th i f rms o

f r gi r h pr d f h r id
.
. .

o e st e as ov e o s uc c onv eni enc e t h at i t i s ap ly

co mi i g r l
ng nt o ene a u se .
26 ACCOUN TI N G M E THO D S O F B AN KS § 3 1
Th r gi e r oi f
e st e f fi h C f p p r f
ns st s o a set o ve s eet s o a e o

d i ff r l r h h
e ent c o o s, eac i i g fi di i i l ik h s eet cont a n n ve v s ons e t at

F I G 32.

s h i n Fi g 30, w i c p ov i des f or
ow n h h r r r rdi
eco ng fi v e t ans
r h
.

ac t i ons, and fi v e c op i es o f eac h a re mad e at one w i t i ng E ac

h r f r
.

set o f fi h i b
ve s d eet s h s ou n
p d h t oget e at t e to an t e ou

d r h rf r h
,

un e p
s d
eet s a r e h h e p i o at eb d so d t at t e co es c an e et ac e

an d fil d p r
e l se Th a at e
p h i y rf r ed d
to h s eet s not p e o at e an w en

ir h i fil d
.

all h d i i i
t e fi ll d h
v s ons a r e e t e ent e s eet s e on a p ost
bi d r
n e d h h b m h p rm l l f r gi r
an t e s eet s eco e t e e anent oose ea e st e

d h f h fir h
-
.

Th h
e copy on i t d pl i
e sec on s eet s a u c at e o t e st s eet ,

ex p h ce h d
t t at h t e di at e d d
t e not e h w as sc ou nt e oes not s ow

F I G 33.

o n a cc ou nt Of bei ng w i t t en r on a da rk r i
-

p nt ed sp ace . T his
c opy is t he not i c e o f t h e d ue d a t e , and is u su a l ly s ent t o th e
 ACCO UN TI N G M E T HOD S OF B A N KS
mak e r a w eek i n ad v ance o f t h e d at e The copy on th e t i d hr
r h
.

s heet i s a d upl i cate of t he fi st and is w at is know n as th e

t i kl r
c e w hi c hi s fi l ed i n a case u nd e r t h e d u e dat e o f t h e not e
f rh r r f rm
, .

T he t he sh eet is k now n t h e i nd o se
’
c op
y on ou t as s o

r d r r
,

a nd i s fi l ed i n a case und e t h e name o f t he in Th

o se e

fh r
.

c opy on th e fi t sh eet i s know n as th e mak e ’

s c opy, and is

i ntuit S t ai rs of America .

M of
Gunnrt l irut .

6 11 3 of Eartforh. n :

I t 11 k m T hat , on the d ay of the d a e hereot f , t

at t he reques of the

Equitabl e Nati onal Bank of fiartfnrh (Hana . .

the
ty l
ho der of th
l th
t t hhere o W
l f l th ty ly
at ac ed, I I LLI AMS,
CHARLES H
l
ty tf tf ty t
.
,

o ar Pu b i c for the Commonw ea of C onneCI i c ut, by aw u au ori , du oom

i ssi oned aud a worn, resi d i ng i n t he Ci o f Har ord, Har ord Coun , presen ed the

and demanded th f h ereo f , i

w i ch w as re used and an wer made

“
so emn l
t
ly t t
m ut .
i
N
l l
o ar I , t he
,
at t he
d
rsai d
e qu
tt t y
es a oresai d, a

y part concerned
ve p rt
o esfe ,
ah
nd do ht
e t
y t t th th h th
d reb
erei n, w e e r as M aker,
y
tt h t
p ro es a g a ns a p erso ns a n e ve r

D rawer, D rawee, A ccep or, Payer l ndorse r, G uaran or, Sure y, or O erw i se, howsoever
,

agai nst w hom i t i s p roper to pro es , f or al l E xc anges, Costs, D amages and I n erests,

f
su f ered and to f
he su f ered, for w an t of all which

I no t i fied the

Wt i ness my h and and offici a l l

sea , at the Ci ty of Har tf ord ,

!
Norm Sm .
)
My Commi ssion eapi ret January 19, 19 Notary Public

fi le d in a c a se und e r t h e name O f t h e make r f rh d

The ou t an

fh r rdi g h
.

fi t c op i es c ontai n a sp ac e for ec o n p a ym m ent s t at ay

b e made on a note Th m e a d i ri ount ue s w t t en n t e i h fir p st s ac e

h ld b m d
.

on t he t w o c op i es a n d if p m ay ent s ou e a e on t h e not e
be fr ii d
o e t s ue t h e o rigi l m i r d na a ount s c osse out and t he new
a m fill d i
ount e n

Wh r
.

en not es ar e p iad h fi l d
, p i
t e m e co es ar e e oved and fi l ed
i n t he d ead h le -
Case .
 28 ACCOUNTI NG M E T HO D S OF B AN KS § 31

30 Wh i di
en a note d f s sc ount e or a c usto mr e t he p ro
lly r di d
.
,

ceed s ar e u sua c e hi te to s acc ount by means o f a d ep osit

t ic k et , as sh ow n in Fi g 3 1 and the a mount Of t h e d i scount i s
r r rb
.
,

c edi t ed t o th e D i scount acc ount i n t h e gene al l edge y means

Of a c r h h
ed i t sl ip l i k e t at s ow n i n F i
g 3 2 Th e a
.c e . f a mount O f
t h e note i s d eb i t ed
t o t he D i scou nt ac

c ount i n t he gene al r
r
l edge by means O f
a h r l i l ik
c a ge s p e

h
t at h i Fig s ow n n

hi h rri
.

33 w c ca es a

f ll d ri i f
,

u esc p t on o

t h e not e . Th e not e
i s fi l ed i n t he not e
fi le unde r i t s d ue
d at e .

3 1 If a note is
hr
.

not p ai d or ot e

w i se p r ov i ded f or at

mat u ity it i s r p r o

ry
,

t est ed by a not a

p ub lic or ot h r e

a ut h ri
o z ed
p ub lic
O ffi cer f or non p y
a
-

ment P r ot e s t is a
r r
.

l egal p oc edu e by
whic h the ban k
ma k e s o mal d e fr
mand f or payment
F I G 35
by means o f a ce r
.

r h
t i fi c at e o f p ot est , s ow n i n F i g 3 4 T r
h i s c e t ifi cat e i s at t ac ed h
fr r r
. .

t o t h e not e, and o mal not i c e O f t he p o tes t i s sent t o t h e mak e

and eac h i nd o se r r fr
O f t h e not e on a o m l i k e t h at s ow n i n h
Fig 3 5
. .
 ACCOUN T I N G M E THOD S OF BAN KS
TR A NS A CT I O NS

32 The f o llow i ng r
t ansact ions t ook p l ace i n t he not e

r r T r8
.

d epa tment S ept embe

’
t ell e s on uesday, 19
y J
,

D i scount ed t oda t h e not e Of H S t eele Co dat ed S ept 8, 1 9

Jm My
. . . .
,

f or 2 mont h s mount $2 00 indo r sed by Proceed s $ 1 98

J
, a , a es ers .
, ,

c r ed i t ed t o t h e account o f . H S t eele
. CO .

P R OOF - B OOK CL E R K

33 Th e p oo book Cl e k r f
ank s l a st among t h e b ook r r
r r
-
.

k eepe s O f a b ank and a st ep abo v e t h e b ank messenge , w hi c h

i s t h e posi t i on u su a lly fi ll ed by t h e begi nne r i n t h e b anki ng

bu si nes s
h r l d i l m f th r rd
.

Th e p r o o f b o o k i s a s eet u e n co u ns or e eco

r
O f t h e c a sh t ansac t i ons f ll h ll r f h b k I i o a t e te e s o t e an t s a

r lbl b k d r W l ri
.

h b k
’

gen e a a anc e oo an s e v es as t e an s o n c ea ng

h f h r d i rib i f h i m h dl d h d I
-

ou se or t e e st ut on o t e te s an e eac ay t
lf h r b k d fr m h
.

b l a anc es i i d lln t se b l an a ot e oo s a re a ance o t e

fi gur f r i h d b i A i r l d ri g h d y ll
e s u n s e y t t nt e va s u n t e a u su a y
rl h i m f h ri ll r h pr f
,
.

h ou y, t e te s o t e va ou s te e s a re sent to t e oo

b k oo h r
w y e e r d i l
the m h i h r
a r e ent e e n co u n s s ow ng t e t ans

r d i Fi 36 hi h h h h
,

i
ac t o n s O i h i ll eac as u st at e n g w c s ow s ow t e

rk f S p mb r 8 h dl d b h pr f b k l rk
, .
,

wo O e te e w as an e y t e oo -
oo C e .

34 A h i m s r i d b h pr f b k l rk h
t e te s a re ec e v e y t e oo oo c e e

r r
-
.

C h kec p s u h d i k
eac h l l h k
ep os p l
t t ic et to see t at a c ec s are ope y
li d h
st e h f
t i at i trr e d h h h k i pr p
oot ng s co ect , an t at eac C ec s o

rl i d r d If f d b rr h h m i
,

e y n o se oun to e co ect , t e cas a ou nt s

r d i h l m f h r i i g ll r d h d p i
.

ent e e n t e co u n or t e ec e v n te e an t e e os t
r di id d h h k h
,

ti kc i
et h l d
s t h
en p ac e on t e c e t s e an t e c ec s on t e

d bie id
t f h d ri b i
s e o t A d f r
e im d ri g
i st ut ng ca se t if e ent t es u n

h d y h p r f b k l rk d di g m h i
.

t e a t e l oo oo h c e t ota s on an a n ac ne t e

d r di i m f rlld r
-

d bie t an c e h i di i d l t d te s or t e n v ua an gene a e ge s

r h m i h pr r l m f h pr f b k
,

ent e s t e a ou nt s n t e op e co u ns o t e oo oo

r f r i h
-

sh eet , an d d h i m sen b kk s t e te s t o the oo eepe s or ent y n t e

l d r
e ge s Ch k d r h b k
ec s hi h h aw n
p i d on t e an at w c t ey a re a

rd r fb h i di d l l d r
.

are en t e e h on t e p oo —
ook s eet as n vi ua e ge

c ha r e
g ,s ad h
n dr h rb k
t os e rd rl
aw n on ot e an s a r e ent e e as gene a
 31 ACCO UN TI N G M E T HOD S OF BAN KS 31

l dg r h r g
e e P id h k d r
c a h rb k es a c ec s aw n on ot e a n s ar e ent e ed r
h l dg r g i hi h dr
.

i n t e h b k e e a a n st t e an s on w c aw n, and th e
l f
tot a h i l i d h f r m h i Fi g
or eac s st e on t e o s ow n n 3 7 f or
l ri g h x h g
.

c ea n -
ou se e c an es .

35 . At t h e c l ose o f t h e
day s b u si nes s t h e deb i t
’

r
and c e d i t c o u l mns of the

pr f b k h
oo oo s eet are

ll r i
-

tot a l d d
e h an eac te e s

f r ihd ih h
,

u n s e l w t t e t ot a
of hi d s r i ay s
’
t ansact ons ,

w ti h hi h h i w c s ac c ou nt

h l d gr
s ou Af r h
a ee te t es e
r d b
.

tota l s a re p ov e to e

co rr h pr f b k
ect , t e oo oo

l rk m k r p
-

c e a es ou t a eca

i l i h
t u at on as s ow n u n e d r
th h d f S
e ea m O t at e ent , a s
F I G 37.

sh ow n on h l f h d di i i f F ig 3 6
t e e t —
an v s on o and as t he e r is
q l d bi d r di m f r
.
,

al w ays an e ua e t an c e t a ount or each t ansac t i on,

d r di l f h pr f b k m r
'’

th d bi
e e t an c e t t ot a s o t e oo oo u st a g ee .

I ND I VI D U A L - L E D G E R B OOK K E E P E R

36 The i nd i v i d ual l edge rb oo rr

kkeepe ank s fi t h i n i mpo f r
hr
-
.

t ance among t h e e mp l oyes of a bank He h as c a ge o f t h e

r i hi h h i di id l h
.

l edge n w c t e n v ua C eck i ng acc ou nt s a re k ept and

co m i p
es r l nto i h d p i r he sona q i c ont ac t w t e os t o s w en any u est on

r rd i g
ega ri E ri i h l d r m d fr m
n ac c ou nt s a ses nt es n t e e ge a re a e o

d r d i m m r d m l ip h f rm hi h h
.

d b e it an c e f t e o an u s s, t e o s o w c av e

a lr d bea h y d h b kk een rm l y b s ow n, an t e oo eepe u st a wa s e on

th l r b
e a e h b k i l i bl f
t, h m
ecau se h t e an s a e or t e a ount w en an

i mh
te b p asd h l d reenH m h r f r i
o st e to t e e ge e u st t e e o e sc ru t

r f lly h i i rr l dr h
.

i
n z e each h k C ec ca e u to see t at t s co ec t y aw n, t at

i i pr
t s rl i d h i i d d h d h h r h
op e y s gn e t at t s not at e a ea t at t e e as

l r i r r h i h b p r p rl
, ,

b een no a t e at on or e a su e , t at t as een o e y
i d r
n o se d , an d m b t h at no st op -
a
p y ent not i c e has een g i v en .
32 ACCOUN TI NG M E T HOD S OF BAN KS § 3 1
37 Wh i k w at h s no n as t i h f rm f
e B o s t o n l ed g er s t e o O

l dg r i g r l Th i l dg r i
.

e e n f
ene ai di id l u se or n v ua acc ount s s e e s

rr g d i i di i i r h f i gpg h
.

a an e n s x v s ons ac os s eac t wo ac n a es, t us

p r i
ov d i g f nr r d i or
g kecor i n a E h
w ee f h
’
s i t ansac t ons ac O t e s x

i r l d i f r l m h d d Ch k i D il
.

di i i
v s ons s u e nt o ou co u ns ea e ec s n eta

Cr d i d B l r d i Fi g 38 hi h
,

D bi e t, e t, i ll
an a ance, as u st ate n w c

r h r h
.
,

sh w o f h
s one o i di i i t d p
e s x f v s ons an I i a a t o anot e n t s

l dg r h f d p i r r r h
.

e e tm e na es o g ll e os
y p i tod i l
s a re p ene a nt e n a a

b i l rd r w h
et ca o e h l dg r i m d en t e h
g p g
e e i h s a e, enou a es w t out

p r int ed m b i
na g dd
es d k e n r fa e to ta A ll e ca e o new ac cou nt s

h k dr g i rd pr l i h
.

c ec s aw n a a n st an ac c ou nt a r e ent e e se a at e y n t e

F I G 38 .

co u l mn und e r t h e h eadi ng Ch ec k s i n D et ai l and at th e C ose o f

l
b usi ness t h e t otal f or eac h ac c ou nt is ent e ed r i n t h e D eb i t
l mn
co u . A
ll of th e col umns are th en oot ed and i f no mi s f ,

t ake has b een mad e t h e t ot al o f t h e Ch eck s i n D et a i l c ol umn

r h A
- -

w i ll ag ee w i t t h e t otal O f t h e D ebi t c ol umn ll pages are

f f r h f
.

oot ed in the sa me wa y a h
tei h d b i w c t e e t oot i ngs a re

rri d h i d i i d l l dg r
,

co mb i ned and ca e to t e n v ua e e accou nt in t h e

r l l dg r d r di f i g r di
-

gene a e e an th e c e t oot n s are t eat e n t h e sa me

wa y
A f r ri l b l
.

c ose o f
’
te a t a a ance h as b een t ak en, at the l t h e d ay s

bu si ness or th e nex t mor ni ng , the b al anc e f or eac h acc ou nt is

34 ACCOUNTI N G M E T HO D S OF BAN KS § 3 1
fi ll d ie d h B l n an l m p r d f t h p g e Th i a ance c o u n ov e or eac a e s

r di h pr i
.

by dd i g h d y b l n
’
i d
s one a n t e a s c e t s to t e ev ou s a a c e,

d d i g h d y d bi
e uc t n d rryi g h m
t e b i d
a
’
s e t s, an ca n t e a ou nt O t a ne
to t h x B l
e ne l m Th t l f h b l l m
a anc e co u n e t ot a O t e a ance c o u n

i pr fr m h l f h Cr di d
.

s d i h
ov e m n t e sa e w ay o t e tot a s O t e e t an

D bi e l m t If
’

co u i f d bns rd r h an a c c ou nt s ou n to e ov e aw n, t e
ry i h B l
.

ent l m i m d i
n t e d i k h m
a anc e c o u n s a e n re n t e a ou nt

d fr m i
,

b i g d d
e n de f dd d
uc t e h l f h o ,
nst ea o a e t o, t e t ot a o t e

co u l mn .

38 . M any of t he r rb la ge an ks k nown a s t h e
u se w h at is
p o s t i n g -
m a ch ine m sy st e w h i c h i s a syst em i nv ol v i ng t h e
fld ri r
,

u se O f a l oose l ea e ge n st ead o f t h e B ost on l ed ge one

rri d r
-
,

sh eet bei ng u sed f or eac h acc ount c a e Th e e nt i es t o an

r
.

acc ou nt a re mad e by t h e post i ng mac hi ne, w hi c h I s ope at ed by

‘

t h e bookkeeper rb d b ei t h e r Th f rm
y h an or y l ri
e ec t c p o w e e o

l f l d ri h
.

o f h l t e oose eai Fi 3 9 Wh
e ge s s ow n n g en a n ac c ou nt

r r r
-
. .

is o p d h
ene m d d t d e naf h d i
e an i a i es s O t e epo s to s t ypew t t en
h
,

at h t p ef h toh h io h i t p e s i h eet , i w m hi c s t en ut n t e p ost ng ac ne

b m y f hi h h
ean s o ri w m d c t e ent e s a re a e

r i d fr m h r f b k l rk
.

A i m s te s a re ec e v e o t e p oo oo c e the
rd d h k db li d p r l
-

d epos i t s, o r c e i t s, an C ec s, o r e i t s, a re st e se a at e y
on p l i h fr
a n m w h si h h
eet s, do h c t ey ar e p os t e to t e ac cou nt

s h eet s,h l f hi h h
t e t ot a ld r s o h h w r fb k c s ou ag ee w it t e p oo oo

rd h
-

b l a anc e D i . epo s ts a re h i h
ent e e on t e ac c ou nt s eet n t e

l m h d d D , d h i d h k
epos i t s
i h l m
‘

co u n ea e an t e p a C ec s n t e Co u n

h d d Ch k i D
ea e l ec si hn ret ai Fi 39
a s sh ow n n t e i l lu st at i on, g
r
.
, ,

an d h d t m e h f
at e h d u st s owf o r eac ay s
’
t an sac t i on s o r a ny

acc ou nt Th b l n i f d i
e new h m a a f
ce s ou n n t e sa e w ay as or

l d r b dd i
.

B h m h h d d p i ne t
’
t he ost on e ge y a ng on t e ac e a
y s e osi t s

h pr i b l d d d h m f h u c t i ng t
’
to t e d ev ou s ay s a anc e an e e a ou nt O t e

p a i d c h ec ks .

39 Th e co rr ect ness Of t he bal anc es Of t he acc ount s is

r
.

p ov ed by t ak i ng O ff a stat e ment o f al l t h e ac c ou nt s on w h ich

t he r
r r e we e t an sac t i ons r
d u i ng t h e d ay Th e co u l mns are

r r fr m
.

l d
t ot a d e an t h e l e s se O f t h e b al a nc es i s su bt ac t e d o th e

g r r If
eat e t h e t ot al Of t h e new B al anc e col umn i s g r r eat e t h an
rr
.

t h at of t he O ld , t h e co ec t nes s O f th e ba l anc es i s s h ow n by
§ 31 A CCO U N TI N G M E T HO D S O F B A N KS 35

t h f
e h h m b hi h h d p i x d
act t at t e a ou n t y w c t e e os ts e cee th e
w ti hd r l i x l q l
aw a s h d i ff r
s e ac t b y h
e ua to t e e ence et w een t e old

an d B lnew l m if h
a anc e l f h
co u B l
ns ; t e t ota o t e new a anc e

co ul m i l hn h s f h
es s ld h d i ff r
t an t at b O t e O , t e e ence et w een

F I G 40.

t h e t otal s Of the O ld and new B al ance co ul mns i s exact l y

e q ual t o t h e amou nt s by w h i c h t h e w i t h d r aw al s exc eed t h e

d epos i t s .

B y t hi s syst e m st at e ment s of ac count s a re made onc e a

mont h or O f t ene r if r q e u e st ed , and a re r ec e i p t ed f or by cu s

F I G 41.

t ome rs ; Thi s syst e m obv i at es t h e nec ess i ty Of bal anc i ng p ass

b o ok s , w h i ch a re c on s i d e edr me rl e y as r ece i p t b ook s f or
d ep osi t s .

40 The d ut i es Of t he i nd i v i dual l edge rb oo kkeep e ri l

nc ud e

r r
-
.

t h e not i fi ca t i on o f d ep o s i t o s w h en t h e i ac cou nt s h av e been

36
’

ACCOUN TI N G M E T HO D S OF B AN KS § 31

ove rd r d h b l
a w n an t e a anc i ng o f p a s s bo ok s Of cu st o me r s of

t h b k
e an Th f rm d e o u se for not ii
y gn c ufst ome s o f ov e r r
dr f r d i Fg
.

a i i ll
ts s ust at e n i 40 , and a b al anc ed pass book i s

r d i Fi g 4 1
.

i ll u st at e n . .

41 Th e debi t ent r I es In t h e pass book a re mad e by t h e

r r r ri
.

ec ei v i ng t el l e as t h e d eposi t s a re mad e and th e c e di t ent es

a re mad e by t h e b ookkeepe r w h en t h e pas s b ook i s p r d

esente

r ri h rg m r
.

Th e c ed i t th e agai n st t he
’
ent es a re c a es c u st o e s

accou nt s i nc e t he pa ss book w as l ast bal anced and a re mad e

di r ect ly fr m h p id o t e a Ch ec ks r m m r d U ll
o r ot h e e o an a su a y,
r di i m m r rd
.

w h en t h e c e t te s a re nu l h
e ou s, on l i y t e t ot a s ent e e

i n th e p b k
assi h oo w t a not at on O i f h mb r f t h r h
e nu e o v ou c e s, t e
i t ems b i he ng s ow n on an a dd i m hi
ng li hi h m ac ne st w c aec o

hr
-

p ani cs t he canc e ed v ouc l e s .

T R A N S A CT I O N S

42 Th e f o ll ow i ng d eb i t s and c ed i t s r h av e b een asse mbl ed

ry r r r
.

f or ent on t h e i nd i v i d ual l edge as a esu lt of t h e t ans

ac t i ons i n t h e d i ff e r ent depa t ment s r on T uesd ay, S ept em
ber 8, l 9
D eposi t t i cket s rom f r ec ei v i ng t el l er
Luc B Fost ell e y .

W H Gi l let t e CO
Jm y
. . .

M
y
a es er s
.

F T Peabod
f
. .

D eposi t t i ck et rom not e t ell er

J f . H S t eel e
.

m y
CO .

an d r ec ei v i ng
Ch ecks p a i ng t el l er s

y
ro

Luc B F ost el l e
.

W . H Gill et te
. Co
W . H Gi ll et t e
. Co .

W H Gi llett e CO
Jm y
. . .

M
y
a es er s

F T Peabod
. .

I . H S t eel e
. CO .
§ 31 ACCOU N TI N G M E HO D S T OF B ANKS 37

G E NE R A L - L E D G E R B OOK K E E P E R

43 The gene al l edge bookkeepe r f r h i imp r r rr an ks ou t n o

hr f h
-
.

t a nc e among t h e emp l oyes O f a b ank H h e as C a ge o t e

r l b k m g hi h h r l l d r hi r
.

g ene a oo s, a on w c are t e gene a e ge cas e s

h k r gi r d r f r gi r a d ifi d h k r gi r
,

C ec e st e , a t e st e ,
n c ert e -
c ec e st e .

44 Th e i ll h rl
g e n e r a l l e d g e r c ont a ns a t e gene a account s

i mi l r i f rm h i di i d l l d r i
.

o f h b k I i
t e an t s s a n o to t e n v ua e ge n

r l di ff ri m i l i h f h h p g
.

g ene a u se, e ng l d
a n y n t e act t at t e a es a re ru e

i n two di i i h r h
v s ons ,
pp l f f r t r e u d h e a or esou ce ac count s a n t e

l r h l f f l i bi l i
ow e a or h i Fig 42 A h
a ty ac cou nt s , a s s ow n n t t e

rri d f r rd d h
. .

en d f h d o h t e b l ay t e new a anc es a re ca e o wa an t e
l m f
co u h h lf f h p g f
ns or eac d Th r
a r bl o t e a e oot e e esou c e a

f d b d di h m i h d b i l m
.

a n c es are oun y a ng t e a ount n t e e t co u n to

t h pr ie b l ev ous d h b r i
a anc e an h r di m t en su t ac t ng t e c e t a ou nt

f d by ddi g h r di m
.

T h l i bi l i y b l
e a t a anc es are ou n a n t e c e t a ou nt

an d d d i g h d bi
e u ct n m E r 6 m
t e he f r t a ount ve y ont s or O t ene
l d d rri d
.

t h i e m nco d xp e an e h
ense account s are C ose an ca e to t e

p r ofi d l t an oss account

Thi f rm f g r l l d r h h d i l di i f
- -
.

s o O ene a e ge s ow s t e a y c on t on o
ev e r y d i i h
accou nt , an rk f b f m m f h t s t e wo o ut a ew o ent s or t e

b kkoo r m k r r ip f h
eepe to a e a h ll d t ansc t O t e acc ount s w en c a e

f orb h yffi r
t f h b k
e o ce s O t e an .

45 Th e i
d raf t k i h i h r rd i
r eg i s t er s a b oo n w c a ec o s

f h dr f dr rr p d b k r
.

m d a e o t e a ts aw n on c o
p es on ent an s, a se a at e

a c c ou nt b i g k f e n h Th f rm f h d r f r gi r
ep t or eac e o o t e a t e st e

r d i F i g 43 A h d r f i d r ry i
.

i i ll
s u st at e n s eac a t s awn an ent s

h h d h dr f mb r i h f r
. .

m d a e to s ow t e at e, t e a t nu e n w ose av o

i i dr x h h rg d h p r
,

t s h m aw n, h t e a ount , t e e c ange c a es, an t e e son

or p pr uf h i h
ose i d r
or w A h lc f h dt w as aw n t t e C ose O t e ay s
’

Am
.

b i u s ness h t l m i
e l d h
ount m b i co u n s t ot a e t e a ount e ng

rri d h D T l l m d r di i k i m d
,

ca e to t e ay ot a co u n, an a c e t t c et s a e

rr p d b k i h i di i d l
.

ou t f h or t f h
e acc ou nt o t e co es on ent an n t e n v ua

l d r
e ge .

46 Th e cash ihi h i i ll r d
er s - ch ec k
’
r eg i s t er , w c s u st at e

h r
.

i Fi 44 i b k i i h ll h k i d wh
’
n g .
, s a oo n c a cas ie s C ec s s sue a re
 § 31 ACCO UNTI NG M E T HO D S OF BANKS 39

r rd d I h h d f i
ec o e . f h h ki m
t s ow s t e at e o ssue O eac c ec , t s nu
b h
er , m f h p y
t e na d h m A h
e o l ft e a ee, an t e a ount t t e c ose o

h d y h Am l m i f
.

b i u s nes s eac d d h a l t e ount c o u n s oot e an t e t ot a

r d i h D y T l l m d r di i k i m d
ent e e n t e a ot a co u n an a c e t t c et

rry h m h C hi r
s a e
’
ou t to ca t
i h i di
e a ount to t e as e s acc ount n t e n
v i d l l dg r
ua Th l l m i f
e h e ry f h d e ast co u n s or t e ent t at e on
w hi h h h k i p id
.
o e

c t e C ec s a .

47 Th i ll r d i Fi g 4 5
e c er t i f i e d - c h ec k r eg i s t er , ust ate n
hi h r r d i m d f ll r i fi d h k
.
.
,

i s b k i
a oo n w c a ec o s a e O a ce t e ec

ry f h d h m f
C s

i d
s s ue I h l m f h t as c o u ns or t e e nt o t e a te , t e na e o
h dr r h m f h pr h rd r i i dr
.

t e aw e , t e na e o t e e son t o w ose o e t s aw n,

F I G 44.

t h e name r ifi d f
Of t he p e son
ll h r i t w as ce t e or , as we as t e
a m h d
ount , t l d h d e id A ay h r i
t ot a an t e at e p a s eac ent y s

h r
, .

m d a d bi i k
e, a i m d e t t h m c et h s a e out to c a ge t e a ount to t e
a c c ou nt of h dr r A h l f h d b i h
t e aw e t t e c ose o t e ay s
’
u s ness t e
l m i f l rr i d
.
.

A c c ou nt c o u d d h n h D s loot e an t e t ot a ca e to t e ay t ot a
l m
co u f r hi h r di i k i m d
n, a t e w crr h a c e t t c et s a e out t o ca y t e

l m
t ot a a h f C r i fi d Ch k i
ou nt to t h i di id l
e account o e t e ec s nt e n ua

l dg r
v

e e .

48 Th g r l l d r b kk p r l h dl
e ene a mb i e ge oo ee e a so an es a nu e
'

f f rm im r hi h i
-
.

O h m
o s, f t e m ost p o t ant o w c s a re i t t an ce
s h i ll
e et r d i Fig 46 Thi i f rm d f l i i
u st at e n s s a o use or st ng

h k dr l l ri g
, . .

c ec s b k id h l i mi
a w n on f h l an s out s e t e ts o t e oca c ea n
40 ACCOUNTI NG M ETHO D S O F BANK S § 31

h d i
ou se an s sent w it h
t he i tems to a cor respon

dent bank f or c edi t r A

rb
.

of th e t e
“

ca on copy

mi t tance h s eet is mad e

on an un e d r h s eet w ich h
is w id r h e t an the t op
sh eet and cont ai ns an

e r lm f
xt a co u i g n o r not n

th m f h l
e na ie o t e ast n

d r r f
o se h i m or eac te
T h i i fil d
.

s hs e as t e

b k r rd Th
’
an s eco . e sec

on d l m co u h h n on t e s eet

i f s i dior i g h h r
n cat n w et e

a h k i b p
c ec s to e ro

t est ed ii id N not p a O

r
.

p i
ot esti d i d s n c at e on

th r mi e e h b tt ance s eet y
an X .

49 As a r u e,l i t ems
r
.

of $ 0
1 or unde are not

p r d
ot est e I m f te s o

m r h
.

o e $ 1
t 0 an p are ro

h
.

t est e d l un ess t ey ar e

sta mp d h r i b he ot e w se y t e

b k an b r h or h r
ea t e aut o

ity f o p r di a g i ece n n

d r r f
o se p r
or no ot est .

Th e l m t ot a li d a ount st e

on h r mi
t e e h t t ance s eet

i d bi d
s e h te to t e account

0 f h rr p d t e co es on ent

b k i
an h i di i d l
n t e n v ua

l d r by m
e ge f eans o a

d bie li
t Wh
s p en a

i mi l r f r mi
.

s a i not ce o e t
g 3 1 ACCOUNTI NG M E T HO D S O F BAN KS 41

i r
t a nc e i d b h E q i bl i
s ece v e d d i f r di
y t e u ta e t sen s an a v ce o c e t,
th f rm f hi h i h i Fig 47 Wh i m
e o o w c s s ow n n en te s ar e

r i d fr m h r b k d r di d
. .

e ce ve o ba not e an an ar e not to e c e te to an

a c count no r sent rr p d b k h r i i g b k to a co es on ent an ,

t e ece v n an

FI G 4 6
.

re mi t s t h e amount t o t h e send ing bank w it h a l ett e r O f adv i c e

o f t he fr
o m sh ow n i n Fi g 48 Th e ca bon . . r c opy o f t hi s l ette r

FI G 47.

o f ad v i ce, hh l m h d d R m rk i fi d
w hic as a c o u n ea e e a s, s le as t he

b an k r rd
’
s ec o

h r i d fr m h r b k
.

Wh h ken c ec s t at a re ec e v e o a not e an a r e not

p a id h tr r d h di b k
ey a r e r ih
et u ne to t e sen ng an t oget h e w t a

r f d i f h f rm
,

l e tt e o a v ce oFi 22 t e o sh ow n in g
. .
42 ACCOUN TI N G M E T HO D S OF B AN KS 5 3 1

TH E CL E A R I N G H O US E

50 O r g a n i z a t i on —
A l
C ea ri g h
n ou se is rgan o ani z at ion

f rm d b s i mp r
.

o e y l ocal bank s i n c i t i es o f an
y b usi ne s o t ance f or

t h e pu rp ose o f sat i s f r i ly
act o eff ect i ng t he e xc h ange o f c hec ks
b et w een t hm e and a so o f enab
l l i ng t h em t o t ak e uni ted act i on
on any matte r aff ect

i ng t h ir i r
e nt e est s

r i i
.

The o gan z at on is
co mposed of a rep

r esent at i v e of eac h

membe r b a nk and

r
Op e at es u nd e r a con

st it ut i on a nd by l aw s
r r
-
.

I ts offi ce s ar e a p esi

d ent , a v ic e p r es i dent ,

r r
-

a sec et a y and a

r
,

manage , who ar e
FI G 49
Ch osen annua lly The
.

r r r r
.

manage has Cha ge of t h e d ai ly out i ne busi ness of the l

C ea

i ng h ouse, and the a ssoc i at i on meet s at t he Cal l o f t he p r esi dent

§ 31 A CCOUN TI N G M E T H O D S OF BAN KS
t o p ass on ll q i a ff i g h p li f h
u est ons arg ec t n t e o cy O t e o a ni zat i on

l ri g h rl
.

Th e O ffi f h
ce o i t lly l
e C ea d i n ou se s usua ocat e n a cent a

b ank b u i ld i ng .

51 P r ep a r a t i on r r f or Cl ea r i n g — E ac h bank p epa es
l r b fir m ki f ll h k r
. .

f o r C ea i ng li y st a ng a st O a c ec s f or t h e Cl ea i ng
h ou se an d h ri h l m t en ent e h pr f b k ng t e t ot a a ount on t e oo oo

r di
-

s h eeth i s F 36
ow n Th h k n h ig e C ec s ar e t en asso te nt o

r f h ri m mb r f h l ri g h f r
. .

g oup s or t e va ou s e e s o t e c ea n ou se, a te
w hi h li i m d f h i m f h d h t l
c a st s a e o t e te s or eac an t e to a s a sc er

i d
t a ne Th l he se r d i h l ri g h
t ot a s a re t en ent e e n t e c ea n ouse

d h Cl m f
-
.

e x h c liangeh i Fi g 3 7
st s ow n dn Th an t e o u n oot e e

r ih h m rd
,
. .
~

t ot al f h o h tli me ex c ange st u st ag ee w t t e a ount ent e e

on h pr f b k h
t e oo h l oo h s l ri g h
eet a s t e t ota sent to t e C ea n ou se,

f d r d pl i ddi g
-

an d h w h men t ese a ou nt s a r e oun to ag ee, a u cat e a n

m hi ac li i m d f h i m
ne st s d h a l f e o hb k t e te s an t e t ot a or eac an

O f h tl ri h e c ea Th ri i l py i
ng ou se h l ri g e o g na co s sent to t e c ea n

rb py i k p h b k
.

i h h
’
h o u se w t h k d h t e c ec s a n t e ca on co s e t as t e an s

r rd Th h f h b k h mp d i h h
eco e C eck s o r eac an are t en sta e w t t e
mb r f
.

na m de an nu di g b k e ll O h d t he d sen n an as we as t e at e an

l d i
a r e enc ose p f h d i f r b
n env el o es k g h r i h or t e f e ent an s t o et e w t
t h li
e f i m f
st o h Th te l p
s f or h b keac e env e o es O eac an ar e

r i d i h h b k m d mb r
.

p nte w t t e an ll s na
p e an nu e as we as a s ace

ri h m f h b k i h h i h x h g i
,

f or ent e ng t e na e o t e an w t w c e c an e s

m d a d e an h m f h
al so x h t e a h i Fig 49
ount O t e e c ange, as s ow n n . .

Th m
e a hount on f e h b k mt b
e env elop eh m or ac an u st e t e sa e

as h t e m a r d h l ri h
ount ent e e x h g li on t e c ea ng -
ou se e c an e st

a ga i nst t h at b ank .

52 . Cl ea r i n g O p e r a t i on s Cl ea i ngs are mad e

.
— r eac h
b u s i ness d ay at ex act l y 1 2 O c l ock , noon Th e envel opes
’
con

ri g h by b k
.

t a i n i ng t h e ex ch anges are t aken t o t h e c eal n ou se an

m r
e s sen
g d b k i fi d f h
e s, anf i l r f i m gar an s ne or t e a u e o ts es sen e

to r rm l f
app ea rr r i x h g l i
p o t
p y o r or any e o in ts e c an e st

r f h b k d l i r h dd i m h i
.

Th m e essenge o eac an e ve s t e a ng ac ne

r f h l ri
-

li f h i m
st s O f x h t e h m te s o e c ange to t e anage O t e C ea ng

h h
ou s e , r h m f w o b k
ent e s h rpr t e a ou nt or eac h an In t e p o e

l m
co u h l ri h
n on t h h e c ead h l ng -
ou se ex c ange s eet , an t e env e op es
§ 31 A CC O U N TI N G M E T HO D S O F B A N K S 4 5

i i g h
c ont a n n m h x h g d w i h h ri
t e i te s a re t en e c an e t t e va ou s

m esseng r f h e s b y h h
or tr b k ose sent t e ot e an s

Th f r m f h l ri g h x h g h
.

e o o t e c eai h i n ou se e c an e s eet s S ow n n

li d r
-

F i g 50 O hi h h b k n t s s heet , h t e an s a re st e ac oss t e s eet

h l f h d rd i g h i r l r i g
. .

an d d ow n l m
t e e t an co u n acco n to t e c ea n

mb r Th m l ri g pr h
-

h ou se nu ef h e a d b ou nt O t e c ea n s esent e y eac

h r r
.

o f h b k t e g i an f h
s a h b k i
a nst eac d i h o t e ot e an s s ent e e n t e

co ul m d r hn un e m f h b k g i t e na hi h i i p e o t e an a a nst w c t s re

s ent ed d pp i an h m o f h b k pr os i g i
t e t e na F e o t e an esent n t or

l ri g h k f h H r f rd N i
.

e x mpl a h e, t e c ea n l B k
c ec s O t e a t o at ona an

w hi h i NO 1 r r h
,

c g si h F m d M a i
a nst B k t e a e s an ec an c s an

w hi h i N r di h l m d r h h d
.
, ,

c 2 s ld b O w ou e ent e e n t e co u n un e t e ea

i g F rm r d M h i
.
,

n a e s an d i h p p a pp
ec i h
an c s an n t e to s ce o os te t e
na m f h H e o f rd N i l Th m
t e art o f h H r f rd at ona e a ount O t e a t o
l E x h g whi h i N 3
.

N i at onal g i h N i a a nst t e at onald c an e, c s o w ou

er d h fir d r h
.
,

l b
a so e ent li be i hon t l m e st ne, ut n t e co u n un e t e

h di g N i l E x h g d
ea n at ona r h pg c an ll e, an so on ac oss t e a e f or a

t h b k e f h
an s o l ri g h i i
t e g i
c ea w h i h
n h ouse assoc at on a a nst c t e

H r f rd N i l pr l ri g l ri g
-

a t o at ona Th f ll
esent s c ea n s e c ea n s O a

h b k li d i h m y
.

t h e ot er an s a re st e n t e sa e wa .

53 Wh h m f h
en l ri g h
t e ba li d
ou nt s o t e c ea n s av e een st e

l d r
.

t h ey a re h p g f
t ota e ah b k ac oss d h m t e a e or e c an an t e a ount

i r di h l m h d dT lS
s ent e e n t e co u Cl r i g H n ea e ot a ent to ea n ou se

E h f h l m i h f d d h m f h
.

ac o t e co u ns s t en oot e an t e a ou nt o r eac

b k i
an r d h l r i d fr m h l ri g h
s ent e e as t e t ota ec e v e o t e c ea n ou se

If h l m f h k l ri g h
.

t e t ota a h ount o by C ec s sent to t e c ea n ou se any

one o f h b k x d h
t e anl m s er i d g h c ee s t e t ot a a ount ece v e a a I nst t at
b k h
an h l ri g h
t en t h b k d h m
e c ea n ou se ow es t at an an t e a ount

n r d i r di l m pp i h m f h b k
,

i s e te eh n t e c e t co u n o os t e t e na e o t e an

If h l m f h k l ri g h
.

t e t ot a a h ou nt o by h
C ec s sent to t e c ea n ou se t e

b k i l
an h h m r i d gi h b k h
s ess t an t e a ount ece v e a a nst t at an t en
l ri g h rdi
,

t h b k e an h ow es d h t m e c ea i n ou se an t e a ount s ent e e n

t h d bie l m
e A t h r m
co u b n q l d bi f s t r e e u st e an e ua e t or ev e y
r di h d b i d r d i l m f h l r i g h
.

c e t, t e e t an c e t co u ns o t e c ea n ou se

x h g h
-

e c an e S m b l eet u st a ance .

54 B l l d h l ri g h
a ances a r e sett e d p id f at t e c ea n ouse an a or

rr y l h r i rr g d f Th d b r b k
.

i n cu enc un es s ot e w se a an e or . e e to an s
 A CCOUN TI NG M E T HO D S O F BANKS
p y
a t he c eal ri g h n hdyb ouse eac d a et w een an P M
S rd y h p m
.
,
.

ex c ep t on at u a i m d b
, w 11 en ay ent s a e e tw ee n :1 5 a nd

FI G 51 .

A M and t h e c l ea i ng r h ou se p y
a s t he c r di r b
e to an ks
rd
. .
,

b et w een and ex c ept on S at u ay, w h en payment i s

made betw een a nd A M
r ri g h
. .

Wh en a bank pays t h e c lea i ng h ou se t h e c l ea n ou se

r fr
,

i ssues a ece i pt O f t h e o m sh ow n i n F ig 5 1 and w h en t h e

l ri h r
.
,

c ea ng b k
ouse p y
a s a an ~t h e bank i ssues a ece i pt of th e
f rm h i Fi 52
,

o s ow n n g
E rr r i r rl
. .

o s h n ex c anges, or c h ec ks n t
p good or i mp ope y
dr aw n i d r d
or djn o se ,
are a u s t ed di r ec t ly by t h e bank s con

HARTFO RD C LEARI NG HO US E

Recei ved from HART FORD CLE ARI NG HO US E

t hi s d ay .

F I G 52 .

r
ce ned be fr
o e 2 o c l oc
’
k eac h day ex c ept on S at u rd ay, w h en

j fr
,

a d u st ment i s made b e o e 1 1 : 30 A . M .
§ 31 A CCOUN TI NG M E T HOD S OF B ANKS 47

BAN K S TA T E MENT

5 5, At ce r t a i n t i mes r r
d u i ng t h e yea t h e U ni t ed S t at es
Compt r ll r
o e ca ll s on eac h nat i onal b ank f or a st at ement o f i t s

C O ND E N S E D ST A T E ME NT

COMP T R OL L E R S ’
CA L L , MA Y 1 0 , 1 9

RE S OU RCE S
Cas h on H and a nd in B ank s
L I m
oans and nv est ent s

r m S ri
.

U i d S
n te G t at es ov e n ent ec u t i es
D F r m Tr
ue r r fU i dS
o easu e O n te t at es
B k B i l di
an d O h r R l E
u ng an t e ea st at e 68
m r Li b i l i U d r L r r di
.

C et t e s O f C
’
u st o e s a ty n e e t
O rd r f
.

ve a ts
Oh rAt N
e i Ab s set s ot n ov e

L I A B I L I TI E S

Capi tal
S u pl usr
U ndi v i d ed P fi
ro ts
R ese r ve f or I r
nt e est

Ci r l
cu at i on

D i v i d ends U npai d
L r
ett e s o f C ed i t r
Di scount s and R ed i sc ou nt s Wi t h Federal Re
r se v e B ank
D eposi t s

F I G 53
.

r r
esou c es and l i bili i a t es o n a spec i fi ed d at e . Thi s is f r ihd
u n s e

i d
n ilet ad d
an a c on ensed st at e ment a s s h ow n i n Fi g 53 is
h r
, .
,

p b l
u i d
s i h e n t e new spape s .

56 Th r r e esou c es O f a b ank w h i c h ar e th e c as h and the

ri i d r p r r
.
,

sec u t e s an p o e ty t h at c an be c o nv e t ed i nt o ca sh , a re

l i st ed i n t h ese st at ement s und e r e i gh t h ead s, as f o l l ow s

48 A CCO UN TI NG M E T HOD S OF B A NK S § 31

1 Cash on H and and in B ank s w hi c h consi st s O f cas hi n

h rb
. ,

t he v au lt and a mount s on d eposi t w i t ot h e an ks

L I
.

2 o a ns ment s w h i c h are d i scounted not es

a nd nvest

r rm i r r r
.
, ,

nv est ment s comme c i a l pape and bond s O t h e

'

sh o t t e

r
-
, ,

t h an U ni t ed S ta t es gov e nment bond s

r h h
.

3 U nit ed S t at es Gov e nment S ecu ri t i es w ic are U ni t ed

r r r ifi d Lib r
.
,

S t at es t easu f i d b d
y not es , c e t ca t es O n e t e ne ss , a n e ty
L b d
oan on s

F r m Tr rr f h Ui dS hi h
.

4 D ue o easu e o t e n te t at es, w c con

r rrf dm
.

i
s st s o f m h U i d S
oney sent to t e n te ta t es t ea su e or re e p
t i on d f d
an h m f 5
un s f h
to t e p i l k
a ount O p e r c ent O t e ca ta st oc

f h b k h ld b r rr
.

o t e an h U i d S e y td mp e n te t at es t easu e as a r e e

i
t on f d un

5 B k B il di g d O h r R l E hi h i h
.

an u n an t e ea st at e, w c s t e

rri d
.

a m ount ca b k f h b k e h l
on t h e f i oo s o t e an as t e va ue o ts
b k b i di
an ud h r r l
l ng an ot e ea est at e

m r L b il i U d r L r f Cr di h i h
.

’
6 C ust o e s ia ty n e et t e s o e t, w c

r fid h
.

i
c ons st s o f h cas k d b d h ld
ce ti e C eck s , no t es, st oc s , an on s e

r f r di d r l r h k i d
,

a s s ec uri f l ty or et t e s O c e t an t av e e
’
s c ec s s su e to
c u st om r e s

O rd r f m r
.

7 vehi h bl i i a f t s, w f h c ar e o gat ons O c ust o e s o t e

rd r f
.

b k f
an o r ov e a ts

Oh r A d r
.

8 t i h i l d
e ll li d
sset s, wh c nc u e a asset s not st e un e

h pr di g h d
.

t e ece n ea s .

57 Th e l i ab i li t i es of a bank w h i ch a re t he mount s t he
a

r r
.
,

b ank ow es t o st ock h ol d e me s bank s

s , c ust o and t h e gov em

r
, ,

ment are l i st ed in t he bank st at ement und e ni ne h ead s, as

f
,

oll ow s
1 Cap i t al w i ch i s t h e h a mount pai d i nto t h e bank by t he
r
.
,

st oc kh ol d er s and u sed as t h e w o k i ng c ap ital

r r h ld
.

2 .S u pl u s w h i ch i s ea ni ngs O f t he b ank
, e on d epos i t or

i nv est ed
Pr fi Whi h ri
.

3 . U nd i v i d ed o t s, c c onsi st s O f ea n ngs set asi de

f h
or m f d b
t e p ayf b ent O a ny e ts O a an k
r f I r hi h
.

4 R ese v e or nt e est , w c consi st s O f a fu nd set a si de

fr m di i d d pr fi p i r
.
‘

o un v e o t s to ay nt e est on money on deposi t .

§ 31 A CCO UN T I N G M E TH O D S O F B A N K S 4 9

5 Ci r l i hi h i f h i l b k
cu at on, w c cons st s O t e nat ona an not es

ir l i d w hi h m y b q l h b k
.

f h b k i
’
o t e an n c cu at on an c a e e ua to t e an s

ca p i l ta
D i i d d U p id w hi h
.

6 v i f m
en s d k
n a c cons st s o a ount s ue stoc

h ld r w h di i d d h k h r
.
,

o e s b
ose p dvf en c ec s av e not een esent e or

p m
ay ent :

7 L r f Cr d i whi h i f f d d p i d by
et t e s o e t, c cons st s o un s e os te
m r r l r f r di r l r h k i d
.

’
cust o e s t o cov e ett e s o c e t or t ave e s c ec s s sue

by h b kt e an

Wi h h F d r l R r
.

8 Di d R di scount s an e scount s t t e e e a ese ve

B k w hi h i h d r di
.

an m f h di
c s t e a ount O t e scount s an e scount s

h ld by h F d r l R r B k g i h b k
,

e t e e e a ese ve an a a nst t e an

whi h i h
.

9 D p i
. h
e os m f m yt s, d p i w i c s t e a ount o one on e os t t
t he bank .

BANK EXA M I N AT I ON

58 A ll xami ned and c ecked up b y

nat i ona l b ank s a re e h
r r r r
.

bank exami ne s und e t h e d i ect c ont ol o f t he Uni t ed S tat es

g o v e r nme nt Th e g ov e nm ent h a s b l oc k ed off t he s tat es i r
nt o

r r r r
.

di st i c t s and each d i st i ct has a numbe O f expe t accountant s

r r
,

and b oo kk eepe s w ho c onduct exami nat i ons o f ev e y nat i onal

bank i n a d i st i ct at l east t w i ce eac yea r h r

r r h h h
.

S ta t e bank s a re u nde t he c ont ol o f t he state i n w i c t ey

a re l oca t ed and are ex ami ned at l east t w i ce a
ye a by e x pe t s r r
w ho a re empl oyed by t h e stat e The capi tal of eac stat e i s h
h q r r r r r
.

t h e ead ua t e s o f t he ex ami ne s and t h e epo t s o f t h e c on

h
d i t i on O f eac st at e b ank are fi l ed w i t t he stat e aut o it i es at h hr
h
t h e ca p i t ol w i l e t h e epo t s on nat i onal bank s are fi l ed i n r r
r
,

Wash i ngt on D i st i ct o f Col umbia

h r r
, .

S ome b ank s al so conduct t ei ow n p i vate ex ami nat i ons

hr h r
,

w h i l e ot e s ave exami nat i ons conduct ed b y p i vate aud i t i ng

comp ani es w i c h h
i s d one usuall y t w i ce a yea ese ex ami r Th
h r r r
.
,

nat i on s w et he by nat i onal stat e o r p i v at e exami ne s are

, , , ,

c ond u c t ed al ong t h e same l i nes and t h e same syst em i s al w a s

y
h
,

emp l oyed N O not i ce i s gi ven t o any bank w en t h e ex ami

.

nat i on s a re t o be c ond uct ed

r
.

Th e ex ami nat ion of a bank u sually st a t s a f ew mI nutes

a f r
te t h e bank s c l osi ng t i me w en t h e payi ng and ecei v i ng
’
, h r
I L T 234 — 5
 ACCOUNTI NG M E T HOD S OF B AN KS
t ell e s r are about t o count up cash and st i k e r a dai ly balance
Th r f r x mi r k i mm di
.

ee or ou e a f l
ne s t a e e at e c h a rge O a l the c a sh

i h
n t e r t elle sh
’
d
cages , c ou nt h d il b l t e ca sh , an st ri k e t e a y a anc e

f or h t e tell r hi h m e s, r i h th l r b l h
w c u st ag ee w t e t e le s
’
a ance s ow n

b y th pr f b k e Th
oo l r m oo i h ir r p e i
t e le s u st st ay n t e es ect ve

x mi r h i r h d ri b l
.

c ages u nt il h t e e a ne s count t e c as an st ke a a ance

I l r r b k
.

n a ge id h
an ibi l i
s, so a s f h gi g to av o t e p os s ty o c an n

cas h b y ll r one h r h x mi r
te e to ll
anot r e t e e a ne s u su a y st a t at

b h ll r r r
,

d f h f d k d h
’
ot en s o t e r ow o te e c a es an wo t ow a t
g s e

mi d d l ge ca eT h l m f h e ll r
t ot a h i a d ount O eac te e
’
s cas s not e

h d f r h hi h l i
.

on t h x mi i
e e a nat o n s eet , an a te t e cas n t e v au t s

cou nt e d h f l
t e t ot al o hm r ih h m a l c as u st ag ee w t t e a ou nt

rri d h r l l dg r d r h h d i g f h
,

ca e on t e gen e a e e un e t e ea n o cas on

h d Th x
an i e ne h r t f
st ep r di s t o t ak e c a ge o the c e t , or not e ,
d p r m
.

e a t A entdd i g m h i l i i i mm di l
n a n k ff
ac ne st s e at e y t a en O

r mi r h r f h l r l
-
.

o f h t e p o d sso y not es an anot e o t e c ol at e a not es

Th m r ih
.

ese a h h k d b k
ount s ar e t d m en c ec e ac an ust ag ee w t
t h e am h rg d
ount c h a d
e rm up aga i n st
h t e not e ep a t ent on t e

g r
ene a l l d g r A ll e e h r f ll r i i
not es are t d b en ca e u y sc ut n z e y
x mi r i r g r d f rm i g r d i d r m
.

t h e e a ne s n e a to o s nat u e , an n o se ent s

d m m r d m i m d ll r l h l d
,

O f h
eac not e an f ll e o an u s a e o a co at e a e

a s secu ri y h ll r l l t on t Th
e co l at e a f ll oa n not es e v a ue O a t he
ll r l rri d i l r h k d h h m rk
.

co at e a ca e s at e c ec e up to see t at t e a et

l
v a ue o f h ri i i ffi i
t e secu rr h l
t es s su c ent to w a ant t e oan

Th p r f b k i h kd p x d h m
.

e oo oo s c ec f h e u ne t , an t e a ount O t e

e x hc anges, an d f r i d rr d i m h ko e gn an co espon ent te s or c ec s, a re

d p
t ot al e d u mp r d i h h m
an co rri d h r f
a e w t t e a ou nt ca e on t e p oo
b k Th
oo r l pr f f pr f b k i h h d
e gene a oo o th e oo oo s t en c ecke up

B l d r
. .

Th x mi i
e e a f h i di i d l
nat on O t e n d v ua or ost on , e ge s an gen

rlld r r d r Th b k r m
,

e a e ge sxa re ne k i t ta en n o e e ook eepe s us t

h ir b k h
.

b l a ance t e f h b l oo s f h d as o t e a ance o t e ate t at t he

e x mi r
a r h x mi i
ne s st a t t h b k
e e a r
nat on, as t ese oo s ar e gone ov e

a d ay or f r h d h h x mi i b i Th
tw o a te t e at e t at t e e a nat on eg ns e

h i di id l l d r
.

e x i
t ens ons o f h i eac ac c ount n t e n v ua e ge are gone

ov e r h f i f h p
t e oot ngs o ri fi d d h l d r i t e ages ar e v e e an eac e ge s

h kd d r b l
, ,

c ec e up an d e a ance

If h i g l dg r r h i m
.

t e sav n s k e e acc ou nt s a re ept sep a at e, t e te s

o f eac h accoun t are r u n O ff on sh eet s on t h e add ing mach i ne

§ 31 A C C O U N TI N G M E T HO D S O F B A N KS 5 1

an d h l
t e t ot a s mp r d i h h
a r e co rri d h g r l a e w t t ose c a e on t e ene a

l dg r Th
e e l f l l h d i ff r
e t ot a s od p r m af h b k
t e e ent e a t ent s O t e an

r rr
.

a r e co mp i l d d hi
e lm an g t i h h
s m t ot a i d u st a ee w t t e a ount ca e

on h g
t r l l dg r
e ene a e e

r l l dg r i h l b k f h b k b x m
.

Th g e ene a e e s t e ast oo o t e an to e e a

i d ne h h di g
; eac rri d i g
ea n r d h k d p Th
ca e s one ov e an c ec e u e

ri rd i g h i
.

tim f q i d
e e u re x mi b k
to e a ne a an va es acc o n to t e S ze

o f h b kt e Th
an rgd i d b k k b 3 dy
e av e a e s ze an ta es a out a s,

h i l h l rg r b k k f m1
-
.

w e t e a e 2 w k
an s t a e ro to ee s .
OPE R A T IN G O N THE NEWYO R K
STOC K E XC HA N GE
D E TA I L S O F B U Y I N G A N D SE LLI NG

E A R LY H I STO R Y OF E X CH A N G E S Y STE MS

1 I n t r o d u c t i on — rd r b i In o e to o ta n a c ea l r id ea O f t he
hrfr f h r i i
.

w hy and t h e w e e o e o t e o gan z at on k now n as t he N ew

r
Yo k S t oc k Ex h i i c r ange , t s nec essa y t o go b ac k i n h i st ory an d
r
t ace t h e l i f h
ev o ut on O x h t e e c ange .

2 B eg i nning s of th e E n g l i sh S t oc k E x ch a n g es .

rl i r rd f
.

One o f t h e ea k x h h dest ec o s O a st oc e c ange as suc a t es

r 1 600 h h I di C m
,

b k ac b h
t o a out t e yea w en t e E ast n a o p y
a n w as
rp r d d l r h H d B C m Th
,

i
’
nco o at e an at e t e u son s ay o n
p y
a e se

r k m i d h ir h r r r d d
, , .

co mp i an es we e st oc co p an es a n t e s a es we e t a e

i b
n a out t h l r r f 17 h e r A hi i m h
at t e p a t O th e t c ent u y t t s t e, t e

k m rk m b r i d di h
.

st oc a id h b et ay e sa to av e een uno gan z e an n t e

r 1 697 h li h P rl i m r m l d l h k i
,

yea t e E ng s a a ent p o u gat e a aw C ec ng

t h il
e ev ri i fr m l i i h ri i f h l
s a s ng o sp ec u at on n t e secu t es o t e a rge

nu mb r f e m O i h xi i n T h i
st ock c om l l p an es t en e st g s sa e aw a so

r id d f h l i i f h k b r k r
.

p ov e or t e cens ng o t e st oc o e s .

3 B eg innings of th e F r en c h S t oc k M a r k et —
Ai
r di d
. .

about t he sa me t i me t hat st oc k t a ng ev e opedli n E ngl and

r f r
,

a st oc k ma k et b egan t o unct on i i Q i n u nco mpoi x S t eet i n

Pa ri s . r
H e e as i n E ngland act v e
, ,
i rd t a i ng t ook place .

4 E a r l i es t P an i c G r ow i ng out Of t h e se ea r ly o pe a r
r f ri h r
-
. .

t i ons , a pe i od o f eve s l
sp ec u a t i on esu l t ed , and i n 1 7 20 t h e

§ 32
2 O P E ATI N G O N TH E
R gas

co ll ap se Of t he S out h S ea Co mpany i n E ngl and and t h e Mi s

r r r
, ,

s i ss ip p i Company i n F anc e cau sed t h e fi st g eat pani c

r
, ,

k now n to t h e st oc k ma k et .

5 F or m a t i on o f t h e L on d on S t oc k E x ch an g e. On
L f Th i
.

J uly 5 1 77 3 the o nd on S t ock E x c h ange w as ound ed s

r r
.
, ,

o gan i z at i on may be sai d to h av e grow n out o f th e ope at i ons O f

t he cu r b b r oker s —
t h at i s , r r
b oke s w h o met on t h e c u b st one r
i n Change All ey in L ond on .

6 B eg i n n i n g s of t h e S t oc k M ark et i n N ew Y or k
Al r i d f k b i d ll i r 1 800
. .

ong abou t t h e yea a p e o O s t oc uy ng an se ng

b i N
ega n Y r k I h i m rk
n h fir
ew of U i d n t s a et t e st i s su e o n te

rm b d l h r
.

S G
t at es ov e n h h f h U i d
ent on s , a ong w it t e s a es O t e n te

S B k
t at es d h B k f N r h Am ri
an an r i lt e an o o t e ca, we e act v e y
d l i
ea t n

f h br r r i i hi
.

Th l m i
e l u sua ee t ng p ac e o t e ok e s op e at ng n t s

m rk a r db
et w as nead r i W ll S r an d ol u t t onw oo t ee n a t eet , an

th km r
e st oc h i d i W ll S ra k et rb a s c ont nu e n a t eet o r nea y ev en

to t hi d h s h N Y rk
ay , k m r
so t d W l
at t e ew o st oc a k et an
“
al

S r t eet ,h r h or m b tlm m
e st eet ,
”
av e c o e to e a ost synony ous

te rm s

r m rdi b mb r
.

I M n f 1 792 ay O an ag ee ent w as ent e e nt o y a nu e

o f br k r h r b
o e s r d h w mmi i
e e f 1
y i t w a s ag ee t at a c o ss on O per

c ent f h O l f h ri i b h
t e sp ec ie ld h l d
v a ue o t e s ec u t es ou g t or so s ou

h r d Th i d m b r rd d h b i i f
.

b e c a ge s ate ay e ega e as t e eg nn ng O t he
r
.

S k x h
t oc i hiE c ange n t s c ou nt y .

7 F ou n d at i on of t h e N ew Y or k S t oc k Ex ch a n g e.

r r
.

I n t h e yea r 1 8 1 7 , t h e same o gani z at i on O f st oc k b oke rs

f r
ou nd ed i n 1 792 w as o gani z ed i nto a b od y t h en k no w n a s t he

N ew Yo k S toc kr E x c h ange B oa rd , a nd i n 1 82 7 t h i s o r gan

i z ati on mov ed i nto t h eM e rch ants E xch ange bu i l d i ng

r r r
.

I n 1 869 t h i s B oa rd and th e O pen B oa d O f B ok e s c on

s ol id at ed fr
o mi ng t h e N ew Yo k S t oc k E x c h ange as i t a opears r
i h i r
,

t od ay w t ts membe s .

8 G ov e r n m en t o f th e N ew Y ork S t ock E x ch a n g e.

r r r
.

T h e N ew Yo k S tock E x c h ange i s gov e ned by t h e G ov e ni ng

Commi tt ee mad e , up O f t h e Pr
es i d ent a nd t h e easu e , w h o Tr rr
§ 32 NEW YO R K S O CK T AN G E
E X CH

l
a r e e ec t ed a nnu a ll y and fr o ty ot h r m mb r
e f h e e s o t e E xch ange,
r r d l ifi d
,

w ho a r e e ect ed l f or t e ms
4 yea s an c ass e so t h at t en Of

r
,

a re el ect ed eac h yea A ny d ec i si on by t h i s c ommi t t ee i s fi nal

fr r h
. .

Th e o ty membe s o f t i s c ommi t t ee ar e so assi gned t h at c e r

t ai n Of t h em se r v e a so on l th e s u bc o mmi tt ees of t h e E x c h ange ,
such a s t he mmit t ees on a co rr ange ment a rbi r t a t i on, a d mi ssi ons
ri
, ,

fi nanc e, c ommi ss i ons law const i t ut i on , st oc k l i st l

c ea ng

ri i
, , ,

hou se, and secu t es .

9 M em b e r s h ip — A membe r hi
s p on the E x ch ange i s
T h i rm r l h br k r
. .

ca ll ed a s ea t h im h s te e at e s to t e t e w en eac o e

h B rd R m b
.

had i di d l
an i n vi ua i seat n t e oa oo u t now , ow ng t o

hi h r r b i rri d h b
,

th e g
-

p h e ss u e u s nes s ca e on, t e seat s av e een

b li h d
a o s e

mb r f
.

Th e nu h x h i l i mi d
e O seat s on t e E c ange s te to
and h m mb r m
eac b l d m mb r e b h b d
e u st e e ec t e to e e sh ip y t e o y
b f r
e o e m h he r f rr d h m hr h ay av e a s eat t ans e e to i t o ug p u r

chas n
i r r i l A m mb r f h x h
g ano t h e
’
s p i v ege s a e e o t e E c ange , a

br k r i r bl r i l d r r i di
.

o e s ans w e a d e to ce ta n a w s, an un e ce t a n con
t ions may be expell ed .

1 0 Va l u e of S ea t s A seat on the E x ch ange i s an

r ri f
. .

asset O f v a u e l ; i t s p i ce va es , O t en go i ng as h i gh as

as i n 1 909 To ow n a seat , a m an mu st not on ly h av e money

r
,
.

must b e
'

but h e of good b u s i nes s epu t at i on an d h av e no as so

ciat i ons t h at w ou l d r
b i ng di sc r die t upon t h e E x ch ange .

1 1 E x p u l s i on —
If f ou nd gu i tly O f
“

fr au d , any membe r
r
. .

may b e expell ed by a t w o t hi d s v ot e

r
-
.

Any memb e may l d be i n any l

a so be xpell ed
e i f he s h ou

way con nect ed w i t h

a ny o gan i z a t i on i n N ew Y o k d eal i ng i n r r
secu r r
i t i es si mi l a t o t h ose l i st ed on t h e N ew Y o k S t oc k r
E x h
c ange .

1 2 R ep r es en t a t i on —
A memb er may ep esent onl y r r
fl r r
. .

one fi rm on the oo Of the E xc h ange Any memb e i n N ew

r r hr i
.

Yo k mu st hav e a p l ac e Of b u s i ness t h e e w e e not ce s may

be sent and r ec eiv ed .
 O P ATI N G O N TH E
ER § 32

LI S TI N G OF S E CU R I T I E S

1 3 S i nc e th e t r ansact i on s on t h e E xch ange c onsi s t o f t he

ri i hm r
.

bu yi ng and se ll ing o f sec u t es, w h ic ay be ei t h e st oc ks or

bond s xplanat i on
e w i ll h r b e e e g i v en a s t o h ow eac h s ec u i t y r
r r
,

mi t ted f or
'

is ad t adi ng on t h e E x ch ange, si nc e onl y secu i t i es

h
t at h av e b een l i st ed on th e s tock l is t are deal t i n on th e
E xc h an e
g .

1 4 R eq u i r e m en t s f or L i s t i n g —
Be fr
o e sec u ri i t es c an

h
. .

b e l i st ed on th e st oc k l i st of t h e S t ock E x c h ange, t ey mu st b e
e xamined b y t he Commi tt ee on S t ock Li st

rd r h h C mmi id r S k Li
.

In o e to av e t e o t t ee on t oc st c ons e a

st ock f l i h or rm rm i st ng, mmi t e p o ot e u st f r i h hi

u n s t s co tt ee
i h
w t r i d W r i r ilr d
ce ta n at a ld e e t a a oa h f ll
t i gd
e o ow n at a w ou
b r q ir d
.
,

e e u e :

L i f h pr r oc at on o t e op e ty
ri i f h r r
.

D esc p t on o t e p ope ty
Am f h r r
.

ap o t e p ope ty .

N m f h m a e o t e co an
p y
f rg i h ri
.

D i
at e od b h o an z at on an y w a t au t o ty .

R out e

P ri f h r d ml d di r i
.

o t on o t e oa co p et e an n op e at o n

Pr d x i
.

opo se e t ens on
E q i pm
.

u ent .

10 Li b i l i i d a m t es an a s set s st at e ent

E r i
. .

11 . a n ngs .

12 S m f i d b d
t at e ent o n e te ne ss

N mb r f h r
. .

13 . u f i l k i e d d h O s a es O c ap ta st oc s su e an t e p ar

l
v a ue

A l i f fi r d d ir r
.

14 st O O f c e s an ec t o s

L i f h ffi f h m
. .

15 ocat on o t e O ce O t e co n
p y
a

L i f r f r fi d r i r i N Y r
. .

16 . ocat on o a t ans e O f c e an eg st r a n ew o k
C i ty

r r q ir d b h mmi
.

I n ev e h d y ca se i t e at a e u e y t e co t t ee c onta n
al h l t r d il r g rd i g h ri h i d i r d
e neces sa y et a s e a n t e secu t y t at t is es e

to h li d ave st e .
§ 3 2 N EW YO R K S O CK T E XCH A NG E
To su m t he mat te r up , t h e c o rp r o at ion h
w ose ri i s ec u t es a r e

about rigidly x mi d by h C mmi

t o be l i st ed i s e a ne t e o tt ee o n
S k Li b f r i
toc st ri i d h ir li i g ill b
e o e ts secu t es a n t e st n w e c on

sid d b
e re h G r i C mmi
y t Th i l r mmi
e ov e n ng o t t ee s at t e co tt ee
fr m h d pr id d a
.

mk i i
a es i i ts nv est gati l
on o t e at a ov e s to cap ta

r r l i bili i mb r f h r Thi
,

esou c es, a di
t es, nu e o s a es out st an ng, et c s

d h pr i b h
.

commi tt ee mmi
an h i t d e ev ou s co t t ee av ng ot p asse

f r bly p h
av o a ri y h
u ri y i h li d f
on t e sec u t t e secu t s t en st e or

r di g h E x h g
,

t a n on t e c an e .

1 5 V Si
al u e r i i bj
of L i st i n g —
nc e a secu ty s su ect to
h r f l r i b h S k E x h g hr h i
. .

suc ca e u sc ut ny y t e toc c an e t ou g ts
l i i g h l d dd f l i g f f i h d
.

d i es d
gn ammi
t e co t t ees , st n s ou a a ee n o a t an

secu r i y r g r di i l
t e a ng ts v a ue .

1 6 S p ec i a l R i g h ts of C om m i t t e e on S t oc k L i st
r
. .

Unde the r ul i ng of t h e E xc h ange , th e Commi t t ee on St oc k

Li st may pl ace on t h e l i st a ny na t i ona l st at e, or c i ty gov e n r
h r
,

ment s bonds ’
, w it out t he consent i ng ac t ion o f t h e G ov e ni ng
Commi t t ee .

1 7 L i s t ed and Un l i s t ed S e c u r i t i es P rev ious to

hr r ri i
-
. .

1 91 0 t e e we e two k i nd s Of secu t es dealt i n on t he

E xch ange, na mely l i st ed and u nli st ed Th e l i st ed sec u ri it es

j r
.
,

hav e u st b een xplai ned it i s only nec essa t st at e t h at

’

e so y o

ri i r h h
,

t he u nl i st ed sec u t es w e e t ose not av i ng been passed on

and sc u t i ni z ed r by t h C mmi
e o tt ee on S tock L i st and t h e G ov
r
e ni ng Commi ttee A h pr
t t e esent t im he li t e un st ed sec u ri it es

r Ex h g h b li h d
-
.

depa tment on t he c an e as been a o s e .

1 8 C l ea r i n g H ou s e an d E x - Cl ea r i n g H ou s e
A rd i r r
.

”
ng t o t h e c u st om i n t he st eet ,
“
S t oc k s. cco soone or

l r
ate k li d
a st oc h Ex m b st e h i ll d on t e c h ange ay e w at s ca e an

i k
act v e s t oc d h b i i anf i b t m el mi uy ng o r sel l ng o t eco es v o u nous

r i i ll b r f rr d h
.

Wh hi en di i t b m s c on t on eco es t ue, t w e e e e to t e

C mmi k Li m
'

o S tt ee d if h
on d id i
t oc i ll b st , an t ey so ec e t w ec o e

a Cl i Hear ng k d ll r d i h
ous e s toc ri ld an a t a es n t at sec u t y w ou
d hr r r
,

b l
e c ear e h h p ti f h C l
ou g i H f
t e o e at on O t e ea ng ou se or th e
N ewY rk S k E x h o S k t oc li d k c ange . t oc s not so st e ar e now n a s ,

E x Cl ear i ng H ous e s tocks

-
.
 O P E A TI N G O N
R TH E (53 2

OPE R A TOR S ON TH E E X CH A N G E

1 9 Cl a s s es of M em b e r s Th e memb e r s i n t he
f r
-
. .

E x ch ange a re d i v i d ed i nt o t h e o ll ow i ng g ou p s

P r i nci pals : membe A pr i nc i pa l is a r O f t h e E x c h an g e who

d oes no buyi ng or sell i ng f or h i msel b ut f one who e mpl oys
r r
,

a not h e b ok er t o b uy and sell f or h i m

Th rkr r
.

Tw o D ollar B r oker s : ese are b o e s w ho op e at e as

rkr rkr r
-

b o e s f or b mmi i
o e s an d c h a f $2 1 00
ge a co ss on O p e r

s har es o f k f st oc r 1 00 h r b h o r ev e y ld b h m s a es oug t or so y t e

Br k r A b 1 00 h r
.

F or e x m l a p h
e , sup po se t at f o e k uys s a es o st oc

for Br k r B h o e Br k r A ; t en ,ld h r B r k r B $2
o e w ou c a ge o e

co mmi i s s onf h i Ex
or d hi av ngrd r f him ec u t e s o e or

Th r
.

R m T d
oo ra ers : m h ese ar e h en w o a re p esent on t e

fl oo r O f h Ex h t e d b c ll
ange , a n ri i f h i r uy o r s e secu t es or t e ow n

acc ou nt Th rf i l l r h bi l
ey a r e p o es s ona s p ec u at o s , w o, e ng a w a ys
r h fl r r d
.

p esent on t e bl oo a re a f
e t o t ake ev e y a v ant age o an

ri i d k r fi
,

O p en ngi bu to d l y an se l s ecu t es a n ta e a p o t .

Sp i i ec a l s ts : S i li m p ec ah m k st s i l
ar e f en w o a e a sp ec a ty O

b i d ll i hr ri i i h l wh a r e u s u al
'

u y ng an se ng t w o or t ee sec u t es , c y
s ec u ri i f i m l
t es o an d h ir b i
nv est ent i c as s , an t e u s ness s to a

l rg x
a e e i h
t ent w t h r br k r ot e o e s .

20 mm Co Wh
i s s i on s br k r b
Ch a r g ed —
en a o e uy s or

m r h
. .

se ll s st ock f or a c u st o d mm ie f e is a llo w e a co i ss on O

( )a 1 00 h rp e r k h s l
a es on st oc $ 1 0 w it a p a r va u e u p to ;

( )
b p 1 00 h r er k i h s p l
a es on st oc fr m w t a ar v a u e o

$ 1 0 to $ 1 2 5 ;
( )c 1 00 h rp e r k i h s p l
a es on st oc f $ 1 2 5 w t a a r va ue o

o r ov e r ;
d
( ) A m i i m m nmm f
u co l l r i
I S S I on o on a t ansact ons

H r h dh m rb m mb r f x h
.

ow ev e s ou l t e c u st o e e a e e o the E c ange,

ri i l h h br r ld ll
,

1
an d a p nc pa t en t e oke if h w ou co ect 3 5 p e r c ent t e
ri ip l r i r i
.
,

na m e O f h t e p nc a we i e h g v en ; we e t not g v en, t en t he
br ok e r ld h r w ou c a f h m rk
ge pri
er c ent . o t e a et p ce .

A i l i
ny v o at on s Of mmi i l t h e co i h bl b s s on a w ar e p u n s a e y su s

p e n s i o n f fr m 1 5 r f h
or o to d f y ea s h ; or t e secon of ense t e

p ena lty is ex pu s i on l .
 N E W Y O RK
'

T
S O CK E X CH AN GE

TR A DI N G ON TH E E X CH A N G E

21 O p en i n g — Ou ev e ry b usi ne ss day t h e E xc h ange is

r rm
. .

op ened at A M and at A M sh a p t h e c ha i an

r
. . .
,
.

annou nc es t h e Op eni ng o f t h e ma k et ; buyi ng and se ll i ng h

t en

begi n rmi
Th e E x ch ange il e a ns open u nt P M on ev e r y
S rd
.
. .

b i d x h i l l k ’
u s ne ss ay e c ept at u ay, w en t c oses a t o c oc

noon Th i i h us 5h r t r id d f h i
s s een t at ou s a re p ov e or t e act v e

r i i S h l d br k r d b i
.

b i uy ng an d ll i f se ng O sec u t es ou a o e o u s nes s

h r i h r i h Ex h id b f r
.

w t i h a not e e t bl i l
e n t e c a nge or p u c y out s e, e o e

f r
,

1 0 00 : A M or fi a f $ 50 i l i d
te P M a ne o s ev e

r ll h h m rk i j h i rm
. . . . .
,

N at u a y w en t e d b h a et s u st opene y t e c a an

h r i gr d h bb b
,

t e e si eat no se a n d h b bb l i f i u u an t e a ng O v o c es to
b h r d br
e ea r ; r i h r d h r mp i
oke s a re unn ng e e an t e e att e t ng t o
ex ec i i h rd r h i h h
te t e o m l de s w rih A c av e acc u u at e ov e n g t s

ll r hi i i y r li l
.

one st an d i h s d
n t h e ga e y an w at c es t s act v t ev e y tt e
w hi l h ill e em w m r fr m h r d r d
see a an e e ge o t e c ow a ou n a p o st
an d m k a m ll p d
e a not e on a s d if h r h ld a a an t e spect at o s ou

ri f h pr d r h
,

b e cu d k h m
ou s an i as t e ld b
ean ng O t e oce u e e w ou e

i f rm d h
n o h m
e t at i g h dt e f an r i w as not n t e at a o a t ansac t on

j l d
u st c o se .

22 M a n n er I r ll b
of h l r
Trad i n g — n ow s , a a out t e a ge

r m h r h b i g d lli g i rri d h r
. .

oo w e e t e uy n an se n s ca e on, t e e are p ost s

r d d h p
e ec t e , an r rd d h m f r i
on t ese ost s a r e ec o e t e na es O sec u

i h
t es t at can b b h ld eh p l S
oug t o r so i i h at t at ac e o t s seen t at

fl r r
.

eac h kh i st oc p l as h h
t s ow n b i g ace onll t e oo , w e e uy n or se

ing t a esk pl ac e

Th r f r h ld br k r h rd r b 1 00 h r
.

e e o e, s ou a o e a v e an o e to uy s a es

o f U i d S n te l h m rk
t at es p r i h
st ee l d at h
t e a et c e, e w ou go to t e

U S S l d
t ee post , h m h an kh c r y outd b ow uc stoc e w ant e to u y,

d h ri h r r r r
. .

an t e p d ce p T h e h b
w ant e k d
to ay e ot e o e s ou n

h ir f ri ri f 1 0 54
.

a b ou t m k a e t e h Of e ngs, say one at t e p ce o

hr r d l d b rr d
,

anot e d at d h an so on, an t e t a e w ou e a ange

Th r ri n r x h d All h i m
.

e e are no w tt e c ont ac t s e c ange t at s ec es

r l r i i m l rd
.

“ ” “ ”
sa y t o c ose a t ansact on ld s a si p e wo t ak en or so

r br k r m k r r
.

Wh enev e a l o e p h h a m es l a sa e or a u c ase e e e y
m k a r
es an ent m l d h y i h
on a s m f h br k r a l pa ,
S ow ng t e na e O t e o e
 PE ATI NG O N TH E O R § 32

to w o h m h ld fr m h m h b h h e so or o ri l w o e oug t t e sec u ty, a ong

w ti h h pr i t e id d ki d f
ce p a k an h r i h h n h r o st oc t oget e w t t e c a

r f h bid f r A x m l i i i Fig 1 Th
,

act e O t e or O f e n e a p e s g v en n e

h r r rd d m B h 900 h r f U S S l
. . .

d at a a s t e e e co e ea n s , ou g t, s a es O t ee
h r fr I br k r
. .

at $ 1 4 9§ m
a s H a e, S m i h d C
o d h t an o an t e o e
’
s

h h x d h rd r
. . .
,

i i i l
n t a s ar e s ig d ne t o S ow w o e ec ut e t e o e .

23 Ch a r a c t er of U d r h l
Bid s an d O f f er s n e t e aw s

Y rk S k E x h d f r m
-
. .

o f h N
t e ew o b d toc b m dc ange, i s an Of e s ay e a e

on t he f ll i
o ow ng t e rm s

( ) a F C h or T h r
as i y : b d l i r d
e sec u h d f t to e e ve e on t e ay o

l d p m m d f i ent t
'

sa e a n ay a e or

r r
.

( )
b R l Wegu ar T h i b
ay : d l i d h
e secu x ty t o e e ve e on t e ne t
b i u s ness d d p m ay an r i d hrfr ay ent ec e v e t e e o

( ) c A 3 D t T h r i ays : b d li r d e sec u h hi rd ty t o e e ve e on t e t
d ay a f r m ki h r
te a ng t e c ont act

ri t b d l i bl
.

( )
d
’
B S l
’
uyer s or Op i S e l er s t ons : ec u y t o e e v era e

not soone r h h f rh d f r h t an t e ou tr l r ay a te t e c ont act , no r ate

FI G 1 .

h
t an 60 days On t h ese r
t ansact i ons w ri t t en r
cont ac t s a re

h r r r r fr m h
.

exc anged w hi ch d aw i nt e est at an a

g d ee ate o t e
r ill f d li r ri
,

d at e Of the c ont act t t he d at e O e f ve

y o th e sec u ty
rr i r
.

”
Some d o nt e est , and a re k now n as bei n “
not ca y g fi at

r r r ll r h
.

U nd e
’
t h ese S el l e ’
B uye s or s Opt i ons t h e se e h as t e

ri h d li r r ri h
,

g t t o mak e a e ve y or t h e buye h a s a g t t o d emand

r h
,

d el iv e y at any t i me w i t i n t he st ipu ate d l t i me by gi v i ng one

d ay s not i ce
’
.
§ 32 N EW YO R K S O CK T E X CH AN G E
24 F i c t i t i ou s S a l e s —
Und e r t he r l
u es O f t he E x c hange ,
r r h k p r i fi i i h fl r f h
. .

a b oke l w o ta es a t n a ct t ou s sa e on t e oo O t e

Ex h c i i h bl b
ange i f r i d f im
s p u n s a e y s u sp ens on or a p e o o t e up

to r Th h ld br k r m k f i i i
one yea l u s, s ou a o e a e a ct t ous sa e t o
h r br k r ri
.

anot h e d i h bl
o Th e t e p a t es so engage ar e p u n s a e e

r l h ll l hall b b fid h i i d
, .

Ex h c ange u es t at a sa es s e ona e; t at s, n g oo

f iha t .

25 T el e p h o n i n g Ord er s F r om th e Of f i ce to
r r h
.

E x ch a n g e. E ve y h fi rm av i ng a membe sh i p on t e
“

Ex h g h h fl r f h
-

c l h
an e b h as a x h t e ep on e oot on t e oo O t e E c ange ,

th b h b i gl d
ese oot id s f fl r
e n ocat e at one s e o the oo

O rd r f r ri i d fr m
.

e s l f or p u l h
c h as e o r sa e O sec u t es a r e t e ep one o

h br r fi fi m b h h r r i d
’
ok e s O f ce h t o the
’
t e r s oot w e e t ey a r e ec e v e

l rk i
,

b h fi m em l d
’

y a c e n d h fl t e r s p oy an c onv eye to t e oor

b k ro f h fi m
er O h x t h m W at rd r h r w o e ec ut es t e h en an o e as

fl r br k r i h d il h l
, .

‘
b x
een e d ec ut e the oo o e g v es t e eta s to t e te e

r h h r r r
, .

p h l k
one C e h l p h ,
l
w o t h b k en te e ones t e esu t to t e o e
’
s

offi ce .

26 S h or t S a l es — A s h or t s al e on t he E xc h ange is a sa e l
h h r r m r r
.

in w i c t h e b ok e ll i ll ’
m
s c u sto e or p e s on s e ng, se s so e

hi g f l hi h h d
,

t n O v a ue F
w x m lc e oes not ow n or e a p e , s up p ose

m r d r fU i dS S l
.

h
t e cu st o e 1 00 oes not ow n sh a e s o n te t at es t ee
r r r r h
,

b ut g i h i d
v es h b k
s o ll 1 00 U e S S l
to t e o e to se t ee ; t at
h r mr
. .

wou ld b l by h
e a s o t sa e h x f 1 00 t e c u st o e to t e e t ent o
hr fU S S l
,

s a es O t ee
Th q i Wh r d h br k r g ri
. . .

ie uest on now h s, e e oes t e o e et t e secu ty

to m k d l i ry f
a e a h ll r ?
e ve or t e se e

Th r i h b rr h 1 00 h r f k fr m
e answ e s, e o ow s t at s a es o st oc o

so m h r br k r W h ll r br k r b rr h
e ot e o e h en t e se e
’
s o e o ow s t e

h r br k r h k f i f ll
.

st oc k h i mm d i l gi e h e at e y v es t e ot e o e a C ec or ts u

m rk a l et d br k r l d g h
v a ue , an the h o e en in t e st ock p y
a s to t e

se ll r b r k r i r
e
’
s o e h m f h h k
nt e est on t r d e a ou nt O t e c ec a t an ag ee

r Th r
at e h h br k r h i l di
e eason th k
at t e o e w o s en ng t e s t oc p y
a s

r h b rr br k r i
.

i nt e e st h m on id hi m b
t e ioney p a y t e o ow ng o e s

h h l di br k r h h i l j
,

t at t e en ng f i d o e as t e u se o ncr ea se cap ta u st

i f h h d b rr rfr h p i r
,

as e d ia h b o ow e t at t e ank ; th e e o e e ays nt e

est f i or I h l g r
t s u se h r i i r l d
. n t e on u n, t _
e t ansact on s eso v e
10 O P E RA TI N G O N TH E gsa

d ow n to l oan of cap ital by one b ok e t o anot h e on coll at eral

a r r r
r r r
,

and t he u l e f or i nt e est app l ies The t e m c ollater al means

r r
.

st oc k s or bond s d eposi t ed as secu i ty f or l oa ns S ecu i t i es so .

d eposi ted are sai d tobe hypoth eca ted

h r r
.

‘
I t is r eadi l
y seen t at by l end i ng stock i n t h e st eet to anot h e

b r k r br k r m b i hé
o e , a o f m r e l h if h ay o ta n t u se o o e c ap i ta t an e

h d m d
a l a h b k e a d d p i d hi
oan at k l t e an an e os t e s st oc as c o

l r l f i h
at e a f lor h r br k r h b i h
n t e ca se o oans t o ot e o e s e O t a ns t e
f ll m rk l h r m r
,

u a h b k h
et b i
v a ue , w e eas at t e an e o t a ns n ot o e

th 80 p
an f i m rk l
er c ent o ts a et v a ue

A hr d h br k r l
. .

not i eh a v ant age k s t at w en a o e oans st oc to

anot h r br k r he d m d io r re im f re can e an ts et u n at any t e a te
hr
,

one d i
’
ay s not ce, h b k h ld h m k w e eas at t e an e w ou av e to a e

a b isu i i hi
st ll r l
t ut l r p
on hi l
n h s co at e a or e se e ay s oan to t e

b k an

f h hr m l dr f k f
.

B ecau se o f t ese ac t s , t e e ar e any en e s o st oc or

h a bl b i h
,

b y l di
so en ng t f i l
ey h re a e t o o ta n t e u se o ca p ta to t e

f ll m rk l f h ri d l r r f i r
u a et v a ue o t e secu ty, an at a ow e at e o nt e est

t h an at t h e b ank .

27 R ea s on f or Sh or t S a l es — Ari ope at o r r w i ll se ll
hr ri i r r
. .

s o t w h en h e b el i ev es t h at t h e ma ket p i ce O f a secu ty s

t oo h i gh d h d li
an p r i ti d at aH d h i i
ec h ne I n ce s ue e oes t s w t
h h m m k d l i ry r r
.

t h he h
ope b h im t at y t e t e w en e u st a e e ve or et u n

i h l di
t to t e br k r h m
en b bl
ng b i h o e ri e ay e a e to uy n t e secu ty at

a l r pri h h f h h i
ow e ce t l d i f hi j d m
an t at i or w ic t w as so ; s u g ent s

co rr h ill m k r fi
ect e w a e a p o t
h r i di b li f r f h
.

B ecau se ll i se ng s h o t n cat es a e e on t e p a t o t e

se ll r h
e h ri will d li
t at t e r r f ll h r
p ce ec ne, ope at o s O t en se s o t to

i fl n u enc e t h m rk d h b ri g b
e a d li by h i h
et an t us n a out a ec ne w c

t h ey m rfi ay p o t .

28 H a n d l i n g of S t oc k L oa n s S i nce t h e l endi ng of
r r ifi
-
. .

st oc k i nc l udes t h e del i v e y O f a st oc k ce t c at e by t h e l end i ng

b r r
ok e t o t h e bo rr ow i ng b r ok e r d h an t e p y
a ment of c ash by
h b rr br k r br r r
,

t e o ow i ng o e t o t he l d
en i ng oke it i s ead i ly seen

r r
,

t hat h t i s op e at i on h as al l the e l m e f ent s O a sa e l So und e

h r l r
.
,

t e u es O f th e E x c hange, s t oc k l n oa s a re t eat ed as sa es l ; t h e
§ 32 NE W YO R K S T O CK E X CH AN G E 11

necessa r y co mpa i sons r a nd t he d el i v e y r O f st oc k a nd ca sh ar e

made j u st as w ith a ny ot h e r sa e l .

29 A rb i t rag e A rb i r g t a e i s t h at ope at i on of r buyi ng i n

L d k m rk ll i g h r i h N Y rk
. .

the o n on st oc d a et an se n s o t n t e ew o

m rka i r d m ki g pr fi B hi p r i
et o r v ce v e s a , a n a n a o t y t s o e at on a

br k r h r L r
.

o e h hi t g iou g d m bs a i ent n on on , ay uy a sec u ty at a

r p r i h h pr i f h r i i h N Y rk
,

l
ow e ce t an t e ce O t at sec u ty n t e ew o

m rka H
et h ll h e ri y h r i h N Y rk
t en se s t at sec u t s o t n t e ew o

m rk r fr r
.

a d by
et an d i gh h k so
p fi o nm h p ie as ta en a o t o t e o e at on .

30 R ep o r t s of B Wh br k r h x d
r ok er s —
en a o e as e ec ut e

C m r rd r h fl r f h E x h g h b r k r
. .

’
a u st o e s o e on t e oo O t e c an e, t e o e

te l ph e h r
one s l b k t ehi fi
esu gi it g l l h ac to s ow n O f c e, v n a t e d at a ,
an d h tb m en f h Ex h g y i k
ean s O f h Cl r i g t e c an e t c et s O t e ea n

H ou se sy m p r ist e
g i h r
as o hi ffi
e at n m p r n t e
“
st eet , s O ce co a es

t h de r rd d i h h f h ffi f h h r br k
at a , a s ec o e w t t at o t e O ce o t e ot e o er

r r
,

w h o w as
p h a i a I
ty t o t h i y h d e t a nsact on n t s wa t e at a a r e

d rr r i r d h mi i m m T h i m h d
.

c h k d p
ec e u d
an e o s e uc e to t e n u s et o

mp r i Cl r i g H
.

O f co l h ld
a d f
son on y o k s goo or ea n ou se st oc s

Wi h E Cl r i g H mp r i
.

t x k ea n m d b ou se st oc s, co a sons a r e a e y
h b r k r bmi i g m m r d m f h r i
-

eac o e su tt n a e o an u O t e t an sa c t on t o
t h e oth r b r k r by me f o e l r k ll d h
ean s O a c e ca e a r u nne r , w ose

d ut yi i t rr h m m r d h h r br k r fi
s to ca y t ese e o an a to t e ot e o e s
’
O f c es ,

h av e h m t rifi d d r
e ve h m hi e anff et u rn t e to s ow n O i ce

ry rpr mp r d by l r h
.
,

I n ev e h case t ese e o ts a re c o a e not at e t an

P . M .

31 T i m e of D el i v er y U nde r th e r
u es o f t h e
l Stock
r ri
-
. .

E xch ange i t i s p ov i d ed t h at i f a sec u ty i s so ld f or cash it

h
s all b e d el i v e ed b e o e P M Of r fr the sa me day If ld so

rgl r h r rh
. . .

”
i n th e
“
e u a w ay t en it must be d el i v e ed b y not l at e t an

P . M . o f th e f o ow i ng
ll d ay .

32 F ai l u re to D el r k r f il d l i r
i v er .— If a b o e a s to e ve a

ri b h h b i br k r
.

secu ty y P M f h d o d t e ay ue , t en t e uy ng o e

d r r l T d hi h b i g
. .

”
m ay l i
c os e t ou t un e t he u e o o t s, t e uy n

b r k r i mm d i h Ch i rm f h Ex h g
.

o e l e at e y fi
not i es t e a an O t e c an e,

w h oi ll r d h
w ea t e not ce i fr m h r r m h f ll i do t e ost u t e o ow ng ay,

an d pr d b ocee to uy h
t at ri i f h br k r Sh ld h
sec u ty n or t e o e . ou t e
12 P ATI N G O N TH E O ER § 32

p r i ce b r e gr h h
eat e r i it l an r t p r i e o h gh b
na c ont act ce, t en t e uy

i ng br k r ho e l im g i
as a c a h ll r d r h
a a nst ri i l t e se e un e t e o g na

r f h di f r h ld B r k r A
,

c ont ac t , or t e F x m lf e enc e or e a p e, s ou o e

f il d li r 1 00 h r f k B r k r B h B r k r B
.

a to e ve s a es o stoc to o e t en o e

if h Ch i r m f h Ex h ld h
,

w ou ld not y t e a an oh t e c ange, w o w ou t en

p r ocee d to h
a nnounce i fr m h r
t e not c e r m d h o t e ost u an t en
1 00 h r r If
,

b uy i h
n t at f k
s h b
a es o p i b
s toc i b l at t e e st ce o ta na e

r r r
.

i t w as b h ioug t $9 1 p h
n at d h ieri l s a e, an t e o g na cont ac t

p ri ce $
w as 9 0 h r h a B r sk r Ba e, l
t d h en l i m o e w ou ave a c a

a a nst
g i B r k r A f $
o e 1 00 h i h i h
or d i f r , w c s t e f e ence .

33 A
T r a n s f er s r k —
r ifi i d by
s ev e y st oc ce t cat e ssue a

kh ld r b r h m f h
. . .

s t oc k m co an
p y to a st oc o e k ea s t e na e O t at st oc

h ld r i i
o e t r h h
s nec essa r ifi h y t at w h d i
en a c e t ca te c anges an s t
r f rr d fr m h m f h r i r
,

s h ll ba e t ans e e o t e na e o t e p ev ous ow ne to
t h at o f h t r h r rd f h k mp
e new ow ne on t e ec o s O t e st oc co any

i i g h
ssu n t k r ifi
e st oc d hce t r ifi b i d
cat e , an t at a new ce t cat e e ssue

to t h e new h ld r o e

hi r l r ifi f rm
.

F or t s h eason t e u sua f k h ce t c at e o st oc as a o on

the b k f i
ac hi h m
O t wb fi ll d c ayi i e h e ou t to a ss gn t to t e new

o w ne r dh h an t en r m k h r ifi
t e new ow ne h ay ta e t e ce t c at e to t e

r f r ffi d h i r f rr d h i m
,

t a ns e O ce a n av e t t ans e e to s na e .

34 C o l l e c t i on of D ivid en d s —
S i nce d iv id ends w ill
r r r h
.

on ly be pai d t o th e eco ded h ol de s o f stock as s ow n on the

r
,

st ock c ompany s book s i t i s ead i ly seen that some sal es Of

’

r
,

sec u i t i es w i ll b e mad e w h en t h e t r ans f er b ook s of t h e com

’

m f al es w i ll be ex di md end
'

p y
a n a r e c l o sed S o e o t h ese s

h h rh r h
-
.
,

w i c means t h at t h e new p u c ase d oes not av e a c l ai m on

r
a ny d i v i d end d ec la ed b e o e t h e st oc k i s t ans e ed on t h efr r f rr
c ompany s b ook s
’
H ow ev e sh oul d t h e sal e ca y div i dend r rr
rh r r fr r
.
,

t h e pu c a se w i ll ec ei ve a due bi l l om t he sell e for t he

di v i dend .
§ 32 NE W YO R K S T O CK E X CH AN G E 13

USE OF CR E D I T I N T H E STOC KM A R K ET

K I ND S OF L O A NS

35 L oa n s at th e B an k — T he money and st oc k ma ket s r

rr l f r
. .

are i nte e at ed ll ow i ng manne

in the o

( )
a T o s ec u e p e r r
s on a l l oa n s S t o c k E x c h an g e s ec u i t i e s a r e r
r
,

deposi ted as c oll at e al

r h
.

( )
b T O O b t ai n w o k i n g c a p i t al b o n d o u se s a n d s t oc k
r r
,

b ok e s engaged i n t he sal e o f i nv est ment sec u ri ti es make

i

h
loans w it b ank i ng i nst it ut i ons by d eposit i ng t ei unsol d ol d h r h
r
i ngs as c oll at e al f or suc l oans h
A r h r
.

( )
c ll s p e c u l at i v e p u c h a se s o f S t oc k E x c a ng e s e c u i
r
t i es ar e pa t l y fi nanc ed by t i me l oans or demand l oans a anged rr
wi t h b ank ing i nst it ut i ons and sec u ed by t ese sec u i t i es as r h r
r
,

coll at e al

Th r r
.

ese st at ement s c l ea l y sh ow t h e manne of Ob t ai ni ng a

fr
l oan om a bank i ng i nst it ut i on by secu ing t at l oan w i t a r h h
r
coll at e a l d eposi t .

36 C er t i f i c a t i on r di
xtended to b oke s
C e t is l
a so e r r
r r i r
. .

by t h e b ank s t h ough t h e op e at on o f a system O f ce t i ficat i on

r r hr
.

Ce t i fi cat i on may b e d efi ned as t hat ope at i on w e eby a bank

r h r r r f
,

t h oug t h e s i gnat u e of i t s ca sh i e o r payi ng t ell e on t h e ac e

h
O f t h e c ec k
g u a a nt ee s t r
h a t t h e s i gnat u e o f t h e d aw e o f r r r
h rr h
-

t he c eck i s c o ect as w ell as t at t h e bank w i ll pay t h e amount

h
of t h e c ec k on i t s p e sent at i on r
r r r
.

By means O f c er ti fica t i on c ed it i s ex t end ed t o t h e b oke

h r r
_ ,

ov er and above t at b ok e s d epos i t i n t h e bank A n ex ampl e

’

hr
.

w i ll be e e d i sc ussed
h r r
S uppose t at B ok e J ones has on d eposi t a bal ance o f
r r
B ok e J ones buys secu i ti es f or hi s c ust ome s t o th e r r
amount o f I t i s c l ea l y seen t h at t h e b ok e s avai l r r r ’

abl e c ap i t al i s i nsu ffi c i ent t o pay f or t h e sec u i t i es t h u s b ough t r

r r r
,

so t h e b ank h av i ng p ev i ou sly i nv est igat ed t h e b ok e and

r rf r r h
,

est ab l i sh ed h i s l i ne O f c ed i t w i ll ce t i y t h e b ok e s c eck s
‘
’

r Th
,

f or t h e amou nt su ffi c i ent t o pay f or t h e sec u i t i es i s c er

r r r
.

t i fyi ng o f a b ok e s c h eck f or mo e t han h i s bank bal ance i s

’

I L T 234— 6
14 P RATI NG O N H E O E § T 32

k now n as ov er c er t ifi i F r m h i x m l i i l rl
ca t on o t s e a p e t s c ea y
r r r r
.

seen h t h at
p i t e o f i fi i
e at on o i i l c ert m p cat on s n ea i t y a te o a y
loan h br k r b
to t e h b k o d
e y t l r x mi i
e an i an up on c os e e a nat on t
i r di l r li l ri k i k i i h
,

s ea hy seen t at v e y tt i e s s ta en n connect on w t
t h r i
e o e at on
p i i i h S
n c onnect on k E x h r w t i t oc c ange t ansact ons
rd r h h r l i g b fi hd
.

I n o e to ave t e esu t n ene t s at tac e t o ov er cer

t ifi i
cat on or mp l te i i or ar y r f h br k r
oans, t s nec essa y or t e o e to
ent e ri d fi i r m ih h b k
nt o a e n t e ag ee h b l
ent w t t e an as to t e a ance

w hi h h br k r ill m i i h b k F x mpl
c t e o e w a nt a n at t e an or e a e, a

b r k er m r m i i d il b l
.

o ay ag ee to f
a nt a n a hi a y a ance o at s

b k an d anh b l h b k m gr
on t at a ance r i f hi
t e an ay a ee t o ce t y s

h k p h m f i ll b r d i ly
,

c ec s u to t e a ou nt o I say, t w e ea

h h ld he B k r i f h br k r h k f h
,
’
seen t at s ou t an ce t y t e o e s c ec or t e

a m ount o f h h b k i ll b t en t e r r if i an w e ov e ce t y ng to

t h m
e a f ount O h i h ld m k t at mp r r s, t ey w ou a e a te o a y
l oan o f h m t at a h br k r ou nt Fr m h di
to t e i ho e o t e sc uss on t us
br r r di i m
.

i ll b l i l h
’
f ar,i t w e p a n y seen t at a oke s c e t s a ost

im p ort ant f r I m b ll act o t

t ay h h br k r
e we to st a e now t at t e o e

r di r f
.

i s not e x d p ec t h l i mi
t e f hi
t o u se e t o s c e t ve y O t en
hr h
.

S f O h ar , we h mp
av e seen l i m d ow a te or ar y oan s a e t oug

t h p
e o r i f r
e at on O i fi i A d ce t i i
cat on r n now t s nec essa y t o go

il r rd i br k r d i h b k i h
.

m d
’
i nto so e et a ega ng a o e s ep os ts at t e an n t e

r m f hi m r r l
ep ay ent O t s te p o a y oan

r m i h h b k h br k r i r q ir d d
.

B h
y t e ag ee ent w t t e an t e o e s e u e an

h r
,

e x p ec d
t e m k hi d to ia hie s epos i
ts to h s a cc ou nt , a s e ec e v e s t e
c h k fr m h
ec s l o f h r
t ri i h h f hi h
e sa e O ot e secu t es t an t o se or w c

h h e p
as i d hr h
a h m
t d i m
oug f h t m e r r l
e fr um O t e te po a y oan o

t h b k Th
e an h l d h br u s, s r d l i r ri i f hi h
ou t e oke e ve s e cu t es , or w c

ld r i h r r ifi d h k h d r hi r
.

h e w ou ece v e ot e ce t e c ec s, t en u n e s ag ee

m ent i h h b k hw t t e ld b x an d e d
w ou i hm e e p ec t e to epos t t e to
hi s ac cou nt at h b k t e an

h br k r h r i d hi k f hi h h h
.

Wh en t e o e as ec e v e s st oc or w c e as

id h r r ifi i f h h k h b k h
,

p a th h oug t e ce t cat on o is c ec s at t e an e

r d rr f h i l
,

p oc ee s to a ange f h or m s x l i d
oans O cas on t h e as e p a ne

i p r gr ph ( ) f Ar 3 5
n a a a c o t . .

37 M or n i n g L oa n s at th e B an k —
I t has bec ome
r h
. .

cu sto ma y Of l at e f or so me Of t he b ank s t o mak e w at are

§ 3 2 T E X CH A N G E
N EW 5 YO RK S O CK 1

ll d m i g l
ca e br k r f
or n n m ffi i oans t o a o e or a n a ount su c ent t o

cov er h p r b bl m t f er ifi i r f h
o a e a ount o ce t cat on nece ssa y or t at

d ay Thi m h m b hr h h d ir d
s c ust o as co e a out t ou g t e es e to o

i h h
.

away mi w t i l i f h N i t l B ki
e see L ng v o at on o t e at ona an ng aw ,

w hi h ip l h i h ll b l f l f
c st u at es i l b k t at t s a e un aw u or a nat ona an

i g i
n i i i r pr
nst t ut on, or i r if h k f ts e esent at v e , t o ce t y a c ec or an

am i
ount x f h m d p i
n e c ess o h r di f h t e a ount on e os t to t e c e t o t e
mk r a e .

38 L oa n s M ad e in th e Ex ch a n g e. — A s h as been pre
r h r
.

v i ou sly e xplai ned t he e i s a p l ac e i n the E x c ange oa d

hr rr h
,

Room w e e money l oan s

loan so ar e a a nged , and eac

rr r
a anged i s sec u ed by sec u i t i e s d eposit ed as c ol lat e al r r
h rr
.

At t i s pl ac e t h e money br oker s a ange t o l end money t o

r r
t he b ok e s w h o may need i t T h ese l oans are usuall y call
rr r h hfl fr
.

loans y i n t and ca
e est at t h e ca l l r a t e w i c u c t uat es o m
r r T
,

day t o d ay somet i mes h igh e , somet i mes l ow e h ese money

r r h r
.
,

b ok e s, w h o mak e i t t ei bu si nes s t o l end money ar e mem

b r h r r
,

f
e s o t h e E x c ange, and a mong t h em are ep esent at i v es o f

t h e bank s .

39 I n t e r es t R a t es on L oa n s A ti me loan i s a l oan
—

h i md x d r h
. .

t at s a e to e t en ov e a spec i fi ed l engt o f t i me as f or

rri i r rg d
, ,

e x mpl 3 0 60
a 90 de, d or ays, an ca es nt e est at an a ee

r
, ,

at e

Ad m d h i md ih h d r
.

ll l
e ian l or c a oan s a oan t at s a e w t t e un e

h i i bj
, ,

st an di ng t ll at im t ll h f l
s su ect to ca at any t e, usu a y t e o

l i gd y
ow n d h i h ll rr i r
a an r dr
t at t s a ca y nt e est at an ag ee ate

r r r fr m l r
.
,

Th i e d m d l
nt e est at es on e an oans v a y o as ow a at e

as 2 p e r c hi h
ent ( J l y 9 1 9 1 9
to) 1 7 as f g as on u p e r c e nt or

r
. .
,

ca p i l l d
ta i d i l
oane k d 1 5 p on f i l
n u st a st oc s an er c ent or cap t a

mi x d ll r l
.

l oaned on e co at e a .

C OL L A T E R A L F OR L OA NS

40 R eq u i r em e n t s A s h as been st at ed , w h l i en a oan s

r r r r ll r l h i h m b
. .

made t o a b ok e t hat b ok e d epos t s co at e a w c i ay e

Wh
, ,

made up O f stock s and bond s or st oc s or on s a one k b d l en

r r f lly fi d
.
,

t he col l at e al i s deposi ted t h e b ank e a nes t ca e u , x mi i to n

 P E ATI N G O N TH E O R

out if h eac ri d d i r dil

s ec u l blty d if h
epo s i t e s ea y sa a e, an eac

h a s a c on stant m rk T l r x a h m etd i r bl o a a ge e t ent , t e ost es a e

ri i f hi r rm b d
.

secu t es or t s p u p k d
o s e a r e gov e n ent on s or st oc an

b d on s O f r il r d m a i hi h l d f hi h d
oa co p a n e s w c ar e i st e as O g s t an

V r f b k ilr f
,

i g n onh x h t e e c ange m e y O t en a an w l e u se to ak e a

h i r d l b i d ri l k ll r l
.

l oan t at s sec u e on yl y n u st a s t oc s as co at e a u n ess

an i
'
d r
nc r ease f i r b hr d dmr f h
at e o nt e est e c a ge an o e O t en t ey

r q ir r i m f r ilr d ri i b i l d d
,

e u e a ce ta n a ou nt O a oa secu t es to e nc u e

i n t h ll r l
e co at e a

Wh rm b d d i d ll r l b k
.

en gov e n ent on s ar e epos te as c o at e a an s

h m rk h r i h l
,

w i ll l oan to t l f h b d
e a et v a u e o t e on s, w e eas w t oans

ll r l h b k i ll l
.

t h ath h
av e ot er co l at e a 80 p t e an w oan on y ab ou t er

cent f h m rk
O t e l f h a ll r l h et i i
v a ue o h suc co at e a t us g v ng t e
r r
.
,

b an k m ai f 2 0 pa g n O mi d ll l d 2 5er c ent
p on xe co at e a an er

i r q ir d ri l ll r l
.
,

c ent s ei d u e on n u st a co at e a

r l h l d h m rk l f h ll r l d l i
.

N at u a l y, s ou t e a et v a u e O t e co at e a ec ne,

t h en h b kt e i ll i an ll f m r
w ll r l m i
s su e a ca i or o e co at e a to a nt a n

t h r q ir d m r i
e e u e a g n .

41 Sub T m k
st b i i
i t u t i on s i ll r l — O a e a su st t ut on n c o ate a

i h dr ri d i i pl b
. .

m
'

f or a l oan eans to w t aw one sec u t y an n ts ac e su

st i t ut e r bl k f ri i f q l l
a no t h e oc m r o sec u t es O e ua v a ue or o e

Th f br k r d ll r l 1 00 h r
.

us I a o e l epo s i t s a s c o at e a fo r a
-
oan s a es

O f M P r l m 60 d 300 h r f i 40 d
ex I can et o eu at an s a es O Er c at an

l r fi d h h
at e n s t d h 3 00 h r
at f E ri
e nee m s t e s a es o e to ake a

d li r
e ve h y l d rr e i h h b
w ou i hdr
a h 3 00
a nge w t t e ank to w t aw t e

Sh r 200 h r
,

a es o f ri d bE i i
e an l su f
st i t ut e n ts p ac e , s ay , s a es o

N ew H 62
av en a tTh i i h h mri h l us t s seen t at t e a g n on t e oan

h b k r m i r i ll h m b f r
.

at t e an e a ns p act c a y t e sa e as e o e .

42 L eg al ity of H y p ot h ec a t i on of C u s t om er ’
s

r ri r ri
.

S ec u r i t i e s — N o d oubt t h e ea d e s w ond e i ng w h et h e t is
l aw ful for a b rkr o e t o h ypot h ec at e t h e sec u ri t i es o f a c u st ome
\
r
w h en t h ey ar e h el d on ma r g i n

r l h qi i h
.

A s has been seen t h e c u st o me on y as an e u ty n t e

ri r
,

sec u t i es h eld f or h i s a c c ou nt
t h m o f h
t i d
e a i b l o unt O s c e t a

a nc e as s h ow n by h i s ac c ou nt T r f r i f br k r lhe e o e, the o e st i l

r ri m r i hi ffi
.

et a i ns sec u t i es f o r t h at c u st o e h xn s O ce to t e e t ent
of t h at c u st o me r q
’
s e u i ty, t h en br k r i
th e i hi h l o e s w t n t e aw .
§ 32 NEW YO R K S O CK T E X CH AN G E 1 7

Th i s i s t h e plan f oll ow ed r
i n t he st eet by m y fi rm
an s op e at i ng r
as r r
b ok e s
rh fi rm h rg m r
.

O h n t e ot h e and many s av e an a ee ent w i t h thei

c u st o m r e s t o t he eff ect t hat t h e sec u ri it es h eld f or a ny cu st o m r e

may b e u sed as co at e a ll r lf or a l oan at t he b ank or l

e sew h e e r .

K CL A S S E S O F S T O C

43 Th k f rp r i
G r ou p i n g — e st oc s o co o at o ns may b e sa i d

i h r mr db
.

to b i e f h
n e t l e one o t e c as ses enu e at e el ow

r r r r
.

( )aR i d S k a f lr oa i l d s: i t oc s o a oa co p o at on s

r r
.

( )
b M i i S f m i i
n ng : i t ock s o n ng co p o a t on s

r r r
.

( ) I
c d i l S n k f i d
us tr a s : i l p t oc s o n u st a co o at i ons .

44 S t o c k C e r t i f i c a t es —
Cert i fi cat es o f st oc k ar e p i eces

r rp r r
.

of t ough pape on w h i ch i s eng av ed t h e name o f t h e co o a

i
t on, ki d f k dn f h r O h ifi
st oc an nu mb r e O s a es t e c ert cat e rep

r r id r rr
,

d h
es en t s , an i d b h t d h
ey a r e s gne y t e p es ent an t e t easu e

O f h t r r i I i p ifi d
e co p ohat onr ifi h h t s s ec e on eac ce t c at e t at t e

r h m r i f i h r fh
.

p e s on w o se na e appea s on ts ac e s t e ow ne o t at c er
tifi l
ca t e h h h r
; r f r bl l h b k
a so t at t e s a e s a r e t a ns e a e on y on t e oo s

O f h t rp r i O h b k i r i d b l k f r m f
e co o at on n t e ac s a p nt e an o or

i d r m ri h
.

n o se ent f l i i
t o a new ow ne h n t e case o a sa e, g v ng t e
rp r f r f h r fr f h k
,

new ow ne ow e o at t o ney or t e t ans e o t e st oc to

h is name .

45 K ind s of S t ock s — I n t he o r gan i z at i on O f a c o r r

p o a

r
. .

may b e i ssued t h e name o f

'

t ion , st oc k und e p f r e err ed s t oc k

and c o mmon s toc k and eac h h as t h e f ll i g r i

o ow n gh t s

r fix d r
.
,

P r ef er r ed s t ock i s st oc k t hat b ea s a e at e o f d i v i d end ,

w h i ch mu st b e pa i d b e frd iv i dend i s payabl e on t h e c om
o e any

mon s t oc k Th e d i v i d eri d may b e cu mu la ti v e or n on cu mu la

r di id d i
-
.

ti v e S h ou l d it be cu mu l at i v e t h en w h at ev e v en s not

rm f r pr fi b f r
.
,

p a i d t h i s yea b e pa i d o u t
u st of ut u e o ts e o e the
co mmon s t oc k h o l d er s w i ll h av e a ny c a i l m f or d iv i dend At
r
-
.

al l t i me s t h i s gua ant e ed d i v i dend w i ll b e acc u mu l at i ng t i ll

p a i d F om t h i s r i t w i ll b e seen t h at r f rr
t h e p e e ed st oc k i s t he
r fr m d i
.

i nv est ment st oc k h el d for ev enu e o v i d end s, w h i le t h e

co mmon s t ock i s t h e spec ulat i v e st oc k .
18 P E RATI N G O N TH EO § 3 2

46 B on d s Th r m f m f b d i d b
— e e a re any or s o on s ssue ut

ry b d r r
. .
,

i n ev e ca se a li
on m g gep esent s a m en, o r ort a e, on so e

p ar t or l l a h p r r
t e f h m
opep h ty i oh b t d e co any t at ssues t e on s

S m f h hi h
.

o e o b d
t ese k on s ar e l id d b d now n as c onso a te on s, w c

a re b d ion s d f r r r i i i pl f p r i
ssue , a te a eo gan za t on , n ace o ev ous

b d i
on ssues I Vh l id d b d i
en a c onso i m d i a te on ssue s a e t con
h pr i d r hi h
-
.

so l id a t es t e b d i ev ous b d i
on ssues un e one on ss ue, w c

r ll pr i
c ov e s a ev ous ones

Th r m b d h y
.

e e ay i bl b d i
e c onv er t d al l
e on s ssue an t e u su y are

hi h v r ibl i
,

b d on s w c ar e con e k t e nt o st oc

Th h ld r r h r
.

i
en aga n, s p ou i b l f
one cor o at on uy c ont o o anot e

ri f b d mi h b i d ll d l l b d I
,

a se es o on s g t e ssue ca e c ol at er a on s n

h y ld b r d by h b d f h p r
, .

t hi s ca se t e w ou e secu e t e on s o t at cor o a

i
t on cont o r ll d e

F h r h ld r r
.

ur t e s p ou i i b a c ord d d
orat on h ssue on s an eco t e

f h h ld r f h m h h b d
,

na m es o t e o e s o ld b
t e ,
t en t ese on s w ou e

k i
nown as r eg s t er e d b d on s

h r f rm f b d i ll d Th
.

A not e o o p on b d i i
s ca e a c ou on an s s a

h h r
.

b d on i h
w t p cou d i h
ons at ta c h i d e on w c t e nt e est ue at c er

ta ni d at esi d d
s st at e h p an m d i
as r t i ese cou ons co e ue, nt e est s

r
, ,

co ll d b
ect e l ippi g ff h
y c p n d od p i g i
t e cou on f u e an esent n t or

co ll i
ect on A d x mpl i h Lib r goo e a p b d e s t e e t y cou on on

r b r m mb r d h
. .

I n ev e y i i ca se t s to b d e ie e e e t at a on const t ut e s
a m r o t gage, o r li en .

WA L L S T R E E T S I N ST R ’
UM E N T S
47 Th e T i ck er . On ent e ri ng a b rkr
o e
’
s O ffice, p rac t i
r hi
.

ca lly t h e fi st t ng t o be not i c ed i s the t i k

c er as i t i s ca ll ed
Th i rm ri
.

s is an i n st u ent t h at au t o mat ic all y p nt s on a tape ( a

FI G 2

r h
.

l ong oll r of p p
a e r abou t 5 i nc h w i d e ) t h e p i ces at w i ch
b l oc k s O f sec u ri i r t es we e sol d on t h e E x c ange h
r rdi h h hrd
.

Th e d ata ega ng t e sa es on l t he E x c ange are gat e e

by rpr r
e o te s f or t h e N ew r
Y o k Q uot at i on Company , w ho
§ 32 —N E W Y O RK S TO C K E XC H A NGE 19

r p r hi i f rm i
e o t t s h i r ffi
n o d i i h
at on to t e o ce , an t s t en sent out

ov e r h wir t e h pl hr h ikr
es to t e k i di ac es w e e t es e t c e s, or st oc n

c at o r s , p ar ed h m h
s eti m ui ll anp r i h t e ac ne a ut o at c a y nt s t e

h f rm h h r pr i d
,

d i
at a n t e i F ig 2 o Th d s ow n n e at a as t e e nt e

r d fr m l f ri h m
. . ,

ea o e t to t
g , ean

1 00 Cr ib l S l ld
uc p r i f $e1 3 6 h r
t ee w as so at a ce o p er s a e ;
2 h r S d b k r
s a es ld $ 1 1 3
tu1 h
e a r e w as so at p er s a e ;
1 00 B h l h m S l B
et ld e $ 1 02
e 5 n d 8 h
t eer “ ”
w as so at a s a es

$ 1 0 3 at

1 00 C r lL h r ent a l d $ 1 1 05} hr
eat e w as so at p e r s a e ;
1 00 S m l r l d $87 p e te hr s w as so at er s a e

d r r
.

I h ld b
t s ou d h e k i d
u n e st oo t at ev e y st oc l st e on the
Ex h g h c an e bb r i i d f
as a n a h rp f ill r ev at on, an or t e p u o se o ust a

ti on a f f h m ew o hr i t e ar e e e g v en .

AB BREVI A TI ON NA M E STOC K
AK Al G ld M i
OF

aska o nes

AR Am ri Sm l i g d R fi i C
. .

e can e t n an e n ng o

Sm l r
. . .
,
“
or e te s
B S B B hl h m S l S ri B et e e t ee e es

A d C pr
.
. .
,

A nc nacon a op e

B R T B r kl R id Tr i
.

oo yn ap ans t
P r
. . .

a M x i l m e ca n et o eu

A m ri C O il
.

A co . e can ot t on

Rb R p bl i S
c l e u c t ee
P l i RR
.

P a enn sy v an a

Pr m r f rr d k X m
. . .

eans p di id d U
e e e st oc ; eans ex v en R
d r r
-
. . .

m eans u n e t he u le .

48 C l ea r i n g H ou s e P ri ce as Sh ow n on t h e T i ck er

r j r rd d h C i
. .

E v e y day, u st as s oon a s th e l ast sa e l is ec o e t e l ear ng

r
,

H p i
ous e m d d
r ces a r e
p h p h a e u an sent out ov e t e ta e to t e

o ffi f h br k r
ce s o Th ri i h r h l mb r
t e o e s at p ce s t e nea est w o e nu e

l ri h ld A d C p r
.

to t h l e F
ast sa ex m l p ce or e a p e, s ou nacon a op e
’
s

l pr i b h Cl r i g H ri
.

lat est sa e h ce d e t en t e ea n ou se p ce w ou l
b 80 b
e 79% i r h h l mb r 80 h
ec au se s nea est t e w o e nu e so t at

h Cl r i r
, ,

p i
r ce o f 80 d H st an
p i s as t e ea ng ou se ce

r h ffi i l Cl ri H ri
.

H ow ev e t m il d b
e o c a ea ng ou s e p c es a r e c o p e y
l rk h g fr m h Cl ri H h b r r m
,

a c e w o oes o t e ea ng ou se t o t e oa d oo
20 PE RATI N G O N THE O § 3 2

an d mpi l
co h m H h h k hi pri
es t e e t m d
en c p ec s s c es as a e u

i h h r r h r
.

w t t ose p i g
a s ap h i
ea k np Son t l d de i fft c e ta e ou a e ence

ri b h h br k r
.

i n t h e p ces d e not e t en ifi d t f h
e o e s are not e o t e

rr r ri A f r h r
,

e o appea h ng on t
p e d i ta e i f h u t e sc uss on o t e use

f h Cl r i g H r r
.

o t e ea np i i ll
ou seb i n l ces w
‘
e g ve at e .

49 T el e p h N on es . h i k r h m
— ex t i mp rto t e t c e t e ost o t ant
r m udi rl i r r
.
,

i nst u ent se h
n p e at on i f h N
to t Y k
e o e at on o t e ew o

S k Ex h g i h
t oc c an e l ph s A h
t e te b e x pl i d h
one s as een e a ne t e
l ph r mi i h rd r f h mr
.
,

te e i one d i s u se n t ans t t ng t e o e s o t e cust o e s

to b y u l fr m h ffi
or se l, o h Ex h
t e o d h
ce to t h e c ange, an t en, w en

t h at o rd r h b x d h d f h r i
e as een e ecut e t e ata o t at t ansac t on a r e

r r d h br k r ffi Wh id r h i
,
’
et u ne to t e o e s o ce en one c ons e s t at n

r i h Ex h
.

one d al
ay h one t e t ansac t on s on t e m c ange ay ru n a s

h h ig as h r r i i r d il
s a es or ov e h i h t s ea y seen t at w t out

h W ll S r
,

t h l hte one t m l d b b dl l
t eet syst e d w ou e a s ow e u
e ep e a
! p y .

50 . T el e
g rap h an d m T h Ca b l e l r h S y st e s. -
e te eg ap

an d bl
ca m
e syst e f i s ar e o d i g i
u se b i
n con uct n out o t ow n us

h r
- -

ness on ot h e ex c anges .

51 N ew s I W ll S r
Slips — h r n a t e et t e e a re t w o new s
h r i
. .

i
agenc es, one o f h h i D J
w ic C s d h ow , hones o an t e ot e s t e
Y rk N B r Th r
,
.

N ew o ew s u eau i p i d s i m
ese agenc es ov e new te s

h f rm f r f mi Th
.

i n t e o li
o new s s p s ev e y ew nut es ese new s

r d l m hi h
.

s l ip s cont a n i im p o r t ant new s a s to ecent eve op ent s w c

mi ht h g av e a d t enf h m rk
ency to T h l ip
af ect t e a et ese s s ar e

d li r d b r ib r r
.

e ve e to su ffi sc b p e s i l m
’
O ce s y s ec a essenge .

52 N ew s hT i ck i k r
er . — r i m
T e new s t c e op e at es n a an

i mi l r r l r d d r ib d l i d f
.

ner s a h i to t e t ck e a ea y esc e on y nst ea o

r i i g ri f k r i i bbr i i
,

p nt n a se es o st oc t ansac t ons n a ev at on on a

na rr l i f p r i pri
ow s p o p a e t h f r ll p p r
nt s a p g
a e on a s eet o o a e

d r id r i Of rpr
,

a b out 6 i h nc id es w e , an p ov es a se es new s e o t s on
t h e c on di i f h m r
t on o td f h he a ket i anhr h o t e ap p en ngs t oug ou t

rl d
,

t h e wo .
§ 32 NE W YO R K S T O CK E XCH AN G E 21

LA N G UA G E OF T H E STR E ET

53 M ean ing s of T erm s Wall S t reet has a d i s ti nct

r l r ll i d r
. .

ve nac u a a d it s ow n m mi i h To un e st an t , one u st x n t e

lf h r d l r i S m f h m r rm
.

i e t e e an ea n mm t o e o t e o e co on te s a re

h r
.

e e e x l i d p a ne

A h
.

b i u h i l
ll f
s one h m k w h
o i s l d i g ong o t e ar e t, one w o s o n

secu r i i d x p h m rk r i
t es an e ect s t e a et to se

A
.

b i ea r h s a s h i h f h m k
or t s el l er , one d w o s s or t o t e ar et, an

w h i o r i f r h m rk d b lli h r
s t y ng t o o ce t e a et ow n y se ng s o t .

m h i
’
To s t r ad i
d le th h d e a r k et s to e g e one s a c c ount ;t at s,

to b l g f h m rk
e on o r i t i i s
e d h r i
a et on ce t a n secur t e an s o t n

h r
ot e s

A m i p r i p ri d i h k m rk
.

la b s a e son nex e ence n t e st oc a et .

Wh h en i l h i
e su st a ns a id h b h d
o ss e s sa to av e een s ear e

i h d p i r q ir d b br k r h
.

M arg in s t e e os m t e u e y a o e w en a cu st o er

g i ves him rd r b an ri i o e ll h m h
to uy s ecu t es or to se t e s ort .

U ll 20
sua y f h pmer c ent f m i l d i
o h t e a ount o oney nv o v e n t e

r i i r q i r d Th m b hi h h m rk
.

t ansac t on s e u e e a ou nt y w c t e a et

ri i h h d x d h m l d
.

l
va ue f o se c u t es yp ot ecat e e cee s t e a ount oane

on h m it e l d h m r i
s a s o call e t e a g n

r p r i h k m rk r
.

Th e p e s on s o e a t i ng db n t e st oc a et a r e ca ll e anke s,

br k r o e s, r i l i p i nc p a m i l r p l r p
s, nv es tor s , an p u at o s s ecu at o s, ro

r r m r d r b ll b r p
,

f ess ona l s ,
i l mb l a s, p u nge s , oo t a e s, u s, ea s, s e

i l
c a i st slq c i d ues , d h l ik p oo l s syn i c a t es an t e e

h m r r i f ri i h b l i l h
, , , .

W h en t e a ket p ces o sec u t es c ange ut tt e t e

m rk i a et d s c all e Th m r k m k
s t ea d y h r p e a et ay t a e on ot e as ect s

i mi h b i b m
.

so h t i i
at ll d t k i
s ca i e i w ea a c t v e, or nac t v e ; t g t e n oo

r r f
,

or a p i d
a n c, an h i h i d
t ie p ll d
ces s ow n are sa to s e or a , a v ance

or d i ec l ne

A h
.

s t r on g m i h b
a r k et i l i s one t at s ow s su st ant a ga i ns n

p ri I i k h h p r i d i I i i d b
ce . t s w ea w en t e c es ec l ne . t s sa to e

s tagnan t h h wl m f l i len t e vo u e o sa es s ow

A r p f r r h d r ib i
.

i
p ool s a g ou o ope at o s w o a v anc e a c ont ut on

t o a co mm f df h p rh f r i k
on un or t h e u c ase o ce t a n st oc s , and w en
th e l ll
p oo hse ks h i pr
out ri eac h r f ont a es s op o t onat e s a e o

p rofi l
t or A oss i. i h i h b
b l i n d p oo l h s one n w c no one ut t e

one managi ng i t k now s w hat st oc k i s b ei ng d ealt i n .

22 O P E RATI N G O N THE § 32

An r k
ope at i on now n as p y r a m i d i n g i s t he act o f buyi ng
hr
ot e secu ri i fr m
t es o r
t h e fi ct i t i ou s p ofi t s o f an i nit i al i nv est
m Thent us , a m an mak es an i n i t i al i nv est ment on a s mall
m r i i ri d
.

a g n n a r i s i ng mar ket or a bu ll mar ket P c es a v ance ,

k i g h i pr fi h i ll h l d
, .

b ut i d f
nst ea ll i g o d se n an ta h n s o t e st o s t e

inv est m h rigi l m rgi d h b r k r

ent o n t e o na ah n an t e o e a ccept s t e

p r fio h
t as s h i b
ow n on k i l i f hs b oo m sr r
n
‘

i eu o ca s to uy o e secu

t i es m r i
on S h pr fi
a g n ll d fi i i
uc p p
o t s a r e ca e ct t ous, o r a er,

h T
.

p fi ro d h
ts , m an i t i de b p
an m idi h
s sai l d i tog h i e yr a ng s o n s s

r r r
.

p y m i d
a i l i k l
s ve b y p by e d yltio i h
e u m k set a ec ne n t e a et

an d h i t er ill h
nv est o i l
w t en su st a n oss

A rp f r i g
.

w ash i fi i i
s al e l f
s a h ct t ou s sa e or t e p u ose o c eat n a

fi i i
ct m rk
t ou s ri a et p ce .

R E CO R D I N G A P U R CH A S E A ND SA LE

54 Th e B r ok en — A s w i ll b e seen fr m o t h e d i scu ss i on
h r rm r rd d
.

t u s f ar , t he b ok e ay be ega e as the mi dd l eman or t h e

d di r r d h ll r
,

one s i t uat e ly b ect et w een t h e b uye an t e se e He i s

i h r h b r
.

the one w h o negot i at es as agent for e t e t e u ye or se er ll .

N ew Y or k, Ju ly 2 ,
1 9
J ohn D oe <9 Co .

B uy f or my a c c ou n t and r i s k

2 00 U 5 S teel
. . at th e mar ket

H A ppel.

FI G 3 .

Th r f re e o e it can be seen t h
man o f bu s iness ab i l i ty i s
at a

r q ir d
e u e t o occupy t i s p os i t i onh I t mu st necessa i l y b e so f o r r
r r
.
,

hi d i
s a v c e on c ond i t i ons i n t h e ma k et a nd ec ommendat i ons t o

m r
c u st o e s ar e o f v i t a l i mpo r
t ance .
 O P E RA TI N G O N TH E

55 Th e Ord er t o B u y o r S el l — N ex t t o be r
consi de ed

r rkr m r i
. .

i n t he b s offi ce w h en a cu st o
’
a re t h e ope at i ons o e e g v es

an o rd r Th emrm k rd r i m e c ust o e a es out an o e n so h f rm

e s uc o

h i Fig 3
.

as s ow n n

rd r i l h d h x h g d h r
. .

Th e o e s te ep one to t e e c an e an t e e e xecut ed
r r d h ffi d i h
,

t h d e at a et u ne to t e o ce, an a not ce as s ow n i n Fig 4

m r
.

i si g h
v en to t e cu st o e

h hr h m r i
.

A s s ow n ifi d h
t e eon, t e cu st o e s not e to t e efi ect t hat
t h Fr k M r
e C mp
an h b h f hi o an o any as oug t or s ac cou nt and

r i k 200 U S S l h pri f $98 p h r

s . . t ee at t e ce o er s a e, and t h at a

N ew Y or k J u ly ,
2, 1 9
J oh n D oe 57 Co .

S ell f or my a c c ou n t a nd r is k

I OO S mel ter s at 93

H A ppel
.

FI G 5
.

commi ss ion o f $ 3 0 h as been cha ged mak i ng t h e net p i ce pai d r r

rA r r fr r
,

by M pp e l Th e b ok e om w h o m t h e sec u i t y
W H
.

w asb h oug t w as J ones Co

Wh h r d r r r
. . .

w as gi v en i t w as ent e ed i n t h e Cust ome s

’
en t e o e

O rd r B k he x oo w en e ecut ed i t w a s ent e ed i n t he u c ase and r P rh

S l B k h i r d fr m ri
,

a es oo t en nt o t h e bl ott e an o th e blott e t w as
r r
, ,

t o t h at cu st ome w h i ch w as d eb i t ed f or
’
p o st ed s l edge accou nt ,

t h e net a mount a s s h ow n on t h i
e not ce

h rA rd r
.

S ou ld M pp e l gi v e an o e to se ll i t w oul d b e giv en as

h
.
,

s ow n in F ig 5
fr rd r i l ph
. .

A s be o e t h e , o e s te e oned t o t h e E x ch ange, e xec ut ed ,

a nd t h h d
en t h d b
e ata t e lep one ac k t o t h e office , and a not i ce is
gi v en M r App l h
. f h e to t e ef ec t t at his o rd r e w as e xecut ed .
 NEW AN G E YO R K S O CK T E X CH

Th i i gi i
e not ce h m f rm h s h i Fig 4
v en n t e sa e o as t at s ow n n

r d W h hi d ld
.
,

an d i hi i fi ll d
n t s c ase s e out to ea : e av e t s ay s o

f or r you d ri k Sh r accou nt an S ri i S m l s a es 1 00 ; ec u t es , e ter s ;

Pri $93 F d r l d S T $ 4 N
,

ce, ; e e a N m anf t at e ax , ; et , a e o

Br k r T O K f 9 C
o e Th p r i r’
i d i
ee e ( m d p o e net ce ec e v e s a e u

f h m rk r r r
, . .

o t e p i i d al m i
et i h g ce d ec e ve e ss cor n ss on c a es an

r fr
t ans e h d f d r l g
t ax rm b
t o t e st at e an e e a ov e n ent s ; ecau se

th h rg h i h h
ese a r e c m r ma p esh r w f r h y
c t e cust o e u st ay, t e e o e t e

ar e d d d e uc t e

f h p r h r r
.

A i h s n t p e i lcase d ib d
o h t e u c a se ev ou s y esc e t e

ri r l r rd s h r m i d d
,

ent m d i
es a r e h a e n t e sev e a ec o t e e ent one an

h
t e c ust om r i r di d i h h m
e
’
s ac c ou nt d i h s c e te w t t e a ou nt not e n t e

l m
net co u n

r f h d l i g h d ry r r d d i h
.

Th m e anne O an n eac an ev e ec o u se n t e

br k r ffi i ll b k l r S i
’
o e s o i ce w e t a en up n a at e ect on .

TH E CU R B MA R K ET

56 B eg inning of th e Cu r b M a r k et — As h as been
r rkr r
. .

p ev i ou s ly ex p a i ned , l the st oc k b o e age b usi ness fi st began

to f unc t i on on the cu rb st ones o f t he r
st eet s o f Pa ri s and Lon
don L r at e on , the cu rb m rk a et b egan t o f u nct i on i n N ew Yo k r
r r 68 W ll S r S ri i d r
.

unde an ol d b ut t onw oo t ee nea a t eet ec u t es

r b gh d d hi l i N Y rk i l b h
.

we e ou t an sol at t s p ace n ew o unt a out t e

t im f h Ci i l W
e o h h m rk t r m d Wil
e v ar , w en t e a et w as e ov e to
li m S r
a b Ex h Pl d B r S r Tr d
t eet , et w een c ange ac e an eav e t eet a

h i m rk j i L d d P ri b
.

i i
ng n t s a et , u st a s n on on an a s, egan at an

ea rl h r d i d i l
y ou h rb d l
an c ont nu e u nt P . M . on t e cu , an at er

in t he h ot el l obbi es .

57 Th er Cu r b A ss oc i a t i on —
r
D u ing t h e i nt e val o f
ri b d b h r r h r
.

tim d
e as esc e a ov e , t e cu b ma k et mig t b e t e med
uno r i d H gan zer i 1 9 1 0 h N Y rk Curb A i ow ev e n t e ew o ssoc a

f rm d hr h h ff r f f m h r
.
, ,

i
t on w as o e t oug t e e o ts o a ew en w o we e

f h d
ar s i g
-
h h b fi te r i fr m r i
enoug to s ee t e ene ts ac c u ng o an o gan

i
z at on

Th r dr d d fif m mb r
.

h e e a re f hi i
two un e an ty e e s o t s as soci at on

an d h d f t h m mb r
e $ 1 00 r
u es O ea c e e are p e r yea .
26 O P E ATI N G O N TH E
R § 32

U nde r the e x i st i ng l aw s of th e a ss oc i at i on, t he t r di a ng on

th e cu rb i s not r ri d h
est ct e to t e membe r s on ly bu t i t i s open to
rd hr
,

al l w ho c h oose to t a e t e e .

58 Th e M a r k et P l ace Th e p — r esent meet i ng pl ace f or

r r r r fr r
. .

t h e cu b ma k et i s on B oad S t eet i n ont o f t h e Wall S t eet

J ou r na l bu i l d i ng .

59 B u s i n es s H ou r s — J u st as on the E x ch ange, t h e
h r x d fr m D ri
.

bu siness ou s e i ll t en o A M t P M u ng

im h fi rm r d h r b k p r pr
. . . .

thi s t he t e s w i o t a e on t e cu ee a e esent at v e

h r h d i i m r rd r i h ’
t e e, w ose h uty t s to ex ecut e t e c u st o e s o e s n t e

open m rk Th m a r f r di g i im l r h
et e anne o t a n s s i a to t at on

h Ex h g r fi d h ll r r d i rr d
.

t e Th bc an e e uye n s t e se e a t a e s a ange

rd r i x d d h d r r d h fi
.
, ,

th e o e s e ecut e an t e a ta et u ne to t e of ce

Th b r k r r d p hr h b
.
,

e ifi hi o e fi f h not es s of c e o t e t a es ut t ou g , y
m f l ph
eans o l d i b
te e h i d i
ones h i d ocat e n oot s s t uat e n t e w n ow s

ov erl k i g h rb m rk Wh
oo n t rd r i r i d fr m
e cu a et en an o e s ece v e o

m r h br k r l rk i
.

ifi h l h ’
a c u st o e fi t e o e s of c e not es t e te ep one c e n

h h i r i fi h rb b r k r b m f
,

thi b s oot ; e, n t u n, not es t e cu o e y eans o a

si gn l g i l
a n u age, i mi l r h or d b d fs gnd
a s s a t o t o se u se y ea an

d mb p r Th b r k r d r d by i g
,

u e sons x h e o er e ec ut es t e o e an s ns

l rk h
.

not ifi h l h
es t e te ifi eph ffi one c e ,
w o not es t e o ce .

60 M et h od of A c cou n ting — The met hod o f account

r r rd i
. .

i ng I S s i mi l a t o t h at e mpl oyed f or ec o ng S t ock E xc h ange

t r ansac t i ons an d w i ll be e xplai ned i n S tock B r oker age A ccou nt
i ng M eth ods .

61 S ecu r i t i es D ea l t i n — Th e sec u ri i r d d
t es t a e in on

rb
. .

t he cu a re t h ose t h at h av e not yas et been ad mi tt ed t o t he

r di
E x ch ange f o r t d r m S a ng ; an ac c o d i ngly, ost t oc k E x ch ange
h mi i r r rb
,

ou ses i h
a nta n ep esent at v es on t e cu

f r r
.

I p i f h
n s h h
te o i i h d t e act t at t e sec u t es t e e ea lt in a re not

li dst e h Ex h on h r t m e im r c a nge, t e e ar e any p o t a nt i ssues deal t

i rb F x m
n on cu il J y 1 9 1 9 h or e a l
p ,e u p u nt ul t e st oc ks of t he
S d r d O il m r rddi h l rb
.
, ,
‘

tan a i co p an es we e t a e n w ol y on t h e cu

r i f
.

I 1 91 9 p i
n i m d
, a li p l c at on w as a e to st c e ta n o t he secu ri t i e s

o f t h at c o mpany on t h e E x c h ange .
§ 32 NE W YO R K T
S O CK E XCH AN G E 27

F r m hi bri f di i i ill b
o t s e sc us s on t w e seen ht at t he cu rb
m rk pl y
a et a s ani mp r p r i h fi
o t ant a t n t e nanc n i g f o new st oc k
co mp i f
an es, h
or , as b xp l i d h
as een e a ne t e secu ri yt o f a new

r r r r ri
,

c or p i i
o at on fi s d l i sth eab m k
t n on t e cu a et , and the secu ty
w i ll i
c ont nue b b ghto d e l d h r by
ou t an so t e e, t he pu bl i c and

oth r il i i li
e s, unt t d s h E h g
ste on t e x c an e.
STO C K BR O KE R AGE A CC OU N T IN G
-

M E T HO DS
B OO K S A N D M E TH O D S U S E D

I N T R O D U CT I O N

1 A s h as been e xplained r
i n t he p ev i ous S ect i on, t h e
r r fr m r
.

t ansact i ons esu lt i ng o the b uyi ng and sell i ng of secu i t i es

by r k r f hi
a b o e mr m r
or F hi r
s cu st o e s a re nu e ou s or t s eason

i br k r
.

a syst em f b k f o h m i
oo s o account as co e nt o u se n o e s
’

ffi
o f r rdi ll
ce s or r d r g rdi g
eco ng a i gl necessa y ata e a n any s n e

r i
t h h k i d f ri y b h
ansact on , suc as t ld h e n o sec u t oug t or so t e
r h r h r
,

quanti ( mb ty f nu) b e l d h po i f s a es oug t or so t e ce, or

fr m h m b h h m ld d m y
,

wh ose acc ount , o w o oug t , to w o so an an

h r im r f hi h i ll h r
,

ot e po t ant b k act s ,
p d w c w e e e t a en u an

xpl i d
e d il
a ne In eta

br k r
.

Th b k f e oo s omm l d i ac count c o ffi i on y u se n a o e
’
s o ce n

W ll S ra f ll
t eet ar e as o ow s

O rd r B k
" e oo

N P r h
E .

d S l
u c B k ase an a es oo

M r i R rd
.

N a n ec o
g
P Cl r i d E Cl r i r
S .

H ea ng H Bl
ou se an x ea ng ouse ott e s

m r L dg r
-

‘
C
’
P ust o e s e e

Pri L d r
.

Q v at e e ge

r lLd r
.

N G ene a e ge

W S ri i L d r
.

ec u t es e ge

k B rr d L d B k
.

P S d
t oc s o ow e an oane oo

B rr d L
.

Q M
a
p doney d B k o ow e an oane oo .

C O P Y R l O H TI D
'
I Y l N f l R N A T I O N A I.
' '
T I XT I O O K C O MA
P NY. A LL R HTIG . N CO -I VI D

l L T 234— 7
 T A S O CK B R OK E R G E
g 33 -

11 S k Tr frR i r
t oc ans e eg s t e

V l Li
. .

12 au t st

r r q ir d b l
. .

13 R T R i ev enu e ax eg st e e u e y aw

Th r rd j m i d l r r r
. .

e eco s u stx p i b d
ent one ar e to a a ge e t ent esc e

by t h l f N
e Y rk S
aw s o h F d r l G
ew rm o t at e or t e e e a ov e n ent , o r

b yh l
t e a w sf h N
o Y rk S k E x h t e I m h r
ew o t oc c ange t ay t e e

fr b fl
.

o e d h
e sa e h m y m f b kk pi
st at e i
t at t e sa e syst e o oo ee ng s

u sed b h br k r
y d
eac h ffi d o f ll e m
an eac o ce oes not o ow a syst e

ir l r r
,

f b k pi h i d f h b kk ’
o ook ee ng t at
p p s ent e y a o uc t o t e oo ee e s

l i
ow n se ect on

r i i
.

Th m f b
e syst ek i d o i i ook eep ng an ac c ou nt ng n ope at on n

W l S r i r ffi i
al t eet f h
s ve b r d m
y e c ent , or it as een c eat e to eet th e
d m d
e an f h b i s o d i t at m f d p i
u s nes s , an s not a syst e orce u on t .

ORD E R B OO K
2 Use — rd r B k i
Th e O e oo s a b ook i n w h i c h t he rd r
o e s

m r r rd d A
. .

of t he c u st o e s a re ec o e s h as b een e xp lai ne d i h
n t e

r h m r r r br k r
.

p ev i ou s S ect on w en a cu st o e
i g i v e s an o d e t o a o e

r ri i
,

to b uy o r sell f or h i s acc ou nt an d i sk h e d oes so i n w t ng

, .

FI G 1 .

Th rd r ese o e s , as soon a s g i v en a re w i t t en r up i n t herd r O e

B k If i i rd r rd d r h
,

oo t s an o e to s ell , t h en i t i s ent e e un e t e s el l

rd r id i Fi 1 rd r rd
.

; i f it i s t o buy, i i s ent e e
‘

o e s s e, as n g an o e t
d r h b y rd r
.

un e id t e u o e s s e, F ig 2 . .
 § 33 A CC O U N TI N G M E T H O D S

3 W h at Th f
I s R ec o r d r r d d r g rd i ged —
e act s eco e e a n a

ll r d r f ll
. .

se o e ar e as o ow s

1 Th m f e a ri y b ld
ount o s ec u t to e so

ri y
. .

2 N m f a e o secu t
Th p r i hi h
.

3 e ll
ce at w c t o se
Wh h r d r xp i r
. .

4 en t e o e e es

m r gi i g h r d r
. .

5 N m f a e o cu st o e v n t e o e

f br k r
. .

N m a e o h m ld o e to w o so .

4 I W ll S r
S t op O r d er s — m r n ry f a t eet , a c ust o e ve o t en
fig r hi h ll r i f h i h l di g i
. .

set s a u e at w c to se ce ta n o s o n s n case

o f d li a i h m rk p r i
ec ne n t e S h a rd r i ll d p
et ce uc an o e s ca e a s to

r r r
.

or d I
er h fn t p d
e c ase o i f h m
a st o ll h o e t e c u st o e te s t e
br k r r i ri y wh h pri f ll r i
.
,

o e ll t o se a ce t a n secu t en t e ce a s to a ce ta n

p i
o nt , th p r i i r at r d d i ce h sp r i ec o l m F ieg 1 T h n t e ce c o u n, en,

h l d h r d r b g d i l l m h r rd r k i p l
. .

s ou t at o e e oo t so e ot e o e ta es ts ace,

i w t ld b g d i ll
ou e rm d d d h i i f rm i p
oo t count e an e an t s n o at on, r e

r d by h bbr i i G T C ld b r rd d i
,

esen t e t e a ev at on w ou e eco e n

l m h d d E xpi r Th g i m r migh
. .

th e co u n ea e es en a a n , a cust o e t
r r h h h
.

g i v e an o d i t el d ft at y 3
s d o i o h or , sa ays ; n t at ca se , t e

f xp i r i r r r
,

d at e o 3
e d l
at on,d b d d ia h E x p i
w ou e ec o e n t e es

m f h br k r h m h l i md i
.
, .

co ul m Th n e na e o t e o e to w o t e sa e s a e s

r rd d i h l m h d d S l d T
.

ec o e n t e co u n ea e o O

b y rd r h f r rd d h m
.

I h n t f e c as e o a u o e t e act s eco e ar e t e sa e,

m f h b r k r fr m h m h
,

wi h h t x pi t e e h hce t on t at t e na e o t e o e o w o t e
se cu ri y b gh i i l d d i h B gh Fr m l m
t w as ou t s nc u e n t e ou t o co u n .

5 mm E xa T e of j h
Use h i r —
r d i o see u st ow t s eco s

id r h f ll i g r i hi h
. .

u se d cons e t e o ow n b t ansact ons , w c ar e to e

r d h w i Fig 1 d 2 S pp h
,

ent e e as s o n n s . J l 1 an . u o se t at on u y ,

1 92
1 W A F r d h m gi Br k r J h J
o a v es rd r o e o n ones an o e to
d r i k 1 00 h r
. . .

b y f
u hi or s acc ou nt U S S
an l s h s a es tee at t e
m rk pri h h r
. .

a (et i h i $
ce 98 5 w )c s a s a e

W A F r dh m gi Br k r J h J rd r
.

2 o a v es o e o n ones an o e to
2 00 h r R bb r r
. . .

se ll f h i or s account $ 90 sh a es u e at a s a e

H A r gi B r k r J h J rd r b f
.

3 e y v es o e o n ones an o e to uy or

d ri k 1 0 h r S d b k r r
. .

hi s acc ount an s $ 7 0s p ha es tu e a e at er s a e ;
1 00 h r s S r R b k a es ea s $ 1 0 5 p oe uch r at er s a e .
 T
S O CK B R OK E R G E -
A g3 3

4 H y g i v e s B Ar
rkrJh J e rd r ll f o e o n ones an o e t o se or

r A nd C r $85 h r i
. .

hi s accou nt 1 0 sh a es naco a opp e at p er s a e, n

3 d ays 1 00 h r; S r R b k s $ 1 08 h r
a es J l 1ea s oe uc at p e r s a e on u y
m d h h rd r r x d
.

I t i s ere as su e t at t ese o e s we e e ecut e on

J l 1 l 92
u y i rd r r d i h h x l i J n o e t o p ocee w t t e e p anat on us t

f rd r b rd r l rk
.
,

as h
ast a s t e oll m i h e s to uy o r se co e n, t e o e c e

ent e s r h m i h O rd r B k M r F r dh m fi r r d r
t e n t e e oo o a
’
s st o e to
h m rk hi h ri
. .

b uy 1 00 U S S l 9
$ 5
t ee8 at t e a et , w c p ce w as p e r

h r i r d i h O rd r B Fig 2 f ll
. .

s a e, s ent e e I
n t h e e ook , as o ow s : n t e

Am l m i r rd d h mb r f h r
.
,

ount c o u n b b
s h
ec o e t e nu e o s a es to e oug t

i h S
n t e ri l m i r rd d h m f h k i
ec u ty c o u n s eco e t e na e o t e st oc ; n

t h Pr i
e l m i r rd d h
c e co u ri hi h h r h
n s eco e t e p c e at w c t e p u c as e

k
t a es p ace l I h Ex ir l m i r rd d h
. n t l e p es co u n s eco e ow ong a

FI G 2 .

t i me t he rd r
o e i s good f or— i n t i s h ca se it e xpi r es ve ry
q i
u ckl y—
d i
an n t h e Cu st ome c ol u mn i s r r rd d
eco e th e name o f
t h e c u st o mr he w o gi v es t h e o d e t o b uy i n t h i s c ar r
se W A
r
. .
,

Ford ham The mak i ng of all t h e ent i es t o t h i s poi nt may be

r
r N 1
.

c ons i d e ed as op e at i on o

Wh h rd r i r i d i i i mm di l l h d
. .

en t e o e s ece v e t s e at e y t e ep one to
h fi m
t e r r r i
’
fl r f h xh g H
s ep esent at v e on the oo o t e e c an e e

rd r d l h h r l b k h ffi
.

ex h
ecu t es t e o e an te ep ones t e esu t ac to t e o ce

Th k l hi h i f r g
.

en ta i N 2 es
p ace op era t on o w c c ons st s o ent e in
m f h b r k r fr m h m h
.
,

h
t e na e o k b h
t i e o e o w o t e st oc w as oug t ; n

hi
t h
s ca se ll i br r J T L mb Th i h
t e se ng ok e w as a en, s nce t e

m r rd r d ri b b h h m rk r
. . .

c u st o e o e e the se c u ty t o e oug t at t e a et p i c e

r i migh b h ri r
,

w h at ev e t ld b m d i h t e, t e p c e ent y w ou e a e n t e
§ 3 3 ACCOUNTI N G M E T HO D S
rp i l m If h r h
ce co u m r h d rd r d h
n ow ev e t e c u st o e a o e e t e
ri b b gh h h m rk r h d r i pri
.
, ,

secu ty t o e ou t w en t e a et eac e a ce ta n c e,

t h pr i
e p ifi d l d h
ce s b r d i
ec p r i N 1e w ou av e een ent e e n o e at on o

F r m h i x pl ri f h h r r i
. .

o i h
t s e anat on , t e ent es o t e ot e t ansact ons ,

h i Fi 1 d 2 ill b i l d r d
as s ow n n gs . an , w e eas y un e st oo .

P U R CH A S E AND SA LE S B OO K
6 Use —
Th e P rhu c ase and S al es B ook is a b ook of

r i l r I i d r r d ll h r h
. .

o gi na ent y td l s u se to eco a t e pu c ases an sa es

r i i b fi m f br k r f h i r m r f r h
.

o f sec u t es y a r o o e s, or t e cu st o e s a te t e

rd r
.

o i
e s are d x d g ve n a n e ec u t e

hi r rd h f ll i f r rd d r r di g
.

I n t s ec o t e o ow ng ac t s ar e eco e ega n a

g iv r i
en t ansact on
"! N m f h br k r h
a e ox d h rd r
t e o e w o e ec ut e t e o e

N Fr m h m b
.

oh h m
w ld o oug t or t o w o so

b r f r b h
.

N m
’
P u e ld o sha es oug t o r so

ri i f ri
.

P D esc pt on o sec u ty
M M rk ri h
.

ahi b et ld
p c e at w ch o ug t or so

h
.

Q F or b wh ld
os e ac c ou nt ou g t or so

N T im f d li r d r rm f r
.

e o e ve y un e te s o c ont ac t

W Th e t ot al a mou nt pai d .

7 S i nc e hr
t e e ar e w h at a re k now n as r
Cl ea i ng H ouse and
r r
.

E x Cl ea i ng H ou se st oc k s, i t w ou l d nat u all y b e a s su med t h at

r r r r
-

t h e e w er e t w o book s u sed one f o r eco d i ng eac h g o up of

rr hr i l P rh
,

i t ems O n t he cont a y t e e s on y one u c a se an d S al es

h b k l Cl ri H
.
,

B ook u sed but i n t at oo a l ea ng ou se i t ems ar e

r d fr m h E Cl r i
,

u suall y s eg egat e o H i t e x -
ea ng ou se t ems .

8 Bids an d Of f er s — F or conv eni enc e, r

t h e p ov i si ons of

r r rd i
. .

law s of the N ew Yo k S t oc k E x c h ange ega ng bi ds and

off e s , r wh i ch g i
we v en r
i n t h e
e p ec e d i n g S e c t i on a r e h e e r r
r r r r
,

epeat ed , and d et ai l s o f ec o di ng o f b i d s and off e s ar e

e xplai ned
r r
.

U nde t h e l aw s o f t he N ew Y o k S t oc k E x c ha nge b i d s and

r r r
,

off e s f o r t h e p u c hase a nd sal e o f sec u i t ies may b e mad e as

f llo ow s
 B ROK E RAG E T
S O CK 33-

1 . C h Sas ri b d l i r d h d y f p r h
: ecu ty t o e e ve e on t e a o u c ase

l
o r sa e an d m m d f i
a
p y ent a e or t
ri b d li r d d p m
.

2 R l egu ar S w ay : ec u ty t o e e ve e an ay ent to
h r f r h x b i d f ll i g h p
.

b m d
e a e t e e o on t e ne t us ness ay o ow n t e ur

c h ase o r sa el
r i b d l i r d h h i rd d
.

3 A 3 d y t S a s: ec u ty t o e e ve e on t e t ay

f ll i h r b d ll
.

o ow ng t e cont act to uy an se

r r
.

4 o d l i f i
'
B i F
’
uyer s ll p or se er s o t ons : r e ve y o sec u ty
r h h f rhd l r h 60 d f rh
.

not soone t an t e ou t ay nor at e t an ays a te t e

d at e o f r C r
cont act x h d h d f ll
ont ac t s a r e e c ange on t e ay o ow

h r r r id f i
.

i ng t e t i S m f h
ansac t on o e o t ese c ont act s p ov e or nt er

h r d Wh r h r d r id f
.

e st an d ot e s o not e e t e cont act s o not p ov e or

r h
.

”
int e est t k ey ar e fl now n a s
“
at

U d r h r d ll r i h b r m
.

’ ’
n e b t ese uye s an se e s opt ons t e uye ay

d m d d li r
e an e h ll r h
ve y h ri hor t d li r h
e se rie as t e g t t o e ve t e secu

im b f r
,

t i es at an
y t h x ir i
e f h
e o e p i O t e e p h at on o t e o t on n suc

r b f r
.

c ont act s , one d i m b i

’
ay s not ce u st e g v en at or e o e P M
b f r ri i d l i r bl ri r h
. .

on h d
t e ay h e o e t e sec u t es are e ve a e p o to t e

m at u ri f h r ty o t e cont act .

9 Abb r ev Th i f rm i
i a t i on s r g rd i U s ed e n o at on e a ng

f d li r d r h r m f h r i r rd d i
-
. .

t im e o e ve y un e t e te s o t e c ont act s ec o e n

h Tim r i bb r i i f ll
.

t e l m b m
e co u f n y eans o ce ta n a ev at ons , as o ow s

1 C h C as

l r
. .
,

2 . R egu a R w ay, .

3 A 3 d t O S O ays , B 3
or
3

r ll r
.

B i S O
’
B O
’ 4
4 u ye s or se e s opt ons , or

bb r i
.

Th e a f h
ev at i ons d f l y x
or l i
cas an or r eg u ar wa e p a n

t h m l
e se v esB O d S 0 m
; b r ian d ll r ean u ye
’
s opt on an se e
’
s

i
opt on, r i l dh x e spec t v e i di
y an h m ri f
t e e ponent n cat es t e at u ty o
r Th i f r ll i d gr d
,

h
t e c ont ac t us , k you we e se ng st oc an a ee to
d li r h i rd d f r h d f r
.

m k a e a e h ve y on t e t ay a te t e at e o cont act .

h
t en, i s nc e r h ll r you we ld h ld h
e t ll r
e se e you w ou o t e
‘
se e
’
s

bb r i i h rh d
,

i
opt on at 3 d i ays , o r , S 0 O h
n a ev at on ,
3
n t e ot e an

r r 3d h r
.
,

we e youh b
t e uye ld h ld h b
at ay s , t en yo u w ou o t e uye
’
s

i
opt on at 3 d i bbr i i
ays , or , 0 If h i r n a ev at on , B 3
t e opt on we e

h r im ri
.

f o r any ot 4 d
e t 30 d i
e, as ld b ays o r ays , t w ou e w t t en a s
sh ow n, B O ‘
l
or S as t h e c a se might be .
A CCO UN TI NG METHO D S
1 0 . E x am p l e of

Us e.— As an e xampl e
of t he use o f t h e Pu r
c h ase and S al es B ook ,
Fi gs 3 and 4 show t h e
ri r fr m
.

ent es esu t i ng l o

h r
t e t ansact i ons not ed
i n t he r r
O de B ook , as

l i st ed i n A rt 5 . .

I n the case o f Mr
r rd r
.

Fo dham s ’
o e , f or
ex amp l e i t w i ll be seen

h d r N m
,

t at un e f a e o

B r k r i r rd d h
o e s ec o e t e
na m f F A D e o ow ne.

h br k r h b gh
. .

t e o e w o ou t
t h k
e st oc d r Fr m ; un e o

Wh m B gh i o ou t s te

co rd d h m f e t e na e o

J T L m b h i h a w c w as
d fr m h
. .
,

o b i t a ne o t e

O r d r B k F ig 2
e oo

U d r N mb r
.
, .

n e f u e o

S h r i r rd d h
a es s ec o e t e

nu mb r f h r
e o s a es

b ou h i hig t, n t s case

1 00 d r D
; un rip i e esc t on
i s h t e m f h
na e o t e

st oc k i hi U S
n t s case

d r Pr i
. .
,

S l t ee ; un i e ce s

t h m rke ri p i d
a et p ce a ;
un d r F e VVh or ose

A ccounti h m f s t e na e o

t h p
e r g i ie son
g h v n t e

o rd r i h i e n t s case

W A F dh m
,

or a

h T im
. . .

I n t l m e e co u n

i r
s rd d h i m
eco e t e t e
533 ACCO UNTI N G M E T HO D S
w h h en ri y ill b d li red d r h rm f h
t e sec u t w e e ve un e t e te s o t e

r I hi
cont ac t h r md i h r g l r
n t s ca se t e cont ac t w as a e n t e e u a

d h f i r rd d b h ymb l R
.

w ay, an t at act s ec o e y t e s o

Th A m l m r rd h d r rm f
.

e l ount c o u n eco s t e t ota cost un e te s o

r i hi
co nt ac t , n t s ca se

Th h r r i
e ot r d i imil r m r
e t a nsac t ons ar e ent e e n a s a anne .

CU S T OM E R S
’
MA RGI N . R E CO R D

1 1 Use — As a c u st o me may buy r st oc ks and bond s on

r hir rh r
. .

ma g i n h
i
g y l
t i
i m
spo t ant t h a t t h e b ok e av e at ha nd a

h r
,

stat ement o f t h e a mou nt o f capi t al eac cust ome h as adv anced

on hi rh s h i h h br k r i h l d i g f
p u c ases h i m Th r
w c t e o e s o n or e e

f r h M r i R rd i tr d d fill h ed
.

o e t e a g n ec o w as n o u ce to t at ne

T hi r rd i i mp r k p i h br k r
.

f h m
’
s eco s one o t e ost o tant e t n t e o e s

fi
of c e I i l h t m r f ll
s a so h d b h br k r
t e o ne ost ca e u y w at c e y t e o e

h h b g d lli g f ri i i ry
.
,

esp ec a i ll y w en t e uyi n an se n o s ecu t es s ve

l r
a ge and h m k i r i
t e ar et s ve y ac t v e

Th M rgi R rd i k p i h r h
.

'

e a n ec o k s e t e t e on w at ar e now n as

m r ia g rd i m l l f r rd h l r b i g
n ca s or n so e oose ea ec o t e att e e n u su

l r f rr d T h i r rd h ll h i f r m
-

al y p e e e l s eco s ow s at a g ance a t e n o a

r r di m r
.

i
t on ega li d b l
ng a c u st o e
’
s acc ount as st e e ow

1 Th mb r f h r l
e nu h r h dg d e o s a es —
ong, s o t, e e

A d rip i f h r i h ld
. .

2 esc t on o t e secu it es e

f h h r
. .

3 * Th i e net p r ce o t ose s a es

Th m r k ri id
. .

4 e a et p ce p a

5 Th m r i d i ( d r r di b l
. .

e a g )n epos t l e ge c e t a ance

Th m r i rmi i g rr h h ldi
. .

6 e a g n ed a n n to ca y t e o ngs, st at e

i h r i p i r g
.

e t e n o nt s or p e c ent a es .

1 2 M m
ar g U ll
inal h br k r
R eq u i re e n ts. —
sua y t e o e

r q ir h m r
.

e u es t d p i 20
e cu st o f h em tof e os t p er c ent o t e a ou nt o

r m rgi
.

m oney i l ed i i
nvo v n a ll
g v en t an sact i on, as a a n, on a

secu ri i hi h h t es w mr m h c b gh ld h r
t at c ust o e ay av e ou t or so s o t
Th i f r l g h i if h m r h ld
.

us , an account we e on ,
t at s, t e cu st o e o s,

* The p ri ce i s mad e up o f t h e market p ri ce plu s

net co mmi ssion
charg es, i f a p urc has e ; i f a sa l e, t h e t ax and commi ssi on
f c h arg es ar e
.

deduct ed rom t h e market p ri c e .

10 T
S O CK B R O K ER G E -
A 33

say, hr
1 00 s a es of stoc
k i g h h mr
cost n t en t at c u s to e

w ou ld b r q ir d e de u i e mr i to i h h br k r h
epos t as a a g n w t t e o e t e

su m f o Li k i i f h m r h d ld h
ew se , ( h t e cu st o e a so s or t t at
i s, ld
so r i i hi h h d i d
secu t es w ) l i k
c m e f not ow n a e a ou nt o

secu ri i i h l f t es w t a v a ue oh ld b r q i r d e w ou e e u e to
d p i
e os m r it a f a g hi
n o hr l on s s o t sa es

I i r dil h b m f h i r r d h br k r i
.

t s ea y seen t at y eans o t s eco t e o e s

b ett e r bl d rmi h m r h m rgi m b

a e to et e ne w en o e c as or a n u st e

f r i h db h
u n s e mri
y t rd r ill m i i hi
e cust o e n o e to st a nt a n s acc ou nt

so h t h br k r him l f
at t e o ei ll i l se h h
w not sust a n a oss, or so t at e

w i ll b f r d
not e ll h
o ce ri i hi h h i h ld i f
to se t e sec u t es w c e s o ng or

h
t at cust o m r e .

1 3 M Wh
a n n er of r r i md i h
Use —
enev e an ent y s a e n t e

P rh rr p di ry i m d i h
. .

u c a se an d S l B k a es oo a co es on ng ent s a e n t e

m r M rgi R rd Th i f mr J h
,

sa m e cu st o e
’
s a n eco us , a cu st o e o n

h r A r h r
.
,

J ay, b 1 00 uys f s d C
a es o p 5
$ p0 h
nacon a op e at er s a e, t e

fir r ld b m d i h O rd r B k h i h P
st ent y w ou e a e n t e e oo t en n t e ur

h d S l B k d h imm di l h r ld b
,

c ase an a es oo an t en e at e y t e ent y w ou e

m r M r i R rd h i
,

m d i h
a e n t e c u st o e
’
s a g n eco s ow ng

mb r f h r b h ld h r
,

1 . Th e nu e o s a es oug t or so s o t .

2 Th k i d f e k n o st oc

Th m r k p r i ri
. .

3 e d
a et ce an net p ce

Th m r i f d p i ( r di b l
. .

e a g n o ) e os t c e t a anc e

m rgi r m i i f r m ki h r
.

5 Th e a n e a n ng a te a ng t e nec essa y
dj r rdi g l
.

a m
u st ent s ega g i n i d
any o sses or a ns sust a ne

Wi h h i i f r m i i i r fi d h mr i
.

t t s n o m at on t s an easy at t e to n t e a g n

h
t at a cu st o m ri m i i i g
e h i h l di
s a nta n n im All on s o ng s at any t e

h i r y i fi d h m r k l f ll r i i
.

t at s necessa s to n t e a et v a ue o a secu t es

h ld l
e ld h r
ong or so d m s20 p o t anf i f co p ut e er cent o t; or , as

m rgi i r q ir d b
.

h as b d
een st at e f 20 p a a n o h er cent s e u e y t e

br k r
, .
.

o e

S h l d h m rgi f ll i d r bl b l
.

ou t e a n 20a h
cons e a y e ow p er c ent t en

ld b m d b h br r h mrf
,
.

a ca ll w ou e a e y t e h oke on t e c u st o e or enoug

m r o e c as h ri i or secu ( h ti es m k top) h r ec over t at s, to a e u t e

m r ia g h
n to t ri i l 20 e o g r q ir d
na p er c ent . e u e .

1 4 m E xa plef M F r h m
of rd r
U se I r o d a
’
s o e s as

r rd d i h P r h l r
-
. . .

eco e n t d S l
e B k
u c hi as e a n a es oo ar e s on y t ans
 A CCO UN TI NG M E T HO D S
i
ac t on s i h Br k r F A D
w t o h e di g f hi ow ne , t e st an n o s accou nt

m r gi l d p i l d b d r mi d by h f ll i g
. .

'

as to a na e os t w ou e et e ne t e o ow n

ent ri es

A h r s t rd f p r h h h h b r k r i h l d i g
e eco o u c a ses s ow s t at t e o e s o n

1 00 h r f U S S M r F r dh m Mr ’
s a es o l f t ee or o a s accou nt ,

F dh m i l g f h m rk h x
. . . .

or a s on o t h ef a et to t at e t ent ; t er e o re, an
‘

ent ry i m d h l g id f h i M rgi R rd h i g
s a e on t e on s e o s a n eco s ow n

h n mb r f h r
,

t e u e hi o s i l g h ki d f
a es k
s acc ount d s on t e n o st oc an

r h r r
, ,

th e net
p i h i i ce,h m w k p ic p l msm i i t e a et ce us co s s on

c h rg a f h br k r
e o t d e y d d i i
o e l x p an T h m r
ank a t ona e ense e a et

r r r r
.

p i cep i d f a h i
or t i l d
e sec u d ty s a so ec o e

h r r d f l i i f d h M r F r dh m h ld
.

I n t e ec o o sa es t s oun t at o a a s so

2 00 h r f R bb r r g r di g h i h r
.

s h ort s a es o d h d u e an t e at a e a n s s o t
h r f r r rd d h i g h mb r f h r d
,

l
sa e a r e t e e o e ec o e s ow n t e nu e o s a es an

k h r h r r r
,

ki d f
n o st oc p si d
o t, t h m k p i
e net f h ce , an t e a et ce o t e
st oc k ld h r so s o t

m r m rgi
.

Si ll
nc e a i i h ld l g f
sec u r t es e on or a c u st o e on a a n or

so l d Sh r o r q ir d b m rgi d by d p i f 20 p
t are e u e to e a ne a e os t o er

M r F d h m i h l di g
.

cent f h o l i
t l d
e v a ue d i nv o v e an s nce or a s o n

r h f k m rgi h ill b r q i r d
. .
,

wo t o st oc on a n, e w e e u e to
d p i 20 p
e os t f i er c ent d o h 2 00 h r t , or f an on t e s a es o

R bb r hi h h h ld h r h i h h br k r
.

u e w c e i ll d p i as so S o t e w e os t w t t e o e

20 p er c ent f o hi h ill i him r di or w c w g ve a c e t

h l dg r f A M F r dh m g
.

b l a anc e i n t e e e o s r o a oes on

r di g h i r di b l i h l dg r ill h g fr m im
.

t a n s c e t a anc e n t e e e w c an e o t e

ri i h ld l g ld h r
,

to t im i ll h
e, as w t e sec u ht es e on or so s o t , so t e

m rgi r
a n rd ec o ry h g b l s ar e v e c an ea e .

TH E B L OTT E R S

1 5 Use I n t h e bookk eep i ng syst e m the nex t book t o be

T i r rd m b id
-
. .

used i s t h eB l ot ter h s eco ay e sa to b e a co mb i na

d h J r l I r li rr
.

i f h C h B
t on o t e as ook an t e ou na ts u ng and a ange

h h r r f r
.

m h
ent a re suc i di as to n cat e w et e an ent y or a gi v en t ans

i
act i on l h r f r fr m
s on y t o s o w a t an s e o one acc ou nt to anot hr e

or h h r
w h et f e h h k l
an ex c ange o ca s as ta en p ac e

Th r r k ri
.

ll
e e bl ar e f u su a y t w o ot t e s ep t , one or ent e ng t h e

r i i Cl ri H
t ansa ct ons k i n ea ng ouse st oc s n 1 0 0 s har e
-
l ots or
12 T
S O CK B ROK E R G E -
A gas

mul ti pl es th er eof s Bl ott e i s call ed t he Cl ea ing Thiouse r r H

r
hr r r
.

Bl ot te Th e ot e b l ott e i n use i s k now n as t he E x Clea

r r r r r
-
.

i ng H ouse Bl ot t e and i t eco d s t ansact i on s i n Cl ea i ng

h h r
,

H ouse st ock s w h i c are o f l ess amount t an 1 00 sha es ; i t i s

r r r r
used al so t o eco d all t ansact i ons i n st ock s t h at ar e not Cl ea

r r r
i ng House st ock s as w ell a s t o eco d all t ansact i ons i n bond s
‘

h h r
.
,

E ac one of t ese bl ott e s w i ll be t ak en up i n det ai l .

1 6 br k r ffi h r ’
. A l t er n a t i n g B l ot t e r s .
—
In o e s o c es t e e ar e

u sua ll yf bl
t w o k f h di i i
s et s o f k ot t er s ept or eac v s on o st oc as

Th h Cl r i r
'

expl i d ab a ne ov e H Bl ey av e one ea ng ou se ot t e

d Frid r
.

k h M d
now n as t e Wd d C H Bl
on ay , e ne s ay, an ay ot t e

d i r r d ll r i h h T
. .
,

an t eco s a k l t ansac t ons t at a ve ta en p ac e on u es

d ay,T h r d Fr i d d S rd l
u s ay, k h
ay , a n at u ay ; a so , one now n as t e

T d d Th r d C H Bl r d i r rd ll r
ues ay an u s ay ot t e an t eco s a t ans

i Cl r i rri g M d d
. .
,

i
a c t ons H n k ea ng ou se st oc s occu n on on ay an

W d de f h
nes ay o k eac w ee
E Cl r i g H r
.

I h
n t m e sa e Bl
w ay t w o d x ea n ou se ot t e s are u se

rr di d f r rdi ll r i h
-

on co espon ng ays , or eco ng a t ansac t ons t at ar e

E Cl r i
x H ea ng ou se

l r i r i i
-
.

B m y f h eans bl o t i bl f
e a h t e nat ng ott e s t s p os s e or t e

b kkoo r k h eepe s m r to peep d d t e c u st o e s

’
account s ost e
'

to ate .

E NTR I E S

1 7 By r f ri
e er F igs 5 and 6 s ow i ng t h e
ng to t h e f rm
o s, h
r r r
. .
,

ul i ng o f each b l ott e i t w i ll be pl ainly seen t hat as t o u l ing

rr r r
,

and a angement t h e bl ot t e s a r e i d ent i cal S o a d esc i pt i on o f

r r r
.

t h e manne o f mak i ng an ent y i n one b l ot t e w i ll ex p l ai n t h e

met hod of ope r at i ng ei t hr e

r rdi h Prh
.

When a t ansact i on i s ent e e n t e u c ase and S ale s

B k h
oo m r i i j r li d
t e sa e t ansact on s ou na ze i n t he Bl otte r
Sh ld h r i q
.
,

ou i i b l
t e t ansact on n uest on e a sa e, t h en i t w oul d b e
r d h T D l i r id f h Bl r
ent e e on t e o e ve s e o t e ot t e and the foll ow i ng

d at al d b r rd d
w ou ml e eco e na e y :

h m ld
,

1 T o w o so

N mb r f h r ld ( q
. .

2 u i y) e o s a es so uant t

A d rip i f h h r ld
. .

3 . esc t on o t e s a es so .
§ 33 A C C O U N TI N G M E T HO D S 1 3

4 Th p r i p
e i d ce h m rak p on th r e a et , er s a e

r
.
.
,

5 Th m e a p id i
ount l m a f n set t e ent o cont act

h rg d by h br k r f hi r i
. .
‘

6 . Th mmi ie co ss on c a e t e o e or s se v ces

o f ll i g
se n

r h r r
.

7 T p ax i d h a atf t pe d
at e o d h h er un e s a es to t e
Y rk m r h F d r l
.

st at e o f N ew d l o h an a so at t e sa e at e to t e e e a

G rm
ov e n ll
ent , on a k l d i h $ 1 00 p st oc so l w t ar va ue

r i di lm f h r
.

8 . Th l m
e tot a a ount ece v e n set t e ent o eac t ans

i
a c t on, hi h i l d
w c h nc u m pes i d f
t e a h k m i
ou nt y a or t e st oc nus an

a d di i l xp
t ona e h ense su c mmi i d a s co d i r ss on an t ax an nt e est .

9 Th m f he na e o ff t e d ac cou nt a ect e

h f rm d b h r d r d r
. .

O l ki g b k
n oo n ac to t e o s , no ou t t e ea e w on e s

w h r h i r i m m fr m hi h ld b r d i
e e t e nt e est te s co e o w c w ou e ent e e n

l m m rk d I r h Cl r i g H r
,

h
t e co u n a e I nt e est Bl
n t e ea n ou se ot t e

r i m ill m fr m i r ll b rr
.

t h ie nt e est te s w co e o d d nt e est on a o ow e an

l oane d Cl r i g H ea n k hi h h
ou se b
st oc s ll d w c av e een ca e or

r e tur ne d S h ld o, s br k r h ou b rr
a o e k m k
ave to o ow st oc to a e a

d li r f mr h r r r
.

e ve y o r a c u st o le fon a s y h o t sa e or o r an ot e eason ,

t h at br k r o l d ll
e w ou h i r mi g fr m h r
co ec t t e nt e est co n o t e t ans
i
act on f ; i i ll b r m mb r d h
or, t w e h b r k r b rr
e e e e i g t at t e o e o ow n

h
t e st oc k i ll gi h i h k f w ve h f ll m r k
s c ec l or f h t e u a et v a u e o t e
st oc k b rr o d d h
ow e i ll r
an i i re w h m
ec e ve g i nt e est on t e a ou nt v en

r r h r h r
,

at an a g d ee O h
at e d n th l de ot h b ke l an s ou t e o er oan

k h d f h i g r r di h ld h
.
,

s toc t i en, nst ea i o av n an nt e est c e t, e w ou av e

r d bi
,

an i nt e est e t
h E Cl r i g H B l r i r i m i ll ri
.

I n t e x ea n ou se ott e nt e est te s w a se

fr m m y b rr d d l d fr m b rr d
-

o one o ow e ll
an oane as we as o o ow e

an d l oane d k f h E Cl r i g H
st oc o t e di i i
x f
ea k
n ou se v s on o st oc

Sh ld h r r h
-
.

ou i
t e t ansac t on b p i de a f l u c a se n st ea o a sa e, t h en
h d
t e r rd d l d b h m h f
at a ec o e w ou e t l
e sa i h e as t at or a sa e, w t
t h e e x pi ce h t on t i d f at h m ld
nst ea o l d r rd
to w o so w e w ou eco

fr m h m b gh l h r l d b
o w o ou t; a so, i m f
t e e w ou e no t ax te or no

i p i d by h p r h r f ri i I r
,

t ax s a t e u c ase o ld b
secu t es nte est w ou e

h l d y b d fr m m y l d
.

i l d d
nc u e s ou an e u e, o k one oane or st oc s

r r d
,

et u ne .

1 8 Use of B l ot t er as a Ca s h B ook —
S o f ar t he
r r r rd r rd
. .
,

Blott e h as b een c ons id e ed only as it eco s t h e d at a ega

18 S TO CK -
B R O K E R AG E 33

r
i ng t ansact i on s in sec u r it i e s . I t w i ll no w be c o ns i d e r e d a s it

r r
‘
d
ec o s c ash .

R ule .
-
S h ou l d cas h be r e c e i v e d, i t is r ec or d ed on th e D eli v er
si de o f the B l ot ter w h i l e if ,
cas h be p a i d i t i s , r ec or de d on th e
R ecei v e s id e o f th e B l ott er

h rr r i
.

Th e ex p l a nat i on o f t is see ming e o s t h at t h e c u st om i n

t he st eet r ha s est ab l i sh ed t he f ac t t h at all sal e s and t h e cash
r ecei v ed t he rfr e o sh al l be r rd d
ec o e on t h e D el i v e r s i de , t he
r
c ed i t
‘
in t hi s c ase bei ng a c e r di h t to t e c u st o me r and a
*

deb it t o
cash

Al
.

so , c u st o m h as estab l i sh ed t h at w h en a p u r c h as e is mad e
and p a i d f o r i n c as h i t i s t o b e ec o d ed on t h e R ec e i v e p g
a e r r
r r
,

o f t h e B l ott e t h e debit bei ng a d ebi t t o t he c u st ome and a

r
,

c ed i t to cash .

1 9 P os t i n g t o t h e L e d g er s A l l p ost i ng to t he l edge
— r
fr m r f
. .

ac c ou nt s i s d one o t he B lot te and i n p ost i ng t h e oll ow i ng

r h f
,

l
u e s ou l d be o ow ed
ll
R ule . Wh en pos ti ng t o th e l edger account fr om th e B l ot ter ,

s h ou l d an i t em a pp ear on th e r i gh t -
h and, D eli v er , page, i t
or

r e res ents a cr ed i t
p t o th e cu s t o mer and a d ebi t t o cas h S h oul d .

th e i t em app ear on th e l ef t ha nd , -
or R ecei v e page, i t r epr es ents ,

a cr ed i t to th e cas h acc ou nt a n d a debi t to th e cus t omer .

20 E x -
Cl e a r i n g H ou s e B l ot t er —
Ou each mo r ning

r i h fr m r
. .

t h e bank b al anc es o t he p ev i ou s da y ar e ent e ed n t e

E Cl r
x H Blea r h D l i r i d f h r rd
i ng ou s e ot t e on t e e ve s e o t at eco

k fr m h Cl r i g
-
.

A t th m m h b le sa f e ti e t e a a nc es o st oc o t e ea n

H B
ou s e f h r i d lot t e r r d h ir o t e p ev ou s ay are ent e e on t e r espec

ti ve s i
d Th C r H es k b l r u s, a lea i ng ou se st oc a ance to ec ei v e

d b e r d r i i
.

w ou l h R ei id f h E Bl
nt e e on t e ece v e s e o t e x ot t e as t s

f h b d li r rd h
-

o t e n ca l l e
d l b w i le a a lance to e ve w ou d e ent e e on t e

D i r d Al h d dr f h b
,

el v e f h E Bl si e o t e x ot t er so, s oul a a t ave ee n

r h
-
.

'
su b m d h Clé i
i tt e H i
to t d e ar ng ou se, t w ou l appea on t e

D l e r d f h E Bl r l ik i e h k ul d p
iv e si e o t e x ot t e ; ew s a c ec wo a p ea r

r
-

on t h e R i d f h E Bl ece v e s i e o t e x -
ott e .

21 m E x a A r i
ple of E n t r i es in B l ot t er —
t ansact o n
r
. .

h av i ng d f
bee n h
ex ec u t e , a cop y o t h at t ansact i on goe s t o t e
 A CCO UN T I N G li l f l U D S
' '

33 19

bl ot t e r r cle k w h o p r o c ee d s t o ou r nal i z e i t i n e i t he t he Cl ea i ng j r r
r
,

House or t h e E x Cle a r i ng H o us e B lo t t e a s t h e ca s e may b e

r rk j r
-
.
,

me t h e po s i t i on
'

Let u s assu of the b l ot t e c le and ou na l iz e

t he t r a nsa c t i on s t h a t w e e sh o w n r in t h P r
e u c ha se and S ale s
B ook
r r
.

Go i ng ov e t he sal es w e p ic k out t h e i tems i n 1 00 sha e l ot s

r
-

o f Cl ea r i ng H o u se s t o c k an d ent e r t h e m o n t h e D el i v e s id e o f

r
the Cl ea i ng H ou se B lo t t e r gi v i ng t h e d at a a s S h ow n i n F i g 5
r r
. .
,

We e nte t h e i t ems o f t ransact i ons in E x Clea i ng H ouse

r rr
-

st ock i n t h e E x Clea i ng H ou se Bl ot t e -
ec or d i ng t h e d at a a s ,

show n i n F ig 6
r r
. .

we t h en w oul d ent e t h e p u c h ases on t h e Recei v e si de o f

each b l ot t e r as t h e c a se may he bei n

g care uf l r rd to eco all

r l r h r f i
,

1 00 sh a e ot s o f Cl ea i ng H o use st ock or u t p l es t e m l i eo n

Cl r i r r i m i h
-

, ,

the ea ng H ou se B lot t e and al l ot h e te s n t e

Cl r i r
,

Ex ea ng H ouse B lott e
fr m h r i
-
.

Let u s a s su me now t h at t he bank b alance o t e p ev ou s

day w as an d t h at t h e e h ad r been no st ock ba lances ;
t hen w e w oul d ent e r t he b ank b al anc e
.

of on t he

Del i v e r s i de of t he E x -
Clea i ng r H ou se Bl ot te r as t he fi r st

ent ry f o r t h at day
ri r r r
.

N at u r a ll y t h e ead e s w ond e i ng h ow w e are t o ent e ca sh

r m r i fr m m r A rd i r
,

ecei v ed a s a g n o cust o e s cc o ng t o t h e l
u e t h at

rd D i r id
.

all cash r ec e v e i d is ent e e on t h e el v e s e , all t h at w e need

to ent e r i s t he a mount r d di i ec e i v e cre t ng the cu st o me r ’
s

Th m r i
,

account and d eb i t i ng h us , t he a n of i d
cas g p a

rdh m i r d i Bl r r
.

by Mr F o . a s ent e e n the ot t e On t h e D el i ve si d e ,

as show n i n Fi g 6 . .

B A L A NC I NG THE B LOTTE R S

22 C l ea r i n g H ou s e B l ot t er H av ing compl etely

r r rdi r
. .

ente ed the dat a ega ng each i nd i v id u al t ansact i on as

calle d for i n eac h co lu mn on t h e R ec ei v e S id e, to ba lanc e t hat
side i t w ou l d t h en b e nec e ss a r y t o t Ot a l t h e ind i vid ual money
colu mns t h en r f
c os s oot the sev e a rl t otal s , as r
app ea i n the
r d h r
-

amount p c ommi s si on i nt e est and t ax co u l mns an t e e s u lt

r T l Am
, , ,

shoul d b e t h e same as appea s as t he t ot al o f t h e ot a ou nt

colu mn .
 T
S OCK B ROK E R G E -
A
T he t h i d r st ep i n the ope at i on r i s to ca rry t he t ot al of t h e
co mmi ssio n mn t o t h e commi ssi on col u mn on t he d el i ve
c ol u r
si d e ad d t h i s amount t o t h e t otal o f t he commi ssi on col u mn on

h h h T A
,

t at page t en ex t end t at t ot al ob t a i ned t o t h e ot al mount

r
,

col u mn an d t h e accou nt t o be c ed i ed i s c ommis s i ons

t
‘
f rh r
.

Th e ou t st ep i n t he ope at i on i s to xtend t he t ot al o f t h e
e

t ax co u l mn on t h d li r
'

e e ve s i de to t he T otal A
mou nt col umn i n
r
,

w h ich t h e a m i h
ou nt s s ow n d i v i d ed t h e F ed e al t ax acc ount
Y rk S r r
,

and t h e N ew o t at e tax account bein c e ted wi th t h ei g d i

r espec t i v e po ri f h
t ons o t e t ax coll ec t ed on all sal es or t an s e s r fr
r
.

Th e at es o f t ax in each c ase a r e t he sa me si s w ill b e e xpl ai ned

r rR r
,

l at e u nde T R i e v enue ax eg st e

h fif h r
.

T e
p t i i st e l g h c ons st s l l m h
n t ot a i n t e sev e a co u ns on t e

T D li r id
o e ve h p s r d b
e as f r hr
t ey a p ea e
p d f r e o e st e s t ee an ou

we r rf rm d h b rr i
e p e o e t r h l f h m
en, y ca y ng ov e t e t ota s o t e co

h T l Am
,

mi i d h
s s on a n m t e t ax c ol u l m
ns t o t d e ota ou nt co u n, an

f i g h T l Am
oot n t e l m h
ot a l h ld
ou nt c o u r n, t e new t ota s ou ag ee

w ti h h m
t e a l m d r
ou nt c o u h rr n an f h rkp ov e t e co ect ness o t e wo
A h
.

Th O i e h Wh n t e l m i ose y m b lcc ou nt co u n s a s o to S ow to
th b kk p r h
e oo h i m pp i
ee e t at t e i i h T te l Am o os t e t n t e ot a ou nt

c ol u m i n bs not d to e piost e h L d r t o a ny acc ou nt n t e e ge

r i rd r m k h l f
,

a lth h h i mi
ou g t e te s necess a y n o e to a e t e t ot a s o
th T e Am
o t al l m f h R
ou nt co u i d h D li r id
ns o t e ec e v e an t e e ve s es

r
ag ee

rd r k
.

Th e xh i b l
si t i st ep h k i
s a anc ng h t e st oc n o e to now w at

th e st oc k b f Th m h d f pr
alanc es c ons i st o d r i e et o o oc e u e s as

f ll r h R i d D l i r i d f h Bl r
.

o ow s : G o ov e t e e ce v e a n e ve s es o t e ot t e

an d ff g i
set o h h r l r
a a nst eac i i h
ot me al t ansact ons n t e sa e st oc k ,

an d h b l t e r i
a a nce d li r
to h
ece v e o rrri d F to e ve ca n e a ve at or

h 1 00 h r
.

ex ml a p h
e, sup po se h db t at w e f U S S a l oug t s a es o t ee
d 400 h r mr
,
. .

an d sol f h ms k f
a es o t e sa h e st oc o r ou r c u st o e s, t en,

i
set t ng o fi r ’
i i h
one t ansac t on aga nst t h r d h e ot e w e w oul av e a

f 300 h r r
,

b l f U S S l h h d ld w h ic
'

a a nc e o s a es o t ee we a so ov e

r ld h b l
. .

th at h h d b
w i ch w e h Bl a ou gh t , so t e ot t e w ou s ow a a a nce

to d li r e f 3 00 h r
ve o S h ld h s di i
a es h b ou t e con t ons av e een

r r d d h db 400 h r
.

ev e se an we a f U S S ough t b d ld s a es o tee an so

1 00 h r r i ld h
. .

only h s b l
a e s, t en ou r b
a ance to ece v e w ou ave een

300 h r s a es .
 ACCO UNTI NG M E THO D S
H av ing balanced t he st oc k t he sev ent h st ep i s to ca rr y t h e

r Bl r
,

balances t o d eli v e t o t h e R ecei v e s i de o f the ot t e and the

r i r
,

balances t o ece v e t o t h e D el i v e si d e ; t h en , u si ng t he l
c osi ng

rp i ce or t h Cl ri
H ou se p ice pe r sha e make t h e ext en
e ea ng r r
r
,

sion t o t he amou nt co l umns on t h e R ec e i v e a nd t h e D el i ve

T A
,

si des and ex t end t h e t ota l o f t h ese t o t h e ot al mount

r
,

col umns on e i t h er s id e o f t he b l ot t e

hh
o

The ei g t st ep i s t o t ot al t he a mount C ol u mns a nd t h e

total amount c ol u mns on bot t h e R ec ei v e and t h e D el i v e h r

r r h
-

si des and compa e t h e esu l t s ; t at i s t h e t ot al o f t h e amount

r h
, ,

col umn on t h e R ece i v e s i d e sh ou l d b e c ompa ed w i t the

t ot al o f t he a mount c ol u mn on t he D eli v e Si d e and t h e d i ff e r r
ence b et w een t h ese t w o t ot al s sh oul d ex act l y e u al t h e d i f q
fre ence bet w een t h e t ot al s o f t h e ot al mount columns of T A
r
.

e ith e si d e

Sh h r r r h
.

ou ld t h e c as t ot al s on t h e D el i ve si de b e g ea t e t an
t he c as h t otal s on t h e Rece i ve s i d e, h
t en w e k now th at a p ofi t r
has been made ; t h at i s t he ex c ess o f v a u e l r ec ei v ed f or s ec u i r
r rh r Th r
,

t ie s so i s g eat e t an t h at pai d f or sec u i t i e s b ough t

ld e e

fr r j
.

o e s i nc e t h e Cl ea i ng H ou se w i ll mak e t h e a d u st ment s f or

r r r
,

d u i ng t h e O pe at i on o f i t s syst em o f c l ea i ng w e h av e a
‘

us

Cl r i
,

ea H b l
ng mi g ouse h d
a anc e c o b n to us ; so w e not e t at an su

mi t adr f h M h a C mp
t on t f h i pr fi Th i
e an a t t an o any or t s o t s

r d h R i v id Cl i H d f
.

am i
o u nt s ent e e on t e ec e e S e as ear ng ous e ra t
i b h h Am
n ot td T l Am
e l m Ti h i
ou nt an ot a ou nt co u ns h s a v ng

d h D li r id f th B l r
.

bee n d h R one,i t e ec e v e an t e e ve s es o e ot t e are

i b l
n m l l
a ance co p et e y
S h ld h h l f h R i id b r r h h
.

ou t e ca s tot a o t e ec e v e s e e g eat e t an t at

o f h D l i r id
t e
-

h l h b
e ve s i d e, ht en a oss as een s ust a ne so t en we
h Cl r i
,

w ou ld m k f h a m d bmi
e not e o t e a ou nt an su t to t e ea ng

H ou s e h k bl
a h
c M h ec C m
p y
a a Th e to t e an at t an o n
p y
a is
h d l i r id r Ch k
.

w ou ld b d e not e f h Bl on t e e ve s e o t e ot t e as ec to
b l
a a n ce, i Fi 5 T
as h h h h n l d b g . m l l
. i en t e s eet S ou e co p et e y n

b l a ance

A ll hi h i b d h fi l p r i i r ll
.

t s av ng een one , t e na o e a t on s to ent e a

B l a anc esi S h h r nr i d i r
t ock , w l et e to ece v e o r to el v e a ong w it h
hb h h r h dr f Cl r i
,

h
t e cas al anc e s , w et e c eck or a t, in the E x ea ng

H Bl r i m r l r d l i d
-

ou se ot t e n t he anne a ea y ex p a ne .
22 T
S O CK B R OK E R G E -
A g33

A t t h i s poi nt i t may be w ell t o st ate t at t he h s h eet as s ub

i
mi t t ed t o t h e Clea i ng H ou se f or t he N ew r r
Yo k S t ock
E x ch ange i s an ex ac t c op y o f the Clea i ng r H ouse Bl ott e w en r h
i t ha s b een co mp let ely bal a nc ed .

23 B al an ci n g th e E x -
Cl ea r i n g H ou s e B l o t t er
r r r
. . .

H av i ng l ea ned h o w t o ba lanc e th e Cl ea i ng H ouse Blot t e as

r q
,

a l ea d y e x plai ned i t w ill be u i t e si mpl e t o bal ance th e

r r r f
,

E x Cl ea i ng H ou se B lott e The p oc ed u r e i s a s oll ow s :

Tr
-
.

1 ea t t he t a x and c o mmi s si on c ol u mns as you d i d i n bal

r r
.

a nc i ng t h e Cl ea i ng H ou s e B l o t t e by t ota l i ng t h e t w o c ol u mns
r T A
,

a nd c a r y i ng t h e t ot al s t o t h e ot a l mount col umn on t he

r r
D el i v e si d e c ed i t i ng Commi ss i ons acc ount w i t h t h e t ot al com
T fr r
,

mi ss i on and t h e ra ns e Tax and t h e F ede al Tax account s

r
,

w i t h t h e e spect i v e t ax es c ol l ec t ed and paid t o t h e F ede ral and

r
S tate gove nment s a s sh ow n by the t ot al o f th e tax col umn
T A
.

2 F oot t h e ot al mount col umns on t he R ecei v e and t he

r
.

D el i v e s i de s

fr m h D l i r f i f
.

3 D ed uct t h e Rec e i v e oot i ng o t e e ve oot ng,

d h r i l b r r rr i d i
.

an l t e e sui t w l
f h b l e ep e sent at v e o t e a anc e ca e n

th b k
e an Th b l r d b m ris h
ac c ou nt s is a anc e is p ov e y co p a on w it
h b k Wh h R i f i i
.

th b e i h a la nc e s n t e c e ck oo s y t e ec e v e oo t ng s

d fr m h li r f i g l b l r if
.

d d e uc t e o t e llDe ve oo t n w il e c ea we r eca

th r l
e h ll
u e as t o l d h r i d w y r rd d a sa e s a n c as ec e v e a re eco e on

th D l i r id
e e ve s e

C rr j b i d h R i id d
.

4 h b l a y t e a anc e u st o ta ne to t e ec e v e s e an

br k i r rr
.

ea p i h t u b l d
nto i h t le seve al a anc es ca ie n t e sev e r a
ba k i f h r b m
n s, h t b ke e I e h r rd ore t an one an acc ou nt n ot e wo s,

h r
.

c a h b ge ea c h b l d p i a nk w ith t e a anc e on e os t .

R E VE N U E T A X R E G I STE R

24 F u n ct i on Th e R e v e nue Tax Regi st e r is u sed to

r rd l r f
-
. .

ec o al sa les or t ans e r s o f s t ock , and t he payment o f st amp

t axh t e r eo n, as p r ov i d ed u nd e r t h e amend ment t o t he N ew
Y r So k t at e l a w , w h i c h beca me ope r at i v e J une 30 1 90 5, and

r hr
,

h
w i ch p ov i d e s f or a t ax o f 2 c ent s p er s a e, of $ 1 00 par

l
v a ue st oc k , on al l st oc k t r f rr d
a ns e e or so ld .
 33 ACCO UNTI N G M E T H O D S 3 2

T h i r rd pr id f h r rd i g f h d f l
s ec o ov es or t e ec o n o t e at e o sa e

or r f m f k h mb r f h r ld r
t ans er ; na e o s t oc ;t e nu e o s a e s so or t a ns

fr d p l f h hr f k h m f h p
e re ; ar v a ue o eac s a e o st oc ;t e na e o t e ur

h
c r h r f r h mb r f m d g h r
a se or t e t a ns e ee ; t e nu e o st a p s u se to et e

i h h f ri g
,

w t lt f h e mp l l m f
ac e va u e o eac st a ; a so a c o u n or ente n

t h e t ot al v al u e o f all st a mps affixed .

25 I m p or t a n c e — Al ong w it h the f act t h h i r rd

at t s ec o

r rdb r r
. .

is eq u i e l w i t i o f e a t i mp o t a nc e i n al l ev i at i ng t h e
y a s g ,

t en dency o f empl oyes t o st eal r ev enue sta mp s f or b y means o f

\

r h
, ,

t h e d at a p r o v i d ed i t i s an easy matt e t o c ec k up t h e N ew
r
,

Y o k S t at e Tax account .

26 M et h od s he k p h of Ch ec k ing — To c c u t e t ax
r i f h l lm d
. .

a c count , all h i t at s n ec es sa y s to oot t e v a ue c o u n, an

a dd m t he a
'

f mp h d hi h f d b i
ount o st a s on an w c is o un y nv en

r h r l gfi d q l h
;

to y ; t e e su m
t in h d gu re shou l e ua t e a ou nt on an

at h b i
t e f r d h i
eg nn i ng NO Y k t h e pe io as s ow n n the ew or

A rlLd r
,

T ax i h G
ccount n t e e ne a e ge

r F d r G rm
.

A h t t em p esent ti x h
e the e e al ov e n ent has a ta w hic
i s al so l d l
c ol ect e k ld r f rr d F i
on a l st oc so or t ans e e or th s, a

r r i ri Thi r rd i
.

s epa at e t ax eg st e d li s kept s eco s an ex ac t up c at e

r d d rib d Th F d r l r
.

o f h t e o ne a l ea y e sc e is e e a Ta x at e i s t he
h r d b Y r S
.

sa m h
e as t at c a h ge h y N e w o k t at e TO c ec k up o n t e

F d r T r f r dr i h m
.

e e al h max ac c ou nt , t e a nne o p oc e u e s t e sa e as

d r ib d b
esc e h i
a ov e , h h F d r l S m
w ith t e ex c ept on t at t e e e a ta p
A l L d r
.

i h
c c ou nt m f h
s t i
e nah G e O t e ac c ou nt n t e e ne r a e ge .

27 U d r h N
R a t e s Ch Y rk S l a r g ed n e t e ew o t at e aw

f r
. .

an d F d
al so t he e e ra l law t he o l lo w i ng at e s a r e c h a r ge d o n

r f ri
,

sales o r t ans e r ng O f st oc k

Y r S
.

N ew o k t at e r at e :

S t ock w i t h par v alue o f $ 1 00 , st a mp t ax is per 1 00 shar es

S t ock w i t h p ar v al u e o f 50 , st a mp t ax i s p e r 1 00 s h a r es

S tock w i t h pa r v al u e o f 25 ,
mp st a t ax i s 50 p er 1 00
. sh a r es

S tock w i t h pa r val u e o f 1 0 st amp

, t ax i s 20 p er 1 00
. sh a r es

S tock s w i t h no p ar val u e, t h e st a mp t ax i s p er 1 00 sh ar es

Fede al r rat e
'

S t ock w i t h p ar va l ue o f $ 1 00 or l es s, t ax i s p er 1 00 sh ar es
S t oc k w i t h p ar val u e o f ov er $ 1 00 , t ax i s 2 p er c ent . o f t h e cash
'
i nvol v ed
 T
S O CK B R OK E R G E
-
A § 33

28 E x a m p l e of Use
r f
. .

Remembe i ng t he ac t t hat t he
tax es payab l e t o t he F ede al r
gov e n r ment and to the N ew
r
Y o k S t a t e gove nment r a re

ali k e t o ex p l ain t he manne r of

r r
,

u si ng one t ax egi st e w i ll ex

p l ai h n t h r Th f r m f
e ot e e o o

Y rk S
.

th N e ew R o tat e ev enue

T ax R i r i h i Fi 7
eg st e s s ow n n g
ri
. .

Th d e f hat a h or t e ent es ar e o

i d fr m h D l i r id
t a ne o f t e e ve s e o
‘
th Bl e r R f r n th
ot t e s e e e ce to e

Cl r Bl r h
.

ea H i ng ou se ott e s ow s

J l 1 M r F rdh m
,

th at on u y o a

l d 2 00 h r f R bb r
.

so s a es o u e ; so

th e st at e p i d $4 d
t ax a w as an

h m r
,

st a mp f s or t at a ou nt we e

u se d Th i l h r f r i s sa e, t e e o e, s

r rd d i h T R gi r
.

eco e n t e ax e st e

i h h
w t d
i

r q ir d
t e at a e u e as

h i Fi 7 T p h
,

s ow n n g o ay t e
Y rk S h r
. .

N ew o t at e t a x t e e

r q ir d
,

w ou l d b e $ 2 e u e two
st a mps t o be affi x ed to the st oc k
c ert i fi cat e It w i ll be not i ced

h lf f h m
.

t h at onl y a o t e a ount

r i rdi h T
eg st e e m f n t e ax c ol u no
t h Bl
e r i r rd d h ot t e s eco e ; t e
h r h lf i r rd d i h
‘
ot e a s ec o e n t e
F d r l T R i r
e e a ax eg st e

E Cl r i g H
.

I h n t e x ea n ouse

ri
-

Bl ot t e i m f s a t ax te o

w hi h i d i i d d i h m
c s v e n t e sa e

w ay, h lf b i g r
one rd d a e n eco e

N w Y rk S
-

i n h t e T e o ta t e ax

R i r d h h r h lf i
eg st e an t e ot e a n

t h F d r l T
e R i
e r e a ax eg st e .
§ 33 ACCOUNTI N G ME T HOD S 25

CU S T O M E R S ’
LED G E R

29 Use —i 1n o rd r r
e to eco rd co mpl et el y t h e t r ansact i ons

r r r r r
. .

of hi s c ust o me s, it is necessa y f or t h e b ok e t o s e e
g g at e a l l
r i
t h e i nd i v i dua l t r ansact ons ent e ed i nt o i n t h e ex ec ut i on o f a

c u st o mr rd r b
e
’
s o ll eri i F hi rp
to uy or se sec u t es or t s p u ose

h l dg r k m r L dg r i
.

h C d i i ll
’
t e e e now n as t e ust o e s e e s u se ; n t a

th e r i x d dr r i
t ansact n
o s e ecu t e m r m
un e a ce t a n cust o e
’
s na e ar e

r rd d i h
ec o e b ri
n t he account m f h eam r ng t e na e o t at c u st o e

Thi l dg r m r l b i d r d p r f h G r l
.

s e e ay t uy e c ons e e as a a t o t e ene a

L dg r f h r i
e e or r ll i
t e e f h C
s no cont o mr ng account or t e u st o e s
’

L dg r p r i i h G r l L d r
,

e e a p ea ng n t e ene a e ge

hi l d r i r r L r r
.

Si nce t p s f h eG ge l d
s a i a t o ll t e ene a e ge t nat u a y
f ll h i rd r h r xp r i f h b i
,

ow s t
”

o at , n o e to ave a t ue e es s on o t e u s ness

c on di i t h b h B l S h i ill b
ons as s ow n y t e r a a nc e eet , t w e necessa y
to seeh h bl t at pp t er g h C
a ances a m r L d g r ea i n in t e u sto e s
’
e e

l
a so ap p r h B
ea l S h
on t e a ance eet .

30 O
F a c t s R ec or d h d bi id r rd d
ed n t e e t s e are ec o e

A ll r h ri i f h r fh
-
. .

1 f p u c ases o secu t es or t e ow ne o t e account ;

h ri fr r L r
.

t ese ent p d m h
es a r e Bl ost ed i h d
o t e ot t e an n t e e ge are

h h d f p r h h mb r f h r d k i d f
,

s ow n t e at e o u c ase , t e nu e o s a es an n o

st oc k h m rk pr i p i d l
t e a h et l m ce id f
a h a so t e t ot a a ount p a or t e

h m r r
, ,

stoc k hi h i l d
, w c p i
nc u es t p l h mem i i a k et ce us t e co ss on

2 All h i hdr b h cas w t m r h aw n i iy t e c u st o e w ose acc ou nt t s

All i r h rg
. .

3 nt e est c a es

r di i d r rd d
. .

O h n t e c e t s e ar e eco e :

1 All l f ri i f h
sa es o r f h
secu t es or t e o w ne o t e acc ount ;
h ri fr r r
. .

t ese e nt p d m
es a r e h l i id
ost e f h Bl o t e De ve s e o t e ot t e

d h mb r f h r
,

an s h d ow f l t h e at e o d ki d f
s a e, t e nu e o s a e s an n o

stoc k l d h m rk pr i
so t r i df he a et k h
ce ec e v e or t e s t oc on t e

m rk r i db h m r f r h
,

a d h
et , an l m t e t ot a a ount ec e v e y t e cu st o e a te t e
br k r h
o e d d d hi
as mmi i e h rg d
u ct e s co h r ss on c a e an t h e t ax c a ge

Al l m r i d p i m d b mr
.

2 a g h n e os ts a e y t e c u st o e

All h r l
. .

3 s o t sa es

r ll d m r i d i d h r l
. .

4 Al l i nt e est a ow e on a g ns epos te on s o t sa es

l r r ll d m r i i 2
. .

Th e u sua f i at e o nt e est a ow e on a g ns s p e r c ent .

26 S TO CK B -
ROK E R AG E g3 3

Th e b rkr
o e may al so d i v i de r h e q ual ly w ith h i s c u st o me t e

i nt e r e st t h at c ome s t o h i m a s
l f hi mr h r a r e su t o s c u st o e
’
s s o t

sa el if Thb r b rr
us, a k mr oke d li r o ow s st oc tO ak e a e ve
y on

br rf m hm
.

h i m h m
e r s s h o r t s a le , i h oke
’
s c u st o e u st g v e t at ro w o
he b r o ro w s th e f mr
s t o c k a c h ec k Thi fo r t he -
ull a ket v al u e s

br ri b rr br ri r f h
.

oke n t u rn p y
a s t he o o w i ng o ke nt e e st or t e u se

o f h m t e h oney r i d fr m h im r l f
w ic h h e has ec e v e o as a e su t o

t he b r i f h
o r ow ng k d it i
o i in r
t e h h
s t oc an s th s te est t at t e
r f d i id q l i h mr
,

b r o ke o t en v es e ua l y w t h t e c u st o e .

31 B al an ci n O m h h L dg r
g t h e L ed g er
—
nc e a ont t e e e

Th i d f r
. .

a c c ount s a r e b d h d
a l an c e as t o c as an s t oc k is s one a te
r
.

a ll i m
nt e est b i te d o h
s h av e A h een p o st e t t e ac cou nt s t t is
m r S r r d Th i ill b
.

tim e al so C the m i
u st o e
’
s t at e e nt s p epa e s w e

l f rh r
.

ex p l a ne
i d d in et a i u t e on

h L d r i f ll Fi r
.

T h e p r oc e
d f b i u re o a lan c ng t e e ge s as o ow s : st ,

b ala nce h t i h
e a c c o u nt m r n th S d e u su al anne as t o ca s econ

ri
.
,

b ala nc e t h e k m st o c f by co d b i p ar i s on o sec u it es not e as e ng

h ld l
e d b
ong o n d f ht he e h
it si
d e o t e acc o u nt w ith t o s e s ol on

th e c red d it si d e , a nh d
no t e ri how t e a cc ou nt st a n s as to sec u

t i es t h a t ar e st i ll
f m h eld or h t h at c u st o
’
e r s accou nt , o r , a s t ey

sa y \V 1 S r
in fa hi h h i l
1 t eet , o d ri w c e s ong, an as to s ec u t ies
w hi h h c mr ld i h
t e c u sto h i e d h m h
so i w t out a v ng p w ne t e t at s,

h r
,

s o l t s a es

r d m r b 1 00 h r
.

I t is ea if i ly seen t h at f a c u st o e u ys s a es o

U S S l d d
t ee t o ay an h m 1 00 h f U S S
se ll s l t at sa e s a r es O t ee
m r th r m r
. . . .

to o r ow , b e e c an b if e no s t o c k bal ance ut t h e c u sto e

r hh b h h r ilb
,

s o l d at a h i gh e p r i c e t ha n t h at at w h ic e ou g t t e e w l e

a cas h ba la n ce i n hi s f r
av o

Th m r b r fU S
.

h ld h
e n , a a i n,
g s ou1 00 t at c u st o e uy sh a e s o

r 1 00 r f Chi C r
. .

S l d
t ee d to ay an al s o sell sh o t sh a es O no op pe

s t oc k , ld b
t h e r e w ou U S S
e a l l ong s t oc k b ala nc e i n t ee ; a

r d hi h
. .

s h o r t st oc k b C C
a l ance I n b hi no oppe an a c a sh a l ance , w c

rm d b h
,

i s d et e i ne h h Sy t l e b p h d
r ice at w ic t ee was oug t an

Ch i no Coppe r w as so ld .

32 m p l e of U s e
E x a A S h as b een ex p l a i ned all post —

fr
. .
.

i ng t o t h e c u st o mer s ac c ou nt s i s d one d i r ec t ly om t h e B l ot
’

te r s Th e met h od o f p ost i ng M r Fo d h am s
. ed ge ac co unt . r ’
L r ,
ACCO UN TI N G M E HO D S T
as sh ow n i n Fig 8 w i l l .
, no w be
ex l a i ne d
p
r
.

I n t he Cl ea ing H ouse Bl ot
t e r a Sal e i s eco d ed f or M r r r
h r f r rd i
.
,

Fo r d h a m ; t e e o e , acco ng

to the r u e l f o r post i ng, Mr

r di d
.

Fo r d h a m s ’
ac cou nt i s c e te
w i t h t he sa e o f l 200 Ru bb r e at

90 , and th e a mount r c ed i t ed in
r rdi
.

the co u l mn f or ec o ng the

p r oceed s fr m h o t e sa e l is e q ua l
to the p ri r ce ec e i v ed on t he
r
ma k et mi nus c h a ge s r f or
hr
,

o mmi ssi on ta x or a ny ot e
g
r
, ,

c ha ge s

Th Cl r i r
.

e H Bl ea ng ou se ott e

l
a so h s h M F rdh m
ow s t at r . o a

h as b gh 1 00 U S S
ou l t t ee at

r r
. .

$ 98 5 d d
an i g h l acco n to t e u e,

F rd h m
-

M
.

i
’
r o a s accou nt s

i h hi rh h
.

d b d
e ite w t t s p u c a s e, t e

d at a b i g r rd d
e n eco e as re

q u ir d b h f rm h m
e
y t e o t e a ou nt

as r rd d i h m
ec o e l n t e a ount co

u m i m d n s f h m rk a e up o t e a et

p r i ce l ph r f
u s any c a m ge s o r co

m i s s i on
Th E Cl r i
.

e H xBl ea ng ou se ot

M F rd h m
-

ter h
s h ow s t at r o a

m r i
.

d i d
ep o s te f 50 a a g n o

h l di d h r
.

on lhis ong o ngs an s o t

sa l e, r f h i r di d
t he e or e : e s c e te
w .t h t h i m s a ount

f rth r ri r
.

f I no u e e nt es we e

m d a i M
e F r dh m
n r . o a
’
s ac

c ou nt u nt i l J ul y 31 ,
i t w oul d at

t h at t i me b e balanc ed i n t h e
f ll
o ow i ng manne r :
28 T
S O CK B R OK E R G E -
A 33

Pr oceed as t o cl ose any o h

t er account f or a caSh balance
h r rr h h r
,

t pen y oc eed t o ca d ow n any stoc k w i c t h e account ow ne

hr
.

may be l ong or s o t o f
r
.

S i nce i t has been show n t hat t he manne of p os t i ng to a

c u st o me r ’
s acc ount in r k r r rd
a b o e
’
s eco a nd t he manne r of

bal anc i ng t hat account h

ar e m t e sa e a s u sed in h andl i ng any
rl d r
ot h e e ge acco u nt , t h r h ld b r
e e s ou e no t o ub le i n h and l i ng t he

oth r e ac count s w h ich a r e aff ec t ed by t h e ot hr e i t ems i n t h e

Bl r ott e s .

CU S T O M E R S S T A T E M E N T ’

33 F u n c t i on —
Th e f u nct i on of the Cu st ome r ’
s S t at e
m r f f rm d
. .

ment i s to k eep t h e c u st o e ul ly in o e as to hi s st and i ng

w i t h t he r r
b ok e ; f o r by i t t he c u st o e mr can see a c o mpl et e
rh h
, ,

s t at e ment i n d etai l sh ow i ng w hat h i s pu c a ses and sa es l ave

r
been d u i ng t he mont h w h i c h t h i s st at ement c ov e r s

r h h b
.

B y th i s st at ement t he c ust ome may k now w at av e een

t he mount s pai d f or t h e secu i t i es w h i ch h e as oug t an

a r h b h d
h r r i i ld f
,

w ha t av e b een t h e amou nt s ec e i v ed f o r sec u t es so or

h i s ac count H e may al so obt ai n om t i s st at ement w hat fr h

r
.

'

h av e been t h e exp ense i t ems o f i nt e est c ommi ss i on and t ax

fr
, ,

on sal es He may see at a glance om t he i t em o f c ash w hat

r
.

has b een t h e amount o f ma gi n d epos it ed by h i m and by ad d i ng

r fr r r
,

h i s p ofi t om op e at i ng t o t h i s ma gi nal d epos it or i n t he

fr r fr
~
, ,

c ase o f a l os s om op e at i ng, d ed u ct i ng t h i s l oss om t he

r
ma ginal d eposi t h e may k now t h e amount o f h i s new ma ginal r
r rr
,

dep os i t ema i ni ng t o ca y h i s account

rf
.

B y e e r enc e t o h i s stat ement t h e c ustomer may see h i s posi

'

r r h
_

t i on a s t o st oc k s s h o t o r l ong I n sh o t th e st at ement s ow s
r r r
,
.

t h e c u st o me all t h e d et a i l s ega d i ng hi s accou nt as i t st and s i n

t h e Cust ome s r L
ed ge o f h i s b ok e
’

’
r r r .

34 . Ch eck on C u s t o m er ’
s S t a t em e n t .
— I n t h e S ect i on
on O per a ti ng on t he N ew Y or k S t ock E x ch ang e i t w as
e xpl ai ned t h at w h enev e r br k r a o e age fi rm ex ec ut es an o rd r f e or

a c u st o me r t h e c u st o m r r i e ec e v es a not i ce t o t he e ff ec t h
t at t he
‘

rd r h
,

o e as b een e x d O
ecut e hi n t s not i c e t h e c omp l et e d etai l s
ri ri q
.

as to the p ce, na me f . o secu ty, and uant i t y so ld or b ought

A CCO UN TI NG M E T HO D S
are gi ve n S o b y c om pa i ng r
h h
, .

t ese not i ces w i t t h e inont h ly

st at e ment a c h ec k can be h ad
fr
,

on th e st at ement as u ni sh ed

by t he b rkr o e to h i s cu st o me r .

35 R ule f or P a y m en t
When rkr
.

of I n t er e s t — a b o e

fr mr
.

u ni sh es capi t a l to a cu st o e

he cha r ges i nt e r est at h r

t e ate

of 6 p er cent per annu n i hil w e

r di
.
,

on t h e c e t bal ances h ll
e a ow s

t h e cu st ome ri r nt e est at t h r e at e

of 2 per cent p e r annu m

T r j
. .

'

his u e l is sub ect to the

one mod i ficat i on t h at in the
case o f a s h r l hi h i o t sa e, w c g v es

h
t e cu sto mr fi i i e r di a ct t ou s c e t
b al anc e, i r i ll d
no nt e est s a ow e

h
t e cu st o m r b h br k r I e y t e o e t
i r di l h h
.

s ea y seen t at any ca s

co mi g fr m h
n l o f t e sa e o a se

c uri hi h i
ty w c d b s not ow ne y a

cust o mrd e i h l rg r
oes not n t e a e

se n b
sel g h
e on m r t o t at cust o e ;
f m
o r so r fi l me pa t o t at east u st

b d
e u se b rr to h o ri ow t at secu ty
a t so m f r d i rd r
e ut u e at e n o e to
m k a d l i ry
e a e h ve on t at cus

m h r l i h
’
to er s s o t sa e, s nce a c eck

f or h m rk
t e l a f hi et v a ue o t s

st oc k i ll h w b i av e een g v en to
h
t e b r k r fr m o e h m h o w o ~
t e

st oc k i ll b b rr w d e Fr m o ow e . o

thi x pl
s e i i i ll b
anat on t w e seen

t h i r li h
at n ea mr ty t e cu st o e

h h h
'

d oe s not av e t e cas as a

r di h i
c e t to s account .
30 S T O CK -
B ROK E R A G E g3 3

36 . R el at i on of th e S t a t em e n t to th e A cc o u n t .

Th e st at ement mu st i n d et ai l w i t h t h e mer
’
a g r ee c u st o s a c c ou n t ,

as it appea s r in t he L dg e e r , and mu st S h o w al l l o ng h o ld i n g s all

r r rr i d
,

sh o t t ansa c t i ons , along w i t h t he balanc e i n ca s h , ca e d ow n

e i h r
t e as a debit o r a c r ed i t , as t h e ca se may be .

°
37 E x am p l e of Use I t h as been e xpl a i ned t h at a c us

r r
. .

t omer ment i n det a i l w i t h t h e me

’ ’
s st at e ag ees c u st o s a cc ou nt

i n t he L dg e e r , S h o w i ng a l l l ong ho ld i ngs a nd a ll sh o r r
t t ans

act i ons , w i t h t he ca s hb a la nc e s c a rr d d
ie o w n, e i t h e r Dr or Cr
fr f rh r d
. .

as may he t her e o e no u t e
t h e case i sc u ss ion i s need ed
fr
,

t o exp l ai n t h e o m sh ow n i n F i g 9 w h i ch i s a st at ement f o r
r r fr L r
.
,

M Fo d ham t ak en om h i s account as show n i n t h e ed ge

.
, .

S E CUR I TI E S LED GER

38 F u n ct i on — The r
S ecu i t i es L dg
e e r , or S toc k R ec or d
r
. . .

as i t i s know n u su a lly in “ f a l l S t e et is u sed t o l i st t h e secu r i

r
,

t i es h el d f or me acc ou nt s , a nd t o S h ow t h e pl ac e o f
’
c u st o s

d eposit , or any ot h e r di p s osi t i on mad e o f t h em

39 ri i L d r m b i h r
S t ru ct u r e —
Th e S ecu t es e
ge ay e e t e a

l f
. .

l
oose l m ea b d
vo u b h
e or a d f oun o ne , a s est su i t s t e nee s o

f f m d f h h l di
-

t h fi m U
e r l l su al y t h e oo se lea or is u se ; or t e o ng s

r id f
.

o f fi md i
a m h b i
r o ng f m uc us nes s a r e o any d i ff e e nt k n s o

secu ri d h
t i es l m f an t r h l d fl
e vo u e o a ny one sec u ity e so u c t u at e s

t h ii f
at t s o r m r h
t en nec essa y t o i a l l ot o e t an one p g
a e to a s ngl e

sec u ri d h t y, b an l d t h is l f
ca n m e ea s i y one w it a l oo s e ea v ol u e

r ifi d r
-
.

A l l ce tf h m ki d f
cat es k oli d t e sa e n o st oc ar e st e un e

one h d h ea if br rhd
; t us, h dr d d f r
a ok e a one or one un e if e ent

ce r ifit f c at es o f h U S S l C r
st oc k o t e t ee orp o at i on , t h e se c e r

d r h h d
. .

t i c at es w ou l
fi d ll b d a U S S e l li st e un e t e ea i ng of . . t ee ,
on

the U S S l h t ee s eet

h l f h d id Ld r rd d
. . .

O n t e f e t an s e o the e ge r s h eet ar e ec o e :

h r rr
-

1
( ) h l di
t e f o m ngs o2
( ) d t h e c u st o e s, or s t oc k s bo ow e

fr m m h r br r m
o so e ot d li re hr l ok e to ak e a e ve y on a s o t sa e

Th f l r rd d
.

e i d
o l ow ng ata ar e eco e :

1 D r i d at e ece v e

N mb r f h
. .

2 . u i de o s a r e s r ec e v e .
ACCOUN TI N G METH OD S
3 B hm y w o ow ned

rr
. .

4 . In case of bo o w ed
s t oc k f or w hose acc ou nt bor
r
,

ow e d

r h m b rr d
.

5 F om w o o ow e

righ h d id
. .

O n the t an s e ar e

ri i hi h
-

s h ow n t h e s ecu t es w c ar e

s ho t r or h
t ose b t h at ca n
'

r
,

l oaned in t h e h
st eet , or t ose

w h ic h a r e on d p i i ri
e os t e the n

the v au lt as ll r l f
c o at e a or a

h r
,

l oan at t he b k an or a t t e t ans

fe r offi ce Th d r rd d
e at a eco e

f
.

a r e as o llow s :
1 D ate
r r
. .

2 N umbe o f sh a es

ml
. .

To w h o oa n ed if
i

3 .
,

l oaned
h r
.

4 For w ose account sh o t

Pl
. .

5 . ace o f deposit .

40 M a n n er o f U s e

r Ld ri
. .

S i nce t he S ecu it i es e ge s

O ne f r r f ho t he eco d s o t e
c ash d m
i er i i k p
’
s epar t ent , t s e t
un d r hi er i i if b s s u p e v s on , not y
h im l f dir lse d fr m i h ec t y an o t e

h k h ri
,

i bl
s a e to c ec t e sec u it es

f or h i h hi fi m i p
w c s r s r es on

l
s ib e Wh k r ifi en a st oc ce t cat e

r h hi r d i
.

’
en t e s t e cas e s h an s, it s

r rd d i hi S R rd
ec o e n t s t oc k ec o .

41 E x a m p l e of Use
Ap g f r Ld
. .

a e o t he S ecu i t i es e ge r

Sh i g ow n h r rdt e f eco k ep t o

U S S l
t ee k i il r dst oc s lu st at e

1 0 Th i h
. .

i n F ig h h s s ow s t at t e

l p r h d b Mr
. .

U . S . S t ee u c ase y .
32 B ROKE RAGE g 33 T
S O CK -

F r dh mo r i d J l 2 1 91 9 d h i
a w as l d ece v e u y an t at t w as oane to
T M F rd h r b r k r I l h h
, ,

o J l 3 anot e o e t a so s ow s t at on u y
W T A l l d h r 300 h r f S l d h
. .
, .
-
,

pp e m k
so s o t s a es o t ee an t at to a e a

d li r f h i m h i b r k r b rr d 300 h r l fr m
. .
,

e ve y or f S s o e o ow e s a es o t ee o

T M F rd Th m r f ri h r i i o e anne o ent e ng t ese t ansact ons s

l r
. . .

c ea h ly s ow n .

STO C K S B ORRO WE D A ND LOA NED B OO K

42 i
F u ct o .
n n — Th e f u nct i on of the S t ock s Bo rr d
ow e

L B r r rd Of rr d
.

‘
and oaned oo k i s to p ov id e a eco al l st oc k s bo ow e

and loaned S uc h r rd
a ec o i s neces sa r i rd r y n o e t h at t h e br k r
o e

d i r rd k h
.

may at al l t i mes k now h ow he

'

st an s n ega to st oc s t at

h e has bo rr ow ed or l oaned .

43 St r u c t u r e .— Thi r rd i s eco s eit hr e a bound vo u l me or

f r f rr d
.

a l oose l ea one t h e b ound vo u l me b ei ng u sua ll y p e e e

rd i d i id d i r ml h B rr
-
.
,

T he reco s v e nt o t w o p a t s , na e y t e o d ow e

d h L l m f r rd f ll
,

an td e i oane d sec t ons, a n co u ns or ec o i ng t h e o ow

i
ng d p r i d d
at a a re ov e

O h B rr n t d e i o r rd d
ow e sect on a r e eco e

? D f b rr i
at e o o ow ng

N N mb r f h r b rr
.

u e d o s a es o ow e

r i i f ri i
.

9 D esc p t on o secu t es
F r m h m b rr
.

9 o d w o o ow e

P ri hi h h r i i r b rr d ( Pri
.

“ ce at w c t e sec u t es w e e o ow e ce

d i i h r h Cl r i H ri f h d
.

u se s e t e t e ea h ng ou se p ce or t at ay or t e

m rk p r i
a eth im f b rr
c e at i t ) e t e o o o w ng

r r r
.

6 R f i at e o d h i h i
nt e est , an a ny c a nge s n t e nt e e st at e as

r h r r
.

s h b
ow n h i ymt e n oney g i h h mb f d a k et , t o et e w t t e nu e o ays

the k i b rr
st oc d s o ow e

f r r
.

7 Th d e at e o et u n

h L r rd d
. .

O n t d e i h d
oane sect on, t e at a ec o e a re

1 D f l i at e o oan ng

N mb r f h r
. .

2 u l ed o s a es oane

ri i f ri i
. .

3
~
D . esc p t on o sec u t es .

4 T h ml d
o w o oane

Pr hi h k l d
. .

5 . i ce at w c st oc w as oane .
§ 33 ACCO UN TI NG ME TH OD S
6 Rat es of i nt e r est and

r
.

nu mbe of days t h e st oc k w as
l oaned
r r
.

7 . D at e of et u n .

44 M a n n er of Ch eck

r h
.

ing To p ovid e a c ec k upon

r r
.

this m
eco d one need onl y co

p a r h k li d i i i h
e t e stoc st e n t w t
t h Se r i i L dg r i r d r
ecu t es e e n o e

to ri fy h
ve k r t e st oc ent y;
w h r h pri
e eas, i t e ce ent r es ar e

c h k d by mp ri h m
ec e co a ng t e

w ti h h ri i h S k
t e ent es n t e toc
B rr d d L d A
o ow e an oane ccount

i h G
n t e r l L dg r ene a e e .

45 E x a mp l e of U se
rfr L
. .

By e e ence to t he oaned

S t ock s ec t i o n as sh o w n in
Fig 1 1 , i t w i ll b e seen t h at
r k rJ r
.

B o e ones, t he ow ne of this
book r
M Fo d on
l oaned to T
r
. .
, ,

J uly 2 1 00 sha es of U S S t eel

r r
. .
,

at t h e Cl ea i ng H ouse p i ce o f

$ 99 p e hr
r s a e F or ht i s s t oc k
T r Br r
.

M F o d gav e ok e J ones

r r
. .

a ch ec k vv h i ch ep esent ed t h e
r r
,

v al ue at Cl ea i ng H ou se p i ce
, ,

d b him
'

o f h k b
t e st oc or row e y
f hi
.

F orh t m e u se o t s oney,

Br k r J o e p i d T M F r d ones a o

r h r
. .

i nt e est at t f4p e at e o er c ent

fr m J l 2 5 d 41 p
.

o u y to an er

fr m J ly 5 6 h h
,

c ent o u to w en t e

r r d
.

l d
oane k st oc w as et u ne to
Br k r J o Br k r J
e ones o e ones

r r d h h k T M
.

et u ne t e c ec to
F rd pl i r
. .
,

o , us nt e est .
 T
S O CK B ROK E R G E
-
A g3 3

The ch ec k ma k r i n t he
co u l mn h ead ed 6 i nd i cat es t h at
t h e i nt e est , r 41 pe r cent ( col
fr
.
,

u mn 5 ) w as i n o ce t o and i n
l d
c u h 6h
i ng t hi h im e t at w c t e

Br k r J r r d h
,

o e ones et u ne t e

c h k T M F r d pl i
ec to o us n

h r h
. .
,

t erest at t e ates s ow n

T h i x pl i h l d
.

s e anat on s ou

mk a l r le h c eari i a so t e ent es n

h B rr
t e d S ko i ow e t oc sect on, as

h i Fig 1 2 T b bl
s ow n n o e a e

d r rpr
. .

t o un e st and d i an nt e et

th d h m i hi g b
ese at a, t e a n t n to e

r m mb r d i h
e e h
e e s t at w en

Br k r A l B r k r B
o e oans o e st ock,

h
t en Br k r B p Br k r A
o e ays to o e
I. h k f i m rk l
c ec or ts a et v a ue

Th B r k r A p i r
.

en o e ays nt e est

f h
or tf hi m e u se o
y h t s one at t e

r i di d
at es n cat e .

M ON E Y B OR R O WE D
A ND L OA N E D B OO K
46 F u n c t i on. The
rr L
.

M oney B o owe d and oaned

B ook i s used t o ec o d all t he r r
essent i al d a t a ega d i ng t h e r r
money b o ow ed and l oaned by rr
a b ok e r r f or h i s c ust ome s r
r r
.

Just as a b ok e i s able to
rr
b o ow st oc k i n o d e t o pro r r
v id e f or t h e d el i v e y o f secu i r r
t i es w hi ch a c ustome has sol d r
h
s ort or t o l oan h i s s u pl us r
ri i hi
,

sec u t es w ch a r e not need ed

§33 A CC O U N TI N G M E T HO D S 3 5

for d l i ry e ve l i h bl so a so b rr m y fr m b k by
s e a e to o ow one o an s

ri i ll r l O br k r m y l
,

d p i i g
e os t n sec u t es a s b co at e a ne o e a a so or

fr m h r br k r O h h r h d h l d h
.

row o anot e o e n t e ot e an s ou t e
br k r h f d h m y l h m h r br k r
.
,

o e av e ex c ess un s, e a oan t e t o ot e o e s

i
n h t r
e Th f r
st eet r rd h ere o e,M y to eco t ese ac t s a one

B rr d L
.

o d ow e an d B k i d oane oo s u se .

47 i Str Th r rd h
i ct u r e. p
—
r h M e eco as two a t s, t e oney

B rr
o d ow ed h M an L d i
t e I h B rr
oney d oane sect ons n t e o ow e

r rd d h f ll i g f
.

i
sect on ar e ec o e t e o ow n ac t s

“
! D f b rr
at e o i g o ow n

N Am b rr
.

ou nt d o ow e

rldp i d
.

N C ll o at e a e os t e

l l r l fr m i m
S .

S S b i i u ist t ut ons n im co at e a o t e to t e

F r m h m b rr
.

‘
P o w d o o ow e

r dd r i fl
.

Q R f iat es o nt e est an u at o n o oan .

D f p m
at e o ay ent

h L r rd d
.

t de i
oane sec t on ar e ec o e

“ D f l at e o oan

N Am
E .

f lount o oan

r ldp i d
.

N
C ll o at e a e os te
ll r l
S .

P S b i i i
u st t ut ons n c o at e a .

‘
P T Wh m l o d o oane

r dd r i fl
.

Q R f iat es o nt e est an u at on O oan .

N D at e of p y
a ment .

48 M a n n er of hCh ec k ing —
S i nce it i s r ead i ly seen t at
ri i l i d h B rr d id f hi r rd
. .

on l h y t e s ec u t es st e on t e o ow e s e o t s eco

ll r l f r f h i b k h ri
,

as co l
at e a h or a oan t o t e ow ne o t s oo ar e t e secu

rl d d b h i m i f ll h h ld
,

t es c o nt o le
i or h ow ne y t o ow s t at t ey s ou

r i h S ri i L d r ll h r f r h
,

appea n t e ec u t es e ge as we t e e o e t e tw o
r rd m b m r d
,

ec o s ay e co p a e

B rr
.

T h k h m
o c ec l li d i h M
t e d
oney v a ues st e n t e oney o ow e

an d L d B k r f r
oane h ld b m d
oo h L e e enc e s ou e a e to t e oan

A r lLd r h ki m ri i h
,

ccou nt i h G n t e ene a e ge to c ec te s app ea ng n t e

L d
oane h r h
sect io n,i m l d i w h B rr d
e eas t e te s i st e n t e o ow e

i
sect on h ld b s h dou i h h i m e h i
c h
eck e w t t e te s as s ow n n t e
S dr D b i
un y i
e h G rlLd r
ts account n t e ene a e ge .
36 T
S O CK B R OK E R G E
-
A § 33

49 E x a m p l e of U se
r rd i m
. .

Th e met h od of eco ng oney

loane d i i ll r d i F ig 1 3
s ust at e n

hi h r p r fr
.
,

w c e p esent s m a age o

h
t e M L oney d i o a ne sect on

br rl m
.

Wh en a oke oans oney,

h
t e one b rr i h m
o ow ng t e oney

f r i h ll r f h l
u n s es c o at e al or t e oan
r rd d h i
.

Th d e ata ec o e ar e s ow n n

t h ef rm I h i o h n t s case, t e

br k r r rd
.

o e h w h o ow ns t e ec o

h as l d oane d f an or

h l WT Hd h d
t at oan y e as e

ll r l fir
. .

p os ti d
e co at e a at st con

f 500 h r f Ch i l
,

i i
s st ng o s a es o e

C p r
op i h
e m rk
w t l f
a a et v a ue o

$ 3 0 h r
a s d 3 00
a e an h r f s a es o

S uga r i h m rk l f w t a a et v a ue o

h r L r T
.

$ 5 0 a s a e W . at e on, . .

H d mk y e a b i i
es i a su st t ut on n

t h at ll r l H
co at e a h dr e w it aw s

h 500 h r f Chi l C p r
.

t e s a es o e o p e

an d b i su 600 h r
st t ut es f s a es o

Sm l r e te r h $2 5 h r
s wo t a s a e on

t h m rke Wh
a et fig r en one u es

h m rk ri
.

t e a l f h
et v a ue o t e secu

t i es d i d epos ll r l
te as c o at e a , as

i
aga nst h l t f e i i
oan o t s

r di l
ea yh seen id m rgi t at a w e a n

i s p ut
p b h
u b rr i y t e o ow ng

br k r W T H d
o e ,
. .
y e .

Th l e oan m d J lw as a e on u y
8 1 91 9 i r r f
at an nt e est at e o

d hi r
, ,

4 p er cent .
, an t s at e w as
i
c ont nue d i ll h 28 h t f h t e t o t e

m h ont h ,
i w h d
en t w as c ange to
4} p e r c ent h i h h l d i ll h w c e t t e

h h l f
s
,
.

3o h t , w en t e oan o
§ 33 ACCO UNTI NG M E THOD S 37

w asr r d by W T Hyd
et u ne e

ll r l w r r d
. .

d hi
an s co at e a as et u ne

h i m W T H yd
to l p id e a so a

r h rg w h h
. . .

hi i s nt e est c a es en t e

p r i i p l
nc w r r a d as et u ne

Wi h h i
.

t xp l i t i s e anat on t
h ld b l r j h h
-

s ou e c ea ust ow t e

ri
ent md
es a r e h M y a e on t e one

B rr o d how e Fi g 1 4 hi h s eet , w c

r rd h m y b rr d by
.
,

ec o s t e one o ow e

h br k r wh
t e w
o e hi o o ns t s r ec

d I
or hi i i
n t h s case t s seen t at

h i br k r h b r r d
.

t s o e as o ow e

fr m h M h o t e an at t an

C mp y o d h
an d p i d an as e os te
ri i
secu ll r l w i h
t es as co at e a t
r r h gi g
,

h i t e nte est at es c an n as

b f r e o e Th l w p i d e oan as a on

h
.

h 29 h f h m
t e t o t e ont .

STOC K TRA N SFE R

R E G I S TE R

50 fr q l
U s e. — As it e uent y
r r fr
.

b m
ec o es necessa y t o t ans e

a r i bl k f k fr m
ce ta n oc o st oc o

h ld r m h f ’
one o e s na e to t at o

anot h r i i e r t s necessa y t o p r o

r rd f h
,

v id e a eco o suc st ock s as

m ay b eh r fr sent to t e t a ns e
fi
O f ce i rd r h
n o m b e t at none ay e

lo st hr h h
t r i
oug t e Op e at on

Th r f r h S k Tr f r
.

e e o e, t e t oc ans e

R i eg st erh m i as co e nt o u se

hi r r d d ll
.

I n t s are ec o e a

st oc k d p i d ih h r
s e os te w t t e t ans
f fi
er O f ce B r f r h y e e ence to t e
f rm h i Fi 1 5
.

o , as s ow n n g .
,
it
38 S T OCK B ROK E RAG E
-

§ 33

w i ll be seen t h at col u mns a re

p r ov i d ed f or r rd i
ec o ng t h e im
po t ar
nt dat a r rdi e ga n g t he
st oc k d epo si t ed , s uc h as :

1 D at e of d eposi t
r f r
. .

2 . N umb e o sh a e s de
p os i t ed
A r ip i
.

3 d esc t on of s uc h

r
.

sh a es
‘

fr m
.

4 I n w h ose name , or o

r f rr d
.

w h om t ans e e

C r ifi mb r
.

5 e t cat e nu e

i hd r
. .

6 D f at e o l w t aw a

i hdr
. .

7 F h mor w o w t aw n

h m r f rr d )
.

( t o w o t ans e e

r ifi mb r
.

8 . N ew ce t cat e nu e .

51 R ea s o n f or Tr an s
Wh enev er
.

f er —
d i v i dend s are

r
.

d ue onk ce t i fi cat es t he
st oc

r
,

d i v i dend s w i ll nat u all y b e pai d

t o t h e l ast ec o d ed h ol d e s as
-
r r r
s h ow n on t h e book s o f t h e cor

por at i on or co mpany w h ose

st oc h k r ifi t e se ce t c at es r ep r e

sent Th r f r i i d e e o e, t s goo

r
.

p l i h
o cy t o k i fi av e a st oc ce t cat e

r rd d d r h m f
eco e un e t e na e o

h
t e r p r i ll
esent ow ne , esp ec a y
w h en a d i v i dend i s d ue .

I n this co nnec t i on i t i s w ell

to k now t h at t h e u sual c u st o m
i n t he r
st eet i s f or t h e b rkr o e

t o cha ge r 3 of 1 p er c ent f or .

t h e c o ect i on ll o f d i v i d end s on

ce r ifi
t c at es h el d f or c u st o me r s,

a nd1 p er c ent . on al l c oupons

c ollect ed .
§ 33 ACCO UN TI NG M E HO D S T 39

52 Ex a mple of Use — Fi g 15 S h ow5 ri t he ent es

Tr f r R r
. . .

made i n t h e S t oc k ans e egi st e in connect oni i h h w t t e

tr fr
ans e o f t he 1 00 h r f U s a es o S S t eel w hi h M r F rd h m
c o a

fr m r r hi
. . .
,

bough t , o t h e name o f t h e p ev i ou s ow ne to s ow n

na me
h l m ih h
.

Th e h ead i ngs f or eac co u n, w t t e ex cept i on of In

whose na me r q ir f r h r d i
e u e no u t e i sc u ss on The co u l mn In
r rd h pr i r
.

w hose na me i d me
’
s u se to eco t e ev ous ow ne s na as

appea ed r on t h ek r ifi h h
st oc ce t cat e w en t at r
ce t i fi cat e w as
deli v e rd
e to t e t h r f r fians e of c e .

VA U L T LI ST

53 F u n ct i o n V l Li
—
Th e
d i h br k r au t st , as u se n t e o e

f rm f r rd h ri i h
. .

age h ou se is a o or e co i ng t e s ec u t es t at ar e

f d rd r h h br k r
,

deposi t ed i n t h e sa e l i epos i t v au t, n o e t at t e o e or

r r dil k b r f r j h
-

hi s l k s may
c e ea i
y now , y e e enc e to t, u st w at

secu ri i
t es a re on h and .

54 Wh at I t R ecor d s —
Thi r rd pr id s ec o ov es a p l ace

r rd i f r rd i ri i
. .

f or ec o ng t h e o llow i ng d at a ega ng sec u t es i n th e

v au lt
1 D at e of d eposi t
r r
. .

2 N umb e o f sh a es

ri i
. .

3 K i nd o f sec u t es

r
. .

4 N ame o f ow ne

r ifi i f
. .

When a ce t cat e s t aken out o f t h e v au t t he l oll ow i ng

d r rd d
at a a r e eco e :

1 D f i hdr at e o w t aw al

N mb r f h r i hd r
. .

2 u e o s a es w t aw n

r hdr
. .

3 Ki d f n o sec u i t i es w i t aw n

P i hd r
. .

4 f l
u rpose o w t aw a

T r rd m b rifi d b h ri
. .

his eco ay e ve e y c h ec k i ng it w it the S ecu

i
t es Ld r e ge .

55 E xa mp le of Use —
Th e f rm o o f t he V au lt Li st is
If i ri i
. .

sh o w n i n F ig 1 6 t b e assumed t h at t h e sec u t es, as

r r fr h r
. .

ec o ded i n t h e o m s ow n, we e ac t ua lly d eposi t ed and w it h

40 TOCK B ROKE RAGE S
33 -

dr wa id f h m
n, an r f h dli g hi r rd ill b
ea o t e anne o an n t s eco w e

h d a

Th fi r ry r rd h f h h i rd f J ly
.

e st ent h ec o s t e act t at on t e t o u

1 00 h r f A d C p r b l F H T
,

s a es o i g nac on a o p e , e ong n to . . ow ne,

FI G 1 6.

we r dp
e e osi t ed in th e v au lt and on the si xt h of J uly 1 00 s a es hr
f A h H T r
,

o nacond a w i ch bel onged t o F . . ow ne w e e taken out

because o f a sa e l .

PRI VA T E LED G E R

56 Use — r r g r di h
W h atev e r f h is t ue e a ng t e u se o t e

r i l dg r i m r i l r i q ll r r g rd
. .

v at e e n a e cant e c onc e n s e ua y t ue e a
p e

i g i
n i W ll S r
t s use n a t eet

Th Pri L d ri d r fr m
.

e vat e e gef s use t o seg egat e a ew accou nt s o

th kp i h G rlLd r d ml
ose e t n t e ene a ri l b l e ge an t o co p et e a t a a

Sh rr h b l fr m h
,

ance or t o m k B l a e a a anc e eet c o ec t , t e a ances o t e

Pri L d r m b d
v at e e ge u st e u se

Pr L r r r
.

Th ie d i d
v at e i d e kge p k l
s us ed f n o e to ee a now e ge o

th ie m f h
nco r h pi l
e o t e c once n, f h p r tr e ca t a acc ount s o t e a t ne s,

an d h r imp r b i
ot e o fr m b i k
t ant us ness ac c ou nt s , o e ng now n t o

all h m
w h o ay h b k
av e accessf h fi Th m to t e oo s o t e of ce e an

f h dl i r rd d i i i h m f
.

ner o h an ng t e ac count s eco e n t s t e sa e as or

h dl i
an h rl d r
ng any ot e e ge account

Pr L r fr h h
.

Th i e d l d
v at e i eh ge w oum i cont a n t e acc ount s o w c

th e r pr fi d l
t ue o t anld b k d h
os s w ou e now n, an w at accou nt s

are i l d d h r i
nc u e l d b d rmi d by h fi m
t e e n w ou e et e ne t e r .
 ACCO UNTI NG M E THO D S
The r u l ing an d rr g ma han em i ent ar e t e sa e as n any ot h e r
l edge r
A rl h i l dg r w l d b k p i
.

cont o account f or t s e e ou e e t n t he Ge n
e ra l L d r e ge .

G E N E RA L LE D G E R

57 U se Wh r
l edge s al eady explai ned are used
e e t he r r
r L r r
.
,

t he Gene al edge o f a Wall S t eet fi r m c ontai ns t he asset

a nd l i abi lit y account s and t h e gene al nomi nal account s I n r
r r
.

sho t i t cont ai ns all t h e account s not k ept i n t h e Cu st ome s or

’

Pr r r
,

t he i v at e l ed ge as w ell as cont oll i ng account s f or t h ese

r
,

l ed ge s .

58 St r u c t u r e .— Wh ere a Cust ome r s

’
and a P ri v at e

r r L d ri
.

l edge a re used , t he Gene al e ge s u sua ll y a b ound vo u l me

r rr r
.

I ts ul i ng and a ange ment i s t hat o f t he u sua l ledge sh eet

w t i h h t e st an a d rd r l i u ng .

CL O S I N G TH E B OO K S

59 P r oc ed u r e —
At ce r ta i n p e ri do s of t he yea r t he
rkr r
. .

b o e
’
s book s a r e c osed
h b l in the sa me manne as ar e t e oo ks
i n mr a il r Th b l
e cant fr m h i e
\ c onc e n e a ances o t e nco me
G r l L d r
.

i
a cc ount s h l n i h t h xe ene a e ge a ong w t t e e p ens e

r r r
,

account s , p d h m are m p ost e to t e c us t o a y te o a y acc ount

call d Pr fi
e d L A o Th fit b l
an f os s c cou nt e nal a ance o thi s
r r rfi
.

account i ll h hw t l en ep esent t e net p o t o r net oss t o be

d bi d
e te r di d h pr ri r
or c e te to t e op et o
’
s acc ount .

PR OF I T A ND LO SS S T AT E M E NT

60 f rm f Pr fi d L
Th e N
o I m S o o t an oss , o r et nco e, t at e
h r r p r hi h fir
.

m ent i i s i h
g v en e ewm t In p e a i ng t s st at e ent , t e st

r i i m fr m h i b r d
.

s t ep i s fi d h to n t e op e at ng nco e ; o t is s su t ac t e

t h e o
p r i ge x at n d h r m i d
e r i ll b p h
en se ran t e e a n e w e t e net op e
r i i mh i b f di
,

i
at ng i m f Th
nc o e e net op e at ng nco e av ng een oun t
h ird
,

i x d d
s e t en h e l m to t e t co u n .
42 T
S O CK -
B ROK E R AG E 33

PROFI T Los s N ET I N CO M E, S TATE M E N T

g
AND , OR

1 . O p er at i n I nc ome
Commi ssi ons
2 Les s O pe ra t i n E x p ense g
Gener al o ffi c e ex p enses
A d mi ni st rat io n ex p enses

B ranc h offi c e o p er at i ng ex pense

S al esmen s sala r i es a nd e x p ens es

’

3 Tot al op er at i n g
g p
. ex ense

4 . N et op er at i n i nco me
5 Ad d i t i onal I nc ome :
.

I nt er est o n c u st o mers ’
ac cou nt s

I nt erest on not es r ec e i vabl e

I nt e rest o n st oc k s b o r ro w e d
P remi u ms on st o c k s l o aned

I nt erest on bon d s h eld f o r i n v es t ment

D i v i d en d s on st ock s h el d f o r i nv e st ment
6 . Total addi t i onal i nc o me
7 Les s Ad di t i onal E x p ense :
.

I nt er est o n st ock l o an s , eq u i val ent to

money bo r r o w ed
I nt er est on mo ne bo r ro w ed y
I nt e r e s t o n not es p ay abl e
Tot al ad d i t i onal e x p ense

N et a dd i t i o na l i ncome
N et i ncome f ro m all so u r ce s

Th e ne xt st ep i s t o fi nd t h e t ot al ad d i t i ona i ncome ; t en
l h
fr m h b r h l ddi l
o t at su t act r
t e t ot a a t i ona ex p ense , a nd t h e emai n

d er i hs d di
t l i
e net am Th fi d h i m t i o na nc o e en to n t e net nco e

fr m ll r dd h r
.

o a sou ce s , a
p i m d h dd
t ie net o e at i ng nc o e an t e net a
i
t ona l i m d h rnco l i ll b
e, an h i m fr m l
t e esu t w e t e net nc o e o a l
r
sou c es

j h l
.

Th h d e i eai h i ngs m h as g v en n t e st at e ent S ow u st w at e e

m ent s r i h r r i f Pr fi d L
ent e nt o t e p epa at on o a o t an o ss , or

I m S m f W Sr h
nc o e, t at e en tTh d f
or a al l t eet ou se e at a or

b i d fr m h G rl d
.

m ki a h
ng up t m b i s st at e ent w i ll e o t a ne o t e e ne a an

l
a so h Pr i
t L d r f i ill b r ll d h h C
e v at e e ge or t w e eca e t at t e us

m r L d r i r rd h mr
,
\

to e s
’
d e ge s u se l to ec o t e c u st o e s
’
acc ou nt s on y,
th r f re e o e h r r t f
ey c a nnot mi l p ep es ent any o t h e no na or ro

p r i
et o rs hi A l i i b r m mb r d h th
p a c c ou nt s so , t s to e e e e e t at e

rfi l f ri d i d rmi d b b r i
.

p o t or oss or a gi v en p e o s et e ne y su t act ng
fr m h l i m h l
o t e t ot a f hnc o
p r i d eh t e t ot a ex p ense o t at e o ; t e
§ 33 A CC O U N TI N G M E T HO D S 43

r l r pr
esu t he p r fi i
esent s m tl efr netm ll o t , or nco e, o r o ss, o a

r f h p ri d Wi h h
sou ces or t at
p i f p
e i b
o l y h t t e ex c e t on o oss t e
I r S k B r d r A dd i i
.

b p i
su ca t on , d
nt e e st on l t oc s o row e un e t ona
I m h bh d i g h l d b i l y d r d
,

nco e, t e su ea n s s ou e eas un e stoo

d r h k h i b rr
.

S m mi ho e g t w o n d e ow st oc t at s o ow e c an net an

i m
nco h b rre to t r Th r e i o h b ow e x pl i d e eason s , as as een e a ne

b f r r k i b rr d
.

e o e, h h t at w enev e h l i st oc s o ow e a cas v a ue s

r l ly h b r k r l i g h k h h
,

x h g d N
e c an e at u a t e o e oan n t e st oc as t e
r f h
.
,

use o f ddi i al pi l h p y i
t ona c a ta f h so e a s nt e est or t e u se o t at
rg d r h r f r h br k r l i g h k
,

m oney at an a ee at e , t e e o e t e o e oan n t e st oc

r i ece v es h fr m h b r k r b rr
c as i g od f ht e f o e o ow n an or t e u se o

t hi dd i i
s a l C pi l h br k r l
t ona i g h a k p y h
ta t e o e oan n t e st oc a s t e

b k r b rr
ro e i g h o k r i i r r f h
ow n t e st oc a ce ta n nt e est at e or t e u se

o f hi m ys H one k b rr .d u r f i
enc e st oc r s o ow e ar e a s o ce o nt e est .

P R E P AR ATI O N OF TH E B A L A NCE SHE E T

61 Wh at t h e B al an ce Sh e et Sh ow s Th e B al ance
f r rdi
. .

S h eet i s u sual l y said t o S how ac t s ega ng t h e account s as

t hey st and ; b ut i n a ny case it i s on ly an app o r xi m at i on, f or no

fi rm w i t h a d efi n i t e a mou nt o f cap i t a l i nv est ed i n sund r y v en

tu r e s , or r i sk s ca n w i th any c e r t ai nt y s ay j u st w hat t he i r r t ue
r
,

net w o th is at any t i me, unt i l al l acc o unt s out st and i ng a re

cl os ed and t he busi ness engaged i n has co me to an end In

Wall S t reet r rkri mr
.

t hi s i s espe c ial ly t u e ; f or t h e b o e s o e or

less l i ab l e to l o ss on hi s c ust o me r s
’
account s , b f ecau se o t he
fl uc t ua t i ons in t he ma k et r v al u e o f sec u ri Th r f r
t i es e e o e, we
r xim i
.

may say t h at t h e B alance S h eet s h ow s an app o at on to

t he net w o t h of r t h e fi rm .

62 M a n n er o f P r ep arat A s i n t h e p epa at i on o f
i on —
r r
r
. .

a b al ance sh eet f or a fi rm engaged i n any ot he b u si ness, t h e

fi r st st ep i s t o p epa e a r r Tr i al B al anc e w h i c h comp eh end s a r
r r fr m
,

su mma y o f t h e d eb i t s and c edi t s , t ak en o t he b ook s of

account , na mely :
1 . Cu st ome s r Ld r
’
e ge —
For posi t i on o f cust o me r s
’
acc ount s

as to D r o r . Cr bal ances
. .
44 T S O CK B ROK E R G E
-
A 33

2. P ri L dg r v at e e e — For pos it i on of cap i ta l account s and

i nco m e

r l L dg r
.

3. G ene a e e — For posi t i on of no minal account s .

63 F or m of B al a n ce Sh e et —The su mma r y obtai ned

r
. .

as d esc i bed w i ll enab e l the ac countant t o subd iv id e t h e dat a so

B ALA N CE S H EET
11

A sset s Li abil i t i es
1 Cap i t al A sset s : 1 Cur rent Li ab ili t i es
g
. .

Value o f E x chan e seat s S tock l oans

Value o f secu r i ti es hel d A ccount s pa abl e y
on i nv est ment
’

Acc rued i nt er est p a yabl e

Furni t u r e and fi x tures Accrued sal ar i es pa yabl e

2 Cu rrent A sset s :
.
2 Total Li abili t ies
.

Cash 3 N et Resou rc es,

. r ep r esent ed
A ccount s recei vabl e by
N otes r ec ei v ab l e Prop ri etor
’
s cap i t al ac
S tock s bo rr ow ed count
Acc rued i nt er est r ecei v Reserv es set asi d e
ab l e Undi v i d ed p rofi t
3 S u spense D eb i t s t o I ncome
g
.

E x chan e d ues pai d i n

ad vance

Rent pai d i n ad vance

I nsurance pai d i n ad

g
vance

A d v e rt i s i n p ai d i n ad

v anc e

O ther asset i tems t hat

w i ll b e ch a r ed off t o g
ex p ense at some l at er 4 Tot al Li abi l i t i es
. and Re
dat e sourc es :

4 Tot al Asset s
.

FI G 1 7

hrdi h
.

ga t e e nt o t h e asset s and l i ab i l i t i es and t he B alance S ee t

ll pp r
,

wi a ea as sh ow n i n Fi g 1 7 .

E X P L A NA T I O N OF I TE MS

64 A s s et s —
I n th e co u l mn o f asset s t hr
e e ar e onl y t wo
h h h r
. .

i t ems t at d emand xplanat i on

e f or t ey ar e so mew at d i ff e
fr m i h
,

ent o t ems a ndl ed t h us f a r ,

na mely
§ 33 A C C O U N TI N G M E T HO D S 4 5

1 S k B toc w d s N r lly w ld xp
orr o e : h at u a one ou e ect suc an

r i i ry
.

i m te b to l i bil i y H
e a a t b f ow ev e t s not , ecause or ev e

k b rr d h r i h k f i m r k v l gi
.
,

ow e
‘

stoc o t e e s a c ec or ts a et a ue v en to
th l e i g br k r b
oan n h b r k r b rr
o e i g hy t e m ki g h o e o ow n t us a n t e
k b rr d b r r d h
,

i m te S h ld h
an as set ou t e st oc s o ow e e et u ne t en

ld h h f q l h m rk
.
,

h e w ou i
av e an asset l f n c as o e ua v a ue ; or t e a et

l
va ue w l d b gi ou f i re r Th i f B r k r A b
e v en or ts tu n u s, o e or

r fr m B r k r B k w r h $ 500 h E x h g
.

ow s o o e stoc o t on t e c an e,

B r k r A gi
o e Br k r B v es h k f $ 500
o e i x h a g f a c ec or n e c n e or

th e st ockb r d Th h B r k r A r r h
or ow e en, k w en o e et u ns t at st oc
Br k r B Br k r A r i fr m B r k r B h h k f
.

to o e o e ec e v es o o e t e c ec or

r r
,

$ 500 h hor t p e m t k en l f h
esent k S b a et v a ue o t e stoc o or

r d k i i r li y
.
,

ow e st oc s n ea t an asset

Th i i m r f r i r
.

2 A d I ccr u e R i bl nt eres t ece v a e: s te e e s t o nt e

h b r k r fr m r r d
.

est i m te l d
s on oans ue id t e o e o out s e sou c es a oun

th r
e st eet , an d ll hr r a h otl e m r
sou c es suc as oans to c ust o e s on

th ire ac count s .

65 t U d r h h d i g f l i bi l i i
L i a b i l i i es — i w i ll
n e t e ea n o a t es t
i d h rr r h i
.

b e not ce h l i bi l i i
t at t e ll f a t es are a o a cu ent nat u e ; t at s,

h y h
t e r l y d d Th h r i m l i d
av e an ea ue fh
at e e ot e te s st e ar e su

ly l r d r i h f rh r l b r i
.

i
c ent bc ea tod e un e st oo w t out u t e e a o at on .

66 N et R T d rmi h r r f
e s o u r c es —
o et e ne t e net esou ces o

b r l l i b i l i i fr m h
. .

h fi m
t e r hsu t act t e t ot a l Th a t es o t e t ot a asset s e

r r i ld
, .

net esou ces nc u e

1 I m f h p r p ri r
nv est ent o t e o et o s

r
. .

2 R id
ese v es set as e

Pr fi r m i i g f d i rib i m g h pr p i r
. .

3 . o t e a n n or st ut on a on t e o r et o s .

A UD I T OF A B R OK E RA G E FI RM S ’
B o ox s

P UR P O S E A ND O B J E CT S

67 P u r p os e r
Th e pu pose o f an aud i t o f t h e book s of a
—

r k r fi mi hr
. .

b o e age r s t he same as t hat f or an aud i t of any O t e

r i
conce n hrb i n any ot e us nes s ; na mel y t o fi nd out t h e ac tua l
r r rfi m
,

fi i l
nanc a i i d p o s t on a n ea ni ngs or l osses of t h at pa t i c ul a r

rd r h h p r p r i r r m h
,

i
n o e t at t e o et o s, bank e s , and e xecut i v es ay av e
46 S TOCK -
B ROK E R AG E g3 3

a r
t ue k now l edge of t h ese cond i t i ons a s sh ow n by t h e r rd
ec o s

o f t he firm .

68 O b je c t s An au d i t c o ns i st s o f an e x a mi nat i on o f t h e
r Pri r r
. .

i n t h e Cu st ome d Gene al l edge s and

’
ac c ou nt s s v at e , an

h r h r r rd l
, ,

a ll v ouc d e s an h
ot e m f h
ec o s , a ong w it st at e ent s o t e
b i u s nes s

bj f ll
.

I ts O ect s a r e as o ow s

1 To d ri f h i m d r i x
a na lyz e an ve y t e nco e an O p e at ng e p ens e s

r i ri d
.

for a ce ta n p e o

re r r ifi d b l
.

2 T o p p a e a h hi h h
ce t h e a anc e s eet , w c s ow s t e

r
.

t ue di
con f h fi mt i on h o im f h
t e di r at t e t e o t e au t
r r m ri r d f
.

3 T o p m ep a e a st at e h ent co p a ng t e op e at i ng ata or

ri d f r
.

a p e o o yea s

r i h hr h b k h b k
.

4 T o a sc e ta n w et e t e oo s av e een ept co r

f rr r
.

rec t l b my, y f x mi i
eans o f h d an e i a nat on or t e et ec t on o e o s

rd r rr rr rk f h r i h
.

In o e i co ec t ly t o nt e p et the w o o ot e s n t is c ase ,

it is nec e s sa r f h di r y or b t e au r ih to not only t o e a p e s on w t a

r h rk i k d f
.

t h o ou g wo ng bnow l e m h ge o ac c o unt ancy, ut he ust av e

a r k ld f h
w o ki ng now e i m
ge o f d i
t e ac cou nt ng syst e as oll ow e n

W ll S r
a t eet

h r b i r id b fi
.

J u st a s i n any ot d e u s ness , a n au it p ov es a ene t,

fir st h
to t r ri r b e p op i r hmh h b k
et o s , eca u se t as su es t e t at t e oo s

ar e b i e ng co rr l k d
e ct h x
y i
ept i ; h isecon to t e e ec ut v es , n t at t
r h m f h ir f i r i i h i rd o h
,

a s s u es t e o t e ef ect v e sup e v s on ; t t t e
b kk p r d l rk r h m h h ir
,

oo ee e s i h
an c e s, n t at it a ssu es t e t at t e

r b i rr d
wo k is e ng c o d r l h m f
e c t ly one a n e i ev es t e o any su s

p i i
c on h i w h m i h cm h gmt co e u pon t e .

C O ND UC T I N G TH E A UD I T

69 P l a n of t h e A ud it —
S i nce no d efi ni t e l r u e can be
f
. .

g i v en a s t o t h e c ond u c t o f an au d i t i t i s l e t t o t h e w h oll y
r r r r
,

a ud i t o t o p ov i d e h i s ow n p l an o f p oced u e ; but t h e ex per i

r
enced aud i t o usuall y h as a p lan, w i ch h e ma
y c h ange a s c o n h
d i t i ons d emand He s h ou ld be p r ov id ed w it h a l i st of t h e b ook s
f rm ri
.

u sed , a s w el l as d efi ni t e i n o at i on as t o w h i c h ar e t h e p n

c i pal and w h i ch ar e the sub si di ar y b ook s .

He sh ou l d al so be
 ACCOUN TI NG M E T HOD S
"

g3 3 47

p i
rovd d i h h me f h w t
p r t e na es o t ose e sons e mpow e ed r to
i
rece v e and p h ay out c as

rmi d b r
.

Th x f he edi i ll b d t ent o t e au t w e et e ne y t h e ag ee ment

r di b
ent e e h di r d hi
nt o li et w een t e au to an s c ent .

70 . Ve r i f i c a t i o n of Ca s h A ccou n t s . —
N at u r lla y , th e
i nit i al s t ep i n t he au d i t cons i st s in au d i t i ng the cash acc ount

q h
.

The c as h on h and p l us t he b ank bal ances s h ou ld e ua l t he ca s

balance as sh ow n b y t h e c ash accou nt

rf r r rd d i h h
.

To ve i y c ash d i sb u se ment s as ec o e n t e c as

r h r r d hr
,

accou nt , t h e ent h i es ar e c ec k ed w i th t e et u ne v ou c e s

ri f hr i h k d ih h b k
.

To ve y t h e cas ec e p t s t h ey a r e c ec e w t t e an

r rd d in h h k h
,

deposi t s as ec o e t e b ank pass b k T oo o c ec eac

r i ih r r i h k d ih
.
,

i nd i v id ual ent y n e t e c a se, t h e cas h ent y s c ec e w t

th e l edge r ac count aff ect ed .

71 Ve r i f i c a t i o n of t h e O t h er A c c ou n t s —
S ince t h e
r rkr
r r
. .

B lot t e s u sed in a b o e age b usi ness pa t ak e o f t h e nat u e

of j r l ll f h
a ou na ash we r rd
as o a cas b ook , t ey const it ut e t h e ec o

fr i hi h ll p i i d
on w c a f h l d r i ost ng s one t o any o t e e ge s n u se ;

th r f r
e e o e, ri f r to ve i y h l d rany ent y t o any acc ount n t e e ge s

r r h ld l b h d h Bl r S m im h
,
'

ecou se s ou a w ays e a to t e ot t e s o et es t e

fr m h B r h l d r b fr q l
.

h ki
c ec i d ng s on e o t e lot t e t o t e e ge ut e uent y
fr m h l d r h Bl r
,

h h ki
t e c ec i d ng s one o t e e ge to t e ot t e s

h Cl r i r r rd r i i
.

Si nce H t Bl e ea ng ou se ott e eco s t ansact ons n

C rilea H k i i ll l
ng r
ou se st oc h k p s,ri t w on y s e v e as a c ec u on ent es

r rdi g Cl ri H
eco n k f 1 00 h r l
ea ng m l i l ouse st oc s o s a e ot s or u t p es

h r f
-

t e eo

h E Cl r i B l r r r d ll r i
.

Si nce t H e x ea ng ouse ot t e eco s a t ansact ons

i Cl r i 1 00 h r h r
-

n Hea k f l ng h ouse st oc l ll s o es s t an s a e s , a so a ot e

stock b d s or ll ll on h r ip d i b r m i
s, as we as a cas ec e t s or s u se ent s , t
r ll f ll h hi r rd r d h pp r i g d
nat u a y o ow s t at t s ec o p ov i es t e su o t n at a

f f o ri f h i d i h d r
ent es o t is k n n t e l e ge account s

ri i h l d r h k d h h ld b
.

A h s t e e nt es n t e e ge s a re c ec e t ey s ou e

m rk d i h d i i
a e i h
w t m rk a d h h h ki i st ngu s i ng a an w en t e c ec ng s

h k d h ld b
,

com l d h p et e m t e op en i ll l k d
i te s not c ec e s ou e sp ec a y oo e

up T.h f i f h e r l
oot ngs o h l d b p r d t e sev e a ac cou nt s s ou e ov e .

72 V er i f y i ng All A s s et s an d L i ab i l i t i es as set s

f rh i h B r
-
. .

an d i bi i i l a l t es as set Sh h ld o t n t e alanc e eet s ou ag ee

4s T
S O CK BROK E R G E -
A s33

w it h t h e l edge r account s ; and it i s up t o t h e aud i t o r t o See t at h

t h ey a r e ner r im d i t he ov e est d l d d h h
at e no r un erv a ue an t at t ey
a re act ua ll x i i g Th y e di r h l d p r
st n lly x mi e au to s ou e sona e a ne

ri i h ld i h r f i m mr
.

f
’
t h e sec u t es e e t e or nv est ent or or c u st o e s

l
account s, a so a ll mm r i l p r d h l i k A ll i m
co e c a ap e an t e e t a t es

di r m
.

th e au to h ll
u st see d l bili i
t at ai l d d as set s an ia t es ar e nc u e

S h i m r f
.

uc te i i s as d id b l
nv o ces an fil u npa il s ve y o t en a r e on e

i h
n t fi b
e of ce, r d i h pr r
ut not ent e e h n t e ope ac cou nt s ; t en, t oo,
ce r i ta n i l i bi l i i
c ont ngent h i a r i l i bi li it es ,h t at s, u nc e ta n a t es , suc

as di d
sc ount e r i bl h b k d i d l i m d
not es ec e v a e at t e an sp ut e c a s, an

hi m r r d i h B l Sh Sh ld
,

s uc te i
s , a re not nco p o at e n t e a ance eet ou

h i b r h di r h l d h h fi d h i
.

t s e t ue, t e au to s i
ou s ee t at t ey n t e r w ay nt o

h B l
t e Sh
a ance eet .

73 V er i m
fying I n coBy ri e an d E x n
p e s es .
—
t u n ng
h f rm h h I
.

b k ac to t e i o s m S m
ow ng t A 60 h e nco e t at e ent , rt t e

r fr m h i h i m d x i m m r di
.
,

s ou ces o w c nc o e an e p ense te s co e ar e ea ly
seen k ; i h
now ng t i i ll b d i ffi l
ese, h k h
t w i m not e cu t to c ec t ose t e s

o f i m nco d x e an T h i m h ld r i r f l
e p en se ese te s s ou ece v e ca e u

ri m h ld b r f l h k d
.

i
at t ent on, an d h t e va ou s a ou nt s s ou e ca e u ly c ec e

to h
see h t rfi
at t e p o ts r d l h h xp a r e not ov e st at e a so t at t e e ense

rd r
,

i m
'

te ll i l d d
s ar e a l nc u ei h h i m i m i a ong w t t e nco e te s, n o e

r f pr fi
,

t h at a m
t ue stat e d l
ent o m yb b i d o t an oss a e o t a ne .

TH E CL E A R I N G H OU SE
74 Th eCl ea i ng H ouse f or t h e N ew
T w o F u n c t i on s —
r
r
.

Yo k S t ock E xch ange may b e sai d t o be composed o f t w o

r
d epa t ment s ; namely, t h e D i st ib uti ng D epa t ment and t h e r r
A ud i t i ng D epa tment r .

75 Th e D i st ri b ut i n g D ep a r t m en t — The D i st r ibut
r r h rr
. .

i ng D epa t ment i s t h e d epa t ment t at a anges f or t he

h
ex c a nge o f r ecei v e t i c k et s and d eli v er t i ck et s , w e eon ar e hr
r rd d
ec o e r rd
t h e d at a ega i ng t h e t r ansac t i ons ent e e rdi nt o by
th e two r i ri
c ont act ng p a t es Thi s r
d epa t ment i s t h e med iu m
hr gh hi h m ri
.

t ou w c co p a sons o f sa e s l d at a ar e mad e .

76 M a n n er of Op er a t i o n To mak e pl ai n th e met
—
h od

r r r h
. .

of p oced u e , th e out in e connect ed w i t t h e busi ness of

 ACCO UNTI NG M E HO D S T 49

Ross D oun as s ow n h h r
by t ei
r
Cl ea i ng H ou se Sh eet Fi g 1 8,

S h h
.
,

w i ll be expl ai ned uc a s eet

h br r
.

must be sent by t e ok e to
t he Cl ea i ng H ou se r l r not at e

t h an 7 : 00 P M o f h d t e ay on

h h r
. .

w ic th e busi ness i s t ans

act ed

h
.

The sh eet s ow s ou
h R t e e

i
ce v e id h R s e D t at oss oun

h av eb h fr m H A D
oug t o o

b rr 3 00 h r f A
. .

a d
s a es o nac on a at

69 Wh hi i f rm i
en t s n o at on

l rk f
.

co m es h i kto t e t c et c e o

R oss D h i mm d i oun, ly e e at e

mk a es r i ikout a ec e v e t c et as

sh i Fi 1 9 d d i
ow n n g an sen s t
h D i rib i D p r m
.
,

to t e st ut ng e a t ent

o f h Cl r it e H ea h r i ng ou se, w e e t
i p s i ut h b nt o tf H A e ox o

fr m h i h i d
. .

D b o ar r , o w c t an

ot hr ik e t c ll d
et s are co ect e at

fr q i r l b
e uent l rk
nt e v a s y a c e

fr m D bo Wh
o arr s D
’
en o

b rr l rk r i
.

h i k
’
a s c e ece v es t e t c et ,

h i mm d i
e l em r at e i y co p a es t
w ti h h d h
t e h h ata h t at e as on t e

r
t ansac t oni If h i k i t e t c et s

rr h mp i i h hi
.

co ec t , e st a s t w t s

fi m r
’
mp d r i i
s st a b an et a ns t to e

sent h Cl r i
to t H e l r ea ng ou se at e

w ti h h i Cl r i s H Sh
ea ng ou se eet

h r h d h D
.

O hn t e ot e an w en o

b rr l rk r i d i
,

i t ck et c e
’
a s ece v e n

f rm i h h l h d b
o at on t at t e sa e a een

m d h i mm d i l m d
a e, e e at e y a e out

a D li r ei k ve d t i c et an s ent t
thr h h D i rib i D
oug t e st ut on e

I L T 234— 1 0
50 S TOCK B -
R OK E R AGE 33

p art ment t o Ross D oun, w h o co mp r d i

a e t w i t h t h ei rd at a,

and , i f i t w as co rr ec t , st a mped i t and k ept i t t o be sent to the

FI G 1 9.

r
Cl ea i ng H ouse hR
w it oss D ou n
’
h
s s eet t h at ni gh t I n t is h
br k r rkr
-

w ay th e buyi ng o e and t h e sell i ng b o e each h av e an

opp r o t u ni t y t o c h k p
ec u the ot h r m m r d
e
’
s e o an a o f t h e sa e l .

FI G 2 0
.

77 Th e>D el i v er sid e o f the sh eet s h ow s t h at R os s D oun

h fr m R r A
.

av e bough t o . H Goodby
. 400 s h a es o f naconda a t
§ 33 A C C O U N TI N G M E T HO D S 5 1

643 , d fr m D T M r
an C 3 00 h r
o f U S S
. l. oo e o . s a es o . . t ee
at 1 00
hi l rk h ffi hr gh
.

I n t h i k s ca se t e t c et c e sent out to eac o ce, t ou

th Cl r i g H
e ea d li r i kn Fig 20 ( )
ou se, ad ( b) d e ve t c et , a an an

h r i d i r r r i i k fr m h m h r d w
.
,

e ece v e n etu n a ece v e t c et o t e ;t e t a e as

co mp r d i a e h m r d rib d d h br k r i d
n t e anne esc e an eac o e r et a ne

h r igh w h h d l i r d hi h
,

i k il h
’
h
t e ot e s t c et unt t at n t en e e ve e s s eet at

th Cl r i g H
e ea n ouse .

78 B al an ci n g t h Th rd f e Sh ee t f or S t oc k — e t a es or

h d y h i g b ri p fr m h i k x h g d
.

t e a av n een w t t en u o t e t c et s e c an e

x hi g
,

th e ne d i t t b l h n h fto k A o s to a ance t e s eet or st oc . s w as

r un m an i c u re WILL 951 l . r w dm BALAN

CEor n oel
A T Ti l l DI LI VI R Y Pl lC l

FI G 2 1
.

e xplai ned unde rbl a anc i ng t he r

Cl ea i ng H ouse l ott e , all t at B r h
is necessa ry i s t o set one r
ent y off agai nst t h e ot h e ; f or r
i nst ance r f rr i
e e ng t o t h e Cl ea i ng r H ouse S h eet i f we set off

r A ri
, ,

t he ec ei v e i t em of 300 nac onda agai nst t h e d el i ve t em o f

4 00 A naconda, r
it is ead i ly seen t hat t h e bal ance t o d el i ve ri s

1 00 A na cond a ; h r
w e eas, i n t he case o f r
t h e ent y of t h e 300
U S S t eel to d li r
e ve t he r e is no set off f or t h at co rr espond

r r f 300 U S S l
-
. .
, ,

i ngly, t h e e is a bal ance t o del i ve d o . . t ee , as not e

o n t he sheet

A h f rm h
.

st oc k bal ance t i ck et i n t e i Fig 2 1 i m d

o s ow n n s a e

h D li r l m b i g l f bl k
.

out f or eac stoc k t he e ve co ub n e n e t an to e

r
,

fi ll ed i n at t he Cl ea i ng H ou se .
52 T
S O CK B ROK E R G E -
A 33

79 E n t er i n g th e S t oc k B a l a n c es . — The st oc k bal
rmi h r r
.

au ces h av i ng been d et e ned , t ey a re ent e ed on the Cl ea

i ng H ou se S h eet , a s s h ow n i n Fig 1 8
If h r rri d r h
. .

t e e is a ba l ance t o d el i v e , 3 5 i n t i s c ase , it is ca e to
t e h R i id
ece v e s d rd h e anTh p r i rdi
ent e e as s ow n e ce ent e e n

h pr i l m i h Cl r i r
.

t e ce co u H n p i s d ht xe ea ng ou se c e , an t e e t en
s i on i fi r d h ri Sh ld h b l b r i
at t at t to
‘

s gu e p ce ou e a nce e ece v e ,

rr p di l rri d h D li id d r d
.

h i i
t en t s c o es on ng y ca e to t e e ve s e an ente e

i mi l r m r ll h ri i h pri d m
.

i
n a s a anne a cas ent es n t e ce an a oun t

fig r d h Cl r i H r
,

co u l m b i ns e ng u e l m p i
at t e ea ng ou se sett e ent ce .

80 B a l an ci n g T b l h h f f or Ca s h o a anc e t e s eet or

l h r i f h m f r
. .

c as h al i t at s necessa l m y s to oot t e a ount co u ns a t e

r d mpl l S h ld
,

a ll k b l
st oc h b
a a nces av e een ent e e co et e y ou th e
r i f i b r r h h d li r f i h l
.

ece v e oot ng e g eat e t an t e e ve oot ng, t en a os s

h as b i d
een su st a ne d h km b h Cl r i
an a c ec ust e sent to t e ea ng

r h ld h d li r f i
,

H ou sef h m
or H
t e a ount ow ev e s ou t e e ve oot ng

h l r r h r i r d d dr f f
.
,

b e t e a gei h b t en a ga n as een eg st e e an a a t or

h Cl r i Th i
, ,

the b l a ance ld b b mi
w oud H e su tt e to t e ea ng ou se s

dr f r fh r i
.

a ld b i
t w ou d b f h m
e s gne y one o t e anage s o t at o gan za

i
t on an d r r d b et u ne f h f ll i d
a ou t f r noon o t e o ow ng ay a te th e
s h h
eet b as h Cl r i
een sent H to t e ea ng ou se

d h i
.

H i av ngb l d h h mpl l
a a nc e t e si fi d eet co et e y an av ng sat s e

h m lf h rr h br r d i h Cl ri
,

i se i i t at t s co ect , t e oke sen s t to t e ea ng

H l
ou se, a ong i h h x h iw t k b lt e e c ange t cket s, st oc
i a ance t cket s ,

an d h
th e c dr f eck o r m b Th h
a m t, b as t he c a se ay e e s eet ust e

ri H b l r h 7 00
.

i n th C e lea ng ou se f h d y not at e t an : P M o t e ay o n

i h r rd d d
. .

wh c b ithe u s ness ec o e w as one .

81 Th e m
A u Th
d iting h bi D ep a r t en t —
e s eet e ng

r i d i h C ri H fir r i i h f
. .

ece v e n t e lea ng ou se, t h e st op e at on s t at o

c h ec k i ng t h e st ock bal ance t i ck et s w i t h t h e s t oc k bal ances as

not ed on t h e sh eet A t th e sa me t i me, t h e amount o f t h e

rf hb l r rd d
.

c h eck or d a t is c h ec k ed w ith the c as a ance as eco e on

the h s eet

C r r h
.

le k s k now n as e xami ne s t h en c ec k al l t he xt ensi ons of

e

t h e balanc es o f t h e st ock s and p r ov e the mount

a c ol umns f or

add i t i on Whi l e h
t i s i s b ei ng d one, t h e ex ch ange t i cket s ar e
r rkr
.

t ak en and so t ed so t h at a ll t h e ti c k et s i ssu ed by any one b o e

§ 33 ACCO UN TI N G M ETHO D S
are in one b ox Th en r ev e y
r h h kd
.

ent y on t h e s eet is c ec e

i h h
w t t ese t i c ket s, as t o h cas ,

ki d f
n o st oc k me of t he
and na

br k r h
,

o e to w om t he stock w as
so ld fr or om w om i t w as h
Whil h e t ese ot e hr ope at i ons r
ar e g i g o n on, t he bal ance t i ck et s
are ent e erd ll ment s eets
on a ot h
hi h h fr h
,

w c av e t he o m s ow n i n
Fi g 22 As t hr h e e s ow n ,

h
. .

Ross kb lD oun av e a st oc a

ance d li r tof 300 U S e ve o

hil H I Th m h
. .

S l t ee , w e . . o as as

a k b l
st oc f 200 U S a ance o

r i dD T J
. .

S l
t ee t o ece v e an . . ones

a b l f 1 00 U S S
a ance o l tee t o
r i T h fr m h ll
. .

ece ve en o t e a ot

h R
.

m ent as s D ow n, oss oun

w i ll d l i r N e 1 h ve to o .
, on t e te

cei v e si de, 200 U S S t eel . . and

to N o 2, 1 00 U S Steel and

h r
. . .

t ese all ot ment s are ent e ed on

t h ir b l
e a ance t i ck et
f r
.

O n t he oll ow i ng mo ni ng
t he bal ance r r t i c k et s ar e etu ned
to R Doss h pr d oun, w o ocee

to d li r h e k verdi t e st oc s ac co ng

h mm r d h r
to t e h e o an a t e e s ow n

Th r di g h i k
.

us, acco n to t e t c et

h i Fig 2 1 h
s ow n ldn t ey w ou
d l i r 2 00 h r
.
,

e ve fU S S l s a es o t ee
H I Th m d 1 00 h r
. .

to o as an s a es

D T J
. .

to ones

Fr m h r
. . .

o p i t ese o e at ons as ex

pl i d i i r di l
a ne t s ea y seen t h at
h r gh h Cl r i H
,

t ou t e ea ng ou se
54 B ROK E RAGE A CCO UN TI N G M E T HOD S § 33
r
o e at o
p i n h
t ed l i er i ver i
es on d h
t ansac t ons are c ut ow n so t at

on l b l
y a ances ar e necessar b d li d y t o e e v ere

h q l h h k f i di i d l
.

I it l
s a so seen t at c onse uent y t e c ec s or n v ua

tr iansact ons ar e not necessa r f h k y d i p m

or c ec s a re u se n ay ent

hrb rd i h
,

f or st oc k b l a ances i to l
r ece v e on y, t e e y e uc ng t e cer

tifi i
c at ons at h b k
t e ll
an s as rd ig h m
we fas e uc n t e a ount o

d i l ffi
et a o ce rk
wo .
 A CC OU NT S FOR ST E A M R OA DS

IN VE S T ME N T I N R O A D AN D E Q U I P ME N T

I N T R O D UC TI O N

1 Th e capi t al st oc k and b ond s of a comp any are gene r ll

a y
issued for t h e purp ose of const ruct i ng and e ui pp ing t h e q r d
oa

and f r i hi
u n s ng t h e r i r d il h r
wo rki ng cap i t a l eq u e unt t e ev enues

are su ffi i m
c ent to f h r i Th x
eet t hee x p en se o t e op e at on e e p ense

d r r r i whil r d ifr m
.

an ev enu el i esu i l t ng o a p ar t a ope at on e a oa s

un e d r r i m
const uct on b i l d d i h r i
u st e nc u e n t e const uct on

accou nt s r i d d b h l ifi i Th m
as p ov e f
y t e c ass cat on e a ou nt o

r i i
.

cap i l h
ta t m b i at df hay f
e ssue or t e u
p p
r ose o c onst u ct on s not

li mi d bte fd r ll w i h ri h r
y any e e ap r r a d ne t e s t e e any owe g ant e

f d lb d f h rii rl fh i i
,

to any e er a o y or t e su p e v s on or cont o o t e ssu ng

o f cap i l b r i lr d
ta m i
y a Th oa mi l f li wi l l
co p an es e cost p er e o ne

r l i rd r
.

v ar y g ea t y i h h
n acco f h ance wt t e nat ur e o t e coun t y
t r r d d h
av e se an f l b r t dm i l
e cost o a o an at er a s .

2 mP ay en t Thf or r d f C on s t r u c t i on —
e p oce ur e or

r i r il r d i
.

const uct ng a l a h moa I m s not a w ays t e sa e n so e cases ,

h r d i b il b r i r d r h
.

t e oa s u t di
y a cont act n g p ar t y an s t u ne ov e to t e

r il d m r d f r i h r i r i
a r oa co p any ea y or op e at on ; t e cont ac t ng p a ty n
T R A A
'
‘'
C O P Y RI G I I I I D l Y MAY R H
IN E N TI O N L Tl X I l O O K C O
' '
P N . ALL IG TS R I S I R VI D
 TS FOR STEA M ROAD S
ACCOUN § 3 4

my i h i w rk k db d
’

t hi s case f a rece v e or t e const ruc t on o st oc an on s

issue d b y h r i lr d mp t S m im
e a mp i i
oa co any o et es , co an es ssu e

h r
.

st ock db d d by
an h p ym on s an
p d b il a cas a ent , urc ase a oa u t
h r m y i hi
,

by m so e ot e if h i gi l
co pdan f ; n t s case, t e or n a recor s o

t h e cost f r i o il bl h i m
const uct on are not av a a e, t e ent re a ount

o f h t r h ri i h rg d
e p u c ase p h Cce f s c a e to an accou nt , suc as ost o

R d P r h
oa d C mp r i ly f w f h l
u c as e . r r il d o a at v e e o t e arge a r oa

syst ems const ruct ed t h e ent ire mi l eage owned or op erat ed in t h e

syst em I n most cases t h e syst em i s comp osed of many sma ll
r r j
.
,

oad s t h at w e e c on soli d at ed and oi ned b y connect i ng lin ks

r h
.

At p esent many of t h e syst ems own or operat e t ousands of

r
,

mil es of road unde one management .

3 r
Some of t h e o i ginal small roads were const uct ed duri ng r
r h h r r
.

a p e i od w en t h e met ods of account i ngwe e not consi de ed of

su c h r
imp o t ance as at t h e p esent t ime and as a conse uence r q
r r r
,

t h e rec o ds of t h e o i gi nal cost of const uct i on wer e i n some

h h
,

cas es lost or k ep t i n su c a way t at i t i s now i I np ossi ble t o

‘

f r h r
,

c l as si y t h e in v est ment i n acco dance wi t t h e p esent cl assi

fi cat i ons . Th r f r
e e o e i t i s i mp ossib l e t o st at e wi t h an y deg ee
, r
of accuracy t h e amount of st oc k and b on d s act u all y i ssued

for t h e p urp ose of o ri i g n al c onst u ct i on r . I t i s known t h at in

man y cases st oc k was gi v en as a b onus wi t h t h e b on ds ld
so for
const uct i on r u
p p
r oses and in ot h e ri nst an ces st oc k was i ssued
r r r r
,

free t o p omot o s and t h e cost of const uct i on was p ovi ded for
b y t h e i ssue of b onds
f h r r ri r
.

A act t h at s oul d ecei ve v e y se ou s at t ent i on and be p op

e rl
y consi d e ed r i s t he mark et l
v a u e of secur i t i es i ssu ed b y t e h
r
const uc t i n g co mp any at the t i me and unde r condi t i ons w en h
the act u a l Const r uct i on wo rk
was p e o med rf r
h r r r
.

Some st at es av e en act ed l aw s g ant i ng a ail oad co mmi ssi on

t h e powe r fro egul ati ng t h e i ssu e of the st oc ks and b onds of

r ila r oad co mp ani es .

4 C on s t r u c t i on an d E q u i p m en t A c c o u n t s —
The con

r q r i lr d h r d
.

st u ct i on and e ui p ment account s of a a oa are c a ge as

f ll w
o o s: (1 ) Cost of t he o ri i g na l r i f
const uc t on o li a new ne ;
t hi s i s u sua lly p ai d for b y an i ssu e f ok d b d
st oc s an on s

ri i l li h
.

(2) Cost of new lin es or e xt ensi ons of t h e o g n a ne ; su c cost

 § 34 ACCOUN T S FOR S TEA M ROAD S
may b e p ai d for b y an i ssue of st ock s or b ond s or ou t of cas h
r r r r
, ,

or f om sp eci al ap p op i at i ons ; su ch in v es t ment s du i ng t h e

y ea arre i n c lu d ed in t h e t o t al i nv es t ment ( 3 ) Co st of ad di t i on s

r r q
.

and b et t e ment s t o oad and e ui pment ; t hi s may b e p ai d for

fr om cas h r r r
S p eci al app op i at i ons or secu i t i es i ssu ed ; i nv est

r
, ,

ment s for ad di t i ons and b et t e ment s are i nclu ded i n t h e t ot al

r q
i nv est ment i n t h e oad and e ui pment
r f r r
.

Th e first wo k p er ormed i n t h e o i gi n al cons t uct i on of a

r i l d i h r h f ri h f
a r oa s t e p u c as e odi rh t he g t o w ay gr a ng, p u c as e

r il r i f b il di
,

an d l i f i
ay n g o d ht es , a s , et c d an t e e ec t on o u ngs an

r h f q i m N rl l l m
.
,

th e p u c as e o e u p ent ea y a a
p y ent s on account

di r r d d qim hr
.

of x e p enf tu es m d b
or oa an e u p ent are a e y v ou c e s

an d h m t e a di ri b d
ount s are h r i st ut e to t e esp ect v e accou nt s

th h h
r ou g h r r i
t r e v ou c e eg st e .

5 Af r h i i l te r i f di fii hd d
t e or g n a const uct on o a roa s ns e an

h r di r d r h r i m f r i
.

t e oa s t u ne ov e t o t e op e at ng co p any or op e at on ,

any e x f p en se r i rk x d h ri i l r d
or const uct on wo to e t en t e o g na oa

or f rm
to li
o h ld b a new h r d h r i
ne s ou e c a ge to t e c onst uct on

d h
a c coun t s , an m x d d d ri
t e a rm b ount s e p en e u ng a y ea ust e

d
st a t e r l i h rri r
sep a at e y l r r Thn t l e ca e
’
s annu a ep o t e t ot a
r i
.

d bie t toh eac i dd d

const uct on h m acc ount s a e to t e a ount

p r iev ou sly d bi d d l f
e te h i an h a t ot a or eac ac c ou nt s s own , as

we ll lf
as a h i
t ot a f h r d
or t e en t r e cost o t e oa .

NE W IN VE S T M E N T C LA S S I F I C A T I O N

6 On Jul y 1 1 91 4 , a new Cl assifi cat i on of I nv est ment of

qui m
. ,

R oa d an d E p ent of St eam R oad s went i nt o eff ect In

I r C mm r
.

p r es ent i n g t hi s l
c assifi cat i on for u se , the nt e st at e o e ce

C ommi ssi on i ssu ed t h e f llo owi ng i nt rd o u ct o r l ry et t e :

T o ACCO U N TI N G O FF I CE R S OF STE AM R A IL WAY S

Th i s Cl assifi c at i on of I nv est ment i n R oad
ment supersed es and E q ui p

t h e Cl assi fi c at i on of E xp end i t u res for R oad and E ui p ment first rev i sed q
,
f J y
i s su e e f ect i v e ul 1 1 90 7 wi t h t h e Supp l ement t h eret o eff ec t i v e ul 1
, , ,
,

J y ,

t h e Cl assi fi c at i on of E xp end i t u res for Add i t i ons a nd B ett er

Jy
1 90 8 , and al so

m en t s first revi sed i ssu e, efi ec t i v e ul 1 , 1 9 1 0 I t al so su p ers ed es c on

g
.
,

fl i ct ing i n st ru c t i ons c ont a i ned i n Acc ou nt i n B ul l et i n , N o 8 . .

 ACCOUN TS FOR STEA M ROAD S § 34

Th e p l an of mer i n gg t he of exp endi t ure for a ddi t i ons and

q
account s s

b et terment s wi t h t h e for i nv es t ment i n roa d and ui p ment

f
acc ou nt s e

p v i d es t h at b e kep t i n su ch orm t h at th e ex p endi

ca rri er s rec ord s sh a ll
’

yf
r o

t u res for ad di t i ons a nd b et t er ment s ma y b e rep ort ed sep a ra t el rom t h ose

g g q
for ori i na l road , ori i nal e ui p ment , and roa d ext ensi ons .

D i s t i nc t h av e b een p rovi d ed for t h e i nv est ment i n sev eral

g f
acc ou nt s

c l asses of b ui ldi n s wh i ch , u nd er t h e ormer Cl assifi ca ti on, w ere i ncl u d ed

i n t he M i scell aneous St ru ct ures
g
acc ou nt .

Th e enera l a nd sp eci a l i ns t ru c t i ons conta i n a co mp reh ensi v e ment

g gg y
sta t e

of t h e p ri nci p l es u nd erl yi n t h e Cl assifi ca t i on , i nd i ca t i n

g g
enera ll t he
a pp li ca t i on of t h e accou nt i n rul e Th e a t t ent i on of a cc ounti n ofii ce rs

q g y g
s .

is ca ll ed t o t h e i mp ort ance of re ui r i n mp l o es w h o
al l e a re ass i ned to
acc ou nt i n g work i n connec t i on w i t h i nv est ment i n roa d q ui p ment
gy
an d

fm
e

il i ari ze t h emselv es t h orou h l wi t h th ese i ns t ruct i ons

g
to a .

I n t h e p rep arat i on of t h e rev i si on of t h e accou nt i n ru les cont a i ned in

t hi s and ot h er Cl assifi ca t i ons for st ea m roa d s , w h i ch are concu rrent l y
i ssu ed , t h e Commi ssi on h as h ad t h e coop erat i on of th e Associa t i on of

Ameri ca n R ai l wa y Ac count i n g Ofli cers , a nd of i t s St a ndi n g Commi t t ee on

Corp orat e , Fi sca l , d G eneral Ac count s

f
an .

Th e Cl assifi ca t i on , i n t ent a ti v e w as p resent ed for cri t i ci sm

m and

gg f g y
or ,

est i ons t o th e ch i e acc ou nt i n ofii cer of each rai l w a an d t o t h e rail

gg f
su

mmi ssi ons of t h e sev eral Sta t es Al l est i ons recei v ed m such
g
way
f m y
co . su ro

p a rt i es h av e b een i v en c are ul c onsi d erat i on a nd an of t h em h av e

b een i ncorp orat ed i n t h e Cl ass ifi ca t i on as h ere i ssu ed .

P R I MA R Y A C C O UNT S

7 Di v i s i on of A c cou n t s —
Th e ac count i ng syst e m p re

ri b d i r rl
. .

sc e n t hi s c assifi cat i on
l p f or t h r ee govi d es
ene a c as ses of
l
account s
—
r oad , e q ui pment and gene al exp endi t u r r es —
each of

r r f llow
,

whi ch i s su b di vi ded i nt o p ima y account s as o s:

R O AD
E ngi neeri n g B all ast
yg f g
11 .

Land for t ransport at i on p ur Track l a i n a nd su r aci n

g
12
f
.

13 Ri h t of

g f
poses .
- -
w ay ences

G ra di n Snow
g
14 . and sand enc es and

Und er rou nd p ower t u b es snow sh ed s

Tunnel s and sub w a s y Crossi n g s a nd s i g

g g
15 . ns
B ri d t rest les , and cul v ert s St a t i on and ofii ce b ui l di n
g
16
y
es , . s

E l ev a t ed st ru ct u res 17 R oa d wa b ui l d i n s

Ti es 18 . Water st at i ons

R ai l s 19 . Fu el stat i ons
O t h er t rack materi al 20 . Sh op s and engi neh ou ses
§ 34 ACCOUN TS FOR STEA M ROADS
G ra i n el ev ators g Pavi n
g
S t ora e wareh ouses ym R oad wa a ch i nes

Wh arves and d oc ks ym R oad wa s all t ools

Wh arves Assessment s for p ub l i c im
g
Coal and ore

ment s
g
d i
g
G as -

p ro u c n p l a nt s p ov e
r

t elep h one li nes R ev enues a nd O p era t i n

g
ra p h and

g
T ele ex

Si n a l s and i nterl oc kers p ense

s d uri n const ruc t i on

P ower d a ms , c anal s , and i

p pe Cost of roa d p urch ased
l ines R econst ruc t i on of road

P ow er p l ant b ui ld i n s g ch ased
pur

g
-

P ow er sub st at i on b ui ld i n O t h er expend i t u res, road

y
-
s

P ow er t ra nsmi ssi on ms machi nery

Sh op
y y
-
s st e

P ow er -
di st ri b u t i on s st ems Power p l ant ma ch i ner
-

l i ne p oles a nd fix t u res Pow er su b sta t i on a p p arat us

g
Pow er - -

Und er rou nd co nd u i t s Unap p li ed const ruc ti on mat e

M i sc ell aneous st ruc t ures ri a l and su p p l i es

EQ UI Pu E N r
St ea m locomot i v es 55 Mot or q m
e ui p ent of cars

gq m
.

O t h er l ocomot i v es Fl oa t i n e ui p

g
56
q m
. ent

F rei h t t ra i n 57 Work e ui p

g q
-
ca rs ent

Passen er -
t rai n c a rs 58 . Misc ell aneous e ui p ment
G E NE RAL E X PE N D I TU RE S
g a ni z a t i on exp enses 75 Ta xes
g
Or .

officers and clerks 76 I nt erest d u rin const ruct i on

g
G eneral .

La w 77 O t h er exp endi t u res , eneral

y g
.

St a t i oner and p ri nt i n

8 H an d l i n g o f P r i m a r y A c c o u n t s
. Th e p rop e h an .
—
r
dli ng of t h ese account s i s exp lai n ed i n t h e Speci al i nst ruct i ons
gi v en i n c onn ec t i on wi t h each acc ou n t a n d i n our t een p a a f r
g p
r a h s of gene a r li nst ruc t i ons as f ll
o ows :

A cc ou nt s for i nv est ment i n r oa d and eq ui p ment i t ems to

r r
,

be ch a d
g ,
e b as i s of ch a ges , cost of const ru ct i on , ex cav at ed

mat eri al i t ems t o b e r

c edi t ed , p r op er t y r ir d
et e and r l ep aced ,

r r ir d r q r ir d l
,

p op er t y et e and not l
ep aced , e ui p ment et e and

r ir d dj r r
,

et e a m u st ent s for conv e t ed p op er t y , ex p enses in con

r r i fi m
,

nect i on wi t h ad di t i ons and b et t erment s i nt e p et at on o te

q
,

li sts su b mi ssi on of u est i ons

A h r r hi rli r i
, .

c ose st u d y of eac
l p a ag ap n th e gene a nst uct ons

wil l b i ng r ou t many im f
por t ant eat ur es F xm l
or he a p e, t e

r ri i l
.

secon d pa agr ap h d eals wi t h t h e const r uct on o i f h t e o g na

road and o ri ig na e u i pmen tl, a soqt h e const u ct on o l r i f r d new oa

 ACCOUN TS FOR STEAM ROAD S
th w i h ri gi l l b h
at as n t r i f whi h w
e o na p an ut t e const uc t on o c as

d f r d
e er e ll h rh f h qi m f i I
as we as t e p u c ase o t e e u p ent or t t
d l wi h fi x d i m r l b ri d
, .

l
a so ea s m h s t e p ov e en t s , su c a t unn e s, s
g ,
e

b il di
u r h rk wi h d di i
ngs , ea t l f i li i wo h s , et c ; t a t ona ac t es , su c as

l q i pm r k b il di g b ri d h r
.

ad di i t ona e u d ent , t ac s, u n s, g ,
es an ot e

r r d wi h b rm whi h im r h xi i g
st uct u es ; an t et t e en t s , c p ov e t e e st n

f il i i h h h b i i f ri r
ac t es t r ou g f i f ri r
t e su st t u t on o sup e o p ar t s or n e o

p a r r i d Whi l h
ts et r e r d l rl wi h l e t ese ar e p esent e c ea y t ou t c ose

l i h y will b m r
.
,

ana ys s lt f i gf
e e o e or ess con u s n

9 O r i g i n a l I n v es t m en t s —
I n t h e in v est ment account s

ri i
. .

a di st in ct i on i s made b et ween o g n a l i nv est ment s ad di t i ons ,

r rd
,

and b et t erment s and the eco s mu st b e k ep t wi t h suffi ci ent

r
,

care xpendi t ures for addi t i ons an d b et t e men t s may b e

t h at e

r r
ep o t ed sep a at el y om t h ose for ro i gi n al oad fr
o i gi nal r r r
q r r
,

e ui pment and oad ext ensi ons an d wil l S h ow sep a at el y t h e

r r r r
, ,

exp en di t u e un d e each aut h o i zed ad di t i on and b et t e ment

r
.

Ori gi nal in v est ment i ncludes c ost of land b i dges b ui l di ngs

’

r r rr r
, , ,

t unnel s ear t h wo k s et c p ov i d ed and a anged for und e t h e

r r r
.
, ,

ori gi n al p l an for t h e c onst uc t i on of a new oad or const u ct i on

'

of ext ensi ons of exi st i ng mai n li nes addi t i onal b anch lin es r
r A r
, ,

and ext ensi ons of exi st i ng b anch li nes l so ollin g st ock

r rr
.
,
.

b oat s hi gh w ay v eh i cl es et c wh en p ov i d ed and a anged for

r r r
, ,
.
,

u nde t h e ori gi nal p l an for t h e const u ct i on of a new oad are

r q r
,

c l assed as o i gi nal in v est ment E ui pment pu ch ased on

r r r
.

ac count of i nc eased mi l eage of t ac k s i s not c l assed as o i gi nal

i nv est ment b ut as ad di t i on s
r r
.

O i gi nal road and oad ext ensi ons Sh al l not b e const rued t o
r
i nclud e fi xed imp ov ement s t h at u n d e t h e o i gi nal p l ans for r r
r
t h e oad s or ext ensi ons i t i s p op osed t o sub st i t u t e at some t ime r
q r r
,

su b se u ent t o t h e b egi nni ng of comme ci al O p e at i ons for t h e

r r r r
,

imp ov ement s o i gi nall y in st all ed and u sed for t ansp o t at i on

r
op e at i ons su c h
as st eel b i d ges su b st i t u t ed for t est les
,
r r .

1 0 A d d i t i on s an d B et t er m en t s —
U d rn e the h d f ea o

f
. .

ad di t i ons me al so addi t i onal

co acili t i es , su ch as a ddi i l t ona
t r ack s , e q ui pment b ui l di ngs u sed in connect i on w t i h r r t ansp o

b ri d r k
,

t at i on , s
g ,
e ad di t i on s t o b ui l di ngs , xt ensi ons
e to t ac s,

ad di t i ona l t i es l ai d in exi st i n g t r ac ks , air r

b ak es ap p li d r e to ca s
§ 34 T S F O R S T A
ACCOUN
E M R OA D S

not r i l h qi d
p ev ou s y t u s e u p Wh
p e h qiii f et c en t e ac u s t on o

qim d r h ri i l l i d f rr d h q i m
.
,

e u p en t un e t e o g n a p an s e e e su c e u p ent ,

q i r d l l b i d r d ddi i
,

w h en ac u e sh a e c ons e e as a t ons

im r f ii i
.
,

B m et t e r m
en t s ar e f i i h p ov e en t s o ex st ng ac l t es t hr ou g
b i i f
t h e su st t u t on o ri r r f i f ri r r r i d h su p e o p a ts or n e o pa ts et r e su c

d r
,

as h t b i i
e su f l i d h l f
st t ut on o h l st ee t re w ee s or cast w ee s un e

r li
-

ol k Th
ng st oc h bl b m i
e cost c h x ar gea e to et t er ent s s t e e cess

r rh r i f r
.

cost o f n ew p a t s ov e t e cost , at c ur ent p r ces o new p a ts

f h ki d r i d
,

o t e n et re .

I 1 Wh ri i m i m en ent e h ld b k
ng nv est ent te s , care S ou e ta en

i l d i m h
not t o n c u i i e m te i r r s s d d ow ng nv est ent n p op e t y not ev ot e

to t r r i ansp o h i m
t at on , ri h bl h as su c te s app ea n t e a an ce S eet

un d r h h die tM i ll
e ea s Ph i l Png r sce aneou ys c a rop e t y .

P R I MA R Y A C C O UN T S R E Q U I R I N G S P E C I A L ST UD Y

1 2 Usu all y t h e na me of a p rim r a y account wil l c eal rl y

Th r rim r d r rl
.

in di cat e i t s u se h
e e ar e p a y acc ount s un e eac gen e a

r h rqi h r m
.

accoun t , h ow ev e i l d ft at b e u r e sp ec a st u y or t e e ay e

i m h r fir i m
, ,

te s c bl a h m h
gea e to t b h h ld
e t at at st t ay e t ou gh t s ou

b e ch r d a ge m h rt o so l h r m yb
e ot m i m e account ; so ,
a t e e a e so e te s

t h at i ld
t w ou m h ld b h r d see h m h s b hou rl e c a ge to t e t at y t e gen e a

or sp ec a i l i r i f h l ifi i m b h r d
nst u ct on s o t e c ass cat ons u st e c a ge

to r
anot h e U d r hi
ac count rl f f h n e t s gene a accoun t , a ew o t e

ri m r r q i ri h f ll wi
.

p a y a c cou n t s i l d e u ng sp ec a st u y are t e o o ng :

1 3 A c cou n t A NO N 1 1 E n g i n ee r i n g —
ccount o

r i d l rk
. .
, . .

i l d
nc u h es t d e a
p y f
an i exp en ses o eng nee s , ass st an t s , an c e s

engage d i h n t d r i f li
e sur v ey an d x const uct on o n ew n es an e t en
i
s on s , an d i m ki d i i
n d ba rm f h rri r
ng a d t ons an et t e ent s o t e ca e
’
s

r d i di Wh
oa nclu d d k
ng Wh h r h
arves an oc s en , owev e su c

f r d h ir
, .
,

e m l p oy es ar e engaged i h m i d
n t e a nt enance o oa t e p y an
a

e x p enses m b h r du st r i x e c If h a ge to O p e at n g e p enses
"

t ey are

r limi r r rri d
.

engage d i n p e h x na m b y su v eys , su c e p en se ust e ca e

i
n a su sp ense account unt il i i d mi d h h r h rk t s et er ne w et e t e wo
Sh a ll i cont nue or not If h rk i i d h r limi r t e wo s cont n u e t e p e na y
r f rr d h r r rk
.
,

e x p ense m b u st e t ans e f h e to t e p op e accou nt or t e wo ;

8 TS FOR STEA M ROAD S § 3ACCOUN
4

b if h
ut l i b d d hi tr limi r x m b
e p an s a an one t s p e na y e p ense u st e

r f rr d r i x rfi dl
,

t ans e i em to Op e at ng e p enses , nco e , or p o t an oss ,

as m b ri A ay l h h d li
e appropf d at e s a resu t, t e an ng o a
p y an

r m m f im b di ri b d
.

ex s i hi d
p en es n t s ep a t ent ust o t ent es e st ute to
oth h m i i d
er accoun t s ri l i t e sa e as n n u st a cost account n g .

1 4 A cc ou n t N O 6 , B r i d g es , T r e s t l es , an d C u l v er t s
A r r
. . .

ccountN o 6 i nclu des t h e cost Of su b st ruct u es and su p e

r r r rr r r r
.

st uct ures t h at ca ry t h e t ac ks of t h e ca i e ov e wat e courses

h r r il h r b ri d
,

hi h
g w a s
y , d Wh an ot e a ways en , ow ev e a ge or

r d b filli i
.
,

l i
t rest e s c onv e h mb km te y ng, nt o an eart e an ent ,

dj hi
,

th l f h
e v a ue o dm b t dbe st r uct ure so u se u st e a u st e et ween t s

acc ount d o f r dian d i x

acc u nt s g or a ng , an op erat ng e p enses

A h li ri wi h hi i h
.

not i er i p ec u a hi l
t y n connec t on t t s account s t at w e

th f b ri d
e cost r d r r d r i i l di h
o ges ov e un e g a e c oss ngs nc u ng t e

i r h b ri d h ll
-

d b m sf i i
'

necessary p e s an a ut ent or su st a n ng t e ges s a

b h
e c d hi arge h f d r
to t d d
s account , t e cost o un e gr a e r oa ways
ri h f dr i d r
,

p aving on m g t o i i ll
w ay , a nage syst e s , an et a n n g wa s

out sid f h b ri d b m
e o i t b h e d A ge a u t ent s s to e c arge to ccou nt

No 1 5 Crossi ngs and

.
,
Si gns .

1 5 A c c o u n t N o 1 2 , T r a c k La y i n g a n d S u r f a c i n g
r j r
. . .

Th e cost of di st i b u t i ng l aying and ad ust i ng t i es an d ot h e

r r r
, ,

t rack mat eri al s u sed i n const uct i on of st uct u es i nc lu di ng

r r
ep air t ack s for t h e mov ement or st o age of l ocomot i v es or r
r
ca s i s c a gea b l e t o hr A
ccoun t N O 1 2 b u t not t h e c ost of t ac k s r
fl mp ry r r f
.
,

for car oat s or te ora t ac k Th

s h e cost , owev e o

h r ri l f r i b h h h m ri l i
.
,

andli ng t ack mat e a or ep a r s , ot w en su c at e a s

rep aced l i n ki nd and wh en rep ace l d i h im r

wt d h i r p ov e or eav e

mat e ri a l is c hr a geab e l to Op e at ng r i x Th r f r e p enses e e o e,

ir fr m
, .

rep a t o b e p ai d for
s are o revenue and not t o b e c onf used
wi t h const uct i on cost s r .

1 6 A c c ou n t NO 1 5 C r o s s i n gs an d S i gn s —
To
A r fr
. .
, .

N o 1 5 i s ch arged t h e cost of cons t uct i ng a m p asses

ccoun t

r r rr r r
.
,

hi gh ways an d ot h er ail way c ossi ngs across t h e ca i e s i gh t

’

f b ri d
,

of w ay , excep t rai lways crossin g at gr ad e Th e cost o ges

r rr i r rr r
.

or t est es l ca y ng t ac ks ov e oad s , hi gh w ays or ot h e

r il r A ri d
,

a ways i s t o b e ch a ged to ccount No 6 .

,
B es
g , Ti '

est l es ,
§ 34 ACCOUN S FOR T TEAM ROAD S
S

and Culv ert s Th e cost of a b ri d hr ge or h

r ot e st ruct u e t at

r f h r k f h r rri r
.

ca ri es ar m p asses hi g ways , or h t e t ac s o anot e ca e

r rri r k i b i l d d i hi
,

the account i ng c a
’
ov e er s t ac s s to e nc u e n t s

account B ut i t i s necessary t o not ce t i h b ri d g k i g h at a e ta n t e

rri r r k r h r k f h r rri r
.

account i ng ca
’
e s t ac s ov e t e t ac s o anot e ca e

i
s c h r d b ri d
a ge hil to s
g ,
e w e a b rid b il b y hge i g u t t e account n

carri r e r h r k to car y t e t ac s f
o hran ot h i g e ov er t e account n

rri r r k i h d Cr
,

h i d Si g
’
ca e s t ac s s c arge to t e ac count , oss n gs an ns
f h r g d f b ri dg d b
.

Th e cost o d i S op an st at on ov e ra e oot es an su

h
- -

ways not p b li i h u c g ways are t o b e inc lu ded i n t h e cost of t he

1 7 A cc o u n t N O 1 6 , S t a t i o n an d Of fi ce B u i l d i n gs
h
. .

To Account N o 1 6 i s c arged t h e cost of st at i on an d offi ce

r f r r fir
.

st r uct ures , i nclu di ng t h e fixt u es , urni t u e, et c necessa y st

q ip
.

to e u t he buil ding for use B u t b ui ldings u sed e c u s v e

:
x l i l y
h r d
.

in conn ect i on wi t h t h e mai nt enance of way are to be c a ge to

A cc ou nt No 1 7 R ai lw ay uil din gs ; and t B h ose u sed e c usi v e x l ly
qi
.
,

n conn ect i on
i wi t h t h e maint enance of e u pment are t o be
c h arged t o Account N o 20 S op s and E ngin e Houses h
r fr
.
.
,

Th e cost of pgr adi ng an d ep ari ng gr ound s b ot h b e o e and

af t er t h e const ruc t i on of t h e st at i on and offi ce b uil di ng in c lu ding

h r
,

t he cost of Sid ewa lk s dr i v eways et c s ou ld b e ch a ged t o t h e

r r r r
, ,
.
,

cost of t h e buil di ng, b ut t h e cost of est o i ng t h e g ound s af t e

addi t i on and b et t e rm ent wo rk m u st b hr e c a ged t o t h e app r o

p ri at e Op e at i ng e r xp ense account Th e cost of p ermanent wat e r

ri h h
.

g ts s ou l d b e i ncl uded i n t h e c ost of t h e b ui l di ng .

1 8 A cc o u n t NO 23 Wh a r v es an d B o ok s —
A ccou nt

Wh fl r
. .
,

No 2 3 i nc ludes arves d ock s dr y d ocks S li p s oat b i dges

h fl r
.
, , , , ,

and ot er l andi ngs i ncl udi ng t h e dr ed gi ng an d oat b i dge

mac hi ry
ne et c x
e cept t h at the cost of coa l and ore Wh r a ves

r A Wh r
, .
,

and dock s i s ch a ged t o ccount N o 24 Coal and Ore a v es

h W r
.
.
,

Th e cost of t h e l and on w i ch h a v es are b uil t an d h t e cost

of r i ripri h
a h r d hi
an g t s ar e not c a ge to t s account b ut t o A ccount

No 2 L df Tr r i P
an or anspo t at on u rp oses Th e cost o f b i l di
u ngs

h Wh r b h r d r ri
.
.
,

loc at e d ion t e a v es s to ec a ge t o t h e account s ap p op

at e for t h e c ass of
l b ui l di ng .
10 ACCOUN TS FOR STE AM ROAD S § 34

1 9 A c coun t No 27 S i gn a l s an d I n t e r l oc k er s

A rl r
. .
.
,

ccoun t N o 2 7 i nclu d es t h e cost of i nt e ock i ng and ot h e Si gnal

r r r
.

app a at u s for gov e ni ng t h e mov ement of t ai ns , i nclu di ng t he

t owe r s r
and ot h e b ui l di n gs in connect i on t h erewi t h If h ow
r r r
.
,

ev e t h e app a locat ed i n a st at i on
at u s is b ui l di ng t h e ent i e

A
, ,

c ost of t h e b ui l di ng Sh ou l d b e in c lu d ed i n ccount N o 1 6, St a .
‘

t i on an d Offi ce B ui l di ngs .

20 A c c ou n t No 32 P o w er D i s t r i b u t i on S y s t em s
A r
. .
.
,

ccou nt No 3 2 i nclu des t h e cost of d i st i b ut i on sy st e ms

r rh f rr
.
,

wh et h e ov e ead , sur ace, or und e g ou nd , for conv eyi ng low

t ensi on l
e ect ri c p o w r fr m r d i
e o p o u c ng p l an t s or t r f an s or me r
st at i ons to t ri a ns an d r f ca s , or or p ower ,
h eat , li gh t , or gene al r
u
p p
r oses

r h
.

Th e cost of di st i b ut i on syst ems l ocat ed i n s op b ui ldi ngs or ,

st at i on and offi ce b ui l di ngs sh oul d b e i nc l u d ed i n t h e cost of t h e

r
,

b ui l di ng : Th e cost of di st ib u t i on syst e ms u sed e c u si v e

x l ly
for op e r r h ll b h r d A
at i ng Si gn al s an d i nt e rl oc ke sS a ec a ge to ccou nt

N o 7 Si 2 l d I rl k r
gna s an nt e oc e s

Wh l ri rr r d
. .
,

h en t e e ect i d i h d c cu ent gene at e or rece v e s c ange

b m y f ean s o r r r i r f rm r
con v ert e s , gen e at o set s , or st at c t ans o e s,

th at i p f h li
or t on o id d r y m rr i
t e ne or ou t s e con u ct o s st e ca n
y g
cu rr f h r h h r i ki d f l h l d b
en t o ot e t an t e op e at ng n o vo t age S ou e

l
c asse d r mi i as tm d ll f i
an s x h r d o
ss on syst e an a o ts e p ense c a ge t
A P r Tr mi i S m b h h
,

ccoun t N 3 o 1 owe an s ss on y st e s; ut w en t e

l ri rr i r d r i d d d b i ll
.
,

e ect c cu ent s gene at e or ec e v e an u se su st ant a y

u nc h d in
ange l d ki d h li vo id dt age an n t e ne or ou t s e con u c t or

di ri b i
,

syst e m h ll b l S d wh ll
a e c asse
y m o y as a st u t on s st e .

21 A c cou n t N o A N 36 i b 3 6 , P a vi n g —
c count o s to e

hr d ih h r k i b li hi h
. . . .

c a ge f
wt i b t e c ost o p av ng a ou t t ac s n p u c g w ay s
th r ou gh whi h h ri r k l i d Th c t f i
e car er s
’
t ac s are a e cost o p av n g
rri r l d i hi h
.

h d f b i l di
’
upon t e ca e s h an s wt n t e groun s o u ngs or ot er

r r m b h d h
st u ct u es u st r id d f h e c arge to t
.

e ac cou nt s p ov e or t e

cost s o f h r r d h t ose f i h
st u ct u es ; an t e cost o p av n u
g p on t e c ar

i
r er s ri h f
’

g t i om b h w ayd A at cr oss ngs u st e c arge to c cou nt

N 1 5 Cr
o i d Si oss n gs an gns

h h dli h h h
.
, .

'

I n t f h
e x an f i i ng o t e e p en se or p av ng s S owri t e t or
ough ness wi t h whi ch t h e Commi ssi on h as gone i nt o d et ail i n
§ 4
3 ACCOUN TS FOR STEA M ROAD S 11

t he di v i si on Of i i
cost s wi h h l yi g n connect on t t e a n out of t hi s

22 A c cou n t N o 45 P o w er P l an t -
Ma c h i n er y —
Th e
h h r r
.
, .

cost of mac in er y and ot er app a at us for gene at i ng power i n

power p l an t s u sed for the op er at i on
n r
of t ai s and cars , or for

fu i hi
rn s ng p ow e r h eat and li gh t for st at i ons Sh op s , or gen e al r
f
, , ,

u
p p
r oses i nc lu di ng t h e co st of sp eci al oun d at i ons and inst al l a
A
,

t i ons , mu st b e ch ar ged t o ccoun t No 45 Th e cost of found a

r h
. .

ti ons ot h e t h an t h ose t o p art i cu l ar machi nes an d ot er

sp eci a l
app ar at u s sh al l be i nc lu ded i n t h e cost of t h e b ui ldi ng and not in
t hi s ac coun t
P r m hi r f h h h
.

ow e ac n ery i nst all ed in a S op as a p a t o t e S op

equ i hpr m h ent u st , owev erb hr d A e cN 4 Sh a ge to ccoun t o 4, op

M hi r P m hi r h r r i ll d
.
,

ac ne y ower d
ac ne y an ot e ap p a at u s nst a e
h r
.

i i d ffi
n st at on s an o l l f
ces so e yh ll b i l d d i
or use t e e S a e nc u e n
A N
ccou n t 6 S O 1 t at i
on an d Offi B i ldi P r m hi r ce u ngs owe ac ne y
r i l r i i lm b
.
, .

an d app a at u s n p ant su d l l f se so e y or op e at ng s gna s ust e

hr d A
c a ge to ccou nt No 27 . Si gn al s and I nt er l ockers .

23 Th e sev e al r rim r p a y accoun t s un de r

t he gener al equi p

r
.

ment account are l

d esi gn ed t o Sh ow t h e cost of t h e sev e al c asses

q
of e ui p ment own ed b y t h e c ar ri e or h eld un d er e u pment r qi
r r r
,

t ust agreem nt s for p u ch ase T h app op ri at e p rimary

e e

r q
.

account S h al l b e ch a ged wi t h t h e cost of all e ui p ment t he

r
,

cost s of ad di t i ons and t h e excess cost of b et t e ment s Th e

r
.
,

cost of emov i ng t h e ol d ap p li an ces an d app l yin g t h e i mp rove

ment s Sh all b e ch ar ged t o op e at ing exp enses r

r q h
.

Th e l edge v al u e of each u ni t of e ui pment S all b e credi t ed

r r
to t h e ap p op i at e e ui pment account w en i t i s et i ed rom q h r r f
ser vi ce Th e amoun t of t hi s credi t s all b e concu rent ly h r
hr
.

c a ged as foll ow s :

Th e mount of th e b al ance sh eet ac crued d ep reci at i on wi t h

q g
a -
account

t o th e ui p ment th u s ret i red Sh a ll be ch ar ed t o t h at

g g
resp ec t e ac count ;
the salv a e rec ov ered sh all b e c h ar ed t o th e mat eri al s and supp l i es account

or el sew h ere , a c cord i n g t o t h e p urp ose for wh i ch used ; t h e amount of

dep reci a ti on p ri or t o J y ul 1 1 90 7 , not p revi ousl wri t t en 0 3 or p rovi d ed y
I L T 234 — 1 1
12 ACCOUN TS FOR STEA M ROAD S § 34

g m
for , sh all b e ch ar ed t o p rofi t and l oss ; and t h e re ai nd er sh all b e cha r ed g
t o th e app rop ri a te Op era t i n g
ex p ense ac c ount for e ui p q m ent ret i red

g q m
.

m m
Th e cost of d e oli sh i n t h e e ui p ent , if d e ol i sh ed b y or for t h e carri er,
g p
sh a ll b e ch a r ed t o th e a p rop ri at e op era t i n g
exp ense acc ou nt for e ui p q
ment ret i re ment s
q
.

Wh en the c ost of th e renew al s to be mad e a ny u ni t of e ui p ment

j q
to
w i ll const i t u t e the ma or p or t i on of i ts v a l u e a s renew ed , th e e u i p ment ,

wh en t a ken of erv i c e , sh all be c onsi d ered a s reti red and a cc ount ed

g g
ou t
s
for p v i d ed i n t h e p reced i n p ara rap h , a nd for t h e p u rp ose of th i s
q
as ro

c l assifi ca t i on t h e renewed e ui p ment Sh a ll b e consi d ered an add i t i on and

th e app rai sed cos t t h ereo f sh a ll b e i ncl ud ed i n th e a c c ou nt a p p rop ri at e for
th e c ost of the q
e ui p ment In no ca se Sh a l l t h e c h a r e g for t h e renewed

q
.

e ui p ment ex c eed th e ( at ma rket i f l ab or and mat eri al )

q y q y q
c os t cu rrent p r c es o

of new e u i p ment of S i mil ar ual ca p a ci t a nd e u a l exp ec t a t ion

f
t pe , e ,

of li in servi ce, l ess su i t abl e a ll ow anc e on ac cou nt of th e second h and

g
e a -

mai ni n t h erei n
p art s
j
re .

Wh en an import ant ad d i t i on and b et t erment p ro ect or t h e const ructi on

of new l i nes neces si t at es t h e p u rch ase O f e u i p ment t o b e u sed ex cl usi v el q y
t h erei n t h e c os t of su ch e u i p ment sh a ll b e i ncl u d ed i n t h e a ccount s q
rep resent i n
,

g
t h e cost of t h e w ork and no ch ar e sh al l b e mad e t o Op erat i n g g
exp enses for d ep reci at i on on su ch e u i p ment w h i l e t h e c ost remai ns so
,

q
ch ar ed g Th e amount rea liz ed rom any sub se u ent sa le or t h e ap p raised f q
q f
.
,

v al u e of t h e e ui p ment ret ai ned a t er t h e comp l et i on of t h e sp ec i al work

for wh i ch i t w as p urch ased , sh all b e cred i t ed t o t h e accou nt s ch ar ed wi th g

i t s cost Th e app rai sed v al u e of su ch e u i p ment ret ai ned sh al l b e d ebi t ed q
y f
.

t o t he a pp rop ri at e i mar h erei n, t h erea t er , for t h e p u rp oses

g p r accou nt and

of acc ou nt i n su ch app rai sed v al u e S h all be c onsi d ered as t h e cost Of t h e

q
e ui p ment
,

q q y
.

Wh en sec ond h and e ui p ment u i red i s in su ch ph si cal cond i t i on

y g
-
ac

t h at i t i s nec essa r make ex t ensi v e rep a i rs t o i t t o b ri n it t o t he

q
to up

st and a rd re u i red b y the c a rri er , th e c ost of su c h rep a i rs sh all b e i ncl u d ed

in th e a pp rop ri a t e for t h e of the q ui p ment A mp re
y
a ccou nt c ost e . co

h ensi v e ment of the mou nt est i mat ed t o b e nec essa r reb ui l d

q
st a t e a to
sec ond h and ment i n accord ance wi t h th e ab ov e p rov i si on sh all
ui p be
f
-
e

u rni sh ed t o th e Commi ssi on as soon as t h e est i mat e i s ma d e .

G E N E R A L E X P E N D I T UR E S

Th e p rimar y account s of t h e gene al exp en di t u es

24 r r
r
.

accoun t are d esi gned t o i nclu d e exp endi t u es mad e i n conn ec t i on

wi t h t h e ac qiii u s t on and c onst u c t i on of o r ri i l r d

g na oa an d e qi u p
ment an d wi t h e xt ensi ons addi t i ons , an d b rm et t e ent s , to r d oa

q r r di r r
, ,

and e ui p ment p op e t y , wh en su ch e xp en tu es c ann ot p op

e rl y b e i n c l u d ed i n any of the o fr egoin g ac coun t s as a p ar t of

§ 34 A CC O UN T S F O R S T E A M R OA D S 13

th f
e cost p ifi ow r k W h
an y s i b l ec c o en ass gna e , su ch ex pen

f h pr p r y i
.

di h ll b i l d d i
t ur es S h
a e nc u e nt e cost o t e o e t n connect i on

wi h whi h h
t x dic r t e e p en t ur es oc cu .

25 A c c ou n t N o 7 1 O r g an i za t i on E x p en s e s

A f r
. .
, .

ccount No 7 1 Sh a ll i nc lu d e t o gov e nment s for

all ees p ai d
r r r r r
.

th e p i vi l ege of i nc o p o at i on , and offi c e and ot h e expendi t u es

r
in ci d ent t o o gani z ing t h e co po at i on an d pu t t i ng i t in readi ness r r
to d o b u si ness ; cost of p rep a i ng and di st i b u t i ng p ospect u ses ; r r r
cost of so li ci t in g su b scr i p t i ons for st ock ; cas h f ees p ai d to
r
.

p r omot ers and t h e act u al cas h v al u e (at t h e t ime of t h e o gani z a

r r r r r
,

t i on ) of secu i t i es p ai d t o p omot e s for t h ei se v i c es i n organi z

rr
ing t h e en t e p i se ; sp eci al counsel ees ; cost of p ep a ing an d f r r
i ssui ng ce r ifi t c at es of st oc k ; f r costi h o p ocur ng t e necessa y r
ce r ifi
t c at es fr m S o t at e au t h ri i
o d h r lik
t es ; an ot e e cost s Th e
r
.

cost of soli ci t i ng for loans orf h l f b d

or t e sa e o on s or ot h e

ev i d ences of i nd eb t edness , h r h ll b h r d
owev e S a e c a ge t o t he
A
,

b al ance sh eet -
ccount N o 7 2 5 D i scount
.
,
on Fund ed D eb t .

26 A c cou n t N o 7 6 , I n t e r es t D u r i n g C on s t r u c t i o n
A r
. . .

Th e h andli n g of ccount N o 76 i s so i mpo t ant t h at all t h at i s

r r
.

sai d in t he c assifi cat i on u n de

l t hi s accoun t i s gi v en h e e I t is
f ll
.

as o ows :

Wh en any b ond s , not es , or oth er evi d ences of i nd eb t ed ness are sold , or

i nt erest b ea ri n g d eb t i s i ncurred for qui si t i on a nd const ruc t i on, of

g q
any -
ac

ori i na l road and e uip ment ex t ensi ons , a dd i t i ons , and b et t erment s , t h e
i nt erest ac c rui n g ,

t h e p a rt of t h e d eb t rep resent i n g th e c ost of y

g q p p t
on ro e r

ch ar eab l e roa d and e ui p ment (l i if y al l ow ed

f
to ac cou nt s ess nt eres t ,
an ,

b y d eposi t a ri es on u nex p end ed b al ances ) aft er such und s b ecome av ai l

f
ab le for u se and b e ore t h e rec ei p t or t h e comp l et i on or comi n i nt o serv i c e g
of th e p rop ert y q
so ac ui red sh a l l b e ch ar ed t o t h i s ac cou nt g .

Wh en su ch secu ri t i es are sold at a p remi m, th e p roport i on of such

mi um assi g na b l e t o t h e t ime b et w een t h e d at e
u
of the a c t ua l i ssuanc e
p e
y q
r

of the secu ri t i es and t h e t i me wh en t h e p rop ert ac ui red or t h e i rnp rov e

ment mad e b ecomes a v a i l ab l e for servi ce Sh a ll be cred i t ed t o this a c count .

Thi s sh a ll i ncl u d e such p rop ort i on of t h e d i scou nt and

g g
a l so

f q
a c c ou nt

und ed d eb t i ssu ed for t h e ui si t i on of ori i na l road , ori i nal

q q y
e xp ense on ac

e ui p ment ,
road ex t ensi ons , a d d i t i ons , and b et t erment s, as is e u i t ab l

assi gnab l e t o t h e p eri od b et w een t h e d at e of t h e ac t ual i ssua nce of secu ri

t i es a nd t h e t i me wh en t h e p rop ert ac ui red or t h e i mp rov ement mad e y q
b ecomes av ai l ab l e for t h e servi c e for wh i ch i t i s i nt end ed . Th e p rop ort i on
 14 ACCOUN TS FOR STEA M ROAD S § 3 4

of d i scou nt a nd ex p ense g t hus m

ch ar eab l e Sh a ll b e d et er i ned b y th e rat i o
b et w een t h e peri od p ri or t o t h e co p l et i on or c o i n m m g i nt o servi c e of t h e
fac i l i t i es or i p rov e ent s a c mu i r ed m
a nd t h e p eqri od of t he f ent i re li e of

th e secu ri t i es i ssu ed
g g
.

Thi s sh a ll a l so i ncl ud e rea sonab l e ch ar es for i nt erest d uri n

f y m
a c cou nt

t he c onst ru c t i on i d be t h e p rop ert b ec o es ava i l ab l e for servi ce ,

f p er o ore

the c a rri er s ow n for c onst ru c t i on

’
on u nd s exp end ed u
p pr oses

t t t t b t g b f
.

N O TE A

t t
.

i n h i s ac c ou n nor sh a
—

ft
In er es
l
b
ll t
on

l
t
ond s , no es
b
i nd e ed ness ac cr ui n

t t b gf
l bl
or o
ll
t h e p roc eeds rom t h e sa e of t h e sec u ri i es ec omes a v a i a e f or u se sh a not b e i nc u d ed
h ere b e i nc ud ed an y i n er es acc r u i n a t er t h e
h er
l
t
ev i d enc es of
e or e

op ert y wi h

t t
,

t o w h i c h t h e p roc eed s are ex p end ed i s r ec ei v ed or ec omes av ai l a l e for u se i n

t by
resp ec
c onn ec i on w i h c ommerc i a ser v i c e l
g by t t y
b l
.

N O TE B — I f any sec uri i es w h i ch h av e een i ssu ed or as sumed t h e c arr i er are so d

t t ht t l l t
l
t l
.

or ex ch an ed or for t h e c arr i er for a c on sid era i on t h e ac u a mon e v a u e of w h i c h a t

t h e i me of su c
ac cru ed i n eres
sa e or ex c h a n e i s es s
h er eon if an y t
i
e d ifi er ence bt
l
e w een t h e mon e y
h an t h e v a u e of t h e sec uri i es at p ar and t h e

t l
t h t
v a u e of t h e c on si d er a i o n

t l
t l
t h f t
ll
t t
, ,

r ecei v ed a nd t h e p a r v a u e of t h e sec u r i t i es p u s t h e acc r u ed i n er es

h llb t
d i sc ou n .

t lt t
I n no c ase ( ex c ep as p rovi d ed i n t h e
t y g gd !
s a b e d eemed a
i rd and ou r h p ara ap h s of h i s accou n )
d i sc ou n s b e i n c u d ed as p ar of t h e c os of an t h i n c h ar e t o a ny a cc oun p re t
t t t g lb l
s a
sc r i ed i n h i s c l ass i fi c a i on

t tW bt t
.

N C —
F or d efi ni i on of sec ur i i es actua ll y i ssu ed , see N o e B u nd er ener a

tt t t t g t t
O TE . a anc e ,

sh ee Ac c o u n N o 7 5 5 F u n d ed D e Unma u r ed

t by
bl
. .
,

N D h enev er i n er es remi u m or di sc ou n assi na e t o t h e c ons ruc i o n

—

t t tt h t t t t g
O TE .
p , ,

p eri od i s i nc urr ed i n c onnec i on wi h an ex p end i ure co v er ed some S ifi c road an d

d ir ec tl y
eq u i p men a cc ou n or a c c o u n s s u c h i n er es p remi u m or d i sc ou n 5 al l b e c h ar ed
t o t h e s p ec i fi c a cc ou n t o w i ch i t i s r el a ed
, ,

.
,

ST UD Y O F C LA S S I F I CA T I O N

27 Sent h I r P ri f h Cl
w i t h t i s nst u ct i on i ap e s a copy o t e ass

f I d Eq i m
.

fi i
cat on o m i R d nv est fS ent mR d n oa an u p ent o t ea oa s ,

ef ect i v e
f J l 9 Thi m h l h ld b di d
u y 1 1 14 s p a p et S ou e st u e as a

r f i l r r ri d wi hi h
.
,

p a t o th h m
s if i esson , t e sa e as t we e ep nt e t n t e

p ages o f hi I r i P r S d
t s nst u ct on l h rl ap e t u y not on y t e gene a

r i b l h m r ri rl d
.

i nst uct ons ut a so h t e at t e conce n ng ea c gen e a an

p rim r a y i l
ac coun t , i h n
p y g
a d r c ose at t en t on to t e not es un e

m any o f h t i i i h
e ac c ount s , ash hfi i t s n t ese not es t at t e ne p o nt s

ar e br ou gh t ou t A l f r lf h l
na h y z e or y ou se eac ac c oun t a ong t e

d r h r l h di i hi
.

li ne o f fthem i d ew ent one un e t e gene a ea n gs n t s

S i ect on

r h r f hi l ifi i b m
.

I i t s not necessa y t at any p a t o t s c ass cat on e co

mi d tte m m r b i h ld b
to e o h r
y hl di
ut d h t s ou e SO t o ou g y st u e t at

t h l
e c ose i i f h diff r
assoc at on i ll b ol rl t e e ent accou nt s w e c ea y
un d r e st oo d ll h r f h i i lf
as we as t e nat u e o eac n t se

f r
.

Th E mi e i xaQ i l l
nat on b d
u est ons t h at o ow are to e answe e

fr m h i f rm i i h l ifi i m h l N di ffi
o t e n o at on n t e c ass c at on pa p et o

rdi di if h f r
.

cu l ty wi ll b e en coun t e e i di n o ng so t e o ego ng rec

t i ons ar e ca e u r f ll f ll d y o owe .
 ACC OU N T S FOR ST E A M R OA DS
( PAR T 2 )

OP E R A TI N G R E VE N UE S A N D O P E R A T I N G
E X P E N SE S

P R E LI M I N A R Y R E MA R K S

1 Th e r
O p e at i ng e xp ense acc oun t s r ll x c ov e a e p enses
r fr m r h r d
-
.

esul t i ng o t he op e at i on of t e oa d h x an su c e p en ses as ar e

inci dent t h re et o an d are not sep a a r b l fr m h r i l r i

e o t e a op e at ons

f O r i
.

On Ju y l 1 1 91 4 , a new Cl as s ifi i
c at on o R p e at n g ev enu es

r i
,

and Ope at ng E xp en ses of St ea mR d oa i s ffw ent nt o e ect In

r h I r C mm
.

p esen t i n g t hi s c as sifi c at i on
l for u se , t e nt e st at e o erce

Commi ssi on i ssu ed t h e f llo owi ng i r d l r

n t o u c t or y et t e :

To ACCO U N TI N G O FF I CE R S OF S TE AM R AIL WAY S

Th i s Cl a ssi fi c at i on of Op erat i n g g
g
R ev enu es a nd Op erat i n E xp enses
t h e Cl assi fi c a t i on of O p era t i n R ev enu es , fi rst i ss u e , eff ec t i v e
Jy J y
supersed es

1 907 a nd t h e Su p p l ement t h eret o , eff ec t i v e u l

Jy
ul

g
1 ,
1 , 1 90 8 ; t h e
Classi fi ca t i on of Op erat i n E xp enses , t h i rd rev i sed

J y
i ssu e, effect i v e

f
ul 1 ,

1 90 7 a nd t h e Su p p l ement t h ere t o , ef ec t i v e ul 1 , 1 90 8 ; a nd t h e Cl assi

ficat i on of

J y
R ev enu es E xp enses for O u t si d e Op erat i ons, fi rst i ssu e,
g
and

eff ec t i v e al so su p ersed es c onfl i c t i n

g
ul 1 , 1 90 8 . It i nst ru c t i ons cont ai ned

i n Acc ou n ti n B u l l et i n N O 8 . .

Accou nt s p rov i d ed i n t h i s cl assifi c at i on for t h e rev enu es a nd ex p enses

f y
a re

e
of op ra t i on s w h i ch h eret o ore h av e b een cl assed a s au xi li ar or ou t si d e
Operat i ons Th e p u rp ose i n mer i n t h ese a c cou nt s h as b een t o sec u re a
. gg
st at ement of rev enu es a nd exp enses i n c onnec t i on wi t h t h e O p era t i on of

all h y si ca l y th e of w h i c h i s i nc l u d i b l e i n t h e for
q
p p p
r o ert ,
c ost acc ou nt s

i nv est ment i n roa d a nd e ui p ment

MA
.

C O PY R HT
IG ED BY IN T R AT
E N IO N A L T l XT B O O K C O P NY ALL R HTIG S R E S E R VC D
 ACCOUN TS FOR STEA M ROAD S
Th e mfOr y y
ai ntenance of h si ca l h av e b een arran ed g
p rop er t
y
accou nt s p
to correspond w i t h t h ose for t h e i nv est ment i n su ch p pert
ro . D ep re
ci at i on a cc ount s h av e b een p rovi d ed for t h e cu rrent d ep reci at i on o f fi xed
i mp rov ements , g f
a l t h ou h u nt i l u rt h er d i rect ed t h e rec o ni t i on i n Op erat i n g g
expenses of cu rrent d ep reci at i on of fi xed i mp rov ement s i s Op t i onal wi th t he
ca rri er It i s p rov i d ed t h at or ani z at i on and g
en eral ad mi ni st ra t i on g
y g
.

d i rec t l assi nab le t o i nv es tments i n st oc k s, b ond s, and oth er

f
exp enses

secu ri ti es sh all be ex cl ud ed m th e account s of thi s cl assifi cat i on and

g
ro

i nclud ed i n I ncome Account N o 549 Mai nt enance of I nv es tment Or

.
,
ani

zat i on

g
.

Th e eneral and S p eci al i nst ruct i ons cont a i n a co mp reh ensiv e st at ement
of t h e p ri nci p l es und erl i n yg the cl assifi ca t i on , i ndi ca ti n gg enerall y the
ap p l i cat i on of th e accou nt i n g rul es Th e a t t ent i on of ac c ou nt i n g ofli cers

q g y g
.

is cal led t o th e i mp ort ance of re u i ri n a ll e mp l o wh o a re assi n ed t o

g g g
es

ac count i n w ork i n conn ec t i on wi t h Ope rat i n a nd Operat in

fm g y
rev enu es

i li ari ze t h emselv es th orou hl w i t h th ese i ns t ruct i ons

g
exp enses to a .

I n th e i f h i i f h i l i d i
y
re
p p a r a t on o t e rev s on o t e acc ou nt n ru e
s c ont a ne n

th i s a nd ot h er cl a ssi ficat i ons for st ea m road s, whi ch are c oncu rrent l

i ssued t h e Commi ssi on h as h ad t h e c oop erat i on of s oci at i on of

t h e As
,

Ameri can R ailw a y Accou nt i n g Ofli cers a nd of i ts St and in g Commi t tee on

Co rp orat e, Fi sc al , a nd G enera l Acc ou nt s

f
.

Th e cl assi fi ca t i on, i n t ent at iv e m h b d f i i i m

gg f g y
or , a s een p resent e or cr t c s

a nd su est i ons to t he chi e acc ount i n offi c er of each railw a and t o th e

y mm gg f
.

ra i l w a i ssi ons of th e sev eral All est i ons recei v ed m

g
St at es
f y
co . su ro

such p art i es h av e b een i v en c are u l consi d erat i on , and man of th em h av e

b een i ncorp ora t ed i n t h e cl assifi cat i on as h ere i ssu ed .

2 Thi s l
c assifi cat i on ca ll s f or t h e u se of ei gh t gene a rl
account s whi ch con t o rl p r i mary accoun t s as f llo ows :

M aint enance of w ay and st u c t u es , r r whi ch i s di v id ed i nt o

sev ent y ni ne p rim r a y ac coun t s

q hi h i di hr
-
.

M aint enance of e ui pment w c s v i d ed i nt o t i t y

r r
,

S ev en p ima y accoun t s

rim r
.

T fli h i h i di i d d i
ra c, w c s v e nt o n n e i p a y accou nt s

T r i r il li hi h i di i d d i fif rim r
.

ranspo t at on , a ne , w c s v e nt o ty p a y
account s

Tr r i w r li hi h i di i d d i h i
.

ansp o t at on , at e -
ne, w c s v e nt o t ree p r

m ary account s

r i rim y
.

M i ll h i h i di i d d i
sce aneou s op e at ons , i w c s v e nt o s x p ar

account s

r l hi h i di i d d i rim r
.

G ene a wl c s v e n t o t we v e p a y accoun t s

Tr r i f i m hi h i
, .

an sp o t atdi on bor n v est ent , cr e t, w c s not su

di v id ed .
 § 3 5 ACCOUN TS FOR STEAM ROAD S
3 Th e h andli ng of t he accou nt s i n t hi s c lassifi cat i on i s gov
r r r
.

e ned by not es in c onnect i on wi t h t h e p ima y account s and

r
by gene al an d Sp eci al in st r uct i ons gi v en sep ar at ely in t he p am
phl et U n d e t h e S p e ci al i nst u ct i onr
s ar e gi v en t h e oll owi ng r f
h r
.
,

whi c are of sp eci al i mpo t ance :

ACCO UN TS O PE RATI N G E X P E N SE S Th e accou nt s p rescri bed for

g g f g
FO R —
.

op era t i n a re d esi ned t o Sh ow exp enses of u rni shi n

g g
exp enses t ransp or
tat i on se rvi c e, ma i nt ai ni n th e p l ant u sed i n
i ncl ud i n the ex penses of

th e servi ce g
Th e account i n sh a ll be as nea rl as p rac ti ca ble u pon t h e y
g
.

basi s of accrua l s ; h owev er t h e O p t i on i s allowed t h e carri er of omi tti n

g ,

ch ar es t o t h e acc ount s p rov i d ed for t h e d ep reci at i on of fi x ed i mp rov e

g
ment s and of i nclu di n t h e d ep rec i at i on (led er v al ue less salv a e) of g g
such p rop e rt y
i n t h e app rop ri at e rep ai r account s at t h e t i me t h e p rop ert y
i s conv ert ed or ret i red for rep l a cement .

Fi xed i mprovements mea ns st ru c t u res wh i ch are fi xed as to l ocati on su ch

g g
.
, ,

as t unnel s , b ri d es , b ui l di n s , ea rt h works , et c .

MAI N TE N AN CE E X PE N SE S — Th e p rov i d ed for mai nt enance of

q g
acc ount s

fixed i mp rov ement s a nd of e ui p ment d esi ned t o Sh ow t h e cost of

g y
a re

repai rs and a l so t h e loss t h rou h d ep reci a t i on of t h e p rop ert used in

op erat i ons , i ncl u di n g a l l suc h ex p enses res ul t i n gf m ordi na r y wear and

q
ro

of servi ce , exp osu re t o t h e el ement s , i nad e uacy , ob sol escence , or ot h er

f y
tea r
dep reci a t i on, m acci d ent fi re, flood , or ot h er casu alt

f
or ro , .

Th e di f erenc e b et w een t h e d ep reci at i on upon fix ed i mp rov ements

ret i red a nd rep l aced and t h e amou nt p rovi d ed for t h rou h t h e d ep reci at i on g
accou nt s , Sh all b e i nclud ed i n th e rep ai r a c cou nt s wh en t h e p rop ert i s y
ret i red Simi lar a d u stj ment s of e q ui p ment ret i red sh a l l be

q
. on account

inclu d ed i n t h e men t ret i rement s ( See cl assifi c at i on

for e ui p

q q
a ccounts .

of i nv est ment i n road and e ui p ment g eneral ac c ount I I E ui p ment ) , , .

D I S TR I B UTI O N O F CHARG E S F O R PRO PE RTY R E TI RE D AN D R E PLACED

g g y
.

I n case t h e amou nt ch ar eab le as Op era t i n exp enses for p rop ert ret i red
and rep l ac ed ( as p rov i ded for i n sec t i on 7 oi t h e enera l i nst ru c t i ons for t h e g
q y g
-

cl assi fi ca t i on of i nv est ment i n road and e ui p ment ) i s rel a t i v el

g y
l ar e and
i ts i nc l usi on wou l d seri ousl y di st ort t h e for a Si n le
g
exp ense accoun t s ear,

the ca rri er , if S O a ut h ori zed b y t h e Commi ssi on , ma y ch ar e t h e a mou nt

th ereo f t o B alanc e Sh eet Account N O 7 2 6, Prop ert Ab a nd oned Ch ar e y g
g f
-
.

ab le t o Op era t i n E xp enses , and d i st ri b u t e i t t h erea t er , i n acc ord anc e

wi t h t h e p rovi si ons of t h at to the op erat i n g expenses of su c ceed

y
a cc ou nt

i ng
g
ea rs .

If S O aut h ori zed b y t h e Commi ssi on, t h e carri er may ch ar t o p rofi t

y g g y
e

a ny ex t ra ordi na ri l i t em
gg g
and l oss l ar e rep resent i n t he c ost of p rop ert

ret i red a nd rep l aced , i nst ea d of ch ar in su c h i tem t o op erat i n expenses .

The c a rri er Sh a ll fi l e w i t h t h e Commi ssi on ment of c ost and a

j gm
the
y
. a s t at e

descri p t i on of t h e p rop ert ret i red a nd t h e rea sons whi ch , i n i ts u d

y gg y
ent ,

i ndi cat e t h e ro
p p ri et o f ch a r i n t h e c os t of su c h o
p p
r ert t o p rofi t and l oss .
4
. ACCOUN TS FOR STEAM ROAD S § 35

D E P RE CI ATI ON FI XE D I MP RO VE ME N TS D ep reci ati on in

f y g
OF —
account s ,

whi ch t o i ncl ud e uni or m mont hl ch ar es t h e d ep reci a t i on of

g
to cov er

fi x ed i m m m h b i d f h f i
g
ov e
en t s av e een
, p ro v ed or t e p u rp ose o cr ea t n

wh i ch will meet or red u c e t h e amount s ot h erwi se ch a r ea b le, as

g
reserv es

may b e app rop ri a t e , Op erat i n t o p rofi t and l oss

y g
to ex p ense or accou nt s

ret i red Su ch d ep reci at i on ch ar es shall b e b ased i n

g g
to cov er ro
p p ert .

ea ch i nst a nce the f h i i l ( i m d i f

g y
up on p erc ent a e o t e o r na c ost es t at e not
known ) , led er v al u e, or p urch ase i f th e p rop ert d et ermi ned t o b e
q p r c e o

of i nf ormat i on
'
e ui t ab l e b y th e ca rri er s exp eri ence a nd b est sourc es

f
as

t o th e act ual current l oss m d ep reci at i on A ment of t h e b ases

g g
ro . st at e

u sed b y t h e ca rri er for comp ut i n t h ese ch a r es sh al l b e i nclu d ed i n i ts

annual rep ort t o t h e Commissi on Unt i l ur t h er di rect ed , t h e use of . f
d ep reci at i on acc ount s for fi xed i mp rov ement s i s op t i onal wi t h th e ca rri er
q g
.

E Q UAL I ZATI O N E X PE N S E S For t h e p urpose of e ual i zi n t he

y g q
—
OF .

mont hl ch ar es for t h e r ep a i rs of fi xed i mp rov ement s and e ui p ment t he

ca rri er may i nclu d e each mont h i n th e ap p rop ri at e p ri mar rep air accounts y ,

f
a uni orm p rop ort i on of t h e amou nt of a ut h ori z ed est i mates of such expenses

for t h e fi sca l or ca lend ar ea r y

I n a l ik e manner t h e au t h orized est i mat es
j y g y
.
,

of ex p enses on acc ou nt of p ersonal i n ur or loss a nd d ama e l i ab ili t for

st a t i oner y
or p ri nt i n g
and for ad v ert i si n may b e e ua l i zed i n t h e mont hl g q ,

y
y
,

for t h e fi scal or ca lend a r I f the carri er has b een u na b l e

y g j
accounts ear . to
i t s p ro m for rep airs and d oes not ad ust i ts
f yf
ca rr out ra acc ount s to con

m t o t he a ct ual exp endi it may orward t h e b al anc es and

g g
or t u re
s , c arr

t rea t th em p rovi d ed in sec t i on 20 , rel at i n t o b al ances i n operatin

j y mg
as

I f, on ac count of cl a i ms for p ersona l i n

g
l oss a nd da
y
re
s erv es . ur or a e

b ei n unset t l ed at the cl ose of th e th e for such exp enses are

j f g
ea r , a c cou nt s

not ad ust ed , t h e b a l ances carri ed orw a rd in t he op erat i n

y
reserv e acc ount

sh all be nal zed a s al so p rov i d ed for i n sect i on 20 of t h es e i nst ru ct i ons

g y g g
a .

Ch a r for st at i oner and p ri nt i n , a nd for a d v ert i si n , for a fi scal or

y j
es

c al endar ea r sh a ll be a d u st ed to the ac t ual exp enses

y
.

B ALA N CE S
O PE RATI N G RE SE RVE S I f , at t h e end of a fiscal ear,
g
IN .
-

b al ances remai n i n op erat i n reserv es , t h e ca rri er Sh all i ndi cat e i n d et ail

f
i n a ormal rep ort t o t h e Commi ssi on t h e amount s t h erei n, and th e con
g y gf
di t i ons c ausi n t h e c arr i n orw ard of such b al ances , excep t a s t o b al ances
j y
a pp li ca b l e t o p ers ona l i n ur or l oss and d ama e li a b i l i t , for w hi ch b a l ances g y
s t h e d et a i l s up on whi ch su ch est i mat es
t h e c arri er Sh all p reserv e i n i t s fil e
were b ased Sep arat e record s sh all b e kep t of th e operati n reserve g
y
.

account s for each ea r .

 ACCOUN TS FOR STEAM ROAD S

D EP R E C I A T I ON

4 Th e l
c assifi cat i on p r ovi d es
th at h hr
mont l y c a ges S h ll a

r f d r i
.

be mad e t o op e at i ng e xp enses on accoun t o ep ec at i on of

p r r
op e ty an d e u qi pmen t E v en wh en p op e t r ryi k s ep t in an

r r
.

app a en t ly good st at e of rep ai t h e const ant u se and t i me wil l

r r
,

s owl l y c au se a con di t i on wh en a co mp l et e new p i ece of p op e ty

or e qi u pmen t wi ll b e necessar y r
To p ovi de for su ch a con
r r
.

di t i on op e at i ng e x p en se s are ch a ged mont hl y wi t h amount s

r f r
,

based on a p e cent age oun d t o be th e av e age necessary to

r
c eat e a r r h will
ese v e t at eq ual t he cost t h e p op e t y or
of r r
e u qi p men t d ri u h rng t e av e age t i me su c h r ro
p p e t y or e u i pmen t q
wi ll b e goo d f h ri or t e se v ce of the co mp any
r
.

Op e at ing xpenses are usu ally consi dered t o b e amount s

e

i d fr m m h f l b m i l r
’

p a o a c o p an y S cas on a cc ou n t o a o at er a s et c ;
h ri r r r
.
, ,

owev e n t h e mat t e of d ep eci at i on t h e amou nt s ch a ged

r
, ,

to t e op e at ing exp ense accoun t s d o not aff ect t h e cas h accoun t

h
r
but are credi t ed t o a eser ve accoun t in t h e gene al led ge an d r r
hr r r
,

t h e t ot al of su c ese v e accou nt i s d edu ct ed f om t h e cost of

q
e ui p ment or ot hr r r
e p op e ty as ent e ed on r t he credi t Si d e of the
bal ance S h eet .

5 Th e eq u i p m en t d ep r ec i a t i o n r e gi s t er il lust r at ed

r r q
.
,

in Fi g 1 Sh ows li ow a eco d i s mad e of all e ui pment p laced

r r rr r
.

in se vi ce and t h e manne of a i v i ng at t h e dep eci at i on Th e

P r q
.

l mns h eaded D at e l aced i n Se v i ce sh ows t h e t ime t h e e ui p

co u

r
ment was p laced i n se v i ce ; t h e d ep eci at i on i s ch a ged om t hi s r r fr
dat e Th e column h ead ed N o of Ca s or Eocomot i v es S ows r h
r r
. .

th e numb e of each c l as s p l aced i n se v i ce at one t ime I n t he

r
.

column h ead ed Cl ass i s ent e ed t h e n ame of t h e c l as s as b ox

h r
, ,

flat gond ola st oc k et c Th e column ead ed O i gin al Cost

r r rd
.
, , ,

Sh ows t h e o i gi nal cost of each car ; t h e d ep eci at i on i s fi gu e

on t h e b asi s of
'
t hi s a ount m h en eq i p en t whi c W u m hi s not

hrfr l d h d r i d l i
.

new an d whi ch t e e o e a r ea y as a ep ec at e v a ue s

pl di
ace r i i l i r di h l m h d dD
n se v ce , t s v a u e s ent e e n t e co u n ea e ep

Vl I h lm h ddD r i i C i rd
.

a ue n t e co u n ea e ep ec at on eases s ent e e

d r i i h r h i h d
.

th de h at e i llw en ep ec at on c a ges w cease ; t at s, t e at e

wh h men h r d f d r i i i q l h ri i l
t ea ount c a ge or ep ec at on s e u a to t eo g na
ACCOUNTS FOR STEA M ROAD S § 35

f h
cost o q i pm f r t e e u en t , a te
whi h frhrd r i
c no u t e ep ec a

i t h rg on c b m d a es are to e a e

l m h d dD
.

I h n t e co u n ea e at e

D r d S ld Ch d
est oy e o or ange

r d h d wh
, ,

i s ent e e t e at e en

q i m
e u i r ipr d f r m
ent s et e o

ri f b i
se v ce on accou nt o . e ng

d r y d ld h ng d
est o e so or c a e

fr m h r
, ,

l
o One c ass to anot e ,

as t h e ch angi ng of a b ox car

to a flat car , et c Th e col

Am
.

u mn h ead ed ount of

D ep r i i ec at on i f h
s or t e t ot al
a m oun t o f d r i ep ec at i on

c h r d
a ge to p r i
o e at ng ex

p enses fr m o t h e t i me t h e
e u qimp w as ent
p u t i n se v r
i ce t o t h e t ime i t was ret ired
Am
.

Th e column h ead ed ount

of Salv age i s for a mount s

r fr m h l f ld
ecei v ed o t e sa e o o

or r ir d q i met e e u p ent or

p ar f i t Wh
ts o i en a car s

r ir d fr m i h
.

et e o serv ce , t e

su m f h m o h t d e a ount c arge

to d r i i d h
ep ec at on an t e

am r i df l
ount e ce v e or sa v age

i d d
s d fr m h ri i l
e u ct e o t eo g n a

cost d h di ff r
an i t e e ence s

rd i h lm
ent e e n t e co u n

h d d Am Ch bl
ea e ount argea e

to E xp ense

qim d r i
.

Th e e u p ent ep ec a

ti r i r hrfr
on eg st e , t e e o e, con

st antl h h yl S f ows t e v a ue o

th qim i
e
‘

e u i p ent n ser v ce,

as the a mount of cost of

§ 35 ACCOUNTS FOR STEA M ROAD S
old q i m er i ed wi ll b
u p en tl d d d
et r d h e const ant y e u ct e an t e

cost o f w q i m wi l l b
any ne dd d h e ul p ent e a e to t e t ot a .

6 Th r i h qim d i i r i r f e ent y n t e e u p ent ep rec at on eg st e o

1 h w ri f fl r w r l d i r i
.

Fi g h s o s t at a se es o at ca s e e p ac e n se v c e

rigi l h f h r w
.

F b 1 1 907
e d h f an t e o na cost o eac o t ese c a s as

r w r i r d fr m i
.
, ,

$653 } O f h ne o t N
e ca s 1 as et e o serv ce on cv

r i f h ri d f 5 r d
.
,

191 2 h i b i hav ng een n t e se v ce or t e p e o o y ea s an

r rd wo l d h w h h r
,

9m Th m
’
h ont s e co p any s eco s u S o t at t e av e

r i 25 y r d h r d r i i
.

age lif f hi l eo f t s c ass o c a s s ea s , an to c a ge ep ec at on

wi h h f ll m
t t f h
e ri gi l i h im h r
u a oun t o t e o na cost n t at t e, a c a ge

of 4 p er c entm w m d r i xp
p er annu as a e t o op e at ng e enses

Thi r i l w i h r i l 5 r d 9 m h
. .

s p a t cu ar car as n t e se v ce on y y ea s an ont s,

an d h r atf 4 p t ep m b
at e o d h r i gi l
er cent er annu ase on t e o na

f $653 d ri g h h r d
.

cost o im w ld h u b
n t at t e ou av e een c a ge

r i x f d r i i Wh
,

to op e at n g e p en ses on ac c ou h
nt o ep ec at on en t e

r i r d fr m r i i w ld f
.

car w as et e o hi l
se v ce t as so or t s sa v age

an d h m t f e a h h r f
oun t od pr i i mk t e c a ge or e ec at on , a es

a l f
t ot a b o r di d h to
g i h
e c e te to t e ac cou nt as a a nst t e

ori i l g n a f $653 d h diff r

cost f
o i d bi d an t e e ence o s e te
r q r r r
,

to t h p i x
e o e at ng e
p i pm i d i d
enses as e u ent et e n acco an ce

wi t h t h e c assifi cat i on
l .

7 Th e h an dl ing of dep r eci at i on account s i n t hi s way

r l r r
.

p ev ent s an e cep t i onal ly

x a ge d eb i t t o Op e at i ng expense

account s at any p a rit cu l a r t i me, b u t cau ses a rd l hr g a ua c a ge

to su c h account s , and wh en q
e ui p ment or ot h r r r e p op e ty on

whi ch d ep r eci at i on h as b een accr ued is r i r d fr m r i

et e o se v c e

t he cap i t a l account s rfl h r wi ll e ect t e t ue con di i f h

t on o t l e v a ue

of t he r oad an d h r r r h
ot e p op e ty, t e cost f whi h h
o b c as een

ch a r ged t o the r d d qim

oa an e u p ent account s .

Opera ti n g exp enses

D ep rec i at i on reserve

E nt r y mad e t o d eb i t op erat i n g exp enses and d ep rec i at i onc red i t

f g
to
reserv e ac count s wi t h one -
t wel t h of ann u al d ep rec i at i on ch ar e .

FI G 2.

As t h e r
op e at i ng e xpense account s are closed mont h ly one
r r
,

twelf t h of t he annu al amoun t wi ll b e ch a ged t o t h e v a i ou s

 ACCOUN TS FOR STEAM ROAD S § 3 5

d r i i d r
ep ec at on account s un r i g xp h e O pe at n e ense ac count s eac

m h ont d h h r wi ll
an wh t h e qim i c a ges cease en t e e u p ent s

r i d h h q l h ii l
,

et re or t e c arges e u a t e or g n a c ost .

8 Wh h d r i i enll l t f q i m
e i r
ep ec at on on a c as ses o e u p ent n se v

fi r d d r
.

i
ce h b as h deen b i f gu e h l at t e a op t e at e as s or eac c ass ,

t h l m
e t ot a f d r i i a i d bi d
ount h r i
o ep ec at on s e te to t e op e at n g

e xp ense d r di d h d r i i r r
accou nt s an c e te to t e ep ec at on ese v e

account h gh j lt ryr ou h w i Fi g 2 a our na ent as S o n n . .

OP E R A TI N G E XP E N SE S ON A C C OU N T OF WA G E S
P A I D E MP L O Y E S

G E N E R AL RE M AR K S

A l rg r f
9 a e xp ense of a ai l oad
p a t o t he r
op e at i ng e r r
r l fr m h p m
.

esu t s o t e ay ent of wages t o i t s emp l oyes Th e p ay

r h
.

m ent Of w ages const t u t es a l ab or exp ense p ecul i a t o eac

i
dep artm f h r i lr
ent o t e a oad o gan i z at i on w hi ch mak es i t neces r
r hr h m r
,

sa y t o c a ge t e a ou nt p ai d t o one emp l oye t o a di ff e en t

h h
account t an t e a m ount p ai d t o an emp loye i n some ot e hr
d rm
ep a t ent

ri l r il r
.

Th f me cost o at e a and su p p li es u sed by a a oad ar e

ll
u su a id f b
y p a or y v ou ch e r Th e v ou c h e s are su r mma ri d ze

h r r i r r r
.

i th
n e v ou c e eg st e and t h e amount s d ebi t ed t o t h e p ope
r r
-

accoun t s Th e t ot al s of t he p ima y accoun t are summari zed

rl
.

to one t ot al , whi ch i s debi t ed t o t h e gene a accoun t in t h e

r ll d r
,

gene a e ge
ri i l r f ll
.

Th e p nc p e of the v ou ch e syst e m is l
a so o owed in t h e
p ay ment of t h e wages t o emp loyes a l t h ou g h a
p y ro s and ll
h r
,

c ec k s are u sed for t h e d et ai l w o k .

1 0 Some of the la r r r i lr
ge a oad s fi nd i t conv eni ent as well
r rl
.

as necessa y t o k eep t h e ac coun t s of each di v i si on ent i e y

r
sep a at e , as if each di v i is on r we e a sep a at e co r mp any I hi
n t s

h r d
.

case t h ere mu st be a di v i si on t o Sh ow t h e amount t o be c a ge

to each di v i si on ; t h i s in t h e c ase of a v ou ch e r i s sh own i

on ts
h h h r d
, ,

face as well as the account to w i c t he mount

a is t o be c a ge .
§ 35 A C C O U N T S F OR S T E A M ROA D S

V h m b r r d b h ri d r m
ou c ers ay e p ep a e y t e va ou s ep a t ent s

r ib l f
esp ons h x e dm orb r d by h r r
t e e p ense an u st e ap p ov e t e p op e

ff r b
o i ce s , b f r h uth r i d f
e o ey m h t e v ou c e s p as se or p a ent to t e
a
p yee i m b di d
t d u str d b y h di r f
e au te an app ov e t e au to o

di b m
s ur se h r i g ffi r
ent s or ot e acc ount n o ce .

PAY R OLLS

1 1 Th e t e rm p ay ro l l is app li ed to a S h eet on w i ch h ar e

r r
.

ent e ed t h e names of t h e mp loyes t h e t ime wo k ed for t h e

e

r
,

mont h ,
t he at e of a
p y, an d t h e amount of w ages d u e for t h e

mont h .

Th e p ayment of t h e mp l oyes i s a di sb ur sement and must e

rfr
t h e e o e b e mad e onl y a t e t h e amou nt s h av e b een p op e ly f r r r
au di t ed and ap p ov ed b y t h e au di t o rof di sb u sement s ; h ow r r
ev e rt h e t ime oi t h e emp l oy es and t h e necessary d et ai l for
r r r
,

ent y on t h e p ay oll s are u su al l y k ep t and t h e ol l s mad e u p

i n t h e offi ce of t h e di v i si on sup e ri n t end ent , t h di i i

e v s on engi nee r
r rm
,

the mast e mech ani c or t h e h ead of any d ep a t ent h av i ng

r r r
,

t h e di ect ch a ge or su p e v i si on of e mp l oyes
ri h r r
.

Th e di v i si on su p e nt end ent , b ei ng i n c a f ge o the t ans

p or t at i on ser vi c e ,
i n whi ch t h e la r gest p e c enrt age of e mp l oye s
are engaged , w i l l h av e exp enses on accou nt of t h e w ages p ai d
and ch a r gea b e l t o the r
op e at i ng e xp ense ac c ount s as ol l ow s : f
Sup e ri n t end ence , d esp at chi ng t ri a ns , r h
t el eg ap r r
op e at o s ,

st at i on agent s and e mp l oy es t ri
a n mas t e r ris, t a n con d r
u ct o s ,

rk m
,

b a e en , flagmen ,
et c .

TI ME RE P ORTS

1 2 St at i on agent s di v i si on op e at o s and ot h e s epo t r r r r r

r r
. , ,

t h e t ime of emp l oyes i n t h ei d ep a t ment s on t ime b ook s

Th
.

ese t i me b ook s Sh ow t h e names of t h e emp l oy es an d t h e

p o si t i on of ea ch a n d c ol umn s ar e p o v i d ed f or ea c h d ay of r
h r r r
,

t h e mont t h e t ot al numb e of d ays wo k ed t h e at e and t h e

h r
, , ,

amount du e W en emp loyes are p ai d at a mont h ly at e

r r
.
,

t h ei t ime i s i ndi cat ed b y a fi gu e 1 for each d ay of t h e mont h

r
wo k ed Wh en emp loyes are p ai d b y t h e h ou t h e numb er r
h r r
.

of ou rs w o k ed each d ay i s ent e ed i n t h e column S h owi n g

t h e d ay of t h e mont h .
10 ACCOUNTS FOR STE AM ROAD S § 35

1 3 Th im f r i m i k p i im b k b
e t e or t an en s not e t n a t e oo ut

rd whi h i m d h ri Thi
.

on a im t e ca f c s a e out or eac t an r un s

r i d gi mb r h p i
.
,

car d h w s o h d hs t e at e, t e t a n an en ne nu e , t e o nt

o f i
st art ng an d h im f l i g h t i f d
e i
t i e O d eav n t e p o nt o est nat on an

t h e im t f ri i d h m f h gi r fir m
e o ar v ng an t e na es o t e en nee e an ,

r fl gm n d b r k m
,

d
con u ct o a a an a e an

If h mp l d wi hi
, , .

t i e run h
s co im l imi ll w d f et e t n t e t e t a o e or

t h e ri t f
a n run whi h h im rd i m d
or h r im
c t e t e ca s a e , no ot e t e

nee d b r d b if h r i i d l y d d r q i r l r
e ent e e ; ut t e t an s e a e an e u es onge

h h r g l r im ll w
t an t e e u a h mb r f h r f
t e a o r an ce, t e nu e o ou s o ove

t im m e b h w
u st h e s rd d d i l d r p r m d f
o n on t e ca an a et a e e o t a e o

eac hdly d h e a an Th im d t f w rd d
e cau se ese t e car s ar e or a e

h ri d
.

h d f h di i i ffi
’
at t e en o eac r un to t e v s on supe n t en ent s o ce,

wh r e e h im k pt e t r h im h p y ll
e ee er ent e s t e t e on t e a ro s .

1 4 B f r h im r e o e r fr m h t e t r h e epo ts o t e agent s , et c eac

ri d im k p r h r
.

h ffi h d h
’
t e su pe n t en en t s o p p ce , t e t e ee e as e are t e

p y a r ll fr m
o s h r i o m h r ll t h wie ll
p hev ous on t
’
s o s S o ng a t e

i f rm i
n o h h m fmly
at on su c as p t h im
e na es o e p o es , et c exce t t e t e

w rk d f rr m h If l f
.
,

o e h or t e m l y h
cu ent ont an y e p o es av e e t
r i d ri h m t h h i r im will b h w l
.

t h e se v ce u ng t e on t e t e e S o n as eav

i
ng t h r i d h x r ll h m i dr p d d
e se v ce , an on t e ne t o s t e na e s op e an

t h e na m f w m l
es o wh w rne mp l d d ri g h
e p oyes o e e e oye u n t e

m onth will b dd d i h ir pr p r pl e a h r ll
e n t e o e ace on t e o s

Th r ll f h f ll wi m h
.
,

e o s or t m l d e o o ng ont ar e co p et e as soon as

p oss ib l f r h r ll f
e a te h t m h h
e o s b f or t e curr ent ont av e een or

w rd d
a e h di r f di b r m
t o t e au I hi w to h oim s u se ent s n t s ay t e t e

r i m m b r d h r ll d il y
.

o f h t e t an en ay ip f
e ent e e on t e o s a on rece t o
t h e im t d f e car h s or ea c run .

P R E P AR ATI O N OF PAY ROLI B

1 5 As soon as t h e names h av e b een ent e ed on r t h e p ay

r ll ri r r
.

o s, men i s ent e ed d ai ly as t h e t ime ca ds

t h e t i me of t h e t an

r
ar e ecei v ed i n t h e ofli ce Th e t ime i s ent e ed for eac day r h
r r r h
.

an d t h e t ai n uns are d esi gnat ed b y l et t e s t at i ndi cat e t h e

p o i nt s b et w een w h i c t h e ru n w as m a d e B e o e en t er i nh
g fr
r r h
.

t h e t ime on t h e oll s t h e t ime ca d s are c eck ed again st t he

r r r h r
,

t ai n egi st e Sh eet s t o see t at t h e t ai n h as mov ed b et ween

 § 35 A CC O U N T S FO R S T E A M R O A D S 1 1

t h e ip o n th w
s s o h im rd d h h im f d r
n on t e t e ca an t at t e t eo ep a t ure
an d ri lar va r hi i y im r wh
are cor ec t ; t s r im s v er p o t ant en ov e t e

i r p
s e ort e d
r l i i difl r
.

O n account o f h difl t e erent runs esu t ng n eren t at es

o f p y , an
a d i wh r fl m
n cas es h l m d im
e e a ag an as a so a e t e as a

con d r b r k m m d im fl gm i m
u ct o or a a e en a e t e as a a an , n so e cases

cons id r b l w rk will b r q i r d
e a e o h l f h m
e e u h e at t e c ose o t e ont to
co m p u the m t fw g d
e a ount o a es ue

Ex r m ll y r q i d
.

t a en are usua w k h e u re ll to or on t e a
p y ro s so

t h at h y m y b
t e r p r d d f w rd d h di r
a e p e a e an or a e to t e au to at

t h rli p ib l d f r h l f h m h Th m
e ea est oss e at e a te t e c ose o t e ont e co

h k d b y h r i rd r
.

pu t at oi
n s md b ma e y one an are c ec e anot e n o e to
i
nsur e acc u ac r y d f r h
an h b
ev en a x r i d te su c care as een e e c se

r r wi ll m im p il f di r
,

e ro s so et i d es d by h
ass unnot ce unt ou n t e au to
h
,

wh o at once not ifi h p i d es t e suffi er nt en ent or ot er o cer .

1 6 I
D e d u c t i on s wh r h —
mp y m i i
n cases e e t e co an a nt a ns

r li f i i f h b fi f mp l y whi h h y
.

a e e assoc at on or t e ene t o e o es to c t e

are rq i d e u re rib h m to cont f h

u t e, rib it e a ount o su c cont ut on

i
s usu a ll d d y d fr m h e u ct e m f w g d o t h m l y
e a ou nt o a es ue t e e p o e

an d i e s r d h y ll i
nt e e on l m
t e r id d f h
p a ro n a co u n p ov e or t at

p ur pose an d h m t few net a

g d h m
ount o
p yl i h a es ue t e e o e s t en

ent e erd i h x l m Oh rd d i
n t e ne t co u n m im t e e u ct ons are so et es

r ll f m h m d m l y
.

md a e on h t e a
p y o s ro t f
e a ou nt ue e p o es , as , or

inst ance , f h r f
or m
t ey h ent o co p an ou ses , et c

Wh rifi d
.

ll en a i h bent r esm d d h m
av e een a e an t e a ou nt s v e e

an d ll d h
t ot a y
e ll t e ll
p a
y w i w
ro i h w
s are u su a
yp i r t t en t a t e r t er
ri li h i d by h ffi
,

in t p cat e , t en s f h di i i
gne t d e o cers O t e v s on , an

f rw rd d h di r
o a e to t e au to .

1 7 P a y Ro l l - A p y r ll r p r
R ep o r t s y
—
r ll a o e o t , or p a o

r h w h di rib i f h m
- -
.

su mm y i ar s nec essa y t o s o t e st u t on o t e a ount s

rim ry xp Thi r r i m d b h
,

to t h e p a e en se account s s ep o t s a e y t e

r h i h ly wh h h ry i f m
.

t im k e eep e as e s t e on one o as t e necessa n or a

Th r h p rim ry r i
,

i
t on h
e l m f
ep ort as a co u n or eac a op e at ng

r r i xp r id d
.

t anspo t at on e d l m i l
ense accou nt , an a co u n s a so p ov e

f ori di i d l
n v d m i
u a s an h m co p an es b so id b t at a ou nt s to e p a y
h r i di i d l m rdi
,

so m e ot e n v ua or co p anf
y are not ent e e n any o

t h r i g xp
e Op e at n l m b e ense co u r d i hi l m ns u t are ent e e n t s co u n .
12 ACCOUN TS FOR STEA M ROAD S § 35

Th if h C D R R i
u s, t e r f h x s f l
t o p ay p a t o t e e p ense o te e

r r b w r i pi h A B R R
. . . .

g p
r a h op e at o s et een ce ta n o n t s on t e

r k h A B R R wi l l m k i r ll
. . . .

f or u se o f h t e t ac s, t e a e t s p ay o s

h w h f ll m r r b wi ll
. . . .

S o t e u f w a d ount h o ages ue t ose Op e at o s ut

c hr i
a ge ts wi h l h
ac cou nt ri f h w i i
t on y t e p o t on o t e ages t s to

p a y h ; t r ie h pCo D t R R
on i t e w i ll b r d i h s t o p ay e ent e e n t e

ol m h d d I di i d l
. . . .

c u n ea e d C m n i
v d b i ll wi ll b
u a s an o p an es , an a e

m d a e aga nsti h C D R R f t e h m or t e a ount

If h fi p r ll h h w h m f l h p r
. . . . .

t e r st ay o s eet s o s t e na es o on y t e su e

d l rk l f h h
-

i d
nt en ent an d hi i h
s ass st ant s an c e s, t e t ot a o t e S eet

wi ll b r d i h l m r id d f h l d l i
e ent e e n t e co u n p ov e or t e t ot a an a so n

t h e co u l m h d d S n i ea d e If h u p er nt en d r ll ence t e secon a
p y o

ri d hr d pr
-
.

S h eet h h as m t f l e na h es o on y t e t a n es p at c e s an o e a

to r h l i ll b
s, t e t ot a w rdi h l l m
e ent e e d l i n t e t ot a co u n an a so n

t h l m h d d D
e co u n eahi g Tr i e whi h i
esp at c h rim ry n a ns , c s t e p a

p r
o e at n i g x e p ense w hi h h
accou nt w h l d bto c su c ages s ou e

c h g d Wh
ar e y r l l h
en h
a p a i h r o b l S eet as ent r es c a gea e to
r d d h
-
.

di fl erent account s , su c h m m b a ount s u st e seg egat e an eac

r m
sep a at e a rdi h r r lm i
ou nt ent e e rd
n t e p op e co u n n ac co ance

wi h h
t tl ifi i e c ass f r i x cat on o op e at ng e p enses .

1 8 Di v i s i on I m Ch h
a r ges y r l l f—
h any cas es , t e p a o s o a

l rg r ilr d m d b h di i i ri d wi ll i l d
. .

a e a oa a e y t e v s on su p e nt en ent nc u e

t h we ages id m l
p a to b di i i
e p d whi h m
oyes on a su b v s on an c u st e

sep arat e d fr m h p ym o td h r e a f h m i di i i ent s an c a ges o t e a n v s on

Thi i pr i d d f b ri h
.

s s ov e or y d m ent e i hng t e segregat e a ou nt s n t e

p r rp
op e S h bace at m f h t mm r h
e ot t o o t e su a y s eet

r ll r r i m d imm di l f r h r ll
.

Th e p ay o ep o t s a e e at e y a te t e a
p y o s

fi i h d d i f rw r d d di r
-

ar e n s e an h s o a e to t e au to .

1 9 A u d i t i n g o f P a y Ro l l s A h r ll —
s soon as t e a
p y o s

r i d i h di r ffi h ri rifi d
.

’
are ece ve n t e au to s o ce , t e en t es ar e v e e as

to t h r f ll
e cor ec t ness o m i d a l If r r
co p u t a t ons an t ot a s er o s

f d h ffi r i wh d r m h r ll
.

are oun t e o ce n ose ep a t ent t e p y

a o w as
d r rr
,

m d i imm di l
a e s ifi d e at e y d not i e an eq u es t e to g ve co ect

i f m i
n or Wh
at on h r ll en r d d h k
t e a
p y o s are ap p ov e an a c ec

h r ll
.

w i r f
t t en h m l or eac h w e p h
oy e S h k o n on t e o s, t e c ec s are

v er i fi d wi h h
e m t t h r ll
e a d r
ount s on d wi h t l e o s an p ov e t a t ot a
h r r ri h m
,

so ht at i ll b
t e e i b ili
w f e no p oss ty o any er o n t e a ount
§ 35 ACCOUN TS FOR STEAM ROAD S 13

p i
a d bou t
y h h k A f r
t e h i h b c d ech h k
s te t s as een one t e c ec s

ri i l f h y r ll r
.

an d h t e o g na od h t p ie p a o s are et urne to t e su er n

t en d d h
ent , an m r t h emp l y a
p y ast e a
p y s t e e o es .

20 Th m
A c c oun t i n g h r d h rim y —
e a ount s c a ge to t e p ar

r i g xp ri d
.

i h fli
’
Ope at n e ense account s n t e su p e n t en ent s o ce ,

d i h di r ffi i m ki g mm y f h
’
are u se n t e au to s o ce n a n a su ar or t e

i
ent r e roa d b hyd utr h t i eh g rl o not ent e t e account n t e ene a

l d r
,

e ge
hr m gi r i h
.

Th i ipl
e p r f h
n c e o t e v ou c e sy st e a an ent e s nt o t e

w rko Th h kmyb e c id r d
ec r f h a h r
'

e cons e e as p a t o t e v ou c e

l h gh i i r Th rdi h g rl
.

a t ou t s sep a at e e accou nt s ent e e n t e ene a

l d r rl
.

e ge h gare t e h wi g h ene al ifi i account s S o n t e c ass cat on as

tr i
ansp ort at on e x r ff x p enses t a ic e p en ses et c :

A h r will b m d b h di r f h p p f
, ,

v ou c e e a e y t e au to or t e ur ose o

m ki g h j r l
a n t ery whi h wil l b m d nl f h l
ou na ent c e a e o y or t e t ot a
r ll f h r p r i d r m
,

am f h p
ou nt o t e ay o s o d t e t ans o t at on ep a t en t , an

th e a m will b d b i d
ount h f r
e p r i e te to t e account O t ans o t at on

exp enses i h g r l l d r p h h m h rg
n t e ene a e ge , exce t t at t e a ou nt c a e

ab e l t o i ndi vi du al s and comp ani es will be ch arged t o t h at

account .

21 It can be readil y underst ood t h i at n as mu c h as t h e 1: ay

ment of t h e w ages S h own on t h e p ay r ll i
o s s made by h k a c ec

and not in act u a l cas hh t at t he cas h accou nt cannot b r i d

e c ed te
wi t h h tmount s unt i l t h e cas h as b een p ai d ou t ; t e e o e
ese a h h r f r
r r
,

when t h e amount s are d eb i t ed t o t h e t anspo t at i on exp ense

account i n t h e gener al l ed ge t ey mu st b e c edi t ed t o a t empo r h r
rr h
,

a y accoun t w hi c b ecomes a susp ense or c l earing account

rr h r
, , , .

As soon as t h e b ank s p ay t h e ch ecks t h e t

’
easu e s cas accou nt

r di d
,

i f d
s af ect e d h f h h kan id mt b e t ot al o t e c ec s p a u st e c e te to
h r r ha i h r l l d r d d bi d
’
t e t easu re s cas ccount n t e gene a e ge an e te to
t h e mm te hi h h d b r i l
rar y or su sp ense accoun t w c a een p ev ou s y
cred i d Th i m r r
te il l h r f r b
s te l r d p o a y accou nt w t e e o e e c ea e

ll h k h id fr m h
.

as soonll h as a b t e a
p y ro c ec s av e een p a o t e

r r h A r i d
-

t easur e id w
’
s cas m b . d ny unp a ages u st e c ed te to an

re mi i a n li b ili
n an op en account as ai l fi ll id a t y unt na y p a or

r di d h fi d l
c e te to t e p ro t -
an -
oss account .

I L T 234— 1 2
 ACCOUN TS FOR STE AM ROAD S
A j r l ry h w i Fi g 3 will h b m d fr m
ou na ent as s o n n t en e a e o

di r h
,

’
th e au to s v ouc er

Th p r h p y r ll f h diff r
.

ed i h m f
oce ure s t e sa e or t e a o s o t e e ent

d r m f r il d Th t t l f h m
ep a t ent s o a h rg d
a r oa . e o a o t e a ount s c a e

Trans port at i on ex penses

I nd i v i d ual s and c o mp ani es

Wa g es d ue
E nt r ym ad e to g
c h ar e v a ri ous account s and c re d i t wa g es d ue account

wi t h th e a mount of p ay r ol-
l ch eck s of t ransport at i on d ep art ment
for month of

FI G 3
.

t o t h e gener al exp ense account s i n t h e general l ed ge wi ll orm r f

t h e t ot al of t h e ope at i ng exp enses , w i c ri s car i ed t o t he h h r
i ncome account and dedu ct ed fr m o the r
op e at i ng r ev enue,

resul t ing i n t h e net r ev enu e .

S T UD Y O F CL A S S I F I C A T I O N

22 Th r e e is sent wi t h hi I r
t s nst u ct i on Pape r a Cop y of t he
C lassifi cat i on of Ope r at i n gR ev enu es and Op e r at i ng E xp enses of
St eam Roads eff ect i v e on Jul y 1 1 91 4Thi Cl ifi i i s ass c at on s

f r i h d i h ri i l f rm h h d m b m
.
,

u n s e n t e o g n a o so t at t e st u ent ay eco e

f mi li r wi h h
a a lt hl t e ac t u a p M p et s u se d i r i lr d w rkn Thi a oa o s

m hl h ld b r f l wi h hi
.

pa p et S ou e ca e u l y st u di d i e i
n connect on t t s

I i P
nst ruct on Th q i ap er e uest ons h t f ll w b d h
at o o are ase on t e

h
.

i nf ormati on cont ai ned i n t h e Class ifi i m

ca t on
p p l a et .
 A CC OU NT S FOR ST E A M R OA DS
( PAR T 3 )

I N G O LI E , P R O FI T A N D L O S S , AN D G E N E R A L - -

B A L AN CE S H E E T A C C O U N T S
-

1 On J u ly 1 me Profi t
1 91 4 a new Cl assifi cat i on of I nco

r A
. , , ,

and Loss and G ene al B al ance Sh eet ccou nt s for St eam

I r r
- -
,

Roads was mad e eff ect i v e b y t h e nt e st at e Comme ce Com

mi ssi on T
hi s classifi c at i on i s in t odu ced b y t h e fol lowi ng r
let t er :
To ACCO UNTI N G OFF I CE RS OF STE AM RAI LWAY S
Thi s Cl assifi cat i on of I ncome, Profi t -
and -
Loss , G eneral B al ance
and

Sheet Ac cou nt s t h e Form of I ncome and Profi t and Loss S t a t e

Jy
su p ersed es

ment for S t ea m R oad s , fi rst i ssu e , eff ect i v e t h e Form of

J
ul 1 , 1 91 2 , and

General B al ance Sh ee t St at emen t , fi rs t revi sed i ssu e, eff ec t i v e

g g
-
u ne 1 5,
1 91 0 It a lso supersed e confli c t i n i nst ruct i ons i n Accou nt i n B u l l et i n

y!
. s

No 8
g y
. .

I n I ncome, all of the for opera t i n ph si ca l the

p rop ert
q
rev enue
s

cost of wh i ch i s i nclu di b l e i n t h e for i nv est ment i n road and e ui p

gy
accou nt s

ment , h av e b een comb i ned i n one acc oun t , and c orrespondi n l the exp enses

of opera t i on h ave b een mb i ned Sep arat e h av e b een p rovi d ed

f g y
co . ac c ou nt s

for t h e m and the exp enses of op era t i n miscell aneou s p h si ca l

y
rev enu es ro

A di st i nc t h as b een p rov i d ed i n wh i ch t o i ncl u d e su ch

f
p opert
r . accou nt

m O p era t i ons h as b een d et ermi ned t o b e u ncol lec t i b le

g
rev enu e ro as

du ri n t h e p eri od for wh i ch t h e ac c ou nt s a re st at ed D i st i nc t accou nt s

f
.

hav e b een p rov i d ed for rent rom and rent for t h e sev era l cl asses of

I n Profi t and Loss , h as b een p rovi d ed i n wh i c h t o sh ow t h e

g f
an a ccou nt

mount of rev enu e ov ercha r es w h i ch a re d et ermi ned t o b e u nre u nd ab l e

g
a

duri n th e p er i od for w h i c h t h e acc ou nt s a re st a t ed An acc ou nt is al so

MA
.

C O P Y R I G HT I D I Y I N T I R N A TI O N A L T I XT I O O K C O P NY. A L I. R HTIG . R I O I R VI D
 ACCOUN TS FOR STEA M ROAD S
p rovi d ed for d onat i ons ro f m m
i nd ivi dua l s and co p ani es for th e const ruc
q
t i on or ac ui si t i on of p roperty m g
or for co i h i f l
g y pensa t n t e ca rr e r or oss

ant i ci p at ed d uri n the earl p er i od of O p era t i on .

B alance sh eet m
h av e b een p rov i d ed for i p rov ement s on
y m g g y
-
a sset account s

lea sed rai l wa s p roperty ; and d ep osi t s i n l i eu of ort a ed p rop ert sol d .

‘
Ad d i t i ona l accou nt s h av e b een p rovi d ed i n whi ch t o i nclu d e d emand
d ep osi t s m and f m
ti e fd ra t s and d eposi t s, i t e s wh i ch h eret o ore h av e b een
i nclud ed as cash Th e accou nt Taxes Pai d i n Ad v ance h as b een el i mi na t ed
g
.

and p rovi si om
n mad e for Sh owi n in red t h e net a ount of t ax es p ai d ov er
t he m of in und er ca p t i on of Tax

g
accr ued th e
y y
a ou nt t axes an ac cou nt

Li ab ili t . h as b een p rovi d ed for rant s i n ai d of con

A li ab ili t acc ount

st ruc t i on, and sep a rat e account s h av e b een p rovi d ed for accrued d ep re

ci at i on upon roa d , upon e ui p q m m

ent , and upon i scell aneous p h si ca l y
I n th e p rep arat i on of t h e t ext of t h e account s and i n t h e roup i n of g g
f
th e accou nt s i n t h e orm of a eneral b al an ce sh eet , i t h as b een p rimarilg y
t h e p urp ose t o p rovi d e for sh ow i n g in the g rou p of ac cou nt s und er the
ca p t i on Curren t Asset s , onl i t ems y ,

of av ail ab le asset s or of asset s whi ch

th ere i s a reasonab le assuranc e wi ll b ecome av ail ab l e w i t hin a y f ea r ro m
th e d at e of t h e b al ance sh eet

g
.

Th e eneral and Sp eci al i nst ruc t i ons cont a i n a co mp reh ensi v e st a t ement
of t h e p ri nci p l es u nd erl i n y g t he cl assifi c at i on , i nd i ca t i n gg y
g g
enerall t he
app l i cat i on of t h e account i n Th e a t t ent i on of ac cou nt i n offi c ers

q g g
rules

y
.

is t o t h e i mportance of re u i ri n all e mp lo wh o a re assi

g g
ca ll ed es ned t o

a ccou nt i n work in connect i on wi t h i ncome, p rofi t and l oss , and

gy
eneral

f
- -

b al ance sh eet -
a c count s to amil i a ri z e th emsel v es t h orou hl wi t h t h ese
i nst ru ct i ons
g
.

I n th e p rep arat i on of th e rev i si on of t h e account i n rul es cont a i ned in

t hi s and oth er Cl assifi cat i ons for st ea m road s , whi ch are concurrent l y
i ssu ed , t h e Commi ssi on h as h ad t h e coop erat i on of t h e Associ at i on of
y
Ameri ca n Rail wa Account i n Ofli c ers , and i t s St andi n Commi t t ee on g g
Corporat e , Fi scal , and G eneral Accou nt s
f
.

Th e Cl assifi cat i on, i n t ent at i v e orm, h as b een p resent ed for cri t i ci sm

gg
est i ons t o th e chi e ac cou nt i n f
offi cer of ea ch ra i l wa g y
gg
and su a nd t o t h e

y mm i ssi ons of th e sev eral St at es All su est i ons recei v ed f m

g
rail w a

f y
co . ro

su ch p a rt i es h av e b een i v en care ul consi d erat i on, and man of t h em h av e

b een i ncorp orat ed i n t h e Classifi cat i on as h ere i ssued .

2 E n t r i e s C o m p os i n g A c c o u n t s. — I nc o me account s are

h rl r i bl f
.

t ose d esi gned t o S h ow as nea y as p act ca e, or each fi scal

ri h ri
,

p e od , t h e t ot al mount
a of m oney t at a ca r er b ecomes
ent i t ed l to r ecei v e for se vi cesr r drd h r r
en e e , t e et u ns acc ued r
up on i nv est ment s t h e ac cru ed cost s p ai d or a
p y ab e l for t he
r r r
,

se vi ces end e ed by it the , losses sust ai ned b y i t , t he amount s

§ 3 6 ACCOUN TS FOR STEAMROAD S
accrued for t axes for moneys and for use of p ope t i es
use of r r
hr r r r
, ,

of ot e s and t h e app op i at i ons mad e f om i ncome d uri ng

r
,

the pe i od Th e net b al ance of i ncome (or loss) sh al l be car

r r
.

i ed t o p ofi t and loss
rr r r r h h r
.

Th e c a i e s eco ds S all b e k ep t wi t su ffi ci ent p art i cul a i t y

’

h f f r
to S ow ull y t h e act s p e t ai ni n g t o all ent i es made in t h e r
r r
accou nt s p ovi d ed h e ei n for i ncome p ofi t and l oss and t h e r
r h hr f f
, ,

g e n e al b al a nc e S eet W e e t h e u ll i n o rm at i on i s no t
r r r r hr h
. .

ec o d ed in t h e gene al b ook s t h e ent i es t e ei n s all b e su p

h rr r f h h
,

p o r t ed b y o t e ec o d s i i i w hi ch t h e ull d et ai l s S all b e S ow n

r r rfr
.

Su ch gene al b ook ent i es Sh all cont ai n su ffi ci ent e e ence t o

r r r
t h e d et ail eco ds t o p ermi t ea dy i dent ifi cat i on and t h e det ail
r r h r r
,

ec o d s Sh all b e fil ed i n su c mann e as t o b e eadi l y accessi b le

r r
for examinat i on b y ep esent at i v es of t h e nt e st at e Comme ce I r r
Commi ssi on .

3 Ti t l e an d D e f i n i t i on of A c c ou n t —
When t h e t i t le
r lb l
. .

an d i ncome p rofi t and l oss

d efini t i on of an or gene a a ance

h mm r hr
- -
,

Sh eet account c l ear l y in di cat e t at i t i s a f su a y o ot e

ac count s , i i t r q ir d hs not i l l d r
e u h ll e t at a S p ec a e ge ac count S a

be k ept d r
un e h i l i l d
su c h b l a fr m h t t e to nc u e t e a ances o t e
ac count s u su a ll k i h l d r b
y i h
ep t h i l
n t e e ge ut n su c case t e t t es

h l d r h ll i rfr b m
,

of t he su b i
account s n t e e ge S a g ve e e ences y nu

b ers t t i l es , orb h h i m fi
ot d l to t rl e nco e, p ro t an oss , or gene a

h r ib d h r i f hi h h
- -
, ,

b al ance -
S eet account p escr e e e n o w c t ey are

su b di vi si ons .

4 D e l a y ed I t em s —
Wh en no p rovi si ons hav e been made
t h rou g h ri ent es in t he ac cou nt s of t hi s l
c assifi cat i on for ant i ci

p at i ng d el ayed i t ems c hr a geab e or l cred i t ab e l t o t h e i ncome

accou nt , and the a mount of any su ch i t em i s rl e at i v e l y so l a ge r
t h at i t s i nc lu si on i n t h e accoun t s for a S i ng e l ye a r wil l seri ou sl y
di st o t t r h ose accou nt s , t he ca rri re if S O au t h ori zed u p on app li

I r C mm r
,

cat i on t o t he C mmi i h ll di nt e st at e o e ce o ss on , s a s

trib rfi dl
ut e to pm h f h m om b t an oss S O uc o t e a ou nt as ay e

aut h ri d Th rri r i i
o ze li i h C mmi i e ca e n ts ap p cat on to t e o ss on ,

h f ll ri l r ri
.
,

Sh ll fila e t h i m
e d h
u p a t cu a s con c e n ng eac te an t e

r h i i j d m i di
easons t hatr ri f h n ts u g ent n cat e t e p op et y o su c

account i ng .
 ACCOUN TS FOR STEAM ROAD S § 36

D e l a y ed m i m r pr
i tei g tr s are te s e esent n ansact i ons whi ch
oc cur e r d b f r h rr y r
e o e t e cu ent ea .

5 U n co l l ec t i b l e I t em s
i s p ovi d ed for —
An accou nt r
r r h r
. .

ev en ue ch a ges agai nst i ndi vi d u al s and comp ani es t at du i ng

t h e p eri od for whi ch t h e i ncome account i s st at ed av e b een h

d et ermi ned t o b e l hi s account s p ov e l
u ncol ec t ib e
or T i r id d f
r fr rri r
.

t h e p u pose of elimi nat i ng om t h e l edger asset s o t e ca e f h

r
,

or of w i t i ng d own t o nomi nal amou nt s in t s asset account s i

r h
,

i t ems of ev enue ch arges t h at cannot b e co ect su c as ll ed

fr i h h d r
,

e g t c arges for whi ch credi t h as b eers ll

a ow e d or un e

hr rd f r fr i h d li r d
,

c a ges di scov e e a te t he e g t h as b een e ve e .

6 I t em s i n I n c o m e A c c o un t s —
I ncome account s are

r
r l h d di d d bi r
.

li st ed u nd e t h e t w o gene a ea s—
c re ts an e ts Unde
h fh mb r f ri m r
.

eac o t h
ese are a nu e p o a y account s , t e na mes and

nu mb r f hi h e s o f l w c are as ol ow s :

C RE D I TS
50 1 y g
R ail w a O pera t i n

f mm
. rev enu es

i scel laneous operat ions

f g
502 . R ev enu es ro

503 Hi re of rei ht c a rs , c red i t b al ance

f m m
.

ot i v es

f m g
504 . R ent ro l oco
t ra i n
f m gq m
505 . R ent ro p assen er
-
ca rs

R ent floa t i n e ui p

f m q m
ro ent

work ui p

J f y
50 7 . R ent ro e ent

508 oint m aci l i t i nco

m f m
. rent e

I nc o e ro l ea se of road

M m
isc ell aneou s i nco
g y
51 0
y
. rent e

51 1 M isc ell aneou s non op erat i n ph si ca l

y p rop ert
-

51 2 . Sep arat el op erat ed o

p p
r er t i es , p rofi t
51 3 m
D i v i d end i nco
m f mf
. e

51 4 I nco u nd ed securi t i es

m f m
. e ro

I nc o u nf u nd ed secu ri t i es and acc ount s

g
51 5
m f m f
. e ro

51 6 I nc o si nki n and ot h er reserve unds

f
. e ro

51 7 m m
R el ease Of iu u nd ed d eb t
f m
.
p re s on

51 8 . m
Cont rib u t i ons ro ot h er co p ani es

51 9 . M i scell aneous i ncome

D E B I TS
53 1 R a il wa y operat i n g
y
. exp enses

53 2 R ai l w a acc rua l s

y
. t ax
533 . Uncollec t ib l e rai lw a rev enues
53 4 . E xpenses of mi scellaneou s op era ti ons
536 ACCOUN TS FOR STEA M ROADS
Taxes m g y
i scell a neou s operat i n p ropert
f g
on

Hi re of rei h t c ars, d eb i t b al ance

m
R ent for loc o ot i v es
g
R ent for p assen er t rai n ca rs
gq m
-

R en t for float i n e ui p ent

R ent for w ork q m ui p

J f
e ent

oi nt aci l i ty rent s

R ent for l ea sed road s

Mi scell aneou s rent s

Mi scell aneou s t a x accruals
Sep arat el y p ropert i es, l oss
O p erat ed

f
I nt erest on u nd ed d eb t
I nt erest on un u nd ed f d eb t
Amort i z at i on of d i scou nt f d eb t
g
on u nd ed

Mai nt enance of i nv est ment or ani zat i on

f
I ncome t rans erred t o oth er comp ani es
Mi scell aneou s i ncome ch ar es g
I ncome app li ed t o si nki n and ot h er reserve u nd s g f
Di vi dend app rop ri at i ons of i ncome
I ncome ap p rop ri at ed for i nv est ment i n p h si ca l p rop ert y y
g
St ock d i scount ex t i n u i sh ed t h rou h i ncome g
M i scell aneou s app rop ri at i ons of i ncome

7 Th e i n c o m e st at e m en t li st s r r
t h e p ima y account s
rf h r r
.

un de mely op e at i ng i ncome non ope at i ng

our eads ; na

fr r
-
, ,

income d edu ct i ons om g oss in come and di sp osi t i on of net

r r h r r
, ,

i ncome Th e o d e i n whi c t h ese p ima y account s app ear

r r
.

unde each h ead i s sp ecifi ed b y t h e Commi ssi on ; t h e numb e s

of su c h account s ar e not in al l c ases run consecu t i v e ly The

f f ll
.

speci fi ed orm of an i ncome st at ement i s as o ows :

O PE RATI N G I N CO ME
R ail w a y Op erat i n g ‘

g
50 1
y
re v enu es
‘
53 1 R ailw a op erat i n

f y
. exp enses

N et rev enu e rom rail wa operat i ons

"

53 2 y
R a il w a t a x accru a ls "

y
.

‘
Uncoll ec t i b l e rai l wa rev enu es
y g
533 .

‘
R ailw a op era t i n i nc ome
50 2 . f
R ev enu es rom mi scell aneou s op erat i ons
53 4 E xp enses of mis cell aneou s op erat i ons
f
.

m mi scell aneou s O p erat i ons

g
N et
y
rev enu e ro

mi sc ell aneou s Op erat i n

g
535 . Tax es on p rop ert
Mi scell aneou s op erat i n i ncome
Tot a l O p era t i n g i ncome
*I
ncl u d es op era t i ons of wa t er- l i nes , if any .
 ACCOUN S FOR S E M RO D S T TA A § 36

N ON -
O PE RATI N G I NCOME

Hire of f g
rei ht ca rs , cred i t b al ance
f
R ent m l ocomot iv es
f g
ro

R ent rom p assen er t rain cars

f gq
-

R ent rom float i n e ui p ment

f
R ent rom work e ui p ment q
J f
oi nt aci l i t y
rent i ncome

f
I ncome rom l ease of road
M i scell aneou s rent i ncome
M i scell aneou s non Op erat i n p h g y si ca l y
y p ropert
-

Sep arat el Op erat ed p pert i es ,

ro p rofi t
D i vi d end i ncome
I nc ome f mf u nd ed secu ri t i es

f m
ro

I ncome u nf u nd ed secu ri t i es and ac cou nt s

f m g f
ro

I ncome si nki n and ot h er reserve u nd s

f
ro

R el ea se of mi ums on u nd ed de bt
f
p re

Cont ri b u t i ons rom ot h er comp ani es

M i scell aneou s i ncome
Tot al non op erat i n i ncome
-
g
G ross i ncome or l oss ,

D E D UCTI O N S F RO M G RO SS I NCOME

Hi re of f g
rei ht ca rs , d eb i t b al ance
R ent for l oc omot i v es
g t rai n
gq m
R ent for p assen er-
cars

R ent for float i n e ui p

q m
ent

J f
R ent for work ui p

y
e ent

oi nt aci l i t rent s

R ent for l ea sed road s

Misc ell aneou s rent s

Mi scell aneou s accru a l s

y
t ax
Sep arat el op erat ed i l oss
f p rop ert es ,

I nt erest on u nd ed d eb t
I nt eres t on u nf u nd ed d eb t
Amort i zat i on of d i scou nt f d eb t
g
on u nd ed

Mai nt enanc e of i nv est ment or ani zat i on

f
I ncome t rans erred t o ot h er c omp ani es
Miscell aneou s i ncome ch a r es g
f g
Tota l d ed u c t i ons rom ross i ncome
N et i ncome or l oss ,

D I S PO S I TI O N OF N E T I N COME

552 . I ncome ap p l i ed t o si nki n g and ot h er reserve fu nds

553 D i vi d end a pp rop ri at i ons of i ncome

y
.

554 . I ncome ap p rop ri at ed for i nv es t ment i n p h si ca l p perty

ro
§ 36 ACCOUN TS FOR STEAM ROAD S
555 . St ock di scount g g mex t i n u i sh ed th rou h i nco e

556 . M i sc ell aneou s a p p rop ri at i ons of i ncome

Tot al ap p rop ri at i ons

I ncome b al ance t ransferred t o credi t , or d eb i t , of p rofi t and l oss

8 I t em s in Prof i t -
ar id - Lo s s A c c oun t s —
Profi t and

h hw h
-
. .

loss ac count s are t ose d esi gned t o S o t he c anges in the

co r r p o at e su r p lu s or d efi ci t du i ng eac r hfi
sc al pe i od as eff ect ed r
r r
,

by t h e op e at i ons and b u si ness t ansact i ons d uri ng t h at p er i od

rfi
,

by any di sposi t i on of net p o ts mad e so el ly at the op t i on of

th e account i ng co mp any by account i ng ad u st j ment s of mat

r r rl r
,

te s not p op e y at t ri b u t ab e l t o t h e p e i od , or b y mi scellaneou s
gai ns or l
osses not p r ovi d ed for l
e sewh er e ; an d to S h ow a so l t he
unapp rop ri dat e surp u s of l the car ri r
e at t h e d at e of t h e b al ance
sh eet

r h
.

Profi t l
and - oss account s are di v i ded und e t wo general ea d s ,

r r h f hi
-

c edi t s and deb i t s und e eac o whi c s li st ed specifi ed p ri mary

th f ll wi
,

accou nt s as sh own in e o o ng :

CRE D I TS
60 1 g g
Cred i t b al ance, at b e i nni n of fi sca l pe ri od
f f
.

C redi t ba l ance t rans erred rom i ncome

603 Profi t on roa d and e u i p ment sold q
y
.

D el a ed i ncome cred i t s
60 5 . Unre fu nd ab le ov erch a r es g
60 7 . Mi scell aneous credi t s

D E B I TS
Deb i t ba l ance, g g
b e i nni n of fi sca l peri od
f f m
at

D eb i t b al ance t rans erred i ncome

g f
ro

Su rp lu s a p p l i ed to Si nki n and ot h er reserve u nd s

Di v i d end a pp rop ri at i ons of su rpl u s

Su rp l us a pp rop ri a t ed for i nv est ment i n p h si ca l p roperty y

St ock di scount ex t i n g g
u i sh ed t h rou h su rp l u s

D eb t di scou nt ex t i ngu i sh ed t h rou h g su rp l us

M i scell aneou s ap p rop ri at i ons of su rp lu s

Loss on ret i red road and e q ui p ment

D el a y ed i ncome d eb i t s
Mi scell an eous d eb i t s

9 I t em s in B a l an c e Sh -
ee t A c co un t s —
B al ance s h eet

h h wi r r
-
. .

account s are t ose S o ng asset s , li abili t i es ,

and co po at e
 ACCOUN S FOR S E M RO D S T TA A § 36

su r p l u s or d efi ci t of a b u si ness Th e p r escri bed li st

f ll
.

acc ount s i s S h own i n t h e o owi ng :

D E E I TS
70 1 I nves t ment i n road and e ment q ui p

y y
.

I mp rov ement s on l eased rail wa p p ert

gf
7 02 . ro

S i nki n
gg
7 03 u nd s

y
.

704 D eposi t s i n l i eu of mort a ed sol d

y y
p rop ert
.

705 . Mi scell aneou s p h si ca l p rop ert

7 06 . I nv est ment s i n a ffil iat ed comp ani es
7 07 . O th er i nv es t ment s
7 08 . Cash
7 09 D emand l oans and d eposi t s
f
.

71 0 . Ti me dra t s and d eposi t s

71 1 . Sp eci al d ep osi t s
71 2 . Loans and b i l ls rec ei v ab l e
71 3 Traffic and car servi c e b al ances recei v ab le

f g
-
.

71 4 . N et b al anc e rec ei v ab l e ma
ro ent s and cond uct ors

71 5 . Mi scell aneou s accou nt s receiv ab l e

71 6 . Mat eri al and su p p l i es

71 7 . I nt eres t and d i vi d end s recei v ab le

71 8 . R ent s rec ei v ab le

71 9 Ot h er
gf
. cu rrent asset s

7 20 Worki n u nd ad v a nces

f
.

72 1 I nsu ra nce and ot h er u nd s

f
.

7 22 . Ot h er d e erred asset s

723 . R ent s i nsu rance p remi ums p ai d i n

an d ad v ance

7 24 Di sc ou nt on c ap i t al st ock
f
.

725 D i scou nt u nd ed d eb t
y g g
. on

726 Prop ert ab and oned ch ar eab l e op erat i n

j
. to expenses

727 Ot h er u nad u st ed d eb i t s
g
.

7 28 Secu ri t i es i ssu ed med

g
. or a ssu , u np l ed ed

7 29 . Secu ri t i es i ssu ed or a ssumed , pl ed ed

CRE D I TS
Cap i t al st oc k

S t oc k li ab i l i t y for c onv ersi on

Premi u m on ca p i t al st ock

G rant s i n a i d of c on st ru c t i on

Fund ed d eb t un mat u red

R ecei v er s cer t ifi c at es
’

g
N on ne ot i ab l e d eb t t o affil i a t ed c o mp ani es
y
-

Lo a ns a nd b i lls p a abl e

Tra ffi c a nd c a r se rvi ce b al anc es p a ab le y

g y
-

Au d i t ed and w a es p a ab l e

y
ac c ou nt s

M i scellaneou s ac c ou n t s p a ab l e
53 6 ACCOUNTS FOR STEAM ROADS
I nt erest mat ured unpa i d '

Di vi d end s mat ured u np a i d

Fund ed d eb t mat u red unpa i d
Unmat ured di vi d end s d eclared
Unmatu red i nt erest accrued
Unmat ured rent s accrued
Oth er li a b i l i t i es
y f
cu rrent

Li ab i li t for p rovi d ent u nds

Ot h er d e f
erred l i ab il i t ies
Tax l i ab il i t y
Premi um fund ed d eb t
y
on .

I nsur ance and ca sua l t

g
reserves

Op erat i n reserv es

Acc rued d ep reci at i on, road

Accrued d ep rec i at i on, q

e ui p ment
Accrued d ep reci at i on , mi scell aneous h y
si cal

j p o
p p
r ert y
Oth er unad ust ed cred i t s
Ad di t i ons t o p rop ert th rou h i ncome y g and surpl us

Fu nd ed d eb t ret i red g
t hrou h i ncome and surpl us
Si nki n gf u nd reserves

Mi scell aneou s fu nd reserv es

Ap p rop ri ated su rp l u s not specifi ca ll y i nv es ted

Profi t a nd loss , b al ance

1 0 Th e manne i n whi cr h a ge n e r a l b a l an c e - S h ee t

h r r r
.

s tat e m en t S all b e p ep a ed i s p escri bed b y t h e Commi ssi on

and is as f l
ol ows :

A SSE T S I DE

I N VE S TME NTS
I nv est ment i n road and e u i p q ment
I mp rov ement s leased railw a y y
gf p rop ert
on

Si nk i n und s

Tot al b ook asset s at dat e, i n sh ort col umn

Carri er i ssu es at d at e, i n Sh ort col umn
’

g
s own

Ot h er d at e, i n lon col u mn
gg y
asset s at

D ep osi t s in l i eu of mort a ed p ropert sol d

Tota l b ook asset s at d at e, i n sh ort col umn
Carrier
’
i ssu e d at e, i n sh ort col u mn
g
s own at

Ot h er d at e, i n l on col u mn
y y
asset s at

M i scell aneou s ph si cal p rop ert

I nv est ment s i n afli l iat ed comp ani es
S t ocks
B ond s
N ot es
Ad v ances
10 ACCOUN S FOR T S TEAM R OADS § 36

707 . Oth er i nv es tment s

St ocks

Tota l
CURRE NT ASSE TS
Cash
D emand loans and dep osi t s
Ti me d ra t s f and d ep osi t s
Specia l d ep osi t s
Tot al b ook assets at dat e, i n sh ort column
Carrier s ow n i ssues at da t e, i n sh ort col umn
’

Oth er asset s a t dat e, i n l on g c ol u mn

Loans and b i l l s recei v ab l e
Trafli c and ca r ser vi ce b ala nces recei v ab le
f g
-

Net b alance recei v ab le rom a ent s and cond uct ors

Mi scell aneou s account s recei vab le

I nt erest and di v i d end s recei v ab l e

R ent s rec ei v ab l e
’

Ot h er cu rrent asset s

Tot al
D E FE RRE D AS SETS
Worki n gf u nd adv ances

I nsu rance and ot h er f

u nd s

Tot al b ook asset s at d at e, i n sh ort column

Carrier s own i ssues at d at e, i n Sh ort col umn
’

Ot h er asset s at d at e, i n lon column g

f
Ot h er d e erred asset s
Total
UNADJU STE D D E B I TS
Rents and i nsurance p remi ums p ai d i n ad v ance
D i scount on ca p i tal st oc k

D i scount f u nd ed d eb t
y g g
on

Propert ab and oned ch ar eab l e t o Op erat i n

j
.

exp enses

Ot h er una d u st ed d eb i t s
Secu ri t i es i ssu ed med
y
or assu

med
,

Securi t i es i ssu ed or assu , p eg ,

l d ed i n sh ort mn onl
col u

Tot al
LI AB I L I T Y SI D E

STOCK
75 1 Cap i t al st oc k
y
.

B ook liab i li t at date, i n Sh ort col u mn

§ 36 ACCOUN TS FOR STEAM ROAD S 11

Held b y for carri er at d at e, i n Sh ort mn

g g
col u

y
or

Act ua ll ou t st and i n d at e, i n lon column

y
at

752 . S t ock lia b i l i t for conv ersi on

753 . Premi um on ca p i t a l st ock

Total
G OVE RNME NTAL G RANTS
G rants i n ai d of const ruct i on
:

LON G TE RM G RAN T
Fund ed d ebt u nmat ured
y
B ook li ab i li t at d at e, i n sh ort column
Held b y or for carri er at da te, i n sh ort col umn
y g
Act uall ou t st and i n at d at e, i n lon column g
R ecei v er s cert ifi ca t es
’

N on -
g
ne ot i able
’
d eb t t o afii l ia t ed co mpani es
N ot es
Op en account s

Total
C URRE NT LI A B IL I TI E S
Loans and b i l l s pa yab l e

Trafli c and ca r serv i ce bal ances p a ab le y

g y
-

Audi t ed and w a es p a ab l e

y
ac cou nt s

Mi scell aneous account s pa ab le

I nt erest mat ured unp ai d
Di v i d end s mat u red unp ai d
Fu nd ed d eb t mat ur ed unp ai d
Unmat ur ed di v i d end s d eclared
Unmat ured i nterest accrued
Unmat u red rent s accrued
Ot h er current li ab ili t i es
Tot al
D E FE RRE D LI A B ILI TI E S
769 Li ab i l i t yfor p rov i d ent und s f
f
.

7 70. Ot h er d e erred l i ab i l i t i es
Total
UN AD JUS TE D CRE D I TS
Tax li ab i l i t y
Premi u m on fu nd ed d eb t
I nsurance a nd ca sua l t y
g
reserves

Operat i n reserv es

Accr ued d ep reci at i on, road

Accr ued d ep reci at i on, q ui p ment

y
e

Accru ed d ep reci a t i on, miscellaneous ph si cal

j
ro
p p ert y
O t h er u nad ust ed credi t s

Tota l
 ACCOUNTS FOR STEA M R OADS
COR PO RATE S URPL US
7 79 y
Ad di t i ons t o p rop ert t h rou h i ncome and su rplus g
g
.

780 Fu nd ed d eb t ret i red t h rou h i ncome and surpl us

gf
.

781 Si nkin u nd reserv es

f
.

7 82 Mi scella neou s und reserv es

y
.

7 83 . App rop ri ated su rp l us not specifi call i nvest ed

Tot al a p p rop ria t ed su rp l u s

784 . Profi t and loss , b al ance

Tot al corpora t e surpl us

1 1 S p ec i a l I n s t r u c t i o n s — Th e met h d fh o o andli ng di s
count and p r mi m
e u on ca pi t al st ock is p r ri b d b
esc e y t h e Com
mi ssi on in Sp ecial i nst ru ct i ons as f ll
o ow s :

D I SCO UN T AN D PRE MI UM ON CA P I TAL STOCK —

g Led er a ccou nt s sh all be
i d d t h e d i sc ou nt s a nd mi ums at t h e sa le or resal e of ea ch

y
p rov e to c ov er p re

sub cl ass of ca p i t al st oc k i ssued a ssu med b y t h e co Th m

g
or p an e . t ot a l
of t h e net d eb i t b al ances re mai ni n i n t h ese sev era l a c cou nt s Sh a ll be
i ncl uded i n Account N o 7 24 , Di scou nt on Ca p i ta l S t oc k , and t h e t ot a l
.

of t h e net cred i t ba l ances i n Accou nt N o 7 53 , Premi um on Ca p i t al S t oc k . .

For exp lanat i on of su bcl ass see Ac cou nt N o 7 5 1 , Ca p i t a l St ock . .

B y t h e t erm di scou nt i s mea nt t he excess of t h e p a r v al u e of st oc ks

act uall y i ssu ed or a ssu med ov er t he mone
a c t ua l y v a l u e of t h e consi d era t i on

recei v ed for su ch st oc k s B y the t erm premi um i s mea nt the excess of th e

y y
.

act ual mone v a l ue of t h e consi d erat i on recei v ed for st oc k a ct u all i ssu ed or

assu med ov er th e par v al ue of su ch s tock .

Th e t erm premi um i s not i nt end ed t o i ncl ud e amou nt s recei v ed rep t e

sent i n g
exp ec t ed d i v i d end s co nsi d ered t o h av e a c cr ued si nce t h e l as t
di vi d end peri od i n case of st oc ks on wh i ch d i vi d end s a re regu l a rl y i
p d,
a

nor i s d isc ou nt , a s d efi ned , i nte nd ed t o b e d i mi ni sh ed b y any su ch

ab ov e

amou nt rep reetent i ng expect ed di vi d end s exp l i ci t l st at ed i n t h e p ri ce at y

wh i ch t h e st oc k i s i ssu ed
g
.

E nt ri es i n t h ese acc ou nt s rep resent i n d i scount s sh all b e ca rri ed t h erei n

unt il off set ( 1 ) b y p remi ums realiz ed on sub se u ent sales of t h e same q
su b cl ass of st oc k (2 ) b y assessment s l ev i ed on t h e st ockh old ers (3 ) b y
,

app rop ria t i ons of i ncome or surp l us for t h at p u rp ose or (4 ) b y ch ar es to ,

,

g
fi d l i m f h k E i i h
g
p r o t an oss u po n r ea c q u r e en t o t e st o c n t r es n t ese
. a c c ou nt s

rep resent i n p re m i um s rea l i ze d sh a ll b e ca rr i ed t h er e i n u n t i l off s; ( 1 ) b y

di scount s sufi ered on sales of t h e same su b cl ass of st ock or (2 ) b y cred i ts ,

t o p rofi t and l oss upon reacq ui rement of t h e st ock

g y
.

I n case t h e account i n comp an i s permi t t ed and el ect s t o di st ri b u te

all or any pa rt of t h e net p remi um on i t s ca p i t al st ock t o i t s st oc kh old ers

t he amount t h us d i st ri b u ted sh all be char ed t o t h e p remi um ac cou nt g .

,

For t h e p urpose of th is Cl assifi ca t i on th e p remi um reali z ed at t h e sal e

,

of cap i t a l st oc k Sha l l not b e consi d er ed a p rofi t and l oss i t em e x cep t up on - -

,

t h e reacq ui rement of t h e s t ock sold .

§ 36 ACCOUN TS FOR STEA M ROAD S 13

In no case sh all di sc ount g on ca p i t a l st oc k be ch ar ed i nclu d ed i n

q g y
to or

any ac count as a part of t he cos t of ac u i ri n any p op ert

r , t angi b le or

i nt angi b l e, p a rt of th e c ost of Op erat i on

g
or a s a .

Wh en st ock wh i ch h as b een i ssu ed med b y t h e acc ou nt i n m

y q
or a ssu co

pan is rea c t h e di ff erence b et ween t h e p ri ce p ai d and t h e p ar val u e

ui red ,

of t he st oc k sh a ll b e cred i ted t o Profi t and Loss Acc ou nt N o 607 , Mi scel

g
- -
.

laneous Cred i t s, or ch ar ed t o Accou nt N o 62 1M i scellaneous D eb i t s

y ,
.
,

may be i i at e Concurrent l the mi m d i

q j g
as ap p rop .
p re u o r scou nt a cc ou nt
for t h e p art i cul ar issue of st ock reac ui red Sh all be ad u st ed t h rou h
p rofi t and l oss t o t h e ext ent of t h e p remi um or di sc ou nt ap p l i ca b l e to th e
sh ares rea cq u i red In t h e p remi um rea l i z ed or d i scou nt suff ered at

q
. c as e

t h e p ri or sal e of t h e st oc k rea c ui red h as b een i ncl u d ed i n an asset accou nt

ot h erth a n t h e p remi u ms and di sc ou nt s accou nt , su ch asset ac cou nt sh a ll

be concurrent l y j g
a d u st ed t h rou h p rofi t and l oss t o t h e of th e
y
ext ent

p remi um or di scou nt p rev i ou sl i ncl u d ed t h erei n wi t h t o t h e Sh ares

q
respect

reac ui red .

ST UD Y O F C L A S S I FI C A T I O N

1 2 ACM p an i
y gn t hi s I r
nst uct i on P ap e r is sent a cop y

I r
.

of t h e Cl assifi cat i onme of nco Profi t an d Lo ss and G ene al

h
-

A
-
, ,

B al ance S eet ccount s of St eam

-
R oad s i ssu ed b y t h e
as

I r Thi h
,

n t erst at e Comme ce Commi ssi on s p amp hl et S oul d b e

r f I r i P r
.

st u di ed as a pa t o t hi s nst uc t on ap e not onl y b ecau se

th e f ll
o owi ng E xami nat i on Q i b
u est ons are as ed on i t but l
a so

i ll r
,

b ecau se a know l ed ge of i t s c ont ent s w p ov e esp eci a lly v alu ab l e

in underst and i ng t h e financi al st at e ment s i ssued b y r ilr
a oad s .
 A CC O UN TS FOR M IN IN G
C OM PA N IES
A C C O U N TI N G ME T H O D S

I N TR O D UC T I O N

1 r
Th e p omi nence gi v en t o t h e mi ni ng i ndust y b y t h e r
r r h
.

di ff e ent nat i ons of t h e wo l d i s sh own b y t h e est ab li s ment

r
of sp eci al gov e nment d ep a t ment s for i t s cont ol Y et t h e r r
rqi m r r r
.

e u re ent s for t h e o gani z a t i on of mi ni ng co p o at i ons are

i h r
ne t e sp eci a l nor unu sual

A mi i r r
.

n ng co mp any is o gani zed in t he sa me man ne as a

manuf act ur i ng or t adin g co po at i on r r r and u su all y und e r t he

r r r
.
,

same gene al l aws al t h ou gh t h e e are p act i ces in connec t i on

r r
,

wi t h t h ei o gani z at i on t h at d o not , as a rul e , ob t ai n i n t he

b li hm
est a s ent of manuf act u in g r co mp ani es
r i r
.

Th e Op e at ons of di ggin g h oi st i ng and p ep ar i ng coal or

hi m ril
, ,

ore f or S p ent is anal ogou s to the manuf act uri ng of a t c es

for r
l t o t h e t ad e Once p od uced and ead y for
sa e r r Shi pment
r r f
.
,

t he sal e and d eli v e y esol v es i t sel i nt o a mat t er of sal esman

shi p , as in any t r di
a ng conce n r .

2 A mi
mp any ei t h er owns t h e mi nes or l eases t h em
ni ng co

r r
.

for a t erm of yea s on a oyal t y b as i s of so much per t on of coal

mi ned Th e comp any t h at op e at es i t s own mi nes may op en r
r
.

an account for ea ch mi ne t o wh i ch i s ch a ged al l ou t l ay for

r r r
,

d ev el opment nec essa y const uct i on irnp rov ement s op e at i ng

r I fr r
, , ,

ch a ges exp enses et c ncome om sal es l ess al l op e at i ng

r r
.
, , ,

and gene al ch a ges sh ow s t h e n et ea rnings of t h e mi ne for any

C O PY R HTIG ED I Y IN T R AT
E N IO N A L T E XT I O O K C O MA P NY A LI. R HT
IG . R E E E R VE D

I L T 234— 4 3
 ACCOUNTS FOR M I N I NG COMPAN IE S § 3 7
fi scal peri od I n case t h e mi ne i s lease t o d h r m anot e co p an y,
r fr li r i d
.

t h e b ookk eep i ng i s redu ced to t h e ent y o oya t es ec e v e

and of dep reci at i ons and ot h e r exp enses i ncur red .

3 As t h e h ead offi ce is u su a ll y locat ed in so me ci t y the

rf r f
.
,

superi nt end ent , or l ks must ca e ull y ecord u ll d et ai l s

hi s c er ,

p er tai ni ng t o o p erat i on s c oal mi ned b ro k en st oc k ed an d

h hr
, , , ,

S i p ped lab or c a ges pay roll acci d ent s et c and t h en send

h h f
, , , , .
,

t ese to t h e ead o fi ce i n t h e form of d et ail ed rep ort s From

h r
.

t ese report s ent ri es are mad e i n t h e p rop e account s

r hr r
.
,

Th e mi ne i s p ai d ei t e b y t h e ton or b y t h e ca l oad of coal

mined From t h e amount t hu s due hi m ow ev er d educt i ons h
h fr r
.
, ,

are made for el pers if any su pp li es u ni sh ed as p ow d e and

hr r h
, , ,

t ool s rent of ou se st ore c a ges and p ob ab ly for b enefi t or

li f f d ri h
, , ,

re e Th b l d
un i id b h m e a ance ue s p a y t e anage n cas

by h k fr m h h d ffi e C hrfr b
.

or c ec m sent o t e ea o c are ust t e e o e e

r hr d
.

i d i k
ex erc se i k f li n eep ng t rac o su p p es , st o es , et c c a ge to
h mi r r h hr
.

’
eac d ne h h d
s accoun t an to rep o t t ese c a ges to t e ea

offi Th cel ll m d fr m h h d ffi h h
e sa es are u sua y a e o t e ea o ce , t ou g
di r rdi di r i
.

shi m p f m h mi
ent s are sent ect ro t e ne acco ng t o ec t on s

B OO K S A N D A CC O U NT S

4 I n the mini ng comp any t e e are nume ou s

condu c t of a hr r
r r h r
.

forms and eco d s i n u se ; many of t ese h ow ev e are st at i st i cal , ,

and hav e li t t l e or no b eari ng u p on t h e account k eepi ng sy st em

r rq r
-
.

A great many of t h ese reco d s are e ui ed b y nat i onal and

st at e law s and egul at i on s and nume ou s r
ep o t s per t ai ni ng , r r r
t o lab or men emp l oyed acci d en t s d eat h s Si ckness ou t pu t
h h
, , , , ,

of ore et c are mad e t o t h e st at e i n w i c

, . t h e mi nes are l ocat ed ,

also t o t h e D ep ar tment of M i nes in Wash i ngt on .

5 lmost ent irely

Th e income from a mi ne mu st b e d eri v ed a

fr
.

from i t s ou t p u t of coal or ore and t o some ext ent om i t s

r
,

b y p rod u ct s ; b u t t h e cost of op e at i ng t h e mi ne mu st b e sep a

T r
-

rat ed i nt o sev eral di vi si ons h e e i s t h e expense at t h e h ead

q
.

ofli ce t h e ori gi nal cost of t h e mi ne t h e cost of ou t si d e e ui p

, ,

ment t he cost of d ev elopment and openi ng t h e mine t h e i nsi de

, ,
 37 ACCOUN TS FOR M I N I NG COM PAN I E S
r i h mi q ipm
const uct on , t f mi i g
e ne e u ent , cost o n n t h e ore, cost

o f bi i g i
r ng n h f f mil li g
t to t b ki g he sur ace , cost o n or rea n t e

f r r i
,

se lli xng e h p en se t e cost o t ansp o t at on , et c

If ll h
, .

a t k e h mi
accoun t s ly h m i are ep t at t e n e , on t e a n

account s nee db k h h d fli wi h ei bl ep t atll i t e ea o ce, t su ta e contr o ng

account s f h i mi
or r p r i d mi
t e v ar ou s i i i ne p o e t es an ne act v t es
ry h r i wi ll b b i d fr m h r r r i d
.

D at af or ent t e en e o t a ne o t e ep o ts ece v e

fr m h mi
o t ei
e d r l i d If h b k
ne sup r nt en ent at egu ar p er o s t e oo s

h r rd d b k
.

are k p e h h d ffi
t at ht ly e ea o ce, t en on su c eco s n ee e ep t

at h mi
t e ry f r i di d il d i f m i
n es as are necessa or p ov ng et a e n or at on

for d il y r a ep ort s

h r q r r r
.

I n an
y i i
case d g l ltd ere m s e u re a ene a e ge cu st o e s
’

l d r di r l d r h r r rd h b k l
,

’
e ge cre to s e ge or v ou c e eco cas oo sa es

b k j l l b r r rd r rd f l fr m
, , , ,

oo our na a o y eco s, eco o sa es o M p an

r r rd f mi d milli x Of
, ,

st o es , ec o o ne an ng e p en ses et c course ,

h i id bl i i h b k d
.
,

t er e s cons era k p
e v ar ance n t e oo s an account s e t
b y mi i g m i
n n d i coh m r f r rdi d
p an es an n t e anne o eco ng at a ,

conse q l y u enty m b li d h
no one s st e ill m h can e ou t ne t at w eet t e

needs of all .

6 A c c ou n t s Of a C oa l - M i n i n g Com p an y —
F ll wi g
o o n

l r
. .

i s Sh own a p ar t i al sc h ed ul e of account s u sed by a a ge m

co

n
p y
a en a
g ged mi ni ng and selling of so t coal and i n t h e
in t he f
manuf act ur e of cok e Fi st t e e are gi v en t h e o t y one gen r hr fr
r r h r
-
.
,

e al l ed ge accoun t s ; t i s l i st sh ow s t h e l a ge v ari et y of t h e

i t ems t h at must be account ed for Th e p es ent li st i s di vi d ed r

r r r r
.

i nt o t wo p a t s Th e fi st p a t (a) Sh ow s t h e ope at i ng exp ense

r
.

account s at t h e mi ne and t h ei sub di vi si ons Th e second

r h r
.

p a t ( )
b s ow s t h e op e at i ng ex p en se acco u n t s at t h e c ok e p l an t
and t h ir e su b di vi si ons .

G E NE RA L LE D G E R A CCO U NTS

of 9 B oardi n g h ou se fi xt ures
g
Cost p roper i
a r .
-

10 Sal oon b uil di n

y g
Lands . s

Mi ne d ev el opment 11 Machi ner for p rospect i n

y
.

Tramwa s ch ut es E arni ngs

g g
, , and t res t l es 12 .

B uil di n 13 Mi ne (cont rolli n

y
s . exp ense

machi ner )
g
Pow er and coun t

Cars and t racks Coke expense ( c ont roll i n

Coke ovens count )

 ACCOUN S FOR T M I N I NG COMPAN E S I § 37

G eneral exp ense ( f req uent l y 28 . Uncl ai med wa g es

su b di vi d ed ) D ep reci at i on
g
29 . reserv e ac count

B oardi n M at eri al and sup p li es

g
h ou se 30
g g
-
exp enses .

B oardi n h ouse rec ei p t s 31 E n i neeri n

y
-
. o
p p
r ert y
R ent s 32 Pay roll d efici enc
j yf
-
.

I nsu ranc e 33 . Personal i n ur un d

Taxes 34 Ani mals kill ed and sol d

j y f
.

Personal i n cl ai ms 35 Sp eci al renewal und

g
-
ur .

Coal p rospec t i n 36 I ndi v i d ual s a nd mpani es (ac

g
. co

D ep rec i a ti on of eneral p l ant , recei v ab l e)

y
count s

Wat er supp l
g
et c .

I nt erest , di scount , and Smi t hi n

g
ex

c ha n e Sawmill
Vouch ers D ep reci at i on of ani mal s
Pay roll s Profit and l oss
Treasur er (or c ash account )

M I NE OPE RATI NG A CCO U NTS

g
-

E xp ense of mi ni n Prop ort i on st ab le

g
exp ense
Hand mi ni n Ha rness rep ai rs and shoei ng

Cont ract mach i ne mi ni n g g

g
Cl ea ri n up wrecks
D ay work machi ne mi ni n g g
R ep ai rs h aul a e Si nal s
g g g g
-

D rilli n , Sh oot i n ,
and l oad Cl eani n h aul a e t racks
i ng rep ai rs and renewals

g m y
Roll er
Loadi n p an c oal g g
R ep ai ri n h aul a e ent ri es

g
co

Ladd ers and t ool b ox es

gm
3 Loadi n
f m y
.

Runni n t ri p
’

g
Ou t si d e an s sal ar

W g m
an ore

Sha rp eni n t ools ei h m an and t op en

Pow d er man Push ers and d umpers

Ch eck man Cou pl ers and sp raggers

Prop ort i on p ower h ouse -

ex

Sh ot i nsp ect ors

E art h t amp i n g p ense
g g i ne
g
Runni n c h u t e en

T a mp i n a nd w d g
Loadi n b y day l ab or
g
p o e r

b ox es Loadi n b y con tract

I nt erp reter g
Ru nni n and rep ai ri n g box
Hauli n g l oad er
Propo rt i on power h ouse -
ex Car h andl ers
p ense Att end ance e l e v a t or s ,

y
sc reens , et c .

Out si d e h oi st men Cos t d umm d oors

Und er g r ound h oi st men Unl oadi n g d ust and yard
Loc omot i v e men
gy
wast e
R op e Cl eani n ard t racks
g
runners

Coup l ers and sp raggers D ama ra il road ca rs and

g
e to
Roll er men and reasers t racks
§ 3 7 ACCOUN TS FOR M N N G COM PAN E S I I I
R epai rs t o I nsi d e p umps and m
g
cars p M p en
R ep ai ri n wrecked Wat er men and suppli es
g
cars

R ep ai ri n D i t ch es and su mp s
g
worn -
ou t cars

R epl ac i n l os t Ti mb er and p rops

g
cars

Repai rs t o t rac ks D ri v i n ent ri es and ms

g g
roo

Hoi st and l oc omot i v e t racks Ret i rnb eri n and rob b i n

Ordi nar y y and m ms

g g
ent r roo roo

t racks R epa i ri n hau la e ent ri es

Taki n g up old rails and t i es Rep a i ri ng ai r and t rav eli n g

E l ect ri
li h t g y
g g
c wa s

Propor ti on p ower h ou se Unl oadi n and

p ili n
g g
-
ex

Hauli n and sawi n

p ense
R ep a i rs i nteri or wi rin g Loadi n g and d eli v eri n g
E nt r y d ri v i n g
Y arda g i n st rai h t g coal D ead work
g g
e

Y arda in coal and rock R et i mb eri n ms

g g g g
e roo

Y arda e i n st rai h t rock Re rad i n and b rushi ng en

All owance for b oney coal or t ri es

roc k Prosp ec tin gf aul ts

All owance for roll s L g

oad i n and h auli n g rock

All owance for water Dum g pin and st owi n g rock

Rooms and roll s g

Und er r ound i nspec ti on
Rooms t urned g
R epai ri n comp an t ool s y
All owance for roll s in ms g
Cl eani n camp
g f
roo

All owance for b rushi n R ep ai rs t o b uil di ngs and ch utes

y
roo

All owance for b one coal or M a i n ch u t e and t res tl e

roc k Crush er el ev at or and sc reen

All owance for wat er b ui l di n g

Vent ilat i on Power and boil er h ouse
Propor ti on p ow er h ouse B oardi n g h ouses
g
-
ex

B arn and corral b ui l di n

p ense
g
s

G as and ai r i nspect ors B oardi n h ouses

Fan exp enses and g i neer B l acksmi t h and machi ne
g
en

B uil di n and rep a i ri ng s top

g
Sh op s

i mi ne b uil di n g
g
p n s Ot h er s

B rat ti ce cl ot h and b rat ti ci n and mi ne

g gm
R ail road t rack
B uil di n and rep ai ri n i ne sc al es

d oors Hospi t al
Trap p ers R ep ai rs machi ner y
Cl ea ni n g ai r B oil ers a nd connect i ons

g
ways
Rep ai ri n ai r y St eam li nes
g gm
wa
y g
s

D rai na e and wat eri n i ne S tat i onar m en i nes

g g
st ea

Proport i on h ouse Steam h oi s ti n i nes

g
p ow er -
ex en

p ens e E l ec t ri c h oi st i n engi nes

Out si d e p u mp s and mp Ai r mp ressors

pu
g
co

men El ect ri c enera tors

 ACCOUN TS FOR M I N I NG COM PAN IE S 37

E l ec t ri c l oc omot i v es Sup eri nt end ent and clerks

Mi scell aneous el ect ri c mo g
Proport i on eneral and mi ne
sup eri nt end ent s sal ari es
’

f
t ors
Outsi d e p ump s Mi ne man
g
ore

Und er round p umps Mi ne cl erks

Out si d e wat er li n es g
E n i neeri n g
g y
-

Und er round w at er li nes-

Mi ne su rv e ors and assi s

Ou t si d e ai r li nes
g
t ants
Under r ou nd ai r li nes Offi ce su ppl i es

Ou tsi d e el ect ri c li nes Out si de

g p ow er exp enses

Und er rou nd el ect ri c p ower G eneral exp enses

Jani t or servi ce

Fans a nd fan en i nes g S undr y supp li es

Prop ort i on c rush ers , el ev a Offi ce fix t ures

t ors , et c . g
Fi ri n ofli ce h eat er
Ti p pl es and screens I nci d ent als
Renew al wi re ropes Mi sc ell aneous t eami n g
g
Mi ni n mach i nes Pay d ay exp enses
y
-

Machi ner i nsp ect i on Free coal

Tel ep h one l i nes Watchman
Prop ort i on sal ar y g eneral

mast er mechani c R escue a p p aratus

COKE E X PE N SE ACCO UNTS

Coal used g y
R unni n l arr cars
Tons Repai ri n l arr g y
cars and

Sup eri nt end en t s a nd cl erks t racks

Prop ort i on g eneral and c oke R epai ri n gm ot or and w
y p o er

sal ar
’
sup eri n tend ent s li nes
and exp enses R ep a iri n g scal es

Coke f men Lev el ers

g g
-
ov en ore

Proport i on ofli ce cl erks B urni n and d rawi n

Proport i on ofli ce suppli es Coke p ull ers
g
Plast eri n ov en d oors
g
E n i neeri n g Prop ort i on p ower h ouse
y
-
ex

M i ne and assi s

g
su rv e ors n
p se
e

t ant s P rop ort i on p umpi n exp ense

Office su p p l i es R ep a i rs ov en wat er li ne-

O utsi d e R epai rs , t ools

gg gg
exp enses

Ch ar i n Ch ar i n h ol e
g
ov ens cov ers

Pr op ort i on p ower h ouse 45 Lo adi n coke

g
-
ex .

Lo adi n r a il road by
p ense
g
cars

Handli n c oal at b i ns
g g
c ont rac t

Cl eani n a t b i ns and scal es Load i n rail road cars b y day

g
Wei hi ng ch ar es g l ab or
 ACCOUN TS FOR M I N I NG COM PAN E S I
Car h andi ers 48 Repai rs t o coke ov ens

g
.

Cl eani n railr oa d t racks B ri ck and firecl ay

D ama g to rai l road ca rs and St one, li me, etc
f
e .

t racks Cast i ron d oor rames

g
-

E xp ense a nd rep ai r tool s Rep acki n ov ens

R a ilroad w ei hman g
Cost d u mmy d oors 49 . R epai rs t o b uildi n gs

R ep a i r s rai l roa d t ra c k -
Slack b i ns
sca l es Store and t ool h ouse
Loadi n g Ci nd ers Scal e h ouse
Loadi n g and unl oa di n g rail Trest les and b rid g es

road cars Superi nt endent m

g y g
’
s o oe

Hauli n i n wa
g g g
aw a ons

Cl eani n d ocks Prepari n and coki n coal

E xp ense and repai r t ool s Transp ort at i on on samp les

Proport i on stab l e expense Cost of anal si s y
D ep reci a t i on of ani mals yq
Lab orat or e ui pment
Fi ri n g col d ov ens 51 . I nci d ent als
Wood u sed

Coal used

Cha rgi n g , b urni n g , and J ani t or servi ce

Free coal
Di sp osi n g of Ci nd ers Tel ep h one servi ce and re

7 Mon t h l y S t a t em en t s —
Frmif o n ormat i on cont ai ned

r r r r f
.

i n t he gene al l ed ge , sup pli ed b y mont hl y epo t s rom t h e

mi nes and t hr ough ad j u stment s of i nv ent o i es accrued i t ems r , ,

I N COME ACCOUNT
B LAN K CO AL CO MPAN Y

g
g gff
G ross ea rni n s rom sal e of coal and coke 5
Operat i n exp enses
N et ea rni n s rom op erat i n of mi nes g
Ad d
f
Recei p t s rom mi ners h ou ses , et c
’

g .
5

y
I nt erest , d i scou nt , and exch an e
Sup pl st ore comp an , di vi dend No
-
y .

g
Total i nc ome
Char es t o i ncome
Taxes
I nsurance

gf
I nteres t on b ond s
Si nki n u nd i nst alment
-

g
Personal i n u r cl ai ms
N et i ncome mont h
-
j y
D ep reci at i on of eneral pl ant s
 ACCOUN TS FOR M I N I NG COM PAN E S I § 37

et c regu a l rm hly m
ont st at e ent s are made of i ncome and

Th r r h
.
,

e xpenses ese st at emen t s are i n t w o p a t s One p a t S ow s

hr r
. .

t h e in come and expen ses for t h e current mont h ; t h e ot e pa t

h
s ows t h e resul t s for al l t h e mont s of t h e fi scal year u p t o h
t h e end of t h e mont h Sh own i n t h e fi rst p a t r .

I N CO ME ACCO UN T

B LAN K COAL COMPAN Y

Jan . 1 ,
1 91
g
g f f
G ross ea rni n s rom sal e of coal and coke
Op erat i n exp enses
N et earmngs rom operat in of mi nes
'

g
Ad d
’
f
R ecei p t s rom mi ners h ouses, etc
I nt erest , di scount , and ex ch an e
.

g
Di v i d end N o
y y
on
S up p l st ore c ompan di v i d end s
-
) n an y st oc k

Sub si di ar coal comp an di vi d end No

os
.

and yy fip .

Total i ncome
g
Char es t o i ncome
Taxes

I nt erest on b onds
gf
S i nki n und i nstalment-

g
D ep reci at i on of eneral p lants
Personal i h ur clai ms
N et i ncome rom Jan 1 t o
-
j yf .

8 B a l an c e Sh ee t s
—
Ad d i t i onal account s are h
s own in
f h hi h r h
.

t h e b alance sh eet s, one or m of w ic s e e s own .

B ALAN CE SHEE T
B L AN K COAL CO MPAN Y AN D S UB S I DI AR I E S
S TATE ME N T OF ASSE TS AN D LI AB IL I TI E S A s OF
Current asset s
Mat eri al and sup pli es , e tc .

Saw mill -
acc ou nt , Mi ne N o 1 .

Saw mill
gg acc ou nt , Mi ne N o 2
-
.

S t ora e coke, Mi ne N o 2 .

S t ora e slack , Mi ne N0 1

J y
Fi re i ns urance (p rop ort i ons not ch ar ed out )
Taxes , N ew erse (p rop ort i on not ch ar ed out )
.

g g
t i ons not ch ar ed out ) gy
Uni t ed S t at es exci se t ax on corp orat i ons (p rop or

y
Cash i n t reasur , N ew Y ork Ci t
Cash i n t reasu r , Home Offi ce y y
Cash i n h and s of Trust Co mp an of
Trust ee , t o p ay coup ons of Coal Comp an
Tru st ee t o pay cou pons of (sub si di ar ) Coal y y
M
D ue f ro
p a ny
m i ndi vi du als and co mp an y ’
s c oal sales
 § 3 7 ACCOUN TS FOR I I
M N NG COM PAN IE S
Due rom i ndi v i duals and comp an
t
y ’
s b ills coll ee
tib e
B lank Coal Comp an first mort a
b ond s i n t reasur and owned as y y gg e5 per
und er
- -
cent .

B la nk Coal Com ny
Sub si di ar Coal
Current li ab ili t i es
y
mpany
Vouchers

Unclai med wa es g
B lank medi cal d epart ment u nd f
y
B l ank Comp an coupons d u e and u npaid i ncl ud
i ng c oupo ns
B lzi r Coal Comp an coupons accrued d ue
igi
y
Sub si di ar y Coal Co mp an
g cou p ons d ue andy
p
Sub si di ar y
un ai d i ncl u di n
Coal Comp an
1 9 1 coup ons
c ou p ons y
accrued
d ue 1 91
f
gf
Accru ed si nld ng und , B lank Coal Comp an
Accru ed si nk i n u nd , S u b si di ar Coal Comp an y y y
Accrued t axes
f
N et p roceed s rom mi nes , B l ank p a ab l e N ov em y
b er E st .

Propert y and i rnp rov ement s , B l ank p a ab le

N ov emb er
y
y E st
Prop ert a nd i mp rov ement s , p a abl e
.

Uni t ed St a t es exci se t ax on corpora ti on, p a able

y
E st
y .

y g
E st
J y y
.

Taxes , N ew erse , pa ab l e
Proper t account s

gf
Less char ed t o
Sinki n u nd
D ep rec i at i on of p ro rty
Sec u ri t i es d eposi ted wi t B l ank Trust Com
p a n y o f T ru s t ee
S ub si di ary Coal Comp an cap i tal st oc k , y
S ha res p ar v al u e
St ore Comp an ca p i tal y
st oc k ,
S h ares p ar v al ue
Anot h er Coal Comp an y
cap i t al st oc k ,

y
sha res p ar v al u e
Su b si di ar Coal Comp an s mort a e, et c
’
y
Addi t i ons t o p l ant s , i mp rov ements , et c
gg .

S ub si di ar Coal y
B l ank Coal Com a ny
mp any
Secur i t i es owned , i n t reasur y
Cap i t al st ock and fi rst mort ga e 6 p er cent
y
- - -
.

b onds of The Coal and ke Comp an

sh ares of ca p i t al st oc k p ar v al u e $ 1 00
ea ch
-
gg
fi rst mort a e 6 p er cent bond s d enomi
- -
.

nat i on
Cap i t al st ock of th e
each )
Coal Comp an y
f
sh ares p ar v alu e
Pre erred ca p i tal st ock
al u e
Comp an sh ares y
p a r v
10 ACCOUN S FOR M N N G COM PAN E S T I I I § 37
O th er asset s

Si nki n gf y
und 5 p er cent -
y
Tru st Comp an of N ew Y ork , T ru st ee for
b ond s, B l ank Coal- -
.
,

Comp an
gf y
Si nki n und 5 p er cent b ond s, Sub si di ar
- - -
. y
C omp an
y
Trust Comp an of N ew Y ork , Tru st ee
I nsu rance accou nt , B l ank Coal Comp an y
I nsu ranc e acc ou nt , Sub si di ar Coal Company
g gg
E n i neeri n p rop er t y y
B oardi n and b unk h ouse fix t ures
y
-

I mp rov ement s, h ome ard s

Less d ep reci a ti on
I mp rov ement s, West ern coal ard y
Cap i t al st oc k
-
gg
Fi rst mort a e 5 p er cent b ond s -

B l ank Coal Comp an , l ess ca ncel ed b y si nki n

-

y .

g
fu n
Sub si di ary Coal Compan , l ess cancel ed by Si nk y
f i ng und
D e erred account s
gg ff
und , B l ank Coal Comp an y
Si nki n
Si nki n
j y
u nd , Sub si di ar Coal Company yf
Personal i n u r and ot h er und s
g
-

D ep reci at i on account , eneral pl ants

Prop ert y d est ro ed b y fire
Profit and l o b al ance t o credi t
y
D at e, i ig
Audi t or

9 I l l u st rat i ve E x am p l e —
In o rd r e to the
r
.

met h od of p ep ar i ng st at e ment s for a mini ng the

f llo owi ng q uest i on frOm t h e N ew York C P A E xami nat i on
r f q i b i ill ill r h w h
. . .

i s gi v en I t is a b ie u es t on ut t w ust at e o t e

h ld b r r d d h h
.

m
st at e ent s s ou difi e p ep a e an t at t ey are no erent

fr m h h p i
,

o mt f
e st ate ent s o ot er cor orat ons :

Pr r i m d p fi d l
ep a e nco d b l
e an ro t an oss ac count s an a ance

r ri ri l h
- -

S h h wi
eet , s o d ng g oss ea n ngs an net ea n ngs , a so t e av er age

cost p erTh ri l b lt on f h XY Z C l Mi i e t a a ance o t e oa n ng

mb r 3 i
.

C m o p af D
ny as o f ll ece e 1 s as o ow s :

r
, ,

Th l e f he
t ot a ou t p u t or t A mi y ea was t ons n exa na
h h h f ll wi h
.

t i on of h b k d
t e oo s an account s s ows t at t e o o ng C arges
h d a b not rd Hr eend m l ent e e d : o ses an u es, car an
mi r il
ne a l im f i j i
account , D i c a s or n ur es , ur ng

r h b kk r h r h r r h r d i i d
-

t h e y a
e t e oo eep e t oug e ro c a ge to ns e

r i r ll Th l i
, , ,

const uc t on i d f i id nst ea o t o ns e p y
a o e coa s

r 20
.

mi d ne l h on a ease Th i t y at av e ages cent s p er t on e nv ent or

f ll Timb r d r
.

i
s as o ow s : wd $555 il e an p op s, p o er , ; o ,
 § 37 T
ACCOUN S FOR M N N G COM PAN E S I I I 11

etc $ 1 75 r h
I n p ep ari ng t i s st at ement al lowance for dep reci a
h h
. .
, ,

tion on b reak er an d machi nery, b l ack smi t s op and const ruc

tion , cars and rai ls , may be consi d ered at t h e rat e of 5 per cent .

10 Th e q ues t i on und e rr evi ew p resent s the feat ure of

r
.

ope at i ng a mi ne on a p er t on royal t y b asi s . The account s will

Ca sh 5
B rea ker and machi ner y
‘
Ofli ce b uil d i n g
Blacksmi t h Sh op
I nsi d e cons t ru c ti on
Car and mi ne ra il -
account

Horses and mul es

Account s rec ei v ab l e

B i ll s recei v abl e

Cap i t al s toc k , co mmon

Cap i tal st oc k p re
, f erred

Coal sal es
Account s p a y ab l e

Su rpl u s
Dep reci a t i on buildi ngs and

y
on

machi ner
Supp li es
Pay roll , ou t si d e

Pay roll , i nsi d e

Sal ari es , sup eri nt endent s, et c .

Salari es , offi ce cl erks

Office exp enses

G eneral exp ense

Cl ai ms for i n u ri es j
I nsurance (exp i res J y ul 1 next )

R epa i rs t o b uildi n g s

R ep a i rs t o c onst ructi on

g
B arn exp ense

Selli n
y y
exp ense

Ro al t account

Wat er
Fu el
Ti mb er and p rops

r li h l fr m ho
diff e s g t y o t se of a co mp any owni ng mi ne b ut i n
t he
h rr
ot e r rd f esp ec t s ec o so O p erat i ons are k ep t i n a si mi l a mann er r
Th r r r
.

e l ym oya ty pa ent s are consi d e ed p a t of th e cost of

12
“

ACCOUNTS FOR M I N I NG COM P N E S A I § 37

Ope at i on r i n much t h e sa me resp ec t t h at t h e d ep reci at i on i s

p a r t of the r
Op e at i ng cost for mp any owni ng t h e mi ne ; i n
a co

conse q uence , t he moot ed q u est i on of mi ne d epreci at i on need

not b e di scu ssed t h ou g h t h e v ari

'

ous p rp
o ert i es b el ongi ng to t h e
r r
,

ope at i ng co mp any must be consi d ered as h avi ng d ep eci at ed

r r
.

M i nes are u sual l y leased for a d efini t e numb e of yea s

h r r h
,

t erefo e all cost s of const u ct i on and b ui l di ngs s ou ld be

wr i tt en off r h li f f h l ov e Sit 5e eo d r i
t e ease nce p er cent ep ec a

h q
- -
. .

ti on i m i s d i ent one i i h f n t ki e u est on , t as, or wor ng u

p p
r oses

md h
,

b een assu h l h d
e t aty ft20 ye ease a a currenc o ears .

1 1 I i
nsurance account md h b f 1 r s assu e to av e een or yea
d h x i r d Thi i
.

an t h lf f i i
at one a o ly a
t s une m p e s s p ur e n assu e
d i mi h b r hi rd
-
.

ti on , an t b g t id e ev en d et t e to cons er one t unu se

h b
-
.

R oya l i h t x es f
to t e e t ent o id ill av e een e
p pa
r as w
f h r i h h
,

b e seen b m i y a co l p ar son o tf e oya ty account wt t e t ons o

ou t p u t I r i i i l f
nt e est ng st at st ca h i h ea t ur es are s own n t e cost

r md
.

su mm h b i
ary on f 1 tf le I mas s o b t on o coa t u st e p esu e

ir
.

h h f l mi d h b di d f i
'

t at t e en t e ou t p u t o coa ne as een sp ose o S n ce

i j ri
,

no m i f
ent on o li kh b m d
coa Cl i m f
n st oc as een a e a s or n u es

id r d r i h l h
.

mi h h g t b av e een cons e e h i as an ope at ng c arge, a t ou g t

w i ll b not id r d h r i
e so cons n m i h
e e h be e ; nsur a ce , t oo ,
g t av e een so

cons id r d le e i r Th dj i
at eas t in p all d f t e a u st ng ent r es ca e or

h ld b m d b f h m l d h y
.
,

s ou e a m e e ore t e st at e ent s are co p et e ;t e are :

Pay roll , i nsi d e

To c onst r uc t i on

Car and mi ne rail account

y
-

To acc ou nt s pa ab l e

Horses and m ul es

To y ab le

j
ac c ount s p a

Cl ai ms for i n u ri es

To a c c ount s y p a ab l e

1 2 Th e f or ms of st at e ment s used are not gi vmod el

en as

r r fr
.

forms for mi ni ng co p o at i on s b ut si rnp l y as one of many o ms

t h atmi gh t b e sh own Some of t h e i t ems in t h e t ree di vi si ons h

h r
.

mig t be di ffe ent ly arranged b ut t hi s woul d not aff ect t h e ,

gen uin ene ss of t h e sol u t i on I n t h e i n come and O p erat i ng st at e

hr
- -
.

ment e e Sh own t h e gr oss earni ngs are gi v en as a final i t em .

§ 37 ACCOUN TS FOR M IN I NG COM AN E S P I 13

I N COM E AN D OPE R ATI NG ACCOUNT

XY Z COAL M I N I NG CO MPANY FO R Y E AR E N DED D E CE MB E R 3 1 , 1 91
I N CO ME
Sales of coal
O PE RATI NG E x PE N S E S
I nsi d e cos t s
Supp l i es
Less i nv en tor y 7 30
Pa roll , i nsi d e
Sa ari es , say 60 per cent . of
R ep ai rs of const ruct i on

y
B arn ex p enses
R o al t i es p ai d
Less p rep a ment y
1

Ti mb er and p rop s
Less i nv entor y
D ep reci at i on of const ruc t i on, cars , rail s ,
5 p er cent .

Total i nsi d e cost s

Ou t si d e c ost s
Pay roll , ou t si d e
Salari es , say 40 p er cent of
R ep ai rs t o b uil di n s g
D ep reci at i on of b reaker and machi ner
.

y and
b l ac ksmi t h Sh Op , 5 per cent .

Total ou t si d e exp enses

Total Opera ti n c ost s

Add selli n expenses g g
Cos t of c oal sal es

G ross ea rni n s of g mi ne

Th e acco mp anyi ng p rofi t and loss account r

b i ngs ou t as t h e
r f
- -

final i t em t h e net ea ni ngs and gi v es in t h e orm of a summary

i mport ant cost i t ems per t on of coa l h and ed

l .

PROF I T AN D LOSS ACCOUN T- -

XY Z CO AL M I N I N G CO MP AN Y , N E W Y O RK
FO R Y E AR E ND E D D E CE MBE R 3 1 , 1 91

‘
G ross ea rni n s gf ro m operati n g CRE D I TS
ac count

D E B I TS
Cl erks
’
sal a ri es
cc exp enses
G eneral expenses
Cl ai ms for i nju ri es
I nsurance used

g
D ep reci at i on offi ce b uil di n
Tota l eneral exp enses
g , 5 per cent .

14
N et earni ngs of co mp an y
14 ACCOUN S FOR T M IN I NG COM PAN I E S § 37

CO S T S UMMAR Y
( Per Ton of Coal )
Coal for ea r
out p ut
I nside Operat i n c ost s
y
gg t ons

Out si d e Op erat i n cos ts . 292

g
Total operat i ngs cos ts
Sell i n cost s
G eneral char es g 4, . 03 4

g gg
. 1 08
A gre a t e cost

Net earni n s, 28 cent s p er ton

B ALAN CE SHEE T
XY Z COAL CO MPANY
FOR Y E AR E ND E D D E CE MBE R 3 1 , 1 91
AS SE TS
Current asset s
Cas h on h and
B ill s recei v able
Accou nt s recei v ab le
Prep ai d charges

y
I nsurance u nexp i red
R o al t i es prep ai d
I nv ent ori es
Powd er on h and
Oil on h and
Prop erti es and e ui p ment
I nsid e const ruct i on
q 12
Ca r and mi ne rai l account
-
8,
Horses and mul es 7
Ti mb er and p rop s 1
Blacksmi t h Sh Op 4
B rea ker and machi nery
Ofli ce b ui l di n g 1 45 ,
5 ,

Tot al asset s
LI AB I LI TI E S AN D CA P I TAL
Current li ab ili t i es
Accou nt s p a able y
R es erve for d ep recia ti on
Ca i tal and surplu s

g
urpl u s, D ecemb er 3 1 , last
N et ea rni n s for ear y
Cap i tal st ock , common
Cap i t al st ock , p re erred f
N et wort h of comp an y
gy t lb y tb
AUD IT CE RTI F I CATE
Havi n audi ed t h e ook s and ac cou n s of t h e X Y Z C oal
y t fy t t t
Comp an for t h e fi sc a
h er eb y g tl t t ?
ear e nd ed D ec em er 3 1
h a t h e acc omp an i n
1 91 2 w
B a a nc e S h ee an
. .

t t t t t y
cer i
Profi t and LOSS Acc oun are i n accord anc e h erewi h and i n

t t
- -

ou r jud s a emen of t h e c omp an

’
ent resen a correc s
p
fi ne nci l
cond i i on and t h e O p era i ons for t h e fi sc a

t y
ear

L L
bl
PHI AD E PHI A Jan 20 , 1 9 1 3
, .
!R J B E NN E TT
. . ( OMPANY ,
Cer i fi ed Pu i c Accou nt ant
.
§ 37 ACCOUN TS FOR M I N I NG COM PAN IE S 15

Th e acco mp anyi ng b al ance sh l h w h r ifi

eet a so S o s t e ce t cat e

of the audi t or .

1 3 D ep r ec i a t i on of M i n es —
Min es b ecome d ep l et ed
r hr r h r
. .

mo e t ou gh t he exh au st i on of t he mi ne al t an t h ou gh any

ot h r r
e p ocess of d ep r eci at i on I t is t h r f r
e e o e a i w as t n g asset

r ri
.

t h at mu st necessari
ly d ecrease i n v a ue n p opo t on t o t h e l i
amoun t of mi ne al ext ac ted r
Th e sa e ap p cat on can b e r m li i
q If h i r
.

mad e t o oil or gas well s u arri es et c t e eng n ee s est imat e

’

r r rr h
.
, ,

of t h e numb e of t ons of mi ne al i n a ne are co ec t t en mi

r ri i
,

t h e v al u e of t h e unmi ned mi neal w ou e t e o g nal v al u e ld b h

p l aced o n i t l ess t h e m i ne al al r ea d y t a en ou t n ac cou n t r k O
r f mi r l i
.

of t h e unce t ai n t y as t o t h e amou nt o ne a n a mi ne

and t h e add ed exp en se i n v ol v ed i n mi ni ng i t i s di ff i cul t t o

r r h
,

d eci d e on a at e of d ep eci at i on t at wi ll accurat el y rep re

r
sent t h e av e age d ep l et i on d ur i ng t h e l if e of t h e mi ne or of

t h e t erms of t h e l ease as t h e case may b e Th e ent ir e

r h f
.
,

mat t e mu st b e b ased on est imat es w i ch mani est l y may

’

rr
,

b e in co ec t and mi sl ea din g I n t h e c ase of a l eased mi ne

r
.
,

t h e p op ort i on t h at t h e t ot al cost of t h e ou t p u t at any t i me

r
b ea s t o t h e est imat ed ou t p u t d uri ng t h e t enure of t h e l ease ,

sh oul d b e t ak en .

Whi l e in most st at es mi ni ng M p ani es ar e not co mpel l ed

t o wr i t e Off any d ep r eci at i on be fr
d ecl a in g a di vi d end i t i s
o e r
r r r r
,

consi d e ed p u d ent t o w ri t e off annu all y su ch p op o t i on of t h e

t ot a l cost l ess r esi d u al v a u e as l the ou t p u t of the mi ne b ea r s to

th e mat ed cont ent s of t h e min e
est i ese v e i s u su all y set Ar r
r r
.

up cal l ed R ese v e for E xh au st i on of M i n e or R ese ve for

r
, ,

D ep eci at i on as t h e case may b e Some comp ani es set asi d e

fr r r r
.
,

such amoun t s om yea t o yea as wi ll b e necessa y t o accumu

lat e i n cash d ur i ng t h e est i mat ed li e of t h e mi ne t h e amount s f

r
i nvest ed t h e ei n ; t h i s mi gh t b e st yl ed a R ese v e for R ep ayment r
of Cap i t al nv estmen t I Th e uest i on n at ur all y a i ses h ow ev e q r r
r r
.
, ,

wh et h e i t w oul d not b e b et t er for t h e st ockh ol d e s t o t ak e

m
am e d i v i d end s om yea t o yea fr
at h e t h an p ermi t t h e r rr r
r
money t o emain i n unuse i n t h e h an d s of t h e company Wh i l e
r r r r
.

c eat i n g t h e eserve t h e st oc kh ol d e s get t h ei i nv est ment b ack

,

at t h e t ime of d ep l et i on ; b u t i n case t h e amoun t s are p ai d ou t

 16 ACCOUNTS FOR M IN I NG COM PAN E S I § 37

in di vi d end s su ch di vi d end s wi ll cont ai n a g rd lr

a ua et urn of t he
id r d
,

i nv estment As di v i dend s are usua ll y cons e e as i ncome

r i r r
.

on ly and not as pa t nco me an d p art et u n of c ap i t a l

r f ll fr
, ,

i nvest o s S h ou l d be u y i n o med as t o t h e p l an b ei ng
f ll
o owed in h and l i ng di v i dend p ayment s Wh il e i t may seem .

good p ol i cy t o u se in t h e p ayment of di vi
all the earni ngs

r
d end s i t i s nev e t h el ess wi se and p ud ent t o eserve a eason r r r
f r
,

ab l e amount t o meet any ut ur e cont i ngenci es t h at mi gh t a i se .

A C T UA L R E P O R T O F A MI N I N G C O MP A N Y

14 In ord r e r
t o ill u st rfl d m
b i e y , t h e st yl e
at e; r an anne of

r ri l r r f ll i
.

p ep a ng an annu a ep o t and st at ement t h e o ow ng p g

a es

fr m h A r f T h B lm D l m
,

o t e nnua lR ep o t o t he onop a e ont ev e op ent

Comp any are u sed , b y p ermi ssi on :

E LE VE N TH A N N UA L RE POR T

TO N O PAH B E L MO N T D E VE L O PME NT CO MPAN Y

PHIL AD E L PHI A, Ap ril 1 5, 1 91 4

To THE STOCKHOLDE R S OF THE TON O PAH B E L MO N T D E VE L O PME NT

CO MPANY :

y
st at ement s h erei n su b mi t t ed , as oll ows :
,

f f
Th e d et ail s and resu l t s of Op erat i ons on y ou r p ropert i es for t h e fiscal
yea r end ed Feb ru ar 2 8 1 9 1 4 , a re set ort h i n t h e fi na nci al and st a t i st i cal

I ncome acc ou n t
Comb i ned b al ance sh eet , Feb ruar 28, 1 9 1 4 y
gg
Comp ara t i v e b alance sh eet
Op era t i n exp enses of mi ne
Op era ti n exp enses of new B elmont mill
T ot al d ev el op ment w ork
g
Th e c ombi ned net ea rni n s of y ou r p rop er ti es d u ri n t h e fi scal ea r g yy
were
g
as c omp a red w i t h

y
for t h e p revi ou s ea r
Th e av era e v al u e of th e ore p rod u c ed d u ri n t h e ear, as com ared
wi t h t h e p rev i ous 4 ears, i s as f oll ows :
p g y .

1 91 4 1 91 3 1 91 2 1 91 1 1 91 0

gg
Tons shi pp ed t o mi ll
Av era e r oss v al u e p er t on

gg
Tons S hi p p ed t o smel t ers
Av era e ross v al ue p er t on
562

gg
Tot al p rod uct i on ( d ry t ons)
Av era e ross v al ue p er t on

y
Th e sal es of ore, b u lli on, c oncent rat es, et c , for t h e
wi th t h e p rev i ou s ears , w ere d i v i d ed as oll ows f . y ea r , as co mpared
§ 37 ACCOUN T S FOR M I N I N G COM PAN IE S 17

1 91 4 1 91 3 1 91 2

N umb er of ounces
Sold for
g
Avera e p er ounce
L
S I VER
N umb er of ou nces
Sol d for
g
Av era e p er ounce $ 591 $ 52 5

Les s
TOt al

assa yi n gf g
t rea t ment
rei ht and
g
c h ar es ,
ex
,

p ress . 26

Tot al recei p ts

Th e op erat i n
t h e p revi ou s 3
gy exp enses of
ears , are as
t h e mi ne for t h e fiscal
foll ow s :
y ear , co mpared wi t h

g
1 91 4 1 91 3 1 91 2 1 91 1
Mi ni n exp enses

ment
eg q
D e p r e c i a t i o n of
mi ni n ui p.

D ev e l 0 p in e n t
work

Total s
D ry t ons of ore
mi ned
Cost p er t on, i n
cl udi n g
d ep reci a
t i on and d ev el
o ment
g
h e op erat i n expenses of t h e new mill , i ncl u di n i ndi rect exp enses
g g
y f
and d ep reci ati on, as comp a red wi t h t h e p eri od d u ri n whi ch i t was operat ed
i n th e p revi ou s ea r , are as oll ows
( 7 Mo ) .

g
1 91 4 1 91 3
Op erat i n expenses
Tons t reat ed
D i rec t cost p er t on $2 560 $2 909
I ndi rect cost p er ton . 489 . 53 5

Av era
Av era
gg
Total

e
e
cost
p er ton
ext ract i on , p er cent
numb er of st a mp s dropped

Th e
cost s ,
new mill has
ap p roxi ma t el y f ym
i n i nc reased ext ract i on and l essened
alr ea d sav ed
ore t h an i t s t o tal cos t .

g
T h e net reali za t i on r om t h e Op erat i on of t h e ol d mill as a cu st om mi ll
d uri n t h e fis c al ea r w as y y
as c omp a red wi t h for t h e
Wh il e t h e net resul t s of Opera ti on of
6 mont h s p eri od of t h e p rev i ou s ea r
y g y
’
.

t h e old mill are rel at i v el u M p ort ant , i t i s consi d ered ood p oli c
c ont i nue i t s op era t i on , wi t h ou t p rofi t i f nec essar , i n ord er t o i nsu re y to
,

y
e g
i t s up keep and readi ness t o trea t B elmont ores exclusi v el i n cases of
mer ency .

I L T 234— 1 4
§ 37 ACCOUN TS FOR M IN ING COM PAN IES 19

m
g m
Th e exa i nat i on of oth erg y
i ni n p rop ert i es , w i th a v i ew t o p urch ase,
m
were m
y
m
has b een c onti nued t hr ou h ou t th e year
f Preli i na r
a d e of fift y sev en p rop er t i es of t h e one h u nd red and
-
.exa i na ti ons
or ty su b

g n f m
m

q g
mi t t ed , b u t i n nea rl all cases t h e p ri c es and ter s were p rohi b i t iv e
Sev eral were c a refu y consi d ered a ter fi nal exa i nat i on, and ne ot i a ti ons
m
.

are b ei n
g m m
y
c ond u c t ed for one wh i ch see
y s to eet all r e ui re ent s
Th ere h as b een no ch a n e i n t h e ext en t of our p rop er t si nce t h e las t
.

annu al rep ort

fg m f
E xt ract s ro
.

y y f
t h e a nnu al report of t h e G eneral Sup eri nt end ent , and a

g m gm g
ma p sh owi n t h e su r ace b ou nd ari es of our p roper t wi t h re erence to
c ont i uous p rop er t i es , are a pp end ed .

Y our ana e
efil ci ent ser vi ce g ent a a i n w i sh es to exp ress i t s ap p rec i at i on of t h e
h M
s of t h e or ani za t i on at Tonop a
B y ord er of t h e B oard of Di rect ors
and
.
ill ers .

CL YDE A HE LLE R, .

Presi d ent

COM B I N E D B ALAN CE SHEE T

TONO P AH B E LE ONT D E VEL O PME N T CO MPAN Y AND B ELE ON r M1 LL 1 N G

CO MPAN Y
FE B R UARY 28, 1 9 1 4
( MM AND MrLL R E OARD E D As ONE )

AS SE TS

f
Sh a t s, b u i l di n
Mill ers mill
g s, and mach i ner y at mi ne

17
I nvest ment s
E smeral d a Power Compan
Tonop ah Mi nes Hosp i t al Associ at i on
y
.

I nt erest 1 n sund r p at ent s y

Available asset s
Mat eri al s and sup p li es for operat i on
St ores on h and at mi ne $ 1 3 4 497 7 6
, .

St ores on ha nd at mill
1 61
Ore st oc k on h and
Ore on hand at mine
Ore on hand at mill
I n ab sorp t i on at mill
1 51

ff
Ac cou nt s rec ei v abl e
D ue rom smel ters
D ue rom sund r part i es
'
y
Cas h i n b anks

Total
Char g av ail ab l e asset s
es ai
p d in ad vance
20 ACCOUN TS FOR M I N I NG COM PAN IE S § 37

L1 AB 1 L 1 T1 E S
Ca p i t al st ock
sh a res of $1 ea ch , f y ull i ssu ed
Cu rrent li ab ili t i es
Accou nt s p a able
Unp ai d wa es
y
gg
Accrued ch a r es

Reserv e for d ep reci at i on

Of mi ne and mill eq ui p ment

f
B al ance of Speci al reserve
A t er w ri t mg d own t h e book v al ues of Tonop ah mil l and
f
of sha t s , b uil di ngs , and mach i ner a t mi ne y
Undi vi d ed p rofit s
B al ance of net i ncome av a ilable for t h e p a ment of di vi
d end s or ot h erwi se
y
Havi n
ty t au d i ed t
the b y
ooks and ac cou n t s of t h e Tono ah
ty
. 43

l
B e mon
Comp an
b y t ,
ev el o men t Comp a n
p
k ep 1 n t h e Ci
F e r uar 28 1 9 1 4 . w e h ere c er i
ty by tl fy lt t
and of t h e B e mo n
of Ph i ad e p h i a f or t h e
ha
M il i
ea r end ed
ngl
b
t h e a o v e B al an c e

WtL
.

S h eet 13 c orrec

t t
.

G E O RG E I KI N S O N CO MPA NY
bl i
.

Cer ifi ed Pu c Acc ou n an s
PHI L L
AD E PH I A . PA March 2 6. 1 9 1 4

COM PARATI VE STATE M E NT OF O PE RAT I N G E X P E N SES OF

M I N E BY M O NTHS
TON O PAH B E L MON T D E VE L O PME NT CO MPAN Y
M ARCH 1 , 1 91 3 , TO FE B R UA RY 2 8, 1 9 1 4
CO M PARAT I VE T OTALS
M ARCH 1 1 91 2 , FE B RUA RY 28, 1 9 1 3
yt yt t t
,
To

Janu ar b
F e ru ar To al s
Am oun Am ou n Amou n Per Ton
D ev elop ment di rec t
Mi ners
M uckers and t rammers . 25 1

g
Ti mb ermen and h elp ers
St op i n d i rec t
Mi ners
.

.
113

53 4
S h ov elers
Trammers . 1 58

Filli n g
Ti mb ermen and h el pers

Pi st on d ri ll s , rep ai rs and
. 662

mai nt enance
g
S t op i n d ri l l s rep ai rs and ,

w
. 046

m m
g
l
a t enanc e x ?e
St eel and Sh arp eni n q
-e
t "

r
- 9

E xp l osi v es
gy f g - 9 s
I A 3

«
n
Hoi st i n t o sur ace :
u uP s
1
r
3

g g
Au xili ar h oi st i n
Ore sort i n and l oadi n
y g
g
e s
a

Su rve i n y g
Samp l i n and assa i n

Sup eri nt end ent and Shi t f

e
s

b osses . 088
§ 37 ACCOUN TS FOR M I N I N G COM PAN IE S 21

t ltTo a s
Amoun
Mine ofiice
fg g
Sur ac e and p lant

gg
Li h t i n
Heat i n
D raya e . 01 6

of b uil di n s g
M ai nt enance and rep airs

Mai nt enance and repa i rs

of machi ne and ma c hi ne
t ools . 01 1
M aint enance and repai rs
of p i p e li nes and t a nks . 02 5
Mai nt enance and rep ai rs

Vent ilat i on
g
of rail roa d sp urs
Pu mp i n . 1 18

g
. 051
Tot al cost di rec t mi ni n
Ad mi mS t rat i on
' °

. 059

g
Taxes and i nsurance
Le al and t rav eli n
ense
g ex
1 01

020
p .

B u lli on t ax . 227
D ep reci at i on
g
1 . 087
Tot al c ost i ndi rec t mi ni n 4 94
g
.

Tot a l op erat i n c ost

g t l
Th e fi ures i n t h i s c o umn i nc u d e
t h ose for t h e 2 mon h s of 1 9 1 3 a s sh own
l
.
t t
h ose f or t h e l as 10 mon t
hs of 1 91 2 . as well as
 A CCOU N TS FOR I N SU R A N C E
COM PA N I ES
LI FE I N S U R A N C E

I N S UR A N C E C O N TR A C T S

1 I n s u r an c e i s a cont act r wh e rb e y for a st i p ul at ed con

r r r
.
,

si d e at i on , one p a ty ag ees to co mp ensat e or i nd emnify t h e

h r f j mount
'

ot le or oss on a Sp eci fi ed su b ect by

. a sp eci fi ed a .

Th e i n s u r er met imes call ed t h e u nd erw ri ter i s t he one

so

r i h
, ,

ag ee ng i t o nd emni fy Th e i n s u r ed i s t h e one t o w om t h e
r mi r r r
.

p o se u ns Th e p r em i u m i s t h e ag eed consi d e at i on
r
. .

Th e p o l i c y i s t h e wr i t t en cont ac t . Th e r i sk , or p er i l , is
t he ev ent i nsur ed again st Th e i n s u r a b l e i n t er es t i s t he
j ri h r
.

sub ect g t or i nt erest t o b e p ot ect ed .

2 Li f e i n s u r an c e i s a cont act r t o p ay a d esi gnat ed or

r
.

det ermi nab l e p e son a cert ai n sum or an annui t y i n t h e ev ent

of t h e d eat h r
of t h e p e son w h ose lif e i s i nsu ed h e e are r T r
r f
.

numer ou s st an d a d orms of lif e i n sur ance some of whi c h h av e

r r l r
,

p ov ed mo e p op u a th an ot h ers Th e poli cy p ri v il eges may

r d r
.

be enume at ed un e the s trai gh t li f e plan , and t h e endowment

-

pla n .

3 The s t r a i gh t l i f e p o l i c y i s one underwhi c t h e i nsu ed

-
h r
r r
.

p y
a s a gi v en yea l yp e m i um fo r lif e t h e cost of same d ep endi ng
r
,

on hi s age at t h e t ime of t akin g t h e cont act .

4 Th e en d o w m en t p o l i cy is one unde r whi h c rd

t h e in su e

r f r mb r f y r
.

will ecei v e t he ac e v al ue if h e li v es a ce t ai n nu e o ea s

C O P Y R I G HTC D DY
'’
I N Tl R N A I I O N A L
‘’
I I XT I O O K C O MA P NY . AL I . RI G HT . Rl l l I Vl D
 I NSURANCE COM PAN I E S § 38
ACCOUN S FOR T
and d r whi h hi h i
un e i ll r i h f lc i f h di s e rs w ece v e t e ac e v a ue e es

b f r h
e o e ir i f h
t mb r f y
e ex p U d r hi
at on o t at nu e o ears n e t s

l r mi m m i ly b hi h
.

p li y h
o c t e annu a h p e u s ust necessar e g er t an

d r h r i h li f l h y m y b m d x d r
,

un e t e st a g t e p an ; t e a e a e to e t en ov e

hi h r r r hr r m
-

th lif f h li t cy or , on at es, ov e te t er
‘

e e o e p o g e a s o

li m y h
.

F i
or 20 d m
n st ance, a h — ear
y en ow ent p o cy a av e t e p r e

mi m rr
u d b id
a h
ange i 20 y d i
to e p a ov er t e en t r e ears or ur ng

th fi e 0 r O i h r pl h li y i p y b l
r st 1 yea s . n et e an t e p o c s a a e at once

in case of d eat h .

Und er t h e en d ow ment p l an pb ecome p ai d up at a

o li ci es
rd
,

gi v en t i me w h en i f d esi e a new p ai d u p p oli cy may b e rewri t

r
-

, , ,

t en for a gi v en a mount or ot h e op t i ons t ak en ad v ant age of if

d esi rd e ; for in st ance one may elec t t o t ak e al l of the cash d ue
r rr r r
,

hi m u nd e t he c ash su -
en de p o li cy , or he may t ak e p a t cas h

and p ai d up i nsurance for a d efini t e a mount may elec t

or he
r r
-
,

to l eav e the ent i e a mount in t h e comp any and ecei ve annual

di vi d end s for a gi v en numb er of years t h ereaf t er .

ME I H O D S ‘
OF C O N D U CT I N G LI F E - I N S I L
R AN C E
C O MP A N I E S

S T OC K P LA N

5 . Th r e e ar e t hr r ee ecogni z ed met hd o s of cond uct i ng li f e

i nsurance co mp ani es : t h e s tock plan ; t h e mu tua l plan; and the

mi xed plan
r r r
.

Unde t h e s t o c k p l a n t h e Sh a eh ol d e s of t h e comp any , i t s

p r ri r
op r h
et o s , if h r mi m h r d
gu a an t ee t at t e p e u s c a ge p rov e

i d q
na e u at e ll l i m d x h
t o p ayi ll ff r h a c a s an e p en ses t ey w su e t e

l
oss I rd r m k hi r n o d he to m h r a e t s gu a an t ee goo t ey u st , t e e

f r r i d h ir m
.

o e, p ov i h b e i l
t e i l (i co p an y w t a su st ant a c ap ta n

a d di i h
t on ri b d by h li h ld r )
to t e asset s cont ut e t e p o cy o e s SO

h if d ri r h i m r h h
,

t at u ng any yea t e n sur ance cost s o e t an t ey

r i h h ll h
ec e v e d q
t ey S f d fr m hi h m k
a av e an a e u at e un o w c to a e

up h d fi i
t e Al e h k h h c en cy f h so , as t ey ta e t e c ances o su c a

h ld r r
.

l
oss , h h t e i l d
s y fi
ar e o h m y e s are ent t e to an p o ts t at a
§ 38 A C CO UN T S F OR I N S URAN CE COM PAN I E S

6 Th m i h d b i
e co p an es h k l
t at o u s ness on t e st oc p an are

hy w d d
.

ca ll d e m
p r op r i et a r y b co p an i es eca use t e are o ne an

r ll d by k h ld r h li yh ld b i g i ply
cont o e st oc o e s, t e p o c o er s e n s rn cu s

to m ers Al h h hi y m i f hi r
. t ou g t s s l rlyst e s or t s eason o
p p u a

k w
no h
n as t k l i i l d i
e st oc d h p an ,
p it i s a so es g te
n a t e non art c

r h
-

p i
a t ngpl b an d i h l i
eca u se un
p y l d d p e i ip t t e o c o ers o not art c at e

i pr fi
n o ts .

7 Th w g e t r m d d by h d
o st ron est a gu ent s a v ance t e a v ocat es

kh l d r
.

o f h t e k l st oc Th p an h i
are : mb k d e st oc o e s, av ng e ar e

a con s id bl mer a f h ir w m
e a y i
oun t o h b i t w ill
e o n one n t e u s ness,

m ana e
g i w i h ti d t rgy N l
cau t on an
y w i ll h i i i l ene ot on t e n t a

rdb l b h r r by y p i
.

cost h i
to t ut t at e can nev e
‘

e n su e e ess e an oss

bili y t d h
ex cee ig lly h rg d
t e rat e or 1 na c a e .

M UTU A L P LAN

8 Wh en t he b usi ness i s cond uc t ed on t he m u t ual p l an

r r r
.

t h e p oli cyh ol d e ceases to be a me e cust ome and b ecomes a

r
so t of p art ne mp any r Th e co may b e sai d t o b e managed for
h h
.

t he benefi t of p oli cy ol d ers exc l usi v el y I t i s t rue t h at t ey

h r r h
.

must p ay i gh e p emi ums t an on t h e st ock p lan b ut t h e

h
,

adv ocat es of t h e p l an c l ai m t at t h e u l t imat e cost wi ll b e le ss

r r
,

beca use i t wi ll b e ed u ced b y di v i d end s Th e ol de mut u al

h r h
.

comp ani es av e no C ap i t al (ove and ab ov e t ei r accumul at ed

asset s) and t h e younge comp ani es av e onl y a nomi nal r h

cap i t al .

9 Th e chi ef r
a gu ment s ad v anced by t he adv oca t e
s of

f hr
.

mut u al i nsurance are : Th e p l an i s ab solut ely sa e w e eas

h h h
,

t ey cl aim t at t h e st oc k p l an i s exp osed t o d anger s t at t he

An amend ment t o t h e la ws of t h e St at e of N ew Y ork , p as sed i n 1 85 3 ,

p rov i d ed t h at all comp ani es su b se u ent l or ani zed sh oul d h av e a cap i t al qg y g
of a t l ea st
sec u ri t i es) t o b e l od ed wi t h t h e g g
i nv est ed i n ov ernment b ond s ( or ot h er p resc ri b ed
ov ernment for t h e p rot ec t i on of poli c
Th e i ncorporat ors of mu t u al c omp ani es si nce t h en, whil e comp l
yy
h ol d ers

l n b
.

i ng wi t h t hi s law , h av e b een ab l e t o or ani z e t h ei r b usi ness on t h e mu t ual

i t h t t i t i on I n h t h u t h ori t t o
g
p a a
y pp p rO i a e c a r er res r c s su c cas es , e a .

g g
v ot e f or d i rec t ors may v est i n t h e h ol d ers of t h e ca p i t al , or t h e p o c y
hold ers ma b e i v en t h e ri h t t o v ote , or st oc kh old ers and p oli c h ol d ers
y
may h av e j oi nt cont rol .
y
 ACCOUN TS FOR I NSURAN CE COM AN E S P I § 38

mut ual comp any escap es Th e mate cost to t he

ul t i poli cy
h r h
.
.

ol d e i s or oug t , t o b e l ess, und er normal condi t i ons .

1 0 P op u l a r i t y of M u t ua l P l an —
Hw o ev er O pi ni ons

r h
.

may d i ff e as to t he meri t s of t h e t r ee syst e ms i t i s a fact

h r
,

t at t h e b ulk of t h e b u si ness h as b een t ansac t ed for a nu mber

of yea s on r t he mut ual p l an by co mp ani es o r gani z ed on t he
mut ual b asi s Th r e e was a t ime w h en t he st ock p l an was
l r r
.

exceed i ng ly o
p p u a i t i s st ill pop ul ar b ut d uri n g ecent
and

r
, ,

yea s t he l me
vo u of b usi ness d one on t h e st ock p l an h as b een

smal l as comm r ed wi t h t he v olu me t ransact ed on t he mut ual

p l an .

MI X E D P LAN

1 1 A comp any conduct ed acco di ng to t h e m i x ed m et h od r

h h
h as a cap i t al w i c i s usuall y l a ge i n ad di t i on to i t s accumu r
r
, ,

l at ed asset s I t off ers i t s insu ance on t h e parti ci pati ng plan

Th rr
. .

at i s t o say t h e p remi um c h arged usuall y co esp ond s wi t h

h r
,

t at ch a ged b y t h e mut u al comp any ; and di vi dend s are Simi

r
l arl y et ur ned t o t h e p oli cy ol d e B ut t h e comp any d oes not h r
h r
.

agree t o p ay all t h e di vi si b l e p rofi t s t o i t s p oli cy ol d e s ; i t

r r ese v es a p ort i on for t h e Sh h ld r

are o e s, wh o r f
are own e s o t he
cap i t a l st oc k Th us i t wi ll b e seen t h at th e mi d m
xe co p any
l h
.

cond u ct s ll y on t h e mu t ua p an a t ough
i t s b usin ess su b st ant i a l l
r r h
,

onl y a p a t of t h e p ofi t s go to p oli cy ol d ers and al t h ough t h e

r
,

gov e n m en t i s l ik e t h at of t h e st o ck co m n
p y
a .

1 2 Th e d ef enders of t he mi xed syst e m clai m t h e foll owi ng

r r
.

ad v ant ages : Th e gov e nment and cont ol are as d efini t e and

secur e as in t h e case of t h e st oc k comp any Th e zeal of t he

r r f r
.

S h a eh o l ders wi ll insu f l m gm h
e so su ccess u a ana e ent t at a te
r
ap p op r a t ng a i i m d r r f r fi
o e at e h y i ll b bl
p e cen t age o p o ts t e w e a e

t o p ay p o li h l d r
cy o l di i d d ld
e s as ar ge rl m l v en s as cou a p u e y ut ua

co mp an y Th l r m e f ai gl
e a k i d
ount od di cap ta st oc p rov es a

li yh l d r
.

t i onal secur t i y f or p o c o e s .
§ 38 ACCOUN S FOR T I NSURAN CE COMPAN ES I
I N S UR AN CE R E SE R VE

1 3 Th e r es e r v e i s t he a mount q
re ui red b y law for an

h h
.

i nsurance mp any t o av e on and in sub stant i al asset s t o

co

enab le t h e comm ny t o car y out i t s cont ac t s wi t p oli cy r r h

hold ers As t h e comp any ent ers i nt o cont ac ts w e eb y i t
. r hr
agrees t o p ay to t h e i nsured d efini t e amount s at d eat h or at
cert ai n t imes , as at t h e end of , say , 1 0 or 20 years, i t must set

asi d e for li gati on such amount s as wi ll e ual sai d

each ob q
ob l igat i on w en i t mat u es h r
Th e annui t i es set asi de draw
r
.

i nt e est and are usually i nv est ed in good securi t i es Th e l aw

q
.

re ui r es t hat t h e reserves Sh all b e fi gur ed at conservat i v e rat es

hr
,

ei t e 3 or 3 5 p er cent accordi ng t o act uari es mort ali t y t ab les

’
.
,

and t h e l ower t h e rat e t h e great er t h e amount to b e reserved

each year h
D eat cl aims accordi ng t o t h e mort ali t y t ab les
r h h
.
, ,

av e age so many per year to t h e t ousand ; t erefore t h e com

r h
,

p a n y m u st so arran g e i t s i nc ome a nd eser v es as t o p y

a t ese

cl ai ms and st ill p rovi d e for expenses di vi d end s and Sur p l us

rfi
, ,

p o ts .

N ew ob li gat i ons are constant ly bei ng ent ered i nt o and a

cont i n uous mi um money i s bei ng recei v ed so i t i s

flow of p re

h
,

impossi b l e at any one t ime t o say h ow muc t h e reserve amount s

to r
Th e b u d en of keep in g t h e reser ve i n condi t i on d ev olv es
rr
.

upon t h e act u ari al d ep ar t ment and i n est i mat i ng co ec t

r
,

amount s ev ery p oli cy i ssu ed must be consi dered and av e aged

r h h
.

Th e memb e s of t i s dep ar t ment estirnat e t at su ch a port i on

of t h e annual p emi um on eac p ol i cyrm u st b e set as i d e as wil l h
q
b e re ui red t o accumulat e t h e face v al ue of t h e p oli cy at t h e
est imat ed d ue d at e R eserves as su ch are non ledger ac counts
h h h
-
.
, , .

t at i s t ey d o not ap p ear as suc i n t h e l ed ger b ut are so

r h
, ,

ecord ed i n t h e annual st at ement s t o t h e v ari ous st at es i n w i ch

a
cornp any t ransact s b usiness .
 ACCOUNTS FOR INSURAN CE COM P N E S A I § 38

B US I N E S S O F A C O MP A N Y

ME T H O D OF H A N D LI N G

14 Th e success of mp any d epend s on t h e

a li f e i nsurance co
“

f r fr
-
.

amount of und s i t can Ob t ai n as p emi ums om app li cant s for

i nsurance and t h e succ ess ul i nv estment of t ese und s Ap p li f h f

h h
.

cat i ons ar e ca ed ll b u s i n es s as i t is on t ese ap p li cat i ons t at

p o i ciles ar e i ssu ed
h h
.

Th e course of t h e b usi ness as i t goes t roug the v ar i ous

worki ngs of t h e i nsu rance offi ce is as f ll

o ow s : Cont ract s are

first h
mad e wi t agent s wh o secu e t h e b usi ness and t h e Si gnat u e r r
of t h e ap p li cant s Wh en t h e ap p li cat i on i s ecei v ed at t h e r
h
.

ead offi ce an acknow l ed gment i s mad e t o t h e agent wh o sent

r r h h
,

it . For ev e y ap p li cat i on ecei v ed a card i s mad e out on w i c ,

i s wri t t en t h e name of app li cant d at e of ap p li cat i on d at e

r
, ,

ecei v ed and t h e name of sol i ci t in g agent Th e b ack of t h e

r r
.
,

car d p ovi d es S p ace for i nf ormat i on conce ni ng t h e medi cal

exami nat i on Th e app li cat i on i s t en d eli v e ed t o t h e medi cal h r

h r h
.

d ep ar t ment w ere i t i s p assed on b y t h e d ep a tment ead s

Th r rr
.
,

i s card i s kep t i n a fil e and one can always t ell b y efe i ng

j If
,

t o i t ust h ow far t h e ap p li cat i on h as gone t h e medi ca l

r h r
.

d ep ar tment ap prov es t h e ap p li cat i on a cl e k of t i s d ep a tment

r r
,

st ammt h e card as ap p ov ed on a ce t ai n d at e Th e ap p li ca
h r hr
.

t i on i s t en d eli v ered t o t h e account in g d ep a t ment w e e

j r
,

several record s must b e ad ust ed b efo e i t i s per manent l y fi l ed .

A CCO UN TI N G ME TH O D S

1 5 Th e li f e i nsurance co mp any se ll s b ut one co mmodi t y

r i h r hi h i
-
. ,

p i d
ot ect on aga nst id i f eat or acc ent , n et ur n or w c t
i
rece v es fr m i r m o i i h f m f h
t s p at ons co p ensat on n t e or o c as

p r mi m Th b kk i i h r f r i i l l
e u s e oo eep ng s, t e e o e, p r n c p a y con

d i h h r rdi f h r i d m
.

cerne w t t e Theco ng o cas ece p t s an p ay ent s e

q i d m k hi r mi m m
.

i d i
nsur e s re u re d to a e s p e u p y
a ent s at st at e

p eri d b
o s if h utrd i i m r t h hm ey are ov e ue t s cu st o a y not t o S ow t e

h l d r Of r h rd
,

in t e e ge mi m i
account s . cou se t e ov e ue p re u s
 38ACCOUN TS FOR IN SURAN CE COM PAN I E S
di l d i
sc ose h li yh l d r l dg r
n t by h
e b p o c o e s
’
e e accoun t s t e a sence

o f an
y di d h f i
cre l y p r
t m ianm m i l lty e a ur e t o pa a e u aut o at ca

l h
ap ses li td e l h i p o c yparn i I h cance s t e n surance ot ec t on n t e

h h m y i li b l f p ym f d h
.

case o f d eat t e co p an s a e or a ent o a eat

r d h b k i l ym i
,
.

l im b
c a h i ut t at s not ent e e on t e oo s u nt p a ent s

h hi g b h r i
,

m d a e , so t at not i l d di h n ut cas t an sact ons are nc u e nt e

account s .

Th e b ook s of accoun t u sed d epend v ery largely on t he

r r
ch a act e and sc op e of t he t r an sac t i ons i nv olv ed , t h h oug

t h e on es fr q l d h h b
most e u ent y u se are t e cas ook th j e l our na

h l d r hi h i h f d m Th r
, ,

and t e e ge l b w c s t e un a ent a ook e e are,

r mr b i di r r rd h hi h h
.
,

h ow ev e nu e ou s su s a y eco s , eac of w c i as ts
f f mi h r i r i f f
,

unc t onsi t o p er or n t e eg st at on o act s and all of t h ese

are necessary in sup p lyi ng t h e dat a for accuracy of t he led ger
account s .

1 6 Th e ca s h j ou r n a l or c a s h b o ok i s t h e prin ci p al
r hr r
.
, ,

b oo k u sed in reco di ng ca s ecei p t s . I t usual l y h as a numb e

t h e home
’
of su b si di ari es known fii cash book, t h e
’
as -
o ce agents

cash book t h e f orei gn cas h book and the cash di sbursements book
r h r
-
.
, ,

All money for p emi ums p ai d t o t h e ome offi ce i s ent e ed i n

r r
.

t h e h ome offi c e cash b ook ; moneys ecei v ed f om agent s for p re

r
-

mi u ms p ai d b y p oli cyh ol d e s t o t h e agent s i nst ead of dir ect t o

t h e comp any are ent e ed i n t h e agent s cas b ook r
Th e fo ei gn
’
h r
r r r
.

cash b oo k i s u sed t o eco d t h e ecei p t of mon eys from p oli cy

h rr
ol d e s esi di ng i n t h e di st r i c t s se v ed b y t h e comp any s b anc r ’
r h
offi ces r r
Th e cas h di sb ur sement s boo k eco d s al l t h e cas p ay h
h rq
-
.

ment s t at t h e i nsurance comp any i s e ui red t o make Th e

r l f h b i di r h b k r rd d i
.

esu ts o t e su s a y cas oo s ar e eco e at g v en

p e ri d i h
o s r l h j l d f m he
n t e gene a d cas our na an ro t nce p ost e to
th l d r
e e E hge hb kmyb i l i f m h ac cas oo a e S rnp e n or or av e

mr rdi h f h i i ll d
.

nu l m
e ou s co u i n s, acco ng t o t e unc t ons t at t s ca e

up on t o rf m I i h r i f m i h
p e or t s t e p act ce o co p an es owev er , to
rr h m i l m f m
.
,

a ange t e n co u nar or .

1 7 Th f li f i
e g en e r a l m y l ed g er o a e nsur ance co p an con

r l d mi l h f mb i
-

i
t a ns t h i e v ar ou s h
ea an no na ac count s , t e or e ng t e

sam e ash f y rdi l d r T h i l l d r

t at o an o nary e ge o t e ge rer a e ge are

d h f
.

p ost e i t f h i l m
e oot ngs o ll h p t e v ar ou s co u ns as w e as t e se arat e
 ACCOUN TS FOR INSURAN CE COM PAN E S I § 38

ent ri es from t h e h b k F m th
cas oo ro ese account s ar e co mpi led
q i d t di ff
.

t h e resul t s and st at e m ent s re u re a erent p eri od s,

month l y ,

ledgers known t h e poli cyholders ledgers ,

’
Sep arat e as are k ep t
r rdi h h ld hw
,

for eco ng t e account s of p o ilcy o ers Pract i ce h as s o n

h ihr h l l hi
.

t at e t e t e oose eaf or car d syst em i s b est adap t ed to t s

ri l d y ih
-

p a t cu ar ut ; e t er syst e m permi t s th e ad di t i on or re moval

o f m wi h
na i es t out nconveni ence .

1 8 A d upli cat e set of poli cy ol de s l edgers i s kep t in t h e

. h r ’

act uarial d ep artment and cont ai ns t h e same i nf ormati on cl assi

r
fi ed acco di ng t o t yp es of poli ci es hi s i s necessary i n order T
h h hr
.
,

t at t h e act uari es may b e sure t at t e e i s mai nt ai ned at all

r h
t imes a p oper mat emat i ca l reserve agai nst t h e v ari ous cl asses
of p oli ci es I
nd eed i t i s t h e d ut y of t h e ac t uarial d ep artment

h
.

t o prot ect b ot t h e i nsurance comp any and t h e i nsured b y

t h e st u dy of st at i st i cs and of mort ali t y t ab l es and of act ual
f Th h
,

act s .i s i nf ormati on i s a prot ect i on bot t o t h e com ny m

and t o t h e i nsured because i t enab l es t h e comp any t o car ry
,

t h e ri sk of t h e i nsured at t he lowest possi b l e pri ce consi st ent

I9 A g en c y R ec o r d s —
Th e b usi ness of a li f
e insurance

h h
-
.

co mpany i s most ly t roug i t s agent s wh o are com

ob t ai ned ,

p e n sat ed b y salari es an d comm i ssi ons for t h e ser v i ces rend ered
q h
.

Th e agents are re ui red t o make regul ar report s t o t h e ome

offi ce of p oli ci es wri t t en p remi ums coll ect ed renewals l ap ses

h hr
, , , , ,

d eat s and all ot e i nf ormat i on necessary for t h e comp any

V h
.
,

ari ous agenci es ar e l ocat ed t hr oug ou t t h e di ff erent st at es at

t h e pri nci p al cent ers and t ese i n t ur n av e t h ei local subh , , h r

agenci es in p l aces of l ess i mport ance Al l wri t in g of ap p li ca .

t i ons renewal s coll ect i on of premi um p ayment s are at tended

h
, ,

t o i n t h e di st ri ct agency It is ob vi ous, t en , t hat credi t

h
.

account s must be kep t at eac agency for t h e v ari ous p ersons

insured , i n orde rh t at t he agency an d its sub agenci es may keep

i n touch at all t imes wi t t h e p oli cy ol ders h h and make coll ect i ons

at proper t imes i n accord ance wi t h t h e p oli cy cont ract s .

20 L i a b i l i t i es
. Reser ves deat cl ai ms and mat ured
—
, h ,

endowment s not set t led must b e li st ed as li abili t i es Di vi d ends .

§ 38 ACCO UN TS FOR IN SURAN CE COM PAN E S I
f
le t w i t h h m y(h t e co p y
an i r t f b ke r )M p an act ng as a so t o an e

m ust a sol b h li b i li
e s own as a h m y i im m y a t y, as t e co p an s S a

d ep os i ry f to h b fi orf t e d Wh i r
ene t o the assure en n t e est on

hy r
.

p o li y l
c i
oans ll d i d
s co ec t e h d f n a v ance , at t e en o eac ea a

ce r i ri i
ta n po t on r d h i i li bi i y d m
s yet unea ne ence t s a a l t an u st

rl k d M di l f d x h h
,

not b
e ov e oo e e cad ees ue, ta es t at av e accru e

h r li b ili i Th
.
,

an d d
sun r y b i ll h d s i
t at are u e con st t ut e ot e a t es ese

f ll d b h i l k d h b l rl
.

are o ow e y t e cap ta st oc an t e a ance or su p us

rl r r m f di i d d h
.

Th e su p u s ac cou nt h ep esent s t e su o v en s t at are

ap p o r i d h ri
t one to t li i d h
e va m ous ri p o c es , an t e a oun t acc u ng

to t h kh ld r
e st oc I m o l lif i
e s m n i ll ut u a e nsurance co p an es, a

rl bl li yh l d r
-
.

t h e su p us h e ongs d i i l d d i
to t e h p o c o e s an s nc u e n t e

i
v ar ous f d un accou nt s

Pr mi m
.

e u id i d s p a f d d if
n a v ance o i ue at e, an y , con st t ut e a

li b i li
a ty f h o m t If h i d di b f r hi f ll
e co n
p y
a t e n sur e es e o e s u

r mi m i i d h m d d
.

annu a l p e u s p a h id t e co p an y e u ct s t e un p a

r i fr m h l im h h r h d h ld r mi m b
,

p o t on o t e c a ; on t e ot e an s ou a p e u e

r f
,

p a id i d
n a v ance t h m y l d h e co d h p an hi wou av e to e un , ence t s

a mount i s a li ab ili t y .

21 A i k
t r i a l b al an c e m hl O k s f ta en ont y ne t a en as o

mb r 3 1 i hri
. .

D ece e f ll w Th i m
s as o o l ifi d
s e te s t e e n are c ass e

d r i
.
,

un e m di b
nco me, s urse d li b i li i C h
ent s , asset s , an a t es as

Pr mi m R l A r r m fr m r
.

e u enew a s h iccoun t s w l ep esent s t e n co e o en e a

p r me i m u F s i r Y P r stm i m A ear s r’
r h e u s ccou nt ep esent s t e

h fir r
.

i
nco m b i
e on f u s ness y l y orT h t m e f h st ea on e su o t ese

ri
.

t w io ll
s usu a h b i f y t x i
e b h
as s or ta at on y t e va ou s st at es

ri i r hm l R
.

Th e va ou s nt e est x l i accou nt s e p a n t e se v es ent

m fr m r
.

R i d i i
ece v e s nco l b e bl o M i ll ent a s y su eas e sce an eous

A r r
.

ccount i s
p a su s l l
ense y i i
accoun t m u su a ep esent ng nc o e

(r enew a l p r mi m ) h l d e u i i s r p r dj m i i e aw a t ng p o e a u st ent ; t s a

r i pl f
est n g ace h r i d
or i h
cas l r f di ece ve w t ou t et t e s o a v ce

All di i d d li d h
.

v en s ap p h e f id
to t i e p ur c as e o p a up nsur anc e

di b r m
-

are b h ot i an m d nc o e an h m m
a s u se ent ; as t e sa e a ou nt

ap p r
ea si i h r
n e t h i e i m r
case , i i t l s s o e a st at st ca accou nt

t h an one hwl to S i
o Th M oss or l Li f d T
ga n e ut ua e an r ust

A r r fr m
.

ccoun t i
ep esent s ld r ece p t s o an o account once

c h r d ff
a ge o .
10
'

ACCOUN TS FOR I N SURAN CE COM PAN IE S § 38

TRI AL B ALANCE
MODE RN LI FE I N S U RA N CE COMPANY
D E CE MB E R 3 1 . 1 91 4
I N COME D ebi ts
Cash p remi um renewals
y
Fi rst ea r s p remi ums
’

y
I nterest on mort a es
I nt erest on b ond s
gg
I nt erest on not es and poli c loans

R ent rec ei v ed
Di v i d end s app li ed t o purchas e of paid up -

i nsu rance
M od ern Life and Trust Compan
Mi scell aneou s accou nt s
y
D I S B URSE ME N TS
Cash su rrend er v al u es
y
-

D i v i d end s pai d poli c h old ers

D ea t h cl ai ms
M at u red end owment s
g y
Sup p l ement a r cont ract s not i nv olv i n li e
cont i n enc i es , p ai d
g f
Di v id end s ap p li ed t o p urch ase of p ai d up -

i nsu rance
renewal p remi ums
py
Di vi d ends app li ed a
Premi um not es , l ap se‘

gg
Ad v ert isi n g
A ent s commi ssi ons, fi rst ea r
’
y
A ent s commi ssi ons, renewals
yf
’

Ac t uar ees
Commu ted renewal commi ssi ons

D ep art ment ees f

Di v i d end s t o st oc kh ol d ers

Fees for c oll ect i on

Furnrt ure and fi xt ures
I ncid ent als

g f
I nsp ect i on of ri sks
Le al ees
Medi cal examinati on

gg g
M u ni ci p al and st a te li censes
Post a e and exp ressa e
Pri nt i n and s tat i onery
Rent
R ei nsurance on renewal s
Rei nsurance fi rst ea r
Sal ari es t o mana ers
yg
Salari es t o cl erks
Salari es and all owances t o a g
ent s
Telegra
p
Taxes , t l s t ear
Taxes , renewal s
y
and tel ep h one

Taxes, capi t al st ock

Taxes , real est at e

g
Taxes , mi scell aneous
Trav eli n expenses
B ad deb ts
§ 38 ACCOUN S FOR T IN SURAN CE COM P N E S A I
g ’
A ent s acc ounts
B ond s
AS SE TS

Cash i n h ome b ank

Mort
yg
Cash i n ou t si d e banks
Poli c l oans
a es on real est at e
D ue rom offi cers
y
'

Premi um not es , first ear

Premi um not es, renewal s
N ort h ern offi ce, cash
LI AB ILI TI E S
os
p
f
h D an ort h , ees unp ai d f
Prol and 1 0 $ s account (i ncl u di n g ca p i t al
0 00 0 0

22 Th e di sbu rsement s are u su a lly c l assified as mount s A

r r r
.

Pai d Poli cy Hol de s and Ot h e D i sb u sement s Under

P
Amount s ai d Poli cy Hol d e s i s i nc lu ded r
. .

m
a ount s p ai d for t h e
r
su r en d er of l mount s p ai d as di v i d end s d eat c l aims
p o i ci es a h
r
, , ,

m at ured end owment s Supp l ement ary Cont act s i s an account

r r
.

rep esent i ng amount s p ai d on in st alment p oli ci es ; t h at i s w h e e

r r r
,

t he p ayment of a d eat h c l ai m i s Sp r ead ov e a t e m of yea s

Prem V r r r
.

i ums N ot es oi d ed b y Lap se ep esent all not es ch a ged

hr
Off w e e t h e assu red f
ai l ed t o p ay t h ei r p emi ums Und e r r
r
.

D i sb ursement s are ot h e i t ems b ut t h e t i t les in most cases

h
,

exp l ain t emselv es Th e accoun t s S h ow exp endi t ure or p ay

r r
.

ment s t o soli ci t ing agent s amount s p ai d st ockh ol de s sala i es

r r f f
, ,

t o offi cers and Cl e k s d ep a t ment ees l egal an d i nsp ect i on ees

r r r
, , ,

amoun t s p ai d t o medi c al examin e s gene al exp ense ch a ges

r r
, ,

v ari ou s amoun t s p ai d for t axes ; t h e sum ep esent s all exp enses

h
ou t si de of t ose p ai d as b enefi t s t o p ol i cyh ol d e s r .

23 . M ort gage loans , as a r ul e , r ep resent t h e great est p ort i on

of t he asset s of a co mp any I nsur ance comp ani es are not

r r
.

all owed t o i nv est in mo t gages h ence t h e mo t gage

sec ond

r r r
,

account ep esent s a good i nv est ment Poli cy loan s epr esent .

money l oaned on t h e secu ri t y of t h e comp an y s p oli ci es Th e ’

r r r
.

amoun t of l oan on a p oli cy p lu s in t e est sh oul d n ot b e g eat e

h r r
t an t h e ese v e b el ongi ng t o i t nt e est on p oli cy l oans i s I r
hr
.

u su al ly col l ect ed i n adv ance ot e wi se t h e c omp an y w ou l d

r r h
,

lose b y b or owe s lap si ng t ei r p oli ci es .

I L T 234— 1 5
12 ACCOUN TS FOR IN SURAN CE COMPANI E S §438
24 Th . ri Pr mi m N Ae va ou s r r e u ot es ccount s ep ese nt per
sona l i b
not es h g d v en d d miy td e assu r e an are not a tte as as set s

h r r
,

l
u n ess t e i d p li i
ese v e i i f hon sa o c es s n excess o t e not es

i d
rece v e Thi i r wi h h g s s t ue l I h t t e a ent s
’
ac count s a so n t e

r
. .

m f h b
’
st at e pp d d
ent a l p i en g e on y a o t on o a ent s accoun t as een

r i i dd
,

d d d
e uct e dmi d
as not al h gh h tte a t ou t e p act c e s to e uct

hi w r i ll y b
,

t h wh l
e m o e a I ou nt m n t s ay a co p an y p ac t ca est a

r r f h
.

li hs es a sec et rese v e , asm p i d ost o t ese ac cou n t s are a at a

l rd
ate F i
at e fix d l
ur n t ure ,
p i d m i d t ures , an su p es are not a t te
i w l d b pr h i li q i d i
.
,

as t ou i ll imp e ib l ac t c a y oss e t o u se t ese n u at on

of p o i c l
y c ai l ms .

25 S a m p l e S t a t em en t s mp anyi ng st at ement —
Th e ac co

r
sh ow s t h e manne of p resent i ng i n ormat i on for pu b li cat i on It f
r r
.

sh ow s t h e ec ei p t s and di sb u sement s for t h e year as w ell as

t h e as set s and li abi l i t i es Th e au di t o s ep o t i s also at t ac ed

. r r r
’
h .

RE VE N UE ACCOUN T
Y E AR E N D I N G D E CE MB E R 3 1 , 1 91 3
R E CE I PTS
Premi ums
I nt erest and rent s
y
:

Su p p l ement ar cont ract s

D I SB U RS E ME N TS
D ea t h cl ai ms l ess
, rei nsu ranc e
M at u red end owment s
Surp l u s ret urned t o
Surrend er and cance
l ess
,

y rei nsuranc e
li c h ol d ers i n di vi d end s
ed p oli ci es

y
Tot al p a ment s t o poli c h ol d ers
Clai ms u nd er sup p l ement ar cont ract s not i nv ol v i n li e
yy '

g f
g
c ont i n enci es
Commi ssi ons and a enc exp enses g y
M ed i cal exa mi nat i ons and i nsp ec t i on of risks
g f y
I nv est i at i on of p oli c c lai ms and l e al exp enses g y
Sal ari es of o fi cers and h ome offi ce emp l o es
g
-

g
R ent s , h ome offi ce and a enci es

g gf
Ad v ert i si n , p ri nt i n , st a t i oner , post a e, t el ep h one, t el e y g
rap h , ex p ress , and u rni t u re
Fed eral and ot h er t a xes , ees , and li c enses
All ot h er i nsu rance exp enses
f
E xpenses on real est a t e
N et exp enses of mort a e l oan a enci es gg -
g
P rofi t and l oss
j
D ec rease b y ad u st ment i n b ook v alu e of l ed er asset s
E x cess i ncome ov er di sb u rsement s, i ncrease i n l ed er assets
g g
§ 38 ACCOUN S FOR T I NSURAN CE COM PAN IE S
B ALAN CE S HE E T

M ort
P ol i c
gy ga el oans
and p rem i um l oans
A S S E TS

Real est at e
R ail road and ot h er b ond s , mark et v al ue
R ail road st oc ks , marke t v al u e
Cas h i n b ank s , at i n terest

f
Cash i n Offi ce
N et d e erred and u ncoll ec t ed p remi u ms
I nt erest d u e and accrued
G ross assets

LI AB I LI TI E S

y
R eser ve, M assach u set t s
P oli c cl ai ms awa i t i n p roo s , g f
st and ard
i n course of

y
set tl emen t ,
Poli c c l ai ms of 1 9 1 3 , rep ort ed t o Comp an i n 1 9 1 4
S u p p l ement ar c ont ract sy y
Unp ai d di v i d end s
f
A c cu mul at ed d i v i d end u nd , su b ec t t o i nsu red s ord er
’

D i v i d end s ap p ort i oned i n 1 9 1 3 , p a abl e fi rst 5 mont h s

j y
of 1 9 1 4
y
Fed eral a nd st a t e t a xes , p a ab l e i n 1 9 1 4 , est i mat ed
Premi u ms, i nt eres t , p ai d i n ad v ance
Unp ai d ex p enses , bill s not p resen t ed
Su rp l u s , D ecemb er 3 1 , 1 9 1 3

I nsu rance f
New i nsu rance pai d for i n
In orce, p ol i c1 es ,
p ol i ci es ,

tf t b t y b y
L SPR IN G FI E
Th e recei p s, d i s urse men s , and al anc es o t h e
D. MA SS
1 91 4 .

as sa c h u s ett s
anu a 21 , .

y
l f
tf t b t f l y t
M u ua Li e I nsur an c e Comp a n f or t h e ear 1 9 1 3 , as sh ow n
t h e oregoi ng st a emen , h av e e en c are u l a u di ed u nd er o u r
b
y
su p er i s ron and
y o
y é
u nd t o b e c orr ec , and w e h av e p e rsonall
ex ami ned and v er ifi ed t h e Corn an s sec u i t i es
’

t
'
.

W } .
G R O E S B E CK
S MAR TI N
.
Audi ors .

26 A n n u a l R ep o r t t o S t a t e —
E ach i nsur an ce co mp an y
r q ir d rh r r ih h
.

is e u e t o fil e a co mp e ensi v e ann u al ep o t w t t e

i nsur ance d ep a t ment of r ev e r y st at e n i hi h i rri b i

w c t ca es on us

ness , and t ese epo t s h r r ar e o f cou se su r bj rfl ect to ca e u ser u

t i ny b y t he v ari ou s i nsu r ance commi i r Th r ss one s e ep ort

d r q ir
.

forrns are ab out t he same in all st at es an h i e u e an ex aust v e

r
desc i p t i on of t h e comp an y s b u s ness
’
i i l di dnc u ng asset s an

r r
,

li ab i li t i es i ncome xp endi t ures nv est ent s ese v es

an d e i m
r r rr
, , , ,

insu an c e i sk s d eat h cl aims ca i ed an d p ai d c l as ses of p oli ci es

r rr
, , ,

and c l assifi cat i ons of i sk s ca i ed et c

f rq P
.
,

Th e orm e uir ed i n ennsy lv ani a i s a b ook C ont ai nin g

44 p ages 1 1 1
; i h
nc es b y 1 6 i nch es . r
E v e y p age h as t o b e u sed
14 ACCOUNTS FOR I N SURAN CE COM PAN IE S § 38
to imp i f rm i 1 i b
art i h n o m f at on ; on a
p ge s to e g v en t e na es o

th ffi r
e o d di r I rd r r i d eifi i f rm
ce s an r ec t o s n o e t o p ov e sp c c n o a

r d r p r
.

ti i
on on p g 2 1 0 f hi
nsu ance account s an e o t s, a es to o t s

r p r r pr d d i Fi g l ( ) (i )
e o t are e o u ce n . a to .

FI R E m S U R AN C E
27 F i r e i n s u r an c e i s a cont act r t o p ay al l , or a ce r t ain
r h r
.

p a t of , any d amage t may b e done b y fir e t o an in su ed

at

p r r ope ty i r
l k e in su ance comp ani es or t h e comp a i es t h at n
hi r r r r
-
.
,

gi v e t s p ot ect i on are o gani zed i n t h e same mann e as ot h e

b u sin ess r
corpo at i ons , t h ou g h un de r sp eci a l st at e in su r ance

l aws .

28 C l as s es of R i sk s Fi r e i nsu r ance co mp ani es h av e

ri k r r hr
- -
. .

all s s c ar efu lly c l as si fi ed an d t h e at e of p emi um c a ged

r
,

d ep en d s la gely on t h e c l assifi cat i ons Cl assifi cat i on i s b ased

r r
.

on the l oc at i on condi t i on of su roundi n g b ui l di n gs p oximi t y

r r r f
, ,

t o h az a dou s i sk s , const uct i on and u se of b u i l di ng urn i shi n g

ri ri r
, ,

goo d s h an dl ed t h e e n, p u b li c and p v at e fi re p ot ect i on , et c

rf r
.

Th e mpani es h av e each ci t y ca e u lly su

co veyed and map ped

r
so t h at ev e y l ocat i on and i sk i s not onl y c l ea ly set o t in i ts r r frh
r
map s b ut accu at ely su v eyed insp ect ed an d desc i b ed om r r fr
f r rr
, ,

t op t o b ot t om i nc lu di ng oun d at i on oof su oundi ngs an d

r h r
, , , ,

al l mo al az a d s .

29 P r em i u m s , R es er v e s , an d R e i ns u r a n ce —
Th e
r r
.

i nsurance p emi ums ecei v ed b y t h e comp any for fire r i sk s i s

g en e all y p ar
i d i n ad v anc e i n st ea d of at st at ed p eri od s as in

Thi r mi m r h f ll m
,

a lif e in surance co mp any s p e u cov e s t e u t er

h h ri i f 5y r r l d
-
.

of t h e p oli cy , w et 3e t s or l or ea s , or p e p et u a an

hrfr id r d
, , ,

t e e o e cannot a ll b i
e consf h e e as earn n gs, or t e current

y reaT h at p r i h h lr d b
o t on t r d rdi
at as a ea y een ea ne acco ng
f r id r d r di m f h
.
,

tom h i ont s n o ce , m b ay e cons e e as ea ne n co e or t e

p ri d hi l
e o w e th r m i d rm
e e b h ld
a n r r f e i u st e e as a ese ve or p oss

d ri r h h li h
,

b le fi re losses u h ng t e yea s t at t e p o cy as y e t to run

r l d x ir d h r f
.

I f the p o l i c y i f
s or 1 yea h on y an e p es at t e en t e eo .
§ 38 S F
ACCOUNT O R I N S U R A N C E C O M PA N IE S 1 5

th e mi m r i d th r n wi ll b
p re u ece v e n id r d ntir ly e eo e co s e e as e e

ea rn d d in l d d
e an r n f c u h y r b e if h p l i y
as ev e ue or t e ea ; ut t e o c

(b i i geg nn n y J n 3 0 f
on , sa h nt y r ) ntin u r e o t e curre ea co u es ov e

i th w l d b l n
,

a t rm f 3 y r th n
e o ea s , ni n
e f h one s x -
ou e o g t o ear gs o t e

fir t s r d fi
y ea i th an rri d n rn d r r
ve s x m t s ca e as u ea e ese ve to ee

f t r l
-

u u e osses Th n pir d pr mi m in h
eu i n id r d
ex e e u eac case s co s e e

n y f h p li y ith r in m nth
.

in pr p rti n o o h o to t e curre c o t e o c e e o s

or d y a s

l th t h r bl g i n t
.

Th fi e re osses h y r a oc cur eac ea are c a gea e a a s

th ni n f th t y r
e ear gs d h b l n
or r pr nt h
a ea an t e a a ce e ese s t e net

il b l f d i t ib ti n in h
,

ear ni n f h gs mp ny
o t e co a as av a a e or s r u o t e

f m f di i d d
or o Th r v r en r q i r m nt s rn d e ese ve e u e e s are gov e e

by h l ri l
.

t f
e h t t aw s o d n eac r m t nt
s a e an ecessa y va y t o so e ex e

It m t b tri tly m i t in d
.

us e s h In
c n C mmi i n a n a e or t e sur a ce o ss o er

w il l mm ‘
p ly pr
ro d in d h fl i
oc ee f h mp ny to w up t e a a rs o t e co a

ly i l r q i th t h In n C m
.

Th P
“
e enns v an a aw s e u re a t e sur a ce o

mi i n r h ll
ss o e l lt h i rn r r f
s a ca cu a e t e re n su a ce ese v e or unex

ri k b y t ki
-

p i d fi re re 50 s s, nt f h pr mi m a ll ng p er ce o t e e u s on a

k l
. .

une g i d ri
p t h
re t h s s t h n 1 y r a d av e ess a ea to run , an a p ro

t
ra a on a ll pr mi m i d e i k th t h u m r th
s rece ve on r s s a ave o e an

1 y ear _
to run .

30 Th e 80 P er C en t - - C o i n s u r a n ce C l a u se —
It is
ll
. . .

t h e prac tice of in suran ce comp ani es tod ay in w e p rotected -

ci ti es t o requi re t h e prop erty ow n er t o insur e hi s p rop erty t o at

l eas t 80 per cent of i t s v a ue f c ou rse a person may insure

. l . O
hi s propert y for as low an amount as h e d esir es b u t u nl ess
l
,

thi s requ irement of t h e comp anies i s met in case of any oss

l l l
,

t h e in suran ce comp an y will con si d er itse f i ab e for onl y th at

l
portion of t h e oss represented b y t h e p roportion that t h e
ac tu al in sur an ce t a en b ears t o t h e requ ired 80 p er cent kIt
l l
.

i s an essentia prin cip e in fi re in sur an ce and comp ani es enf orce

l
heavy pena ties against those w h o d ecl ine t o comp y there l
with there b ein g usua y an ad d ition t o t he rate oth erwi se
, ll
requ ired Th e 80 p er cent c oin sur an ce cl ause i s b ri efly ex
l l ll k
- -
. .

p ain ed i n t h e fol owi ng i ustration ta en from a circul ar

issued b y Th e Ph il ade phi a Cont ri b ut i onshi p t h e o dest insur l , l
ance comp an y i n Amer i ca .

2793 — 1 0
16 ACCOUNT S FOR I N URAN CE COM S PAN IES § 38
THE SO PE CE NT CO I N S URA N C
l
R- -
. E

U nd er t h e p ri nc i p e of
l l
T h e P r i n c i p l e o f C o i n s u r a n ce .
—

coi nsuranc e t h e owner of a b u ildi n h as hi s osses pa i d on y i n t h e p ro

ort i on t h a t t h e amou nt of msu ran k
p
i nsu rance t h a
h e t a es ou t b ears t o t h e amount of
t t h e c omp ani es b e i ev e h e sh ou d ca rr y l l l .

ml k
U nder t h e 80 p er c ent coi nsurance c ause, an owner ust ta e out
l
-
.

i nsu rance t o t h e amount of 80 p er cent , or ov er, of t h e act u a cash v a ue .

of t h e p rop ert y ; t h at i s , t h e cos t of repl aci n

ll
th e b uil di n at t h e t i me of
t h e fi re, if h e d esi res t o c o ec t 1 n fu u p t o t e amoun t 0 hi s p o i cy , any
l oss t h at may oc cu r
ll i l
MPL l
.

E XA E No 1 —
Cost of rep aci ng b uil d i ng
. .
$ 1 0 ,000

I
80 p er cent of su ch cost
nsurance t a en ou t
.

k
. .

O
R E S ULT .

wner fai l s t o
—
Am ll ll ou nt c o ec t ed from co mp ani es .

PA l
co ec t

k
EX NA
l Th e
h av e t a en ou t at eas t
owner sh oul d
L —
TI O N
i nsu rance b u t h ad on and so b ecame a coi nsu rer f or $ 2 ,000 , t h e
y
ll
.

amou nt of t h e d e ci enc ; t h erefore , t h e c omp ani es p ay on y

of or
fi y
a nd t h e owner h i mself oses t h e b a ance of
l l
Th e owner s oss mi gh t h av e b een av oi d ed b y carryi ng
ll
'
or $ 1 ,000 .

t h e req ui red amou nt of i nsura nce, as i n t h e fo owi ng

PL l l .

E X AM E N o 2 — Cost of rep aci ng b ui di ng .

I
80 p er cent of su ch cost
nsu rance t a en ou t
.

k
8,000

RE S UL T Am 0 unt col ec t ed l from mp ani es

PL
—
. co

E X A N AT O N I
Th e owner h ad t a en out i nsurance t o t h e amou nt
.
—
k
of 80 p er cent of t h e cost of rep l a ci n

of th e oss l
t h e c omp ani es p ay
.

o
h i s b u il d i n
or
or t h er efore ,
t h e fu l amoun t f l
M P l l
.

L
E A
l E No 3
l
I f t h e oss equ a s or exceed s 80 p er cent of t h e cost
ll ll
—
X . . .

of rep aci ng t h e b u i d i ng t h e cond 1 t i ons wi b e as i n t h e fo owi ng :

Cost of rep l aci ng b ui di ng l .

I
80 p er cent
nsu rance t a en out
. of su ch c ost
k
8 000

RE S ULT nsurance co
.

Loss t o t h e owner
—
I ll ec t ed from comp ani es

EX P A ATI
L N O N .
-
Th e
l
d h av e t a en ou t at eas t
owner l l
sh ou k l
i nsurance b u t h ad on y
of Or
l
a nd wh i e t h e c omp ani es p ay
t h e fu a ou n t of t h e 1 nsu rance, y et t h e owner
’

hi mself h as a oss of $ 2 ,000 b ecau se h e was u nd eri nsu red , and h ad not
ll m
h eed ed t h e w arni ng of t h e 80 p er cent c oi nsu rance c ause - -
. l .

31 Th e fo ll owi ng i s made a part of each l p o icy :

C
.

RE D U ED RA T E AVE R A L A US
GE C E

ly
-

In consi d erat i on of t he red u c ed ra t e at wh i ch t hi s p o i c i s wri t t en, i t i s

ly l
st i p u at ed a nd mad e c ondi t i on of t h i s c ont rac t t h a t t h i s c om

ll l l l
exp ress a

y sh a b e i ab e for no great er p roport i on of any oss t h an t h e amount

p an
h ereb y i nsured b ea rs t o 80 per cen t of t h e ac t ua c ash v a ue of t h e p rop ert y l l
m wh l ll
.

d escri b ed h erei n t he t i en su ch oss sh a h ap pen, for more

l l
at e nor

t h an t h e p rop ort i on w hi ch t h i s po i c y bears t o t h e t ot a i nsurance t h ereon ;

 38 ACCOUNT S FOR S
I N URAN CE COM AN IE P S 17

p rov i d ed , h owev er, t hat if t h e aggregat e clai m for any l oss sha ll not exceed
fiv e (5 ) p er cent of such actua l l
cash v a u e , no sp e ci a l i nv ent ory or app rai se

ll
.

ment of the u nd a maged p rop er t sh a y be req ui red

l
.

I f t hi s p o i cy b e di vi d ed i nt o t wo more i tems t he foregoi ng condi

l l ly l
or ,

t i ons sh al app y t o ea ch i t em ; and i f t wo more b ui di ngs

l l l
sep ar at e or

t h ei r b e i nc u d ed in a si ng e i t em, t h e i cat i on of
t h e p ro
l ll l
or c ont en t s ap p

v i si on as speci a i nv ent ory or ap p ra i se ment sh a be i mi ted t o each

l
to
b ui di ng and i ts cont ent s .

32 ng quest ion
F i r e I n s u r a n ce A c c o u n t s
- —
Th e fo ll owi

l
. .

i s from a Pennsy v ani a examination and i s used as a b asi s for

stud y in t h e accounts of a fir e in sur an ce comp an y rom t h e F
l F
-
.

tri a b al an ce of t he Safety ire Insur ance Company h ere

l l
,

sh own prep are a b a an ce sh ee t at D ec emb er 3 1 a

,
nd t h e re ativ e ,

income accoun t for t h e year endi n g th at d ate ; al so d esc ri b e t h e

proced ure adopted in v erif ying t h e assets and iab i ities and l l
k
ma e any cr iticisms i n resp ec t of reserv es app arent y omitted l
I
.

TR AL B ALAN CE
C B
l
D E E M E R 3 1 , 1 91 3
ks k
St oc

IR l
M ort gage
and

nt erest recei v ab e on
l bonds, b oo
oans
l
v a ue

mort gage l oa ns
$3
1
, 000
O

000
000
ea est a t e 000
Cash a t b an s and on h and k 000
Uncoll ec t ed p remi ums
Cap i t a st oc l k
000
.
w

G l
U np aid d i vi d end s
Surp us acc ou nt , anuary 1 , 1 9 1 3
ross p remi ums
J
II
Ret urn p remi ums
ncome from st oc s and b ond s
nterest on mort gage
k
l oans
R ent s recei v ed
Losses
Rei nsurance p remi ums
Commi ssi ons
Tl ax es
Sa ari es
Uncol ec t i b l le p remi u ms

Reall
Reb ates
-
est a t e exp enses
l
PL l
Rea est a t e osses
-

ost a ge
ega exp enses
M ap s
U nd erwri t ers ’
b oa rd and t arifi
'

associ a

IG t i ons
nsp ec t i ons
enera l and su rv e
exp enses
ys

w
18 S FOR I NS URAN CE COMPAN IES § 3 8
ACCOUNT

33 Th ti n l k m ny d t il th t w l d rdi
e q u es o il y ac s a e a s a ou o n ar

n bl
.

b r q i d
e e u re r p rto ti f t y t t m nt
e a e one to p e a e a sa s ac or s a e e ,

but thi n d b t s h int nti n f h

o ou mi r hwas t e e o o t e ex a n e s, as t e

d i p l y hi kn l d f fi in r n
,

cand i d t i r q ir da e s e u e to s a s ow e ge o re su a ce

Th b k f t k
-

ac cou nti ith t i t n

ng w l ou d
ass s a ce e oo v a ue o s oc s an

m rk t l R l
.

b nd i
o s i n b s h
g ve h r f
ut not t e p ar or a e v a ue t e eo ea

i d nt l b t k n h b k
.
,

t t i
es a e s ev e l y It i im
t o i e a e at t e oo v a ue . s p oss

b le t o d etermin e wh eth er interest on or not there is ac cr ued

‘

mort gages and b onds oth er th an t h e sh ow n and we

k l
, ,

mu st th erefore ta e t h e income from th es e sou r ces as comp ete

t o d at e . F l
ire osses for t h e year amou nt t o R eturn
p r em i u ms an d r e in sur an ce p r emi um s m u st b e d ed u c te d from
t h e gr oss pream ums whi ch i nc u d e premiums recei v ed d uri ng
'

, l
t h e year an d all reserves carri ed ov er from previ ous years It i s .

ob vi ou s th at onl y p art of thi s amoun t canb e app ortioned as

earni n gs for t h e cu rrent year wh il e t h e requ ired reserv es mu st

k l
,

b e prorat ed t o un ex pir ed ri s s Thi s i s t h e crucia test in t h e

l l l
.

prob em and certain conc usions mu st nec essari y b e assumed

l
.
,

If t h e aggregate outstandi ng insur ance w as gi v en and c as si fied

as t o time t o r un t h e proratin g of r eserve p remi ums w ou d b e l
l
,

an easy matter b u t as t h e ex amin ers h av e p ur pose y omitted

ll
,

thi s i nf ormation it wi b e supp osed th at , h as b een

ear n ed d ur ing t h e year and th at i s t h e u nearned
reserv e F
rom thi s year s earni ngs are d ed u cted t h e fire osses ’
l
l
.
,

reinsur ance and return premi ums Th e sur p us ac cou nt i s

l
.
, ,

v ery arge w h en comp ared wi th t h e cap ital an d no d ou b t p art ,

of it w as contr i b u ted b y t h e ori gin al su b scri b ers Th e capital

l l
.

and sur p u s fu n d s of i n sur an ce comp ani es mu st b e in ves t ed on y

-
l
in first c ass mort gages and gi t edged securi ti es on whi ch there l -
,

i s requir ed a gi v en margin of saf ety

k l
.

Th e main b oo s u sed b y fi re in sur an ce comp ani es are ed ger

k l l
-

and cash b o o t h e atter wi th sp eci al co umn s t o su it t h e in come

k
,

and di sb ur sement s Th ere are numerou s record s ept on card s

k k l
.

an d in b oo s of v ari ou s ind s a so reports from agenc i es , ,

w h enc e t h e greater p art of t h e b u siness c omes .

34 Fr m h o ttrial b al ance i ust shown an income and expense

e

nt d l k ll
- -
.
,

accou an a so a b al an ce sh ee t may b e wor ed u p as fo ows :

§ 38 ACCOUNT S FOR I N SURAN CE COMPAN IE S 19

I N OM AN D N O N
I SU A C MPAN
C E E X PE SE ACC U T
A
C MB
S F E TY F I RE N R N E CO Y

DE E ER 31

E x penses I m nco e

Commi ssi ons

Tl axes
P mm m m k 5
4,
re iu
I nco e fro
s ea rned
s t oc s a nd
Sa
U nco
ari es

eb at es
ll ec t i b el mm p re iu Il s . m
40 ,
3
b ond s
nt eres t
oa ns
on ort gage

Real
l
est at e exp enses R 5 ent s recei v ed
-

PL l
Real es t a t e oans 3
-

ost a ge
ega exp enses

BI
M ap s
oards and associ at i ons

G l
nsp ect i ons and su rve s y
TB l
enera exp enses

ot a exp enses
ala nce d own , ex cess of
i nc ome ov er exp enses

Fi re
year
l osses p ai d d u ri ng Bla ance d own

N et earni ngs for yea r

$ 661 000
,

B ALAN CE S HEE T
S A FE TY F RE RA I I N SU NC MA
C MB
E CO P NY
DE E ER 31

Asset s l
Li ab i i t i es

ks
St oc
M ort gage
Rea l
and
l b ond s
oans P mm
U np ai d
re iu
d i vi d end s
s u nearned , not
2,
T l ll
es ta t e r eserve

Im l
Cash
U nco l ec t ed mi ums
ot a i ab ili t i es
k
$2
,

l J
r
p e Cap i t a st oc 500 ,000
nt eres t
l
a cc ru ed ou Su rp u s , anuary 1 , 1 9 1 3 ,000
'

ort gage oans N et ea rni ngs for yea r 4 5 1 ,000

P RE MI UM CC A O UNT

G ross p remiums recei v ed

Less reserv e for rei nsurance, est i mat ed
BD l a a nce av ai ab e as
ed u ct
l l i ncome for yea r
R et u rn m1 ums
p re
Remsurance p rem1 ums
Bl
a a nce p remi u ms ea rned
,
20 ACCOUNT S FOR S
I N URAN CE COM AN IEP S § 38

35 A n n u a l R ep o r t s haustiv e
an d S t a t e m en t s —
An ex

l
annu a rep ort and st atement must b e sent t o t h e Insuran ce

Commi ssioner of ev ery state in whi ch t h e comp any d oes b usi

ness Th e reports must comp y wi th t h e aws of sai d states
. l l ,

in some of w h ich a deposit of securities must b e mad e Thi s .

report inqu ires into ev ery detail of t h e comp any s b usin ess and ’

l
fi n an ci a con di tion and furni sh es a most exh austi v e exhi b it of
,

i t s affai rs In rep orting assets t h e company i s requi r ed t o

l l l l
.
,

d ed uc t those th at are not usual y av ai ab e for sett emen t of

l
fi re osses as fur ni tur e su pp li es printed matter et c t h e com
k l l l
.
, , , , ,

p a ny s ow n
’
st o c ow n ed or o a n s m a d e th ereon b il s recei v ab e

l l l
,

p as t due agents b a ances aft er a b rief time h as e ap sed oans

'

l k l k
, ,

on p erson a secur ity boo v al ues or ed ger asset s ov er mar et

l l
,

v a ue et c Th e in suran ce d ep artment i s a ways exactin g

l l l l
.
, ,

and any assets not cap ab e of real i zi n g ful v a ue on forced sa e

are eith er omitted or red uced t o a safe w or i n g b asi s All k

l ll
.

i ab il ities no mat t er h ow sma of a real or contin gent natur e

l
, , ,

mu st b e accounted for and all fir e osses un p ai d wh ether in

l l k
, ,

di sp u te or not must b e in c u d ed at t h e face v a ue of r i s s

l
.
,

Th e form d oes not diff er v ery much from t h e one a read y

sh own for l
if e in surance comp anies b ut in order t o show
l
-
,

t h e u sua account s requ ired t h e accomp anyi ng rep rod u c

l
,

tion of pages 2 t o 9 of t h e Penn sy v ania form are shown in

Fi g 2 (a) t o (h)
. .
 MUNICIPAL ACCOUNTING
I N TR O D U CT I O N

G E N E R A L E X P L A N AT I O N S

Fr m h rli t tim f hi h hi t ri l r rd
1 o t e ea es es o w c s o ca ec o s

p pl h
.

r m in
e ria va f n d it on ni nt
‘

ou s eop rh p es av e ou C ve e or e a s

mf r bl b lting f l ing f ri
, ,

co o ta f h r e ecause o t e esu ee o secu t y, t o

co ngr g t in mm niti
e a e hi h ltim t ly d l p d int
co u es w c u a e ev e o e o

rl i t f m f m ni ip l i i In Gr
'

cii t h es , t e ea es orh ii o u c a t es eec e suc c t es

d in It l h Ci y
.

a ssum d h f n ti n e f t r ign i
e u c o s o sov e e t es, a n a y t e t
of R m b m tr ly
o e r ign d m y b
eca id
e hu r l d sov e e an a e sa to av e u e

th e rl d wo
In h M i ddl A g f E r p in l d ing E ngl nd
.

t he iti e es, t e c es o u o e, c u a

l t m h f th ir imp r n d ith h pti n f rt in

,

os uc o e o t a ce an w t e ex c e o o ce a

in It ly th r in N rth rn G rm n f r b ly
,

cii t es d a an o e s o e e a y av o a

l t d f tr d l ft impr i n p n h tim With

oca e or a e, e no es s o u o t e es

ing f f d l p
.

th p e as s r h iti by d gr
o eu q ir d
a ow e s, t e c es e ees ac u e

l l h r r d b m h imp r nt d infl n i l m
oca c a t e s an eca e t e o ta an ue t a co

muni t ies th at r ecogni z ed ar e now .

In t he United S tates many o f t h e c iti es antedate th e Revo

l l
,

lut i on hav ing been estab i sh ed un der authority of r oya grants

l
,

o r ch arter s Up on t h e c reati on o f t h e sev era states t h e

l
.
,

sov er e i gnty ther eto f ore vested in t h e E ng i sh Crow n r eve rted

l
t o t he p eop e, w h ose r epr esentativ es f orm ed egi s ati v e b od i es l l
ll k l l
,

g en e r a y n ow n as eg i s atu r e s S in ce t h e f o r mati on of stat es

l l
.
,

Cit i es h av e been c r eated by t h e egi s atu r es un der t h e a ut h orit y

ll l
,

o f gener a aw s or sp ec i a acts c onf erring ch arter s u pon t h e

l
mu nic ip a it ies These chart er s w i be more f u y d escribed in ll ll
l
.

ater p ages .

C O P Y R I G H TE D I Y l N T l R N AT l O N A L T EX T I O O K C O MPAN Y . ALL R I G H TS R ‘B C R VI D
2 MUNI CI PAL ACCOUNTI NG § 39

2 D e v el o p m en t of M u ni ci p al A c cou n t s .— R eco rd s
l k
.

a re ex t a nt w h ich indicate that in t h e ear iest times c i t ies ep t

record s w hi ch perhap s met all o f their r equirement s

l l l
.

In ater t i mes t h e met h od s app ied t o muni c ipa accounts d i d

l
not pr ogres s a s rapi d y a s d i d t h e munic ip a it i es in n umb er s l
l l Ol l
,

w ea t h and p op u at ion
,
n y w ith in t h e ast quarter o f t he
.

ninet eent h c en t u ry hav e ac c ountan t s sh ow n an ac t iv e int er est

in th e accounts o f munic ipa it ies a nd made p ersi stent and sys l

t emat i c attemp t s t o p ace t h e account s o f c iti es on t he samel
s c ienti fi c bas i s requ ir e d b y priv at e b u s iness c onc e rn s Progress
F lB
.

in th i s d irection h as b een f ostered by t h e edera ur eau o f

Census ; t h e
'
B
ureau o f M uni c ip a Re sear ch a priv ate y c on l ,
l
t r olled organi z at ion h av ing i t s h eadqua rt er s in t h e Ci ty o f N ew
Y k or ; many l
eagues or or gani z at i on s o f mun ic ip a iti e s an d l
account an t s ; and by t h e u reau o f M unic ipa Acc ounts a B l ‘

ll
,

d epart ment in t h e ofii ce o f t h e Comptro er o f t h e S tate o f N ew

Y k or and s i mi a r gov e rn menta agenc i es l l
l
, .

In t he c ourse o f the app i cat ion o f modern methods o f

a cc oun t ing t o c i t i es it soon b ecame ev i d ent th at u nif ormity i n

l
,

t h e accounts o f c i t i es w as d esirab e t o t h e end th at r eport s t o

l
t h e c en t ra aut h ori ty S h ou d b e unif orm and r ea d i y adaptab e l l l
f or comparat iv e p urposes T h i s f a ct d irec ted a t t en t i on t o t he

l k l
.

ac o f u nif ormi ty in accounting termino ogy a nd pr ompted t h e

B
Cen su s u reau t o ad opt st and ar d terms w h ich a r e now inc ud ed l
l
,

in t h e pub icat ion s o f th at department

l
.

A di scussion o f account ing ter mino ogy w ith definitions o f ,

terms may be f ound in t h e 1 906 and 1 907 c en sus reports on

l H l O
.
,

F inanc ia S tati st ic s o f Cit ies av i ng P opu ati on s o f ver

3 D ef i n i t i on s t matic records or
—
A c c ou n t s ar e sys e

l l
. .

s t at emen t s o f f act s u s ua l y o f a fi nanc ia ch a ra ct er eith er

l l
, ,

s i mi a r or d i ss i mi ar a nd so a rranged a s t o pr ov i d e s umma ri es

l
,

o r ba an ces
:

l
.

A c c o u n t i n g i s t he a rt o f record ing c as s ify ing sum

l l
, ,

mar i z i ng ana yz ing and int erpr et ing f ac t s re at ing t o t he acqu i

l l
, ,

s it iou prod u ct i on t r an s f er a nd ow n er sh ip o f a rtic es o f w ea th

l
, , ,

o r v a ue .
'
§ 39 MUN I CI PAL A CCO UNT I NG
M unicipa l nt ing i s t he app i cation o f account ing meth od s
accou l
an d prin ip l c es t o t h e bu siness o f munic ipa c o rp orat i on s l
l l
.

C o r p o r a t i o n s ar e ega ent it i es c reated by or und er author

i t y o f law and a re eit h er priv ate or p ub i c l
l l
.

Private corporations embrace that arge c ass o f b usiness

o rgani zati on s now S O common w h ich ar e p r I nc i pal ly engaged

l
, ,

in t he pu r su it o f gain a though there ar e many priv at e cor

ll l l
,

p o r a t i on s e n g ga e d w h o y i n ch a ri t ab e r e i g i ou s a nd ed u c a

k
, ,

t i onal w or
l
.

M unicipa corporations are sub d iv i sion s of t he state created

l
,

by or un der aut hori t y o f t h e aw s o f t h e state and endow ed w ith

l
more or ess pow er o f oca se f gov ernment T h ere are h ow l l l
l
-
.
,

e v er c ert a in sub d iv i s i on s o f t h e s ta t e ex erc i s in g i mi t ed p ow er s

l l l l
,

o f oca Se f gov er nment w h ich a r e not in f act munic ip a cor

k
-

p o r a t i o n s a n d a r e n ow n a s q u as i c o r p or a t i o n s T h e se e m b r ac e

l l
-
.

sp ec i a t ax d i st ricts sch oo d i st ric t s and in some stat e s

, , , ,

p arishes or c ount ies

k l
.

Unl i e priv at e or bu siness corporations munic ip a corpora ,

tions are not emp ow er ed t o engage i n b usiness f or profit ; but

l
th eyare frequent y p er mitted t o engage in th e c on servation or
l
t h e producti on a nd sa e o f cert a in c ommodi t i es such as w at er
l
, ,

g a s e e ctri c it y W h en s o a u t h o ri z ed i t i s a ssu me d th at t h e S er

ll l l
.
, ,

v i ce w i be r ender ed t o t he con sumer at th e east p ossib e c ost

a nd at rates that w i ll
pr ev ent a d efi cit w ithout c reat ing a profit .

4 M u n i c i p a l A c c ou n t s
F u n c t i on of Th e Ch ie f —

l
. .

f unction o f a syst em of munic ipa account s i s th e preserv at i on

o f systemati c r ec or d s t h at w i ll pr omp t y d i sc ose t he cost o f
°

l l
g ov e rn men t f or a fi S C
a l p eri od a n d th at w i f u rni sh r e i ab e ll l l
d ata f or future p anning l
p an o f financ ia op erat ion Wh en a l l
l
.

in th e f orm o f a budgeth as prev i ous y been ad opt ed t h e

l l l
,

account s S h ou d S h ow t h e r esu t s o f t h e p an and f u rni sh t h e

l
r esponsib e O ffic er s w it h inf ormat ion up on w h i ch t o base f ut ure
budgets .

5 . Co m p a r i s o n B et w een P r i v at e an d P u b l i c

A c c ou n ts rd ina ry b u s iness corp oration i s o rgani z ed

Th e o

l
.

w it h t h e a i m o f se l ing i t s pr od uct t o t h e c on su mer at t h e h i gh

l
est price obt a inab e and o f d i stribu t in g i t s pr ofit s in t h e f or m o f
 MU I CI N PAL ACCOUNT I N G § 39

d i v id end s t o it s s oc t kh ld r S h rp r i
o e s uc a co o at o n requires and

ll pr fit d l
.

u su a y ma inta in s a o an nt oss accou

l
.

Th e munic ip a co rp orat ion i ms

a t o giv e t h e gr eatest amount
of l
pub ic serv ice t o t he w i t h in i t s b oundaries at a c it i z en s

mini mum c ost henc e it need s no profit and oss account but l
l
, ,

may r equ ire account s show in g surp us or d efi c i ency Th e .

officer s o f pri v at e c orp oration s may ex p end c orp orate f un d s f or

any p u rp ose w ith in t h e S cop e o f t h e c or p orate organi zati on and

a r e r ar e y l l
i mited by a budgetary program Th e offi cer s o f
l l l
.

municipa corporat ions may ex p end i ts f und s on y f or pub ic

pu rposes and w i th in t he imits fi x ed b y t he ch arter or t h e l
l l
fi nanc i a p an prev i ou s y adopted l
enc e pri v ate c orp orat ion s H
l
.
,

need no appr opri ati on ac c ount s a th ough such acc ount s ar e an

l l
,

e ssentia feature in a modern system o f municip a accounting

l
.

The v arianc es betw een p ub ic and priv at e ac count ing do not

l
re ate t o d i ff erences in meth od s but r at h er t o t h e subj ects con , ,

c erning w h i ch inf or mati on i s sough t In both ca ses t h e f unda

l k
.
,

menta p u rp ose o f eeping accounts i s th e same Th e offi ce rs

l k
.

o f each c as s o f corp or ati on d esir e t o n ow t h e c ost o f carr y

i ng on t h e busin ess Th e manager s o f t h e priv at e c orp ora tion

k
.

d esir e t o now w h et h er or not t he busin ess i s being so con

duc t ed a s t o pr oduc e d iv i den d s f or i t s st ockh o d er s ; t h e officer s l
l
o f t h e p ub i c c orp or ati on w h et h er or not t h e b u sin es s o f t h e

l
,

muni c ipa i t y i s being con duct ed w i t h in i t s income In both

ll
.

c a s es t h e met h od s mu st b e such as w i en ab l e t h e acc ountin g

l l l
,

O ffic er s w h et h er p ub i c o r pri v at e t o supp y w i t h t h e ea st

l l l
, ,

d e ay comp et e and ac curate r ep or t s A th ough di ffering i n

l l l
.

d et ai s t h e princ ip es un der ying p ub l ic and priv ate ac count ing

,

are the sa me .

6 M e t h od s of ry recent y t h e
A c cou n t i n g —
Un t i l ve l
l l l l
. .

oc a offi c er s o f n ear y all mu ni c ip a iti es in t h e Uni t ed S t ate s

h av e b een c ont ent w it h syst ems t h at d i sc osed mere y t h e flow l l

o f cash in a nd ou t o f t h e muni c ip a treasu ry Wit hout any l .

at t emp t at u nif or mit y eac h system r efl ect ed t h e not i on s o f t h e

l k
,

ind i v idua c h ar ged w ith t h e dut y o f eeping t h e accounts or

l
, ,

as w as fr equ en t y t h e c a se t h e practi c e o f a pr edec essor T h at

l
, .

a syst em o f ac c ount s w h i c h mer e y r ecor d s c ash r eceipt s an d

§ 39 N P AL A CC O U N T I N G
MU I CI 5

c ash d i b r m n i in mp l
s u se d in d q
e ts i s g co et e an a e uat e s now en

er ally dmit d a d in p l h r f
te ;y m an b in g ac e t e eo s st e s are e

d pt d th t i ll h nl l r n
, ,

a o e a h r
w i d b S ow not o y ca s ec e ve ut a so ev e ue

nl y l p n in rr d
,

r d
acc u e d an h p id b
not o cas a out , ut a so ex e ses cu e

In mm r i l b kk ping l rg l h ingl ntr

.
,

co e c a oo ee on a a e sca e, t e S e e y
f b k h l ng in b n di rd d d d bl ntr
-

set o oo s as o s ce ee sca e an ou e e y
b i t d D bl f r l d n min l
-

su st tu e n r p rmi h ou e e t y e ts t e u se o ea an o a

in rn l h k l ri l rk
.

accou nt hi h pr i d
s, w c h ov e an te a c ec on t e c e ca wo
d m k p ibl h pr p r i n f ri l b l n d b l n
,

an a e oss e t e e a at o o t a a a ces an a a ce

sh t fr m h inf r m i n
ee s o nt in d in h b k
t e o at o co a e t e oo s

r rd ll h d t il m ni ip l it
.

In t mpting at e f to ec o a t e e a s o a u c a y
’
s

fi n n i l tr n
a c a i n in g n r l l dg r
a sa c t o h b k b m s a e e a e e suc a oo ec o es

n i ld d n it bl f h n dl ing
,

u w e y an u T b i
su th i d i fii
a e or a o o v at e s

l h n r ll ing l d by m n f
.

cu t y, t e co nt h b n t o ac c ou as ee ev o v e ea s o

il b i d i r l dg r
,

w hi h h d
c t f nd in
e et a s ar e In h r ou su s a y e e s . ot e

wo rd s, a c o n t r o l i n h ling h in a c cou n t s an acc ou t t at S ow s,

su mm r f r m i m h
a y pp
o in d i l in h
,
te n
s t at a ea r et a ot e r a c c ou ts .

M UN I CI P A L C O R P O R AT I O N S

7 Cl a s s i f i c a t i o n ter m m u n i c — I n N ew Y kSor tat e t h e

l
.

i p a l c o r p o r a t i o n i s d efi ned by sta t ut e t o inc u d e cou nt i es

ll
,

Ci t i es tow n s and v i ages B y t h e c on st it ut ion o f t h e sa me

l l l
.
, ,

s tat e c ities a re c ass i fi ed ac c or d ing t o p op u ati on a s fi r st c ass

l l
, , , ,

s ec on d c ass a nd t h ir d c a ss ,
.

C i t i e s c o u n t i e s t o w n s a nd V i l l a g e s are al l defi n ed as
l
, , ,

munic ip a corp orat ion s compri s ing t h e inh ab i t ant s w i t h in t h eir

r esp ecti v e boun d ari es and f or me d f o r t h e p u rp os e o f ex er c i s

l l
,

i ng such p ow er s o f oca gov ernment as may be c onf erred or

i mposed by law
O l l l
.

f t h e f ou r c asses o f munic ip a it ies c it i es p ossess t h e a rgest

l l l
,

measure o f oca se f gov ernment and p r esent th e great est

l
-

v ariety o f prob ems t o t h e ac c ount ant

ll k l
.

In t h e f o ow ing pages it i s int ended t o ta e t h e th ird C as s

Y k l
-

c i t i e s in t h e st at e o f N ew or a s t yp e s a nd t o out li ne a p a n

l
o f account in g r ead i y ad ap t ab e t o t h e c i t i es o f t h at c ass l l
ll l
.

N o attempt w i be made t o out ine systems r ecor d in g t h e

l
transaction s o f p ub ic Uti it i es such as gas and elect ri c ity f or l , ,
 N PAL ACCOUNT I N G MU I CI

h r
t e n th t
easo h rd in rily nd r h j ri di ti n f
a suc o a ar e u e t e u s c o o

p bl i
, ,

u r i c mmi i n d th ir
se v c e nt d r p rt
co ss o s, an e accou s an e o s

m t f ll
us h r l ti n pr rib d b h ommi i n
o ow t e egu a o s e sc e y t e c ss o s

t r rk
.

F or t m f nt f
a sys e h r d r i o ac cou s or wa e wo s, t e ea e s

r f rr d
e e h nif rm l i fi i n f
e to t nt d pt d by
e u o c as s cat o o accou s a o e

th A m ri
e W t r W rk A i ti n d by h B r
e can a ef o s ssoc a o an t e u eau o

Cen sus .

8 O r g a n i z a t i on rganiz ed or
of Ci t i es — Cities are o

l l ll k
. .

c r eat ed by ac t s o f st at e egi s atur es w h ich ar e u sua n ow n

y ,

a s ch a rt er s In t he case o f each c ity t h e c harter i s t h e f und a

l B
.
,

ment a law w h i ch c onf er s and d efines it s p ow er s ein

g a

l l
.

c reati on o f st at ut e a c i ty h a s on y such p ow er s as a r e ex pre ss y

l
,

r nt d t o i t b i t h r t r o r su c h a s ma b i mp i d fr om t h
g a e y s c a e y e e , e

p ow er s granted .

9 F e a t u r e s C o m m o n t o A l l Ci t i e s ities t h e — In al l c

l l
. .

p ow er s a r e d iv ided b etw een ex ec ut iv e and egis ativ e b ranch es

ll
.

Th e ex ecut iv e p ow er s ar e u sua y entru sted t o a mayor or t o

k l l
,

some ot h er offi ce r b y w h ateve r name now n The egis at i v e

ll k
.

p ow er s ar e u sua y ent r ust ed t o a boar d or c ommi ssi on now n

a s t h e c oun c i l
board o f a der men or by some ot h er s i mi a r l l
l N l k
, ,

tit e . ear y all c i t ies hav e a th ir d sub d i v i s i on now n a s th e ,

j ud iciary w h ich i s not a coord inate b ranch o f t h e c ity gov ern

l
,

ment and b ear s no resemb ance t o t h e th ir d branch of t h e

F l
ed er a gov ern ment w h i c h i s now n by t h e same name k
l
.

Th e p r in c ip a sou rc e o f r ev enue o f al l c i t ies i s a pr op erty

t ax l
ev i ed again st t h e r ea p r operty w it h in t he c ity i mi t s l l
l
,

ac c ord in g t o t h e a s s essed v a uat i on w h i c h i s d et er min ed by a

l l k
,

oca offi cer or boa r d now n as assessor or b oar d o f assessors ,

a s t h e case may be O th er rev enue i s deri v ed from tax es

l l l k
.

ev i ed or a sse ssed again st p a r t ic u ar c asses o r c erta in ind s of

propert y ; for ex amp e ban tax es mor t gage tax es iquor l k l
O l
, , ,

t ax es and i ncome tax es t h er r evenue i s a so d eriv ed fr om

l l l
.
,

t h e sa e o f priv i eges suc h as Sp ec ia franchi ses v endor s ’

l l
, ,

i censes amusement p ermi t s and d og i censes

ll
.
, ,

Cit i es a re u sua y per mitt ed t o pro cur e f un d s t o meet c u rr ent

e x p en ses by mean s o f t emp or ary t ax oan s A th ough t he p ro l l
l y
.

c eed s o f suc h oan s inc r ease th e ca sh in t h e c it treasury t h e ,

§ 39 MU I CI N PAL ACCOUNT ING
moneys so recei v ed rev enues The pow er t o borrow
a re not .

money h ow ever i s not inh e rent in c ities and d oes not ex i st

l l
, , ,

unl es s ex pr ess y gr anted in t h e c ha rte r or by a gen era la w

l
w hi ch app ie s t o al l c it ies
O l l
.

t h er r eceip t s inc ude t h e proc eed s o f sa es o f b ond s a ssess ,

ments again st property t o pay f or i mprov ements and fund s

l
,

w hi ch ar e h e d in tru st by t h e c ity .

1 0 Co n s t i t u t i o n a l L i m i t a t i on s on M u n i c i p a l i t i es
l
. .

The nst itution s o f many states i mpose imit at i on s on t h e

co

pow er s w h i ch may be granted t o muni cipa iti es inc u d ing c i t ies l l

Y k l
, ,

and in t h e c on stit ut i on o f t h e sta t e o f N ew or t h e i mit ati on s

a re f ound in S ecti on 1 0 o f Art ic e VIII l

l
.

Th e char t er s o f t h e c it ies o f t h e th ir d c ass in t h e state o f

N ew or Y k
a re not unif orm Th e c ities h ow ever are c ass i l
ll
.
, ,

fi able as f o ow s
Gr oup A w h ere t h e muni c ip a activ ities are practica y al l
, l ll
ad mini ster ed by a gov ernment ha v ing one ex ec utiv e h ea d a nd a

s in
g l l
e set o f fi nan c i a officer s and in w hi c h t he v a ri ou s d ep a rt

l
,

ments are subj ect t o one cont ro or sup erv ision

l
.

Gr oup B w h ere t he admini strat ion o f muni c ipa affair s i s

l
,

d ist ri buted among a number o f mor e or ess ind ep end ent b ut

l
c orr e ated c ommi s s i on s or b oar ds

l
.

Gr oup C w h ere t h e a dmini st ration of munic ipa a ff air s i s

ll l
,

v ested in commi ss i oner s w h o ac t in g c o ect i v e y c on st i t ut e t h e

l ll
, ,

c ounc i and in d i v i d ua y a r e h ead s o f v ari ou s d epa rt men t s

l
.
,

T h is method i s common y d esignated as the c ommissi on f or m

o f gov e rnment .

1 1 G r ou p A Ch ing i s an ana ysi s

art er s .— Th e fo ll ow l
l G
.

o f t h e c har ter o f a c i ty typica o f th ose w it hin roup A

l
.

Th e ex ecuti v e p ow er i s v ested I n a mayor e ected b y all t h e ,

v oter s o f t h e c it y f or a ter m o f year s n amed 1 n t h e c ha rte r and

ll l
usua y p ai d a sa ar y in an amount pr esc ribed in t h e c h a rter

l
.

He i s required t o enf orce t h e aw s o f t he state and t h e ord i

l l
.

nances o f th e Common Counci and may appoint and at p easure

remov e t h e h ead s o f t h e admini st rativ e d epartments .

In h i s capac ity as manager o f t he aff air s o f t he city t h e

k B
,

mayor i s as si st ed by an adv i sory boar d now n as t h e oar d o f

I L T Z34 — 1 6
 PAL ACCOUNT I NGMUN I CI 5 3 9

E tim t
s d App ti nm n
a e an lly mp d f h m y r
or o e t , u sua co ose o t e a o

pr i d nt f h C mm n C n i l mptr ll r ;
,

es e o t e o rp r ti o ou c co o e co o a on

n l ity ngin r
,

c ou se d h an t e c e ee

n ti t h B rd f E ti m t
.
,

Th m ff r w h
e sa e o i ce s d
o co s tu e t e oa o s a e an

App rti nm nto o pt th t h e mmi i n r f p bl i

ex ce rk a t e co ss o e o u c wo s

he pr i d nt f h C mm n C n i l
,

is su st b i d f t ut e or t es e o t e o o ou c con

h B rd d S pp ly
,

st i t ut e t f C ntr
e oa hi h i
o h rg d
o act an u w c s c a e

ith h d ty f l tting n r t f
,

w t h p rf rm n f ny t ac s t e
’

e u o e co or e o a ce o a

wo rk f or h pp ly f y m t ri l r q ir d b
or t e su f ho an a e a e u e y or or t e

u se o f y fli
an b r d o d p rt m
ce r ,nt f h itoa
y in ll or e a e o t e c a cases

h w rk
,

m p i fi d in h
'
wh r e e h p n
t f
e ex e dse o suc o ex cee s a su s ec e t e
c h rt r
a e

mptr ll r tr
.

Th dmini tr i
e a ffi r s at v e o r r ce s a r e c o o e easu e cor

n l i y ngin r mmi i n r f p bl i rk
, ,

p i n
ot at o c ou se c t e ee co ss o e o u c wo s,

mmi i n r f p bl i l ti
, ,

an d co ss o f y h e o upp i c sa et , w o are e ec v e or a o n

ti v e as h h r r m y pr rib
t e c a te a esc e

mptr ll r i h w h m ll l i m
.

Th e co d i ing fli
o e s t e au t o cer , to o a c a s

g
a a in t h s i y m t t b e cpr n t d f d it
us d ll n e H ese te o r au an a ow a ce e

p ri t nd h e fi l ff ir f h i y d
.

i r q ir d
s e u e t o su e n e t sca a a s o t e c t an to
mn g h
a a e m p r t nt
e sa l d h
e rd in n
u sua f h to aw an t e o a ces o t e

C mm n C n il
o o H i r q ir d
ou c k p pr
. e nt
s e u e to ee a se a at e accou

w ith h d p rt m nt f h i y
ea c e a dr rd r
e o rr nt t e c t ; to aw o e s or wa a s

on h tr
t e r r in p ym nt f d it d l im
easu e d a p rf rm e o au e c a s, an to e o

s uc h h r d i ot e m y fr m i m
ut es as tim b imp d p a o t e to e e ose u on

h i m by l by rd in n
aw or f h C mm n C n i l o a ce o t e o o ou c

ll t r t di n f i y f nd d
.

Th tr e r r i x
ea su e s ta co ec o , cus o a o c t u s, an

d i b r ing ffi r
s u s N m n y m y b p id
o ce by h i m o pt o e a e a ou t ex ce

mptr ll r
.
,

u p n h
o rd r
t e rr nt f h
o e or wad h i a o t e co o e an e s

mptr ll r d ily
,

r q ir d
e u er nd r to h e e t t m nt f ll
to t e co o e a a s a e e o a

m n o eys r i d d p id ece v e b h im an a out y

n l i r q ir d tt rn y
.

Th rp r ti n
e co o a o b cou d
se s e u e to e an a o e an

c ou n ll r se l o H i at h l g l d i r
aw f h C mm n e s t e e a a v se o t e o o

C n il r l ity ffi r
.

ou c d f h an o d i r q ir d
t e sev e a c o ce s an s e u e to
appear f or and protect t he righ t s and interests o f t he City i n al l
act i on s and pr oceed ings b rough t by o r again st i t

l k
.

The commi ssi on er of p ub i c w or s i s t h e h ead of t h e D ep art

l
ment o f P ub ic Work s and 1 8 charged w ith t he sup erv i sion of
con str uc t i on and o f r ep air s t o street s p ar s c ity b u i d ings and ,
k , l ,
 39 MU I CI N PAL A CCOUN T I N G
l l
pub ic p d in iti
ac es an ning m f r rk
c es ow a syst e o w at e w o s,

ll ith h p rint nd n f h t m
,

u sua y w t e su e e e ce o suc Sys e

mmi i n r f p bl i
.

Th e co f
ss o i h h d f h fi
e o u c sa ety s t e ea o t e re

an d p li o d p rtm nt h in p
ce e a r pp int e hi f f h
s, av g ow e to a o a C e o t e

fi re d p r m nt
e a d thi f f p li
e fir m n
an d p li m n
a c e o o c e, e e an o ce e

O h r i ffi r h in p i l d limi d p r d
.
,

t e c ty o ce s av g s ec a an te ow e s a n not

d ir l n rn d i h h m n m nt f i y ff ir
ec t y co ce e w t t e a age e o c t a a s ar e a

co mmi i n r f h ri i
ss o e j d o f inf ri rc rt a f i il
t es , u ges o e o cou s o c v

an d rimin l j ri d i i n
c a r u l r f i ht d
s ct o as ses so s , a sea e o we g s an

B rd f H l h
,

m r
easu es , a n d m mb r f e e s o a oa o ea t
N rl l h B rd f E d i n n i ing
.

ea ll i i
y a c t es a so av e a oa o uc at o co s st

ll pp in d b h m r
,

o f th r m r m mb r
ee o r o e e e s, u sua y a o te y t e ayo

nr l f h
,

w hi h ic h rg d i h h m n g m nt
s c a e d w t t e a a e e an co t o o t e

p bl i
u h l
c sc oo s

Th l i l ti
.

e p
eg s a r f h i i ve d in h C mm n
ow e o t e c ty s v es t e t e o o

C n il
ou c mp , d f l d rm n l
co os e d f m h o r l a rd e e e ec t e ro t e sev e a wa s

or bd i i i n
su f h
v s o i y Th m in s o f h C mm n
t e c t e eet gs o t e o o

C n il l d B rd f Al d rm n
.

ou c it i m im
o r , as s so et e s c al e ,
the oa o e e ,

a re pr i d d es rb h m r
e ov e b pr i d n y t e in m ayo or y a es e t w h o, so e

n il fr m i m mb r h i l in th
,

c ii i h nb h
t es s c ose y t e c ou c o ts e e s, w e o er

c iti h i l
es e d by h l r f h i y h m im
s e ec t e t e e ec t o s o t e c t at t e sa e t e

an d f h
or m t rm
t h m
e sa r e e as t e ayo

Th C mm n C n i l h l rk i
.

e o h ri
o h ou c as aut o t y t o C oose a c e w ho s

l i l rk d h e d ti in l d h k pin f h
,

a so c ty c e an w os u es c u e t e ee g o t e

min s f h C mm n C n i l
,

u te o t e d h r b rd
o d ho ou c an ot e oa s an t e
issue o f li n p rmice s es , e t s , et c
Th p in ip l r
.

e r n c f h it i d ri d fr m t
a eve ue o t e c y s e ve o ax es ,

l i d b h C mm n C n il p n
ev e y t e o im t f r n o ou c u o an est a e o ev e u es

l pr p r d b h B rd f E im t d
,

an d exp n pr i
e se s ev ou s y e a e y t e oa o st a e an

Apportion ment Up on t h e adop t ion o f t h e est i mat e i t bec omes

.

t he t ax b u d get a nd t h e amount s th er ein e st i mat e d f o r ex p end i

t u res b ec ome approp r i at ed in t h e amount s and f or th e sev era l
d ep ar t ment s offi ces and p u rpo ses a s t herein sp ec i fi ed f or t h e
l l
, ,

fi sca year A f t er t h e ad op t i on o f t h e ann ua e st i mat e t h e c it y

'

.
,

has p ow er t o b orr ow mon ey f o r t h e payment o f t h e d ebt s and

ex p en ses o f t h e c ity w i t h in t h e a mount s appropri at ed t h er e f or

l
f or th e fi sca year in an t ic ipat i on o f t h e receipt o f t h e t ax es and
l l
,

r evenues app icab e t o such purposes .

 N PAL ACCOUNT I NG MU I CI

1 2 Th f ll ing i
G r o u p B Ch a r t e r s n l i f e o ow s an a a ys s o

i y ypi l f th i h in Gr p B
-
. .

t h h rt r f
e c a e o a c t t ca o ose w t ou

Th m y r i
.

e h hi f
a o i ffi r d is t t d ih
e c e ex ec ut v e o ce an s v es e w t
au th rity d h rg d i h h d ti g n r lly in id nt
o an c a h
e w t t e u es e e a c e to t e
o ffi ce

hi f fi l ffi r i h ity h mb rl in h p rf rm
.

Th e c e sc a o ce s t e c C a e a w o e o s

h C mm n C n i l m y
,

suc h d ti in id nt u hes ffi c e to t e o ce as t e o o ou c a

d ir tec H i r q ir d
. m int in
e h rs rd e u ill lle to a a suc eco s as w at a

t im r fl es h t
e ect f h ri fI d t f h i y hi h
e s at us o t e va ou s i n s o t e c t w c

m y b l ifi d f ll F ir
, ,

i n citi f thi typ

es o s e, are or a e c as s e as o ow s : e,

P lio c e, I mpr m n S r Light W t r P bl i W rk

ov e e t, ew e a e u c o s,

P r G n r l Ci y d S h l
, , ,

oo e e a H i r q ir d t r p rt an c oo e s e u e to e o

m nthly h C mm n C n i l h fin n i l
.
, ,

o to t e o ndi i o ou c as to t e a c a co t on

f h m ni ip l ity
,

o t e u c a

ity j dg ity l rk ity

.

Th ffi r
e o th r h b rd
ce s, o e t an oa s , ar e c u e, c c e , c

a ttorney and c ity engineer w ho are v ested w ith t h e authority

, ,

and c har ged w ith t h e d uties inc i d ent t o offi ces t h us des ignated

l
.

I mportant ad mini strativ e f unctions dev o v e upon v arious

boar ds d esignated as f o ow s : oa rd o f P ub ic Wor s oar d ll B l k B
F l l
,

of ire and Po ice Commi ssioner s D epartment of Pub ic

B H l
,

Inst ruction oar d of ea th, Department o f Charities

B l k
.
,

The oard o f P ub ic Wor s c on si st s o f t hree member s

appo inted by t he mayor T h i s board i s v ested w ith t he cha rge

k
.

and management o f al l thoroughf ar es sew er s w aterw or s

l
, , ,

l i ght p ant s and app u rtenances ther eto I t appoints anengi

l k
.
,

neer and a superintendent o f pub ic w or s

B F l
.

Th e oar d o f ire and P o ice Commi ss ioners consists o f

t hree memb er s app ointed by t he mayor w ho appoint t h e c h i e f s
l
, ,

o f t he fi re and po ice d epart ments and sever al subor d inates

y ll
.

Th e boar d i s charged w ith t he d ut Of aud iting t h e p ayro o f

ca ll l
fi r emen and c aims again st t he fi re and po ice d epa rtment l
other than fi x ed sa aries l
B
.

The oard o f E ducation consi sts o f th ree or more member s

y l
,

appo inted by t he ma or w h o hav e genera super v i si on o f all

l
,

property u sed i n t he schoo system and t h e moneys rai sed f or

p u b icl sc hoo p u rpos es T h ey l
pr ep are an a nnu a b u d get a nd l
ll l k
-
.
,

w h en fi na y adopted fi le t he same w ith t h e c i ty c er w h ere

l l
, ,

upon t he Common Counc i inc udes t he amount thereo f i n t h e

§ 39 N P A L A CC O U N T I N G
MU I CI

t ax d an m nt r ll f
assess h n ing y r b
e ll t d by o or t e e su ea to e co ec e

th it h mb r l in d r d i d
e c y C a h g n r l
e h l f nd f
a an c e te to t e e e a sc oo u o

th m ni ip l ity
e u c a

Th B r d f H lth
.

e oa n i t f hr m mb r pp int d by
o ea co s s s o t ee e e s a o e

th me r th y pp int h
ayo ; ity ph i i e d p h
a o t e c ys c an an osse ss t e
p r f b rd f h l h
ow e s o ad fi n d by t t t
oa o ea t as e e s a u e .

The D epartment nder the superv i s ion o f a

of Charities i s u

Commi s si oner o f c harities w h o i s appo inted by t h e mayor and

l
,

w ho inv estigates all requests f or p ub ic a i d and approv es or d i s

approv es o f them He fi es a statement o f accounts and C a i ms l l
ll l
.

p eriod ica y w ith t he Common Counci w hich possesses the

l
,

pow er o f aud it in re ation to t he same

l l l
.

Th e egi s ativ e p ow er i s v ested in a Common Counc i w hi c h

y l
.
,

con si sts o f t he ma or and a d er men w h o en act c ity or d inances ,

and p osses s th e pow er o f aud it ex c ept in ca ses w h er e t h e pow e r

i s v ested i n one of t he board s estab ished under t he prov i sions l

o f t he c harter .

1 3 G r ou f o ow ing i s an anal ys i s of
p C Ch a r t e r s
— The ll
y l G
. .

th e Cha rter o f a c ity t pica o f those w ithin roup C

l l
.

The ex ecuti ve egi s ati v e and administrati ve pow er s in a

l
, ,

munic ipa ity hav ing thi s f o rm o f gov ernment a re vested i n

c ommi ssi one r s y
T he are fi v e in n umber and acting c ollec
l l lly
.
,

ti v e y cori st i tute t he Counci and ind iv idua ar e denominated

ll
a s f o ow s :

r
M ayo w ho i s ex officio commi ssioner of pub ic aff airs and -
l
l
, , ,

a memb er o f all c
it b oar d s
. yl
commi s s ion er o f p ub ic sa f ety ;

c ommi ss i on er o f p ub i c w or s ; commi ssi oner o f fi nance ; com k

missioner of accounts
l l
.

Th e mayor ,as commi ssi oner o f pub ic aff air s i s respons ib e

l
,

f or t h e enf orcement of t h e aw s He i s t he presi d ing offi cer o f

l ll
.

t h e Counc i and i s c harged gen era y w ith t he overs ight o f all

departments board s and commi ss ion s of t he c it t he oa rd y B
l
, , ,

o f E ducation being an ex ception t o thi s genera prov i si on

l l l
.

The c ommi ssi one r of pub ic sa fety as t he tit e i mp i es has

l l
, ,

c harge and sup erv i si on o f t h e p o i ce fi r e sanitary hea th

r
, , , ,

c ha ity and correcti on depart ment s S ubord inate offi cers o f

l ll
, .
,

which t h e hea th offi cer i s an i ustration ai d hi m in t he per ,

 N PAL ACCO UNT I N G MU I CI

f m or f h i d ti
anc e C ll t r l d ti
o i mp d p n
s u es o a e a u es a re ose u o

mp l in p ti n f p l mbing
.

hi m by h h rt r f t e c a e , a s, o r ex a e, s ec o o u ,

w i he g d m
t s r an easu es, et c

mmi i n r f p b l i rk h
.

Th e co h r ss o d p r e o u c wo s as c a ge a n su e

i i n f ll p bl i th r
v s o o hf r ap bl i b il d inu p rk c o oug a es , u c u s
g , a s,

wa t r d p r m nt
e d ll r l
e d p r n l pr p r
a t e n d an a ea an e so a o e t y ow e

l d ntr ll d by h m ni ip l it
, ,

ease or c o in h r o f ay e t e u c a y not c a ge o n

th r d p r m t H i l
,

o e e h r d
a ih h d t f
t en m e s a so c a ge w t t e u y o reco

n il n r p b l i i mpr
.

m n d ing
e h to t m nt
e c ou d h c ecessa y u c ov e e s an as

C harge nstruction o f suc h w h en authori z ed

o f co .

The c ommi ssi one r o f fi n ance i s ex offi c io c it y t reasu rer and

.
-

there f ore h as custody o f all mon ey coming into possessi on o f

l
,

o r be ongin g t o t h e c ity H e i s required t o maint ain prop er

k
.

boo s o f acc ount so that h e may at any ti me inf o rm t h e Coun

l l
,

c i l as t o t h e fi nan c i a stat u s o f t he muni c ip a i ty o r o f any

d epa rt men t t h ereo f H e i s t h e d i sbu rs ing offi c er ma ing pay k

l l
.
,

ment s how ev er on y up on t h e ord er o f t h e Cou nc i by cer

k
, ,

t i ficat e o f t h e c ommi ssi on e r o f ac coun t s ta ing an appropriat e ,

v ouc h er th er e f or H e i s ex offi c i o aud it or and ex amines and

ll l ll l
-
.
,

aud i t s a ll b i s p ayab e b e f o r e th ey ar e a ow ed b y t h e Counc i

l l
.

It i s a so h i s duty t o pr epare an annua budget and t o present

t h e same t o t h e Counc i l
l k
.

Th e c ommi ssioner o f acc oun t s i s ex offi ci o c ity c er and as

l k
-

s uch per f or ms all o f t h e d ut i es inc i d ent t o t h e O ffi ce o f c er

‘

l l k l
O ,

inc ud ing c er o f t he Counc i at i t s meetings H e i s t he city

ll
co ector and i s r esp on s ib e f or t h e pr op er a nd pr om l
.

pt col
l ecti on o f t ax es assessment s ; w at er and ot h er r ent s
,
icenses , l ,

f ees and o f a ll mon ey due t h e c ity from any source w hatso

l
,

ev er He i s a so charged w i t h th e d uty o f assessing prop erty

l
.

ocated in t h e c ity

l
.

The j ud ic iary p ow er i s v ested in a co urt hav ing c iv i and

c ri mina j u ri sd icti on l
l
.

The sub or d in ate offi cer s and emp oyes are n ominated f or
position s in t h e various d epart ments by t h e c ommissioner hav
i ng d irect sup e rv i sion and t h e app ointment i s eff ecti ve a fter
l
,

con fi r mati on by t h e Counc i

l l
. .

The Civ i S erv i ce Commi ss ion i s app ointed by t he Counc i

and i s v ested w ith p ow er s in c i d ent t o suc h c ommi s s i on s .
§ 39 MUNI CI PAL ACCO UNT I N G 13

TH E B U D GET

P UR P O S E A ND ME TH OD OF P R E P A R I NG

1 4 P u r p os e of nomic point o f
a B u d g et — Fr mo an eco

ll l l
. .

v i ew ,
it i s genera y admitted t hat munic ipa it i es shou d not
p ermit ex p en d it ures t o ex ceed r ev enues In ot h er w ords i t i s
l
.
,

”
i b etter th an t h e
“
c onced ed t h at a p o i cy o f
'

a s you go s
p y
a

practi ce o f fi r st incu rring t h e debt and t h en rai sing t h e money

t o pay l
The better po icy h as been adop t ed by t he offi c ia s o f l
l
.

many munic ipa it i es and i s i mposed on many cit i es by p ro

v i s i on s i n t h e c ha r t er s

l
.

Cont ro ov e r ex pend i t u res i s obt ained by means o f a b ud get

ll
,

an in str u ment w h i ch h as b een d efi n ed as f o ow s : A b u d g et

l l
i s a f orma comp ete and fi na st at ement o f a fi nanc ia p an l l l
l
, ,

f or a fi sca p eriod S h ow ing t h e auth ori z ed ex p end it ures f or

,

that period and t he est i mated revenu es and other mean s o f

meet ing t he ex p end it u res .

1 5 . P r oc ed u r e in P r ep a r i n g and A d op t i n g a

B u d g et —
Cit i es that a r e on a bud geta ry ba si s becau se o f ch a r
l k
.

requirements must oo t o t he charter f or gui d ance as t o t h e

'

t er
ll
,

proced ure t o be f o owe d in t he preparat ion and ad opt ion o f

t he budget In t he case o f muni c ipa it ies ot h er t han c ities l
l l
.
,

w hose offi c i a s d es ire t o adopt t h e bud getary p an t h e gov ern

ll ll
,

ing boa r d s w i u sua y b e f oun d p ossessed o f pow er t o pr ov id e

f or th e ad opt ion o f t h e p an by r u e or d inan ce or oca l aw l l , , l l .

1 6 In a typica l
hird c ass in t he st ate o f N ew
C it y o f t he t l
Y k l l
.

or that i s t o say a c ity hav ing a pop u at ion o f ess than

l
, ,

t he proced u re ead ing t o t he preparati on and ad op t ion

o f t h e b ud get i s b ri efl y a s f o ow s ll
l
, ,

Wit h in 30 days preced ing t he end of t he fi sca year t he heads

l
,

o f al l d epa rtment s emp ow er ed t o auth ori z e or c ontro ex p end i

tures are required t o submit t o t h e mayor estimat es in w rit ing

l
O f t h e prob ab e r ev en ues and ex p en d it u r es f or t h e n ex t fi sca l
y ea r in their dep artments Thereup on t he mayor i s required .
,
14 MU I CI N PAL ACCOUNT I N G § 39

to lay t he ti mates so submitt ed t o hi m be f ore t he oar d o f

es B
E stimate and App ortionment
l
.

Within 30 days a ft er t he c ommencement of each fi sca year

th e B oard o f E st i mat e and Appo rt i on ment i s r equir ed t o ma e k
an itemi z ed st atement in w ri t in g o f t h e esti mated r ev enu es and

ex pend itur es f or t h e fi sca yea r ; thi s statement i s l now n as t h e k

annual es ti ma te A fter comp etion t h e annua estimate i s sub l l
l B
.
,

mit t ed t o t he Common Counc i by t he oard o f E sti mate and

‘

Apport ionment w ith such ex p anatory matter as t he board

,
l
may deem necessary
l
.

The Common Counci i s required t o c on si de r t he est i ni at e

l
,

g i v e a p u b i c h ea rin g t h e r eon an d ad o pt t h e sa me as s u
,
b mi tt e d ,

o r it may d i mini sh or rej ect any i t em th er ein c onta in ed and

ad opt t h e esti mate a s s o amen d ed The Counc i may not how l

l l
.
,

ev er d i mini sh o r r ej ect any item w h i ch r e ates t o sa ari es t h e

, ,

in debtedness or estimated rev enues or a mounts due upon

k
, ,

j udgments or t o S i n ing fund s or th e estimates submitt ed by

, ,
-

t h e D ep a rtment o f E ducat i on
l ll
.

When t he Counc i sha h av e adopted t he esti mate it mu st ,

be entered in i t s minut es and t he su ms th erein est i mated ,

f or ex pend itu res thereupon become appropriated in t h e

a mou nt s and f or t he s ev e ra dep a rtments offi ces and pu r l
l
, ,

poses as t herein spec i fi ed f or t he fi sca year , .

When t he amount requ ired t o be rais ed by tax t o meet est i

mated ex pend itu res i s det er mined th e Common Counc i i s l
l
,

requ ired t o evy and raise that amount by a tax again st t h e

l l
property iab e there for w ithin t he c ity .

1 7 l
B udgeta ry c ont ro i s that c ontro w hic h bv mean s Of a l
l
,

budget t h e tax aying boa rd or c ommi ssion secures ov er t h e

l
-

ex p end itures o f all mu ni c ip a d ep artment s Upon t he ad option

ll
.

o f t he bud get t h e sums th e r ein a ott ed t o t h e v ari ou s d ep art

k
,

ments became now n as appropri ations t h e amount o f each ,

ind icating t he ex tent t o w h ich eac h department may incur l i ab il

i t y w ithout f u rt h e r aut h oriz at i on or appropriat ion b y t h e
k
budget ma ing boar d Th e imitation on t h e spend ing p ow e r l
ll
-
.

o f each d epartment w i be f ound in t he City s charter in a

’

l l l
,

oca law or by l aw or in t he r eso ution adopting t he budget

-

, .
 MU I CI N PAL ACCOUNT I N G
F OR M OF B UD G E T

1 8 In i ts fi na lf rm
hou d inc ude appropria
o t he bud get s l l
ll
.
,

t i ons o f rev enues as w e as o f ex pend itur es S O arranged as t o

l l
, ,

corr esp on d in termino ogy and in c assi fication w it h t he

acc oun t ing p an l l
It shou d be d iv i d ed int o t w o pa rts ; n ame y l
l
.
,

) appr o pri ati on s ; 2

( ) pr ov i s i on s f or m ee ting appr opria

tions .

1 9 Cl a s s i f i c a t i on of Exp e n s es . — I n t h e b udget and in

l l
.

t h e account ing p an ex penses are c assifi ed by gov er nmental

f u nc t i on and b y o bjec ts of p
ex en di t u r e

l
.

The f unc t iona cl assi ficat ion and t h e st and ar d ex pen se

ac c ount s ar e in u se in muni c ipa iti es i n t h e st ate o f N ew or l Y k
u sing systems o f ac counts f or mu ated by t h e comptro er o f l ll
that stat e .

20 Th e l
i fication by g o v e r n m e n t a l f u n c t i o n i s
c a ss

l B
.

based u p on t h e c assi fi ca t i on ad opted by t he u reau o f Cen su s

in it s l
ann ua rep o rt s o f t h e fi nanc i a stati sti cs o f c i t i es a nd i s l
as fo ll ow s :

I . Gnr lG
e e a rnment ov e .

II Prot ect ion o f Per son and Property

H l
. .

III Conse rv ati on o f ea t h

l l
. .

IV S anit ation and Promotion o f C ean iness

H
. .

V . ighw ays .

VI . Charit ies and Corr ect i on s .

VI I . E ducat ion .

VIII Rec reat i on

l l l
. .

IX Pub ic Ut i ities N on Commerc ia

—

ll
-
. .

X M i sce aneou s
l
. .

XI . Munic ip a In d ebt edness .

XI I Constru ct i on and P ermanent I mprovements

F
. .

( ina nc ed fr om c u rr ent r ev en ues )

l l l
.

X III . P ub ic Uti ities— Commerc ia .

21 . The c ass l
ifi cation by o b j e c t s o f e x p e n d i t u r e
requires t he use o f f our standard ex pense accounts w hich in
l
, ,

c onnect ion w ith t h e poss ib i ity o f f urt her itemi z at ion or sub
16 N PAL ACCOUNT I N G MU I CI § 39

d i i i n f rni h
v s o ll h d t iluhi h r sn bl a t e e a s w c easo a y may be
ll
,

r q ir d Th f r
e u e nd rd p n e nt ou st a a ex e se acc ou s a re a s fo ow s :

S l ri d F
.

1 . Wg a a es, a es, a n ees .

2 P r h f E q ip m nt
u c ase o u e

M ri l d S pp l i
. .

3 . at e a s an u es .

4 E x pen ses
l
. .

I f f urt her i t emI z at i on be required t he accounts M ateria s

l ll
,

a nd S upp i es and E x p en ses may b e su b d i v i d ed as f o ow s

3 Mat erials and S upp i es

’

l
F l
. .

( )
a u e

F
.

( )b o o d
O l
.

( )
c th e r m a t e ri a s ( s p e c if y)
O l
.

( )
d t h e r m a t eri a s ( sp e c if y) .

4 E x p en ses
l
. .

( )a Tr a v e in g .

( )
b Prin t in g a n d A d v e r t i s in g .

( )c M a int en a n c e o f E q u ip m e nt
O
.

( )
d ffi c e E x p e n se .

( )
e In su r an c e

B l
.

(f) R e p a ir s t o u i d in g s b y C o ntr a c t .

( g) L i g h t a n d P o w e r .

( )
h R e nt
O
.

i
( ) th e r ex p e n se s ( s p e c if y)
O
.

( j) t h e r e x p e n s e s ( sp e c i f y) .

22 Cl a s s i f i ca t i on of R ec ei p ts — Rec eipts a re l
c a ss i
l
. .

fi ed as r ev enu e and n on r ev enu e inc ud e R ev e n u e r ec ei pts

l l
-
.

Such a s ar e app i cab e t o t he c urr ent main t enance and supp ort
o f gov ern ment suc h as t ax es icenses and per mit s fi nes and l
l l
, , ,

p ena t i es interest rent depart menta earnings et c

l y
.
, , , ,

N o u r e v e n u e r e c e i p t s inc ude t h e proceed s of t empora r

-

t ax oan s l trans f ers ref und s and other receipts w h ich are
l
, , ,

receiv ed and pai d by t h e muni c ipa it y as a fi duc iary that i s t o

l
,

say as agent or tr ustee and in w hi ch t h e munic ip a it y acquir es

, ,

no pr opriet ary int erest .

23 F u rt h er Cl a s s i f i c a t i o n Of E x p en s e s and

B l
.

R ec ei pts es id es the i ficat ion o f ex penses and of

c a ss

lr
.

r eceip t s a ead y d esc rib ed , ex p en ses and r even ues a re segre

§ 39 MU I CI N PAL A CCOUNT I N G 1 7

ga edto r c as s l
ifi ed by department s Thi s means t hat appropria
l
.

t i ons f or ex pend it ur e b y t h e mayor ar e i st ed un der t he head

.

i ng M ayor and appr opriat i on s f or ex p en d it ur e by t h e Common

l l
,

Counc i a r e i sted un d er t h e h ea d ing Common Cou nci l and so

lk
,

on w i t h eac h d ep ar t ment and i ew i s e w i t h r ev en u es I f it be

ll
.
,

ex p ect ed t h at r ec e ip t s w i b e f or t h c oming from any d epart

,
l
ment t hat fact S h ou d b e sh ow n in t h e bu dget und er t he name ,

o f t he d epa rt ment ex p ect ed t o pr od uc e t h e r ev enue

l l
.

The d ep a rtmenta t it es or h ead ings must c orresp ond to t h e , ,

names o f t h e offi ces or d epart ments f ound in t he vari ou s munic

i pali t i es l
In a most all in stances h ow ev er t h e ti t es w i bear l ll
l l l ll l
.
, ,

c ose r esemb anc e t o t h e ti t es in t h e f o ow ing out ine o f a

bud get .

O UT L I N E OF B UD G E T

24 ll
f o ow ing abb rev iated f orm o f a b ud get w i Sh ow
The ll
l l l l
.

on y f u nc t i ona and d epa rt menta c ass i fi cat ion o f ex p en ses and

sourc es o f in come w i t h t h e stan da r d ex p en se ac count s in sert ed

l
,

on y a f t e r t h e fi r st su b d i v i si on It mu st b e un der st ood th at t h e .

ex p en se accou nt s ar e used in c onnec t i on w i t h eac h d ep art ment

t o w hi ch they ar e app i cab e l l .

APPRO PR AT ON S I I
I GE N E R AL G OVER N M NT E

Al l
.

d er men or Counc i
1 . Sa l ar i es, w ag es, and f ees ( g ) L ig h t and p o w er
2 Purchase o f eq u i p ment ( It ) Rent
l l
.

3 Mat er i a s and supp i es ( i ) O t h er

F l
. ex p en ses

( 0 ) ue Mayo r
( b ) ood F Ci ty manag er
( )
c t her ma t O
e r i a s l B oar d o f E sti mat e and A p po r t i o n
4 E x p enses m
T l B ly
. ent

( a) rav e oar d o f Cont ract and S up p

( b) P rinti ng and ad v er Purchasi ng
ll
ag ent

t i si ng Ci ty co mp t ro er or co mmi ssi oner

( ) cM ai nt en an c e o f e u
q pi o f account s

ment Ci ty t r easu rer o r co mmi ssi oner of

( )
d O ffi finance
I ll
ce e x p en se

( e ) nsu ranc e Recei ver of tax es o r tax co ector

( f ) Repai rs t o bui di ng s l l
Ci ty c erk or c erk o f counc i l l
A
.

cont ract ssesso r s

18 MU I CI N PAL ACCOUNT I N G § 39

La w D ment— O ffi c e of Ofi f f c i ty engi neer

l l
epa r t c or ce o

i E ect i ons

l l
po r a t o n c o u n s e

Ci v i S er v i c e Co mmi s si on Ci ty muni c i pa
l l l
or co u r t

O ffi c e o f c o mmi ssi oner o f p u b i c Muni c i pa b ui d i ng s and o ffi ces

k Und i st ri but ed
Ofi
w or
l
s ex p ense s

f ce of co mmi ssi on er of p ub i c
sa f et y
11 PROTE CT ION or P ERSON AND PRO P TER Y

Pl l B B l I
.

B ureau i ce— P o i ce f o rc e ur eau o f ui d i ng n sp ec ti on

B
of

B Pl Pl m
o

i c e— Ca re and mai n bi ng oar d

Pl m
u reau o f

l
o u

t enanc e o f bui d i ng s and g rounds u b i ng i n sp ecti on

B Fi r e Fi r e fig h t i ng l
S ea er o f w
ei gh t s an d mea sur es

P l
ur eau of -

force u b i c p ound ; d og cat c h er

B u reau o f F i r e — Care and mai n

t enance o f b ui d i ng s l and g round s

III S AT ION H ALT

CON ERV or E H

A (B I l l l
.

d mi ni st rat i v e oar d so at i on h o sp i t a i so at i on

H l l
ex penses or at

of ea t h and h ea t h ) offi cer m ho es

Conservati on and I nsp ec t i on A l y ux i i a r ac t i vi t i es

l
P ub i c hea th
-
l l aborato r y
IV S A N ITATION O M OT I ON
AND L A N LI N SS
PR OF C E E

B l l
.

ureau o f S ewers R e f u se and garbag e d i sp osa p

l l l
ant

S t reet c ea ni ng S ew ag e d i sp o sa p ant
Re f u se and garbag e l P l m
col ec t i on an d ub i c co f ort stati ons
d i sp osa l
V I AS H GH W Y

A H y
.

dmini st rat i on o f h ig h w a s— O f y ig hw a s and b i d Car e

B
r —
g e s

fi ce o f u reau o f S t r eet s o r m ai nt enanc e

H igh w ay s H y l igh w a b u i di ng s
S no w and i ce re m oval
VI A IT I S
CH R O C ION S
E AND C RRE T

l
.

Commi ssi oner of c h ar i t i es V i ef

’

l
or eterans re

ov er seer o f poor y Ci t ho sp i t a
O ut doo r p oor r e i ef l l Cor r ect i ona i nst i t ut i ons
P oor i n i nst i tut i ons ml
or fa P
i i es B rob at i on oar d o r offi c er

V U CA T I O
II ED N

Am O
.

d i ni st rati on m perat i on and a i nt enanc e

El ement ary s ch oo s— l E x pense l l of sc hoo

H l l p an t

i nst ruct i on
H
ea t h serv i c e in sc h oo s

i gh sc h l E x p ens e ofA l y in ux i iar ag enc i es

l l
oo s—

st ruct i on Genera ex p enses S c hoo

Oh l P l l
— s

t er s ch o o s— E x p en se of iny ub i c i bra r

st ruct i on
§ 39 PAL ACCOUNT I NG
MUN I CI 19

VIII C AT RE
P kD B l
. RE I ON

m and ce eb r at i ons and

Pl y
ar epart ent conc er t s,

g round s m ent ert ai n

P l l
a ent s

ub i c bat h s M m or i a D ay ob ser vance

I X UBLIC UTILI I S O MM C I L
e

P NO N C
P l mk
— ER A
. T E -

ub ic Cemet ery
P l
ar et

k
ub i c d oc
SC LLA N OUS
s

X MI E E

J m lm Dfi ll
.

udg ent s and set t e ent s e c i enc i es in co ec t i on o f t ax es

R e f und s o f t ax es y S t ate and count t ax es

X I MU N ICIPAL I B N SS N DE TED E

I
.

Red emp t i on o f d eb t f unded debt

k F m o y l
nt erest on

Cont r ib ut i ons t o S i n i ng I u nd nt er est on t e oans

ON ST UCT ION
p rar

XI I C R M A N NT IMP O M T S
AND P ER E R VE EN

A
.

s sess ments agai nst Ci ty p p

r o Ci ty s shar e o f assessment wor
’
k
et t y O t h er c onst r uct i on i t ems

X III UBLIC UTILITI

P E S— CO MM CI AER L

Am l O
.

d i ni st rat i ve and perat i on and mai nt enance Water

g enera
D
ex ,

p en ses epar t ment

Wat er debt
II
PRO V S ON S FO R I
ME E T N G APPRO PR AT ON S I I
I ST I M AT E US
R EVE N E — M I ELL N EO SC
REVE N E A US US
l l
. ED

Sp eci a Ci ty c erk ( f ees )

B
t ax es :
k k Law d ep art ment
l l
an st o c t ax es
M Muni c i pa bui ding s
I B P l
ortgag e tax es
ureau o f ice
B
nsuranc e t a x es o

L icenses and per mi t s u r eau o f Fi r e

l
L iq uor i censes ( E x ci se ) B urea u o f B l I ui d i ng nsp ec ti on
l l
t ax
Marri age i censes S ea er o f m
w eig ht s and

l B Pl m
easu r es

D og i censes oar d o f m bi ng E x a i ners

Am l B H l
u

ment i c enses oard o f th

l l
use ea

V endo r s
’
ic enses m
S t r eet c eani ng d ep art ent
D m l per mi t s l
Pub ic bath s
F l
epar t enta

i nes and p ena t i es Co mmi ssi oner o f ch ari t i es

P l i ce or ci t y fi nes Ci ty ho sp i t al
I l B
o c o ur t

nt erest and p ena ti es oar d o f E ducat i on

O n tax es l l
Pub i c i brary
On ban balances k P k m d ep art
P l m k
ar ent

Rent o f ci ty p ropert i es ub ic
l P l k
ar et s

S t at e appo rt i o nment f o r sc h oo s ub i c doc

D l
s

epart ment a ear ni ng s :

Ci ty c ou rt ( fees )
City t r easurer T l
ota ,
mi sc e ll aneous r ev enues
20 N PAL ACCO UN TI N G MU I CI 39

II A N I N S O MM CI A UBLIC UTILITI S
E R G or C ER L P
lW D m O
. E

M uni c i p a t h er
l T l l
ater ep art ent r ev enu es

S a es o f w at er mm earn i ng s o f c o

O l
ot a ,
.
erc i a p ub
t h er r ev enues l ic ut i i t i es
M lL D m
uni ci p a T l m
ig h t i ng est i

l
ep art ent ota , at ed r ev enu es

Sa es o f cu r rent

U T U PLUS IO A 1 11 C RRE N S R or PR R YE R

A l l
.

vai ab e f or r educt i on o f t ax at i on

I V ONT IBUTION S O M I N I N U N S C R FR S K G F D

l
.

( ) Gi v e t i t e o f each f un d
V TA X LEVY
l
.

To ba anc e

T l ot a budg et

TH E A CCO U N TI N G P L A N
25 S ince th e c ha
rter prov i sion s o f v arious cities vary in
‘

l ll
.

d et ai s it w i b e f ound nec essary t o r e f er t o t he c harter s t o

k l l
,

now th e d etai s required t o be ex h ibit ed in each part icu a r

City N
ot w i th st an d ing t h e v a r i at i on o f d et a i s it w i gen er a y l ll ll
ll
. .
,

be f ound th at f und ament a y t h e p ow er s and d ut ies o f th e

l l
, ,

offi cer s as a w h o e ar e t h e same and t h at it i s p oss i b e t o

l
f ormu ate a syst em o f accounts f o ow ing genera princ ip es and ll l l
pe rmitting such v ariati ons in detai s as t he oca cond it ion s l l l
may require .

B O OK S U SED

26 It i s assu med that th e reader i s f ami iar w ith th e boo s l k

l B k J l
.

c ommon y u sed in b usines s su ch a s Cash oo ou rna and

l l
, , ,

L edger Th e or dina ry f or m o f j ou rna and ed ger i s intended

l
.

t o b e u sed in op erating t h e p an desc ri b ed h er ein Th e Cash

B k l ll l l l l
.

oo Sh ou d b e sp ec i a y r u ed by co u mn s d ev e oping t ot a s

ll l
.

f or p ostin g t o contr o ing ac c ount s t h e d etai s o f w h ich a re ,

posted t o subsi di ary recor ds

O k l
.

ther boo s o f origin a entry required are : Or d er R egis ter ,

Clai m Regis ter War r ants P ayable R egi s ter

, .

27 O r d er R eg i s t er — Th e O rd r R e eg s e i t r is u sed to
mp r ll r l
.

e nter o rders present ed to th e co t o e f or h i s a pprova

§ 39 MU I CI N PAL ACC OUNT I NG 21

be f or e t h e d ebt may be incu rred Th e f orm i s as sh ow n in t he

R O
.

ecord o f r ders and Cont ract s sh ow n in Fi g 1 A s in t h e

B k l l ll
. .

Cash tot a s are dev e op ed f or p osting t o t he

oo c ontr o ing

G l l
,

acc ount in t h e en er a Led ger and t h e d et a i s a r e p ost ed t o sub

S i d ia ry r ec or d s l
The t ota s ar e p ost ed t o t h e contro ing ac count ll
l
.

by mean s o f p eri od ica ent ri es w h ich d i mini sh t h e appr opri a

tions and set up reserv es t o meet t h e v ouchers w h en presented .

28 Cl a i m R eg i s t er f or m o f —
Th e C l im R gi r h
a e st e t e
k f ri in l ntr l
. .
,

w h i ch i s S h ow n in F ig 2 i s t h e b oo o o g a e y o f c a i ms

l
.
,

present ed f or au dit Th e c ai m w h en presented f or aud it

l l
.

sh ou d b e ac comp ani ed by a c op o f t h e o r d er prev i ou s y

y
i ssued w hich f urni sh es t h e c omptro er w i t h t he inf ormat ion ll
l l l
,

r equ ired t o cance th e reserv e prev ious y estab i sh ed T h i s i s

l
.

d one by t h e en t ry o f t he amount o f t h e or der in a co umn p ro

v id ed f or th at p u rp ose t h e tot a o f w h i c h i s p osted p eri od i ca y l ll
ll G l
,

t o t h e cont r o ing ac count in t h e en er a Ledger and t h e

l
d eta i s a r e p osted t o a sub s id iary r ec or d
k l l l
.

T hi s boo a so cont ains a c o u mn f o r t h e c ai ms aud it ed t h e

ll G l
,

t otal o f w h ich i s p ost ed t o a c on t ro ing a cc ount in t h e en er a

l
Led ge r and t h e d etai s a r e p ost ed t o a sub si d i ary r ecord .

29 . Warran t s A f t er c a ims are

P ay ab l e R eg
’

i s t er .
—
l
a ud ited acc ount s a r e d r aw n on t h e t r easu r er o r d i sbu r s ing

ll l
,

o ffi c er by t h e c o mp t r o e r and ent e r ed in a Wa rrants P ayab e

l
R egi st er t he tot a s o f w h ic h a re p ost ed t o t h e au d i t s i de o f an
ll ll l
,

accou nt in t h e gener a ed ger c a ed Wa rran t s P ayab e a nd t o

t he c red it si de o f cash .

TH E ACC O U N TS

30 G en e r a l L ed g er A c cou n ts — I n the Gn r lL d
e e a e ge r
f ll
. .

t he acc ou nt s r
a r e seg egat e d into f ou r group s as o ow s

Cu rrent Capita l
A ssessment Trust
B y t h i s meth od t h e accou nt s d ea ing w ith t h e same c ass o f l l '

tran sacti on s ar e group ed in t h e en er a Ledger w h ich i s p hys G l

l
,

i cal ly sub d iv i d ed by co ored Sh eets or t ab s b earing t h e n ame o f

t he gr oup The group s in eff ect compri se sep arat e and d i st in c t
.
22 N PAL ACCOUN T I NG MU I CI § 3 9

l dg r
e lth gh th y
e s, a ithin h
ou m lm d lf e are w t e sa e vo u e an are se

b l n ing
a a c Th l f h p r i n ill b b ie v a ue o s uc a se a at o w e o v ous

th t f nd ppl i bl
.

wh enit i p int d
s o e f h f r
out a u s a ca e t o one o t e ou

p p ur osesn mdmy b
a ppl i d
e y m r f ah not e a e t o an one or o e o t e
other purposes .

31 . Th e nts i n t he c u r r e n t g r ou p conta in t he
accou

recor d of t h e c urrent op erat i on s of t he c ity These accounts

ll l
.

are cl osed pe riod ica y into a Curr ent S urp u s acc ount w hich

l
ind icates t he resu t o f t he fi nanc ia p an adopted at t he begin l l
ning of th e fi sca period l
f cu rrent rev enues ex ceed cu rrent I
l ll l
.

ex pen ses a surp us w i resu t O n the other hand i f t he

ll ll
.
,

ex penses ex ceed t h e revenues a d efi c iency w i f o ow .

32 . Thents in t he a s s e s s m e n t g r ou p record the

accou

t ran saction s in conn ecti on w i th c ity i mprov ements that ar e

fi nanced by means o f spec ia assessment s ev ied a g a in st gr ou p s l l
o f pr ope rty ow ner s T hese accounts if all assessments hav e
l ll l
.
,

beenpaid du ring t he fi sca year w i S how neither a surp us nor ,

a defic i ency .

33 . The accoun s record t he trans

t in t he cap i t a l g r ou p
acti on s l n connecti on w it h c ity improv ements made at t h e
‘

l
ex p ense o f t h e c ity at a r ge and w hi c h are fi nanced by t h e i ssue

o f b on d s o r by appropri at ion s

l
.
,

City prop erties at their apprai sed or assessed v a ues ar e

l
, ,

i nc uded i n thi s gr oup and represent assets o f t h e c ity w hich

l l
, ,

w hen set up aga in st t h e bon d ed d ebt ( i ab i ities ) show t he

capita surp usl l .

34 Th e accounts in t h e t r u s t g r o u p recor d t he r eceipt

l
.

and d i sbu rsement o f f un d s in w h ich t he mu nic ip a ity acqu ir es

no propri etary interest and acts on y as agent or tru stee l .

35 . Sub si d i ar y R ec or d s .
— As lr
a eady d efined , a c on

t r ol l i n g acc ou that sh ow s in summary f orm t he items

nt is one

w hi ch app ea r 1 n d etai in ot her acc oun t s l

The oth er acc ount s
l ll
.
,

wh ich show t he d etai s are ca ed s u b s i d i a r y accounts In

ll
.

thi s S ect ion t he contro ing accounts are ind i cated by means
k l l
,

o f an asteri s preced ing th e tit e ; for ex amp e ,

‘Current Revenues .
 N PAL A CCOUN T I N GMU I CI

F b i d i ry r
or su s rd am r b k h ld b eco s d t w o or o e oo s s ou e u se

B f h l r g n mb r f it m r l ting
.

ecause o t e a e p nd it r
u e o e s e a t o ex e u es

f or h i h ppr pri ti n m
w c a b m d o a b i d i r l dg r
o s ay e a e, one su s a y e e

i
s use d r rd to h p n d it r
eco d i ll d h App p i
suc ex e u es an s ca e t e ro r a

t i onL dg eL dg A A ll h r b id i r it m m b
er , or e er ot e su s a y e s ay e

ingl l m kn n d n min t d
.

r rd d in
eco e a s e vo u e, ow or e o a e as

L d B
m
e ger

f L dg r B
.

F h p rp
or t e u y r
oses od in ry f r m f e e an o a o o co

m i l l dg r m y b p i l r l ing
,

er c a e d e L dg r A r q ir
a e u se . e e e u es s ec a u

o f the f orm sh ow n i n F ig 3 . .

C U R R E N T ACCO U NT S

36 Th e cu rrent ac cou nt s i n t he Gn l e era Ledger ar e as

ll
.

fo ow s

D EB IT S CRED I TS
Cur rent Cash Cur rent C ai ms l
ud i t ed A
T l Recei vab e Cur rent Current War rant s P ayab l
T l
ax es — e

Recei vab e County Current Loans

l O A
ax es -

Tax S a D ue t o t h er
T bl A T
e ccount s

R ec ei v a e— Du e t o County reasu rer

F mO A Ol
ax es rr ea rs

D ue t h er Reserve f o r Cu r r ent b i gat i ons

F
ro cc ou nt s

k
S i n i ng und Cont ri but i on Re Cur rent Revenues —
E st i mat ed
q ui red Cur rent Revenues Unest i mat ed
A
—

E sti mat ed Revenues Cur r ent pp ropr i at i ons

Cur rent S urp l us

Ex p l n ti n
a a o s th ese accounts f o ow and i us
f or t h e u se o f ll ll
t r at i v e entri es are gi v en f or t ran saction s o f frequent oc cu rren c e .

E NTR I E S R E C O R D I N G TH E B UD G E T

37At t he beginning o f a fi sca ear t he boo s of a c ity d i s ly k

l l B
.

c osed a curr ent su rp us o f Th e oar d of E stimate and

App ortionment prepared and t h e Common Counc i adopted a l
budget w ith appr opriation s amounting t o esti mated

rev enues in t h e sum of S i n ing f un d contri buti on s t o k

l
meet mat u ring in st a ments on the bond ed debt prov i ded f or i n
t h e budget in t h e sum o f and a fter app ying t h e c u r l
l
r ent surp u s ou reducti on th ereof a tax evy of , l
I L T 234— 1 7
24 MU I CI P N AL A CCOUN T I N G 39

Thi s inf ormation i s tran smitted t o t h e comptro ler by t h e l

c it y l k
c e r w h o d e i v er s t o t h e c o mptr o er a clop y o f t h e b u d get ll
l
,

ad opted by t h e Common Coun c i

ll k ll
.

T hereupon t he comptro er ma es t he f o ow ing entry in h i s

l
,

J o u rn a :

Cu r rent Surp l us

E st i mat ed Revenues
S in i ng k F und c ont r i but i on r eq ui red

T Recei vab e l
A
ax es — c u r r ent

To 1 “
Cu r rent pp p
r o r i a t i on s

38 C om m e n t s ou
-
th e F o r eg oi n g E n t r i es . Cu r
G l ll
-
.

r en t in t he enera L edger w i b e d ebi t ed w h en the

S u rp l us
item i s p osted It i s assumed th at at t h e date of t h i s entry t h e
l l l
.

edge r account Cu rr en t S u rp u s sh ow s a c r ed it b a anc e w h i ch

ll
, ,

w i be off set by t h i sd eb it ent ry D uring t h e year th i s account

ll
.

wi b e d eb ited w i t h c h ar ges or p ayments on acc ount o f

ex p en ses o f pri or yea r s un es s a r eserv e o r some ot h er p ro , l
v i si on ha s b een mad e t o meet su c h ch arges and p ayment s At
l ll
.

t h e end o f t h e fi sca year th er e w i be tran s f err ed t o t hi s

l
acc ount t h e amount s o f t h e d eb it ba anc es in t h e account s

ca ll d i m d R
e E st d A pp p i
a te d R ev enu es a n r o r a te evenu es

r C rr nt S rp l i ll b r d it d ith h
.

D ring h
u t e yea u e u us w e c e e w t e

am nt ou f r r
s o n ll d h i h ese v es c a d h r r ce e w c ex c ee t e ese v es set

up A h d
t t f h fi l
e en
y r t h r oi ll b tr tn f rr
e d sc a ea e e w e a s e e to
C rr nt S rp l r d it b l n n kn n
.

u e h u in h
us t e c e a a ces t e acc ou ts ow as

C u rr ent R E im d C
ev enu es — R U i
st a te ur r ent ev enu es— nes t

r d it b l n in h nt kn n
,

m d at e d h an t e c e C a a ce t e accou ow as ur

hi h b l n
,

r en t A pp p i i r o r a t ons, r pr n n n mb r dw c a a ce e ese t s u e cu e e

b l n
a a f ll
c es o rr nt ppr pri ti n
a cu nt e a o a o accou s

At h l l r d h n h ntri d rib d
.

f h fi
t e c ose o t e sc a yea an w e t e e es esc e

h av eb n m d ee h nt i ll h
a e, i h r d b it
t e ac c ou r d it w S ow e t e a e or c e

b l n
a a A d bi b l n m n
ce e rr nt d fi it
t a a in h r ce ea s a cu e e c o r, ot e

A r d it b l n
.
,

wo r d th t p n
s, h a exd dr en ses av e ex c ee e ev e u es c e a a ce

rr nt rp l
.

m n ea s a cu e fr su n r p n
u s, or an ex ces s o ev e ues ov e ex e ses .

Wh r d fi it pp r h m nt th r f i rri d f
e e a e c a ea s , t e a ou e eo s ca e or

wa rd d in l d d in h
an d ing
c u e l Th m nt t e succ ee t ax ev y e a ou

rp l rri d f r rd d pp l i d
.

o f a su if hb h n i
us, su c e S ow s ca e o wa an a e

in h l l y
,

w in p rt
o e or h r d ti n f h a to t e e uc o o t e t ax ev .
§ 39 MU I CI N PAL ACCOUN T I N G 25

39 . E st i m a t ed in h G n r l
R e v e n u es t e e e a Ledger is
d eb i t ed w i t h a mount o f r ev enues ppropriat ing board w h ich the a

h as esti mated w i ll
be receiv ed d u ring t h e c urrent year and
l
w h ich has been app i ed in red ucti on o f t h e tax evy I f du ring l
y
.

t he ea r r ev enues in ex c ess o f t h e amounts est i mated a r e

d eri ved from esti mated sour ces and a re app i ed or tr an sf err ed l
to th e c red it of appr opri ation s or oth er acc ounts th ey ar e ,

d eb it ed t o E sti mat ed R ev enues At t h e end of t he year th i s

ll l
.

a ccount w i be c osed by a cr ed it ent ry t h e amount o f w h i ch

ll l
,

w i at t h e same ti me b e d eb ited t o Cu rr ent S u rp u s

l k
.

During t h e year and unt i t h e boo s are balanced t he E sti

ll l
,

mated Rev enues account w i show a d eb it ba ance w h ich

l ll
, ,

w h en c ont ra sted w i t h t h e c red it b a ance in t h e account ca ed

Cu rr en t R ev enues E s ti ma ted ind icates eit h er t he amount o f
—
,

a n t i c ip at ed r ev en u es w h i c h mu st ac c r u e or b e r ecei v ed i n ord er

t o meet t he r equ ir ement s o f t h e b udget and sub sequent appr o

r i at i ons from s uc h rev enues or an ex c ess o f c u rr ent r ev enu es
p ,

from esti mated sources ov er th e amount s antic ipat ed and

a ppropriated

l k l
.

Care sh ou d be t a en t o av oid conf u sion bet w een t h e ti t es

of the l
ed ger ac c ount s E st i mated R ev en ues and Curr en t
l
, ,

R evenues E sti mat ed

— Th e t it e E s ti mated R ev enues as h as
l
.
,

b een ex p ained r e f er s t o t h e r ev enues w h i ch t h e ap pr opri at ing

ll l
,

boar d h as est i mat ed w i be rece iv ed d u ring t he fi sca year and

t h e amount o f w h i c h as e st i mat ed h as been app i ed t o red uc e l
t h e t ax l evy .

The m
t r Cur r e t R ev enu es E s ti ma ted re f er s t o rev enues
e n —

o f t h e same c h aract e r as t h ose inc ud ed in E st i mat ed ev en ues l R

ll ll
,

but w h ic h hav e t
ac u a y r
a c c u ed o r b een co t
ec ed

ll
.

Curr ent R ev enu es Unes ti ma t ed mean s r ev enu es c o ect ed

—

o r acc r ued w h i c h w ere not c onsi der ed w h en t h e b udget w as

,

prepared
ll
.

Th e acc ou nt E stimat ed R ev enues w i not requ ired in

be
th ose c ities w h os e c ha rt er s d o not permit t he k
ma ing o f appro
p r i at i on s based on esti mat ed r ev enues a s we ll a s on t ax es .

40 . Th e a cc ou nt k n ow n as S ink i ng F un d Con t r i b u
t i on R eq u i r ed is cha rged ( d eb ited ) w it h the mount
a e st i
26 MUN I C I PAL ACCOUN T I N G § 39

mated in t he budget as t h e contribution o f t he sin ing f unds t o

'

k
meet maturities of bonded debt prov i ded f or in the budget
ll
.

Th e same account w i be c red ited w h en payments ar e mad e

k
f rom sin ing f unds t o t he cu rr ent accounts t o meet th e est i
mated requ irements
l
.

A debit ba ance i i any ind icates t he amount o f cont ribut ions

k
, ,

f rom si n ing funds r ema in i ng unpai d .

41 Th e accou nt kn ow n as T a x es R ec e i v a b l e w i ll be
l
.

d eb ited w it h t h e a mount o f t he t ax ev y and w ith suc h a dd i

t i onal items as may be c harged aga inst tax payer s and c o ect ed ll
w ith t he tax es
ll l
.

T h i s acc ount w i a so be d ebited w ith t he amounts re fund ed

on account of erroneous or ex cess iv e p ayments not inc ud ing l
l
, ,

how ev er such ref und s as may be made on y a ft er author iz a

,

tion by t he proper boa rd and appropriation th eref or

ll
.

F rom time to time this account w i be c red ited w ith t h e

ll
amount s co ect ed on ac count o f c u rrent tax es w i t h amounts

ll l
,

can c e e d and w ith amounts trans f erred t o Tax S a e acc ount

l
, .

A debit ba ance remaining in thi s account ind icates t h e

ll
a mount o f u nco ected tax es and shou d corresp ond w ith t h e l
a mount o f unpai d tax es on t h e cu rrent t ax r o ll .

42 C u r r e n t A p p r op r i a t i o n s is a co ntro ing account ll

l l k
.

and s hou d be su pported by items in a sub s id ia ry ed ger now n ,

as t h e A ppr opri at i on L edger or L edger A

In G n r l L dg r C rr nt Appr pri ti n i r d i d
.

t he e e a e e u e o a o s s c e te
l f h ppr pri ti n in h b dg t d fr m
,

w ith t he t ota o t e a o a o s t e u e an o

d d i i n l ppr pri ti n
,

t i me t o t im i h e h tr n f r
w t su c a s e s or a t o a a o a o s as

may be made nder aut hority of t he appropriating board and

u ,

w it h r e f u nd s of erroneous payments .

Certa in d eb its and c red it s in th i s acc ount in connection w ith

t h e i ssu e o f or der s e ff ecting commitments or cha rges again st
ll
appropri ati on s t h e can ce at i on o f suc h items and t he au d it o f
i

ll ll l
, ,

cl ai ms w i be more f u y ex p ained f u rt h er on in Art 5 1

l l
. .

At t he c ose o f t h e fi sca year Cu rrent Appropriations

account w i ll l
or dinari y sh ow a c r ed it ba an ce w hi ch r epresent s l
l ll l
,

t h e unencu mbered ba ance of appropriations and w i be c osed

into Current Su rp us l .
§ 39 MUN I C I PAL ACCOUNT I N G 27

The b a ln
a ce in Current Appropriation s account shou d cor l
r esp ond w ith the l
aggr egat e o f t h e ba ances in t h e Appropria

tion Ledger .

E NTR I E S R E CO R D I NG S UND R Y R E CE I P T S

43 From time t he treasurer receiv es cash from

time to
l ll
.

s un d ry sou rces and repo rts t h e sa me d ai y t o t he comptro er

ll B k l
.

Th e comptr o e r recor d s t he receipts in a Ca sh oo proper y

l l l
r u ed to d ev e op tota s o f t h e sev era c asses o f co ections l l ll
l
.

The detai s are p ost ed item by it em t o proper accounts in t h e

l
s ub s i d i ar y edger ( Led er
g ) an d t h e t ota s a r e post B
ed p eri l
ll
o d i ca y t o t h e contro ing account ll
ll ll
.

Th e fo ow ing entri es i u strate th e method of recor d ing

r eceipts from tax es estimated revenues unest imated rev enues
k
, , ,

s in ing f und cont ribut ion s and t he proc eed s o f tempo rary

l
,

oan s i ssued in antic ip ation o f t ax es

Cu rrent Cash
To ax es T Recei vab e l
Cur rent Cash
To S i n i ng k F un d Cont r i b ut i o n Req ui r ed
Cu r rent Cash
‘
To Cu rrent
"
Rev enues — E st i mat ed

Cu r r ent Cash
To Cur r ent
“ 1
R n
ev e u es— U nest i mat ed

Cu rrent Cash
To Cur r ent Loans
44 C o mm e n t s on th e F o r eg oi n g E nt ri es .— It is
l m nt r
.

e e e a that nt i s d eb it ed
ca sh ac cou
w h en c a sh i s r ec ei v ed
y
a nd c r ed it ed w h en cash i s p a i d In t he c u rrent group t h e cash
ll
.

a cc ount i s ca ed Curr ent Cash a nd i s so segr egated t o pr ev ent

ex pen d iture of t h e c ash for other than curr ent p u rp oses .

45 Th e nts now n as T ax es
accou k R i l
ec e v ab e and S in k in g
F
.

u nd Contribution Required hav e been d esc ri bed in Arts . 40

a nd 41
ll
.

The n ries i u st rated mean th at tax es o f the

e t cu rrent yea r
t o t he amount Of hav e b een co ected ll and t h e sum
28 N
MU I CI PA L A CC U TI O N NG § 39

required o f t h e s i nk in g f u n d s h as b een t r a n s f e rr ed fr om S in k
i a g Fund account s t h e cu rr ent gr oup
’

to .

46 . The acc ou k
nt now n as Cu rrent Rev enues E stimated —

is c edr ited w it h rece ipt s o f rev enues f rom sou r c es est imat ed in
t he budget
ll b d bit d i h h m nt i m
.

Th e sa me ac cou nt wi e e e w t t e a ou of te s

r f nd d d h i h h d
e u e n pr i
an l r di d w c a bee ev ou s y c e te
At h l l r di b l n ill b l d
.

f h fi
t e c ose o t e s ca year a c e t a a ce w e c ose

int C rr nt S p l
o u e ur us .

47 Th nt k n n C rr nt R n
e ac cou E im t d ow as u e ev e ues —
st a e

b t nti ll nt C rr n R n
.

i s su h s am h a y t e sa e as t e ac c ou u e t ev e ues

Un im t d
e st Th d i in i n b
a e n C rr n R n e st ct o et w ee u e t ev e ues

p l in d i
.

E im d
st d C rr nt R
at e n U n ti m t d i
an u e ev e ue s —
es a e s ex a e n

A rt 3 9 . .

48 n as Cu rrent Loan s i s c red ited

The ac count kn ow w h en
l
.

te mporary oan s in ant ic ipat ion o f tax es are i ssued

l
.

The same account i s d eb ited w h en t he oan s a re pa i d

l l
.

A c red it ba anc e ind icates t h e amount o f t emp orary oa ns

o ut stan d ing .

E NT R I E S A F F E CT I NG A P P R O P R I A T I O NS

49 Wh en order sria s or supp ies are present ed f or mt a e l l

ll l
.

t o t h e c omp t r o er f or h i s appr ov a they ar e enter ed in an o r d er

r egi ster l
Detai s are p osted item by it em t o t he prop er acc ou nt s
l
. .

i n t h e Appropriat i on Led ger a c o umn b eing prov i ded on eac h

l ll
,

page f or t hat p urp ose T ota s are posted p eriod ica y t o

G l ll
.

account s in t h e ener a Ledge r b y mean s o f t h e f o owin f r m

g o

o f entry .

*
Cu rr ent A i i
Ol
pp p
r o r a t o ns

To *
R eser vc f o r Cur rent b i g at i ons

l
C ai ms r nt year present ed to t he c omptro er f or
of t he c u r e ll
aud it h ave annex ed copi es o f t he o rd er s p r ev i ou s
y a ppr o v ed b y l
t h e c omp t ro er ll
Th e c a i ms ar e enter ed in a C ai m egi ster l l R
l
.
,

o f t h e f or m sh ow n in Fi g 2 h av in o u m n i n w h i h t nt r
g c s c o e e

l ll
.
,

t he amount o f t h e c a i m and t h e a mount o f t h e or der can ce ed .

5 3 9 MUN I C I PAL ACCOUN T I N G 29

50 In h in n d t il p dea c l mn pr id d st a ce e a s ar e ost e to co u s ov e

t t l
.

In h p gt f h Appr pri i n L d r
e a es o d t e o at o e ge an t he o a s ar e

p t d p ri d i ll
os e n in h G n r l L d r b m n
e o ca y t o a c c ou ts t e e e a e ge y ea s

of ntri e f ll es as o ow s

‘R Ol f o r Cu r rent b i g at i o n s
A
eser v e

To I"
Cur r ent pp r op r i at i ons

*
A
Cur rent i i
lmA pp p
r o r a t on s

To Cur rent C ai s ud i t ed

51 Co m m e n t s on th e F or eg o i n g E n t r i es In
ll d C rr nt Appr pri ti n i d rib d
. .

Art 4 2 the a c c ou nt ca e u e o a o s s esc e

l ing f n id ti n h r h ph
.
,

eav or c o s f th
era o nt d e e t e a ses o at acc ou an

o f h t nt ll d R r f C rr nt O bl ig ti n ind i t d
e acc ou ca e ese v e or u e a o s ca e

b y h f r
t e ing ntri o ego e es

nt ll d C rr n A ppr pri ti n i int nd d

.

Th e acc ou ca e u e t o a o s s e e to
h ll ti m h l imit f h it p nding p r f ’
s ow at a es t e o t e c ys s e ow e or

cu rr nt p rp e T h t l imit t nd
u oses h t l f ppr pri
a s a s at t e to a o a o a

ll d th ri i n h n h b d t
-
. s

i n
t o s, or , m im as so et es ca e au o z at o s, w e t e u ge

d pt d Th l imit i r d
,

is a o e d h n
e rd r i i d s d e uc e w e an o e s ssue an

mptr ll r
.

a ppr d by hov e Ord r

t e co pr nt d h o e e s ar e ese e to t e

mptr ll r f h i
\
.

co o r ifi ti n
e or h f t th t
s ce t m ca o to t e ef ec a an unencu

b r d b l n
e e r m in in h
a a ce nte f t h
a s rt in b t e accou a ac e asc e a s y
b i d i ry l dg r
,

r f r n
e e e ce h nt in h
to t e acc ou Th rd r t e su s a e e e o e s

m d by h d p rtm nt in trip l i t
.

ar e a e t e e a p m ining e ca e, one c o y re a

in h d p rtm nt fil
t e e a b ing l ft ith h
e mp r ll r
es, one d e e w t e co t o e an

h thir d b ing d l i r d
,

t e e h p r e h m it i d ir t d f
ve e to t e a ty to w o s ec e or

l im
,

a nn ing ex h to t e c a

r d r l ft ith h mp r ll r O rd
.

Th e o e s e wnt r d in t e co t o e ar e e e e an er

R gi t r r l d
e s e pr d t t l f p ting p ri d i ll
u e to o uce h o a s or os e o ca y t o t e

co ntr ll ing o nt ll d R r f C rr nt O bl ig ti n
accou s ca e e se v e or u e a o s

an d C r nt Appr pri i nur e h d t il f h r

o r b ing
at o s, t e e a s o t e ese v e e

p t d by it m
os e pr p r l mn in h Appr pri ti n L dg r
e s to o e co u s t e o a o e e

rn l ntry f t t l i h
.

Th j e ou a e h n i Art 4 9
or o a s s t e one s ow n

l im h r r
. .

Wh n h rd r i r t rn d nn d
e t e o e h s e u e a ex e to t e c a t e ese v e

n ll d
,

is ca d hce ppr pri i n r t r d by r r ing h

e an t e a o at o es o e ev e s t e
e nr h n in Art 5 0 Th inf rm ti n p whi h th i
t y as s ow e o a o u on c s

n r i b d i t k n fr m h Cl im R gi t r Th Cl im
. .

e t y s ase s a e o t e a e s e e a

R gi t r i r l d pr d l f p ting p i di ll
.

'

e s e s u e to o uc e t ot a s or os er o ca y t o
30 MUN I C I PAL ACCOUN T I N G g s a

h
t e ntr ll in
co nt h o d il g f n ll ti n b ing
ac c ou s, t e et a s o ca ce a o s e

p t d by it m
os e h pr p r l m in h Appr pri ti n
e s to t e -
o e co u n t e o a o

L dg r
e e

C i i d n ll h t t l f h l mn in h Cl im R gi t r
.

'

o nc e t a y, t e o a o t e co u t e a e s e

sh ow in l im dit d i p d h ntr ll in
g c a s au ent s ost e to t e co o g acc ou

( C rr
u nt Appr e pri i n ) h d t i l ob ing p d
at o h s t e e a s e ost e to t e

l mn in h Appr pri i n L dg r d h m
,

pr p r
o e co u t e o at o e e an t e sa e

a m nt r d it d
ou c e nt in h G n r l L d r
e to ll d
an ac c ou t e e e a e ge ca e

C rr nt Cl i m A d it d
u e a s u e

Th t t l f rr nt l im ill ll
.

e o a d it d
o cu e d h c a s au e w u su a y ex c e e t e

t t l f rd r r r d
o a o o d a n ll d f
e s h r
ese v e n th t an c ce e or t e easo a

rr nt l i m d i d in l d l i p r ll b nd int r t
,

cu e c a s au te c u e sa a r es , ay o s, o s, e es ,

an d h r it m f
ot e hi h rd r h
e s b n ior dw c no o e s av e ee ssue

A r d it b l n in h nt ll d R r
.

c e a a ce f C rr nt
t e ac cou ca e ese v e or u e

O b l ig ti n a h o sh m nt r s r d f ow s h p m nt f
t e a ou ese v e or t e ay e o

l im
c a s pr nt d f
not y d it
et d h
ese l f h e or au an at t e c ose o t e

l r ill b rri d f r rd
,

fi sca yea w e ca e o wa .

52 Th nt ll d C rr nt Cl im A d it d i r it d
e a ccou ca e u e a s u e s c ed e

i h h t t l f l im ih h t t l f
.

w t t e di d
o a s o d d b it d c a s au te an e e w t t e o a s o

wa rr nt d r n in p m nt A r dit b l n ind i
a s aw h
ay e c e a a ce cat es t e

m nt f l i m
:

a ou d it d f
o hi h
c a rr nt h
s au e or w c wa a s av e not yet
b n dr
ee n d aw h l f h fi l r ill b rri d
, an at t e c os e o t e sca y ea w e ca e

f orw ard .

53 I f d ring h y r h ppr pri ti nu t e ea t e a o a o s ar e i nc reased by

l ti n f h ppr pri ting b d h r
.

r eso u o o t e a o a o y t e eco rd i s enter ed in

mp r ll r b k by f ll
,

t he
’
co nt y
t o e s oo s an e r as o ow s

‘E st i m at ed Revenues
To A 1 “
Current p p rop ri at i ons

E NT R I E S R E CO R D I NG P A Y M E NT S

54 C ai ms l
that are based on ord ers i ssued sa aries pay l
ll l
.
, ,

r o s maturing inst a ments of t h e bonded debt interest on t he

l
, ,

b on ded d ebt and all ot h er items chargeab e t o appropria t ion s

, ,

a re pai d by mean s o f w arr ant s and ar e c harged t o t h e account

ll l
,

ca ed Cu rr ent C ai ms A u d i t ed and c r ed it ed t o an account

ll
ca ed Cu rrent Warrant s P ayab e as f o ow s : l ll
5 3 9 MUN I C I PAL ACCOUN T I N G 31

l
Cu r r ent C ai ms udi t e A d
To Cur rent ar rant s W Py l a ab e

When t he w a rr ants presented to t h e c ity treasurer and

are

a re pa i d and t he fact reported to t h e comptrol er an entry i s l

ll
,

made as fo ow s

Cur rent War r ant s P ayab l e

To Current Cash

55 No prov i sion i s made in th e budget fo r t h e payment o f

l l
.

oan s i ssu ed in ant ic ip ati on o f tax es S uch oan s a re paid from .

t he t ax es collect ed and payment i s recor d ed in t h e coi npt r oll er s

‘
'

k
b oo s by entries as f o ow s ll
Cu rr ent Loans
To Cur r ent C a i ms l A u d i t ed

Cu r rent C a i ms l
u d i t ed A
To Cu rr ent Cash

Cu r r ent Loans
To Cu r r ent Cash

56 .from ti me t o time it be f ound necessary t o ma e

If k
c orrecti on s in t he nat u re o f re f u nd s on acc ount o f e rron eou s
,

payments t h e account benefited by t h e error i s debited and

l ll
,

Curr ent C ai ms A u d ited i s c red i t ed in t h e f o ow ing manner :

T Recei v ab l
l A
ax es e

To Cu r rent C ai ms ud i t ed

I"
Cur r ent Rev enues— E st i mat ed
To Cu r rent C ai ms ud i t ed l A
‘Cur rent Rev enues— U nest i mat ed
To Curr ent C ai ms l A ud i t ed

57 C om m en t s on th e F or eg o i n g E n t r i es — Th e
ll d C rr nt Cl im A d i d h b n d rib d i
.

acc ou nt ca e u e a s u te as ee esc e n

Arts 5 2 an d 54
nt ll d C rr nt W rr nt P bl i
. .

Th e ac c ou ca e r d it d
u e a a s aya e s c e e

w ith t h e a m nt f d it d l im f hi h rr nt
ou o au e c a s or w c wa a s or

d ra fts on h t
t e r r a dr n
r easu e d i d bi d h n h re aw an s e te w e t e

p id A r d it b l n ind i t
,

w arrant s are a . h m nt fc e a a ce ca es t e a ou o
32 MUN I C I PAL ACCOUN T I NG § 39

wa rr nt
a t t ndin
s ou s a d h l f th fi l y r h ld
g, an at t e c ose o e sca ea s ou

b e ca rri d f r rd e o wa
l im di d d f rr nt
.

Th f h
e u se o n f t e accou ts or c a s au te an or wa a s

p aya b l d pende e h fi n i l pr i i n s on f h t e h r r d na c a ov s o s o t e c a te an

on t h pr d r i h i
oce u e T i ll tr t n eac In i h ty us one c t y, t e
l imf dit h h
e c o a e:

h mb rl in d
.

c a e a r i oes not ec e v e any c a s or a u , as e as

not t h p e r f d it W rr nt
ow e o dr au n him f p a a s are aw on or ay

l im dit d
.

m nt H th r f r d
e e r q ir
e e o e oes not nt e u e a c a s au e acc ou

r d i d d ir tl
-
.
,

as ht e wa rr nt a s ar e c e f h r nt te ec y t o one o t e wa ra s

p aya bl nt
e ac c ou d h m ti m h s , an ntr i m d f at t e sa e e t e e y s a e or

t h e ca n ll ti n f h r r
ce a o if f
o rd r
t e nr ese ve , any, or o e s or c o t ac t s
l iq id t d
u a e .

In n th r ity h
a o emmi i n r f fi n n
c t e h b h h co ss o e o a ce as ot t e

l im b in p id ft r dit
,

p ow e r f d it
o d p m nt
au an ay e c a s e g a a e au

H r ll l i m m b
,

w ith t h
ou f
t e u se o rr n any wa a ts e e, a c a s ay e

l im d i d
.

c er d it d e to a nt c a d h n p id
s au te ac c ou an w e a ar e

r d it d d ir l
-

, ,

c e e h ec t y t o ca s

nts ill b r q ir d
.

In d i f r nt i n i h r f h
a f e e c t y, e t e o t ese accou w e e u e

h mb r l in p
,

as h t e c a ll e rr n dr n
a him
ays h a wa a ts aw on as e

r i ece v es th m fr m h it l rk th r f r m k ing h i r d i
e o t e c y c e e e o e a s c e ts
l
,

d ir ect y h
t o c a s

In ill n th r i
.

st a b th th
o e nt m b
c t y, d Th o ese acc ou s ay e use e

mptr ll r f th t i r l im d d r
.

co o e oi d dia c ty ec e v es an au ts c a s an aw s

wa rr nt
a h tr
s on r r f t h ir p m n
e Cl i m
ea su e h ld or t e ay e t a s s ou

l im di d
.

fir t b
s r d it d
e c e e nt d th n p
to a c a s au te accou an e as s to
bl
-

w rr nt p
a a s-
d th n
aya h e an e to cas .

E NT R I E S I L L US T R A T I NG T R E A T M E NT OF U NCO L L E CT E D
TA XE S

58 It has been sh ow nth at w h en t h e amount o f in A rt 4 1

ll l l
. .

t ax es co ectib e in a fi sca yea r i s determined t he accou nt

ll l
,

ca ed T ax es R ecei v ab e i s d eb ited Thi s account represents an .

asset o f t h e c it y w h i ch fr om ti me t o ti me i s conv ert ed into

cash to t h e ex tent o f co ecti on s Th e ba ance in t he ac count i s ll l

ll ll
.

r educed by t he amount o f c o ection s entered a s f o ow s

Cur r ent Cash

To T ax es Rec ei vab e l
§ 39 MU N I C I P A L A CC O U N TI N G 3 3

59 At m d. in h fi lso e r fi d by h h rt r
at e t e sc a
yea ,
xe t e c a e ,

th tre r r d rmin
easu e h m nt np i d
et e nt f
es t e a ou u a on ac cou o cu r

r nte pr p r
t a x e s, l i t f p r l f h r l t t b rd n d
e a es a s o a ce s o t e ea es a e u e e

w tih h np i d i m
t e u d l a h nt
te ll d T
s, an c oses t e acc ou ca e a x es

R i bl in
ece v a S l
e nt b m n f h f ll in
t o a Tax a e a c cou y ea s o t e o ow g
Tax S a l ( )
T R l year
e

To ax es ec ei vab e

h rg b l
‘

60 I f h rt r pr i i n p r mi c a eh r it m ov s o s e t ot e e s c a ea e

in t ind i id l d p i l
.

aga s h v np i d t r r n
ua s , suc as u a wa e e t s an s ec a

m nt
a s ses s b in l d d in h
e s, to l h nr k h
e c u e t e t ax sa e, t e e t y ta es t e
f ll in f rm
o ow g o

Tax S a l ( )
T R l
e y ear
.

To ec ei vab e

l
ax es

W R R ent s ec ei vab e

A m A
at e r

D ue t o ssess ent c c o unt s

61 I n h int r l b n pr p i n f h
t e e va l et w ee t he e ar a t o o t e t ax sa e

li t d h l in f T R i bl d linq nt m
-
.

s an t e c os g o ax es ec e va e, e ue s ay p y
a

th tre r r h r rd h
ea su e ,
mw f ll
o ec o s t e sa e as o ow s

Current Cash
l (y )
To Tax S a e ea r

O h d n t f l e ay ol r ifi sa e,p r h db t ax sa e c e t cat es a re u c as e y t h e

p bl i n l d ntin
-

u d h it m r m inin
c an t e e s et f h a g u so co u e an asse o t e

c it ybt o b q n l r d m d b d l inq nt
e su se ue t y e ee e y e ue s

Th f ll ing ntr l l
.

e o ow h e nt y c oses t e t ax -
sa e acc ou s

Cur rent Cash

*
T Recei vabl eb A rr ear s
l ( )
ax es

To Tax S a e y ea r

62 C om m en t s on th e F or eg oi n g E n t r i es Th e
ll d l
-
. .

accou nts ca e Cu rr ent Ca sh a nd T ax es R ecei v ab e h av e,

a lr ead y b een d esc ribed
ll l
.

Th e nt ca ed Tax Sa e ( year ) i s debited w it h t h e

ac cou

amount r ema i ning unp ai d on a cc ount o f c urrent tax es and

'

w her e aut h ori z ed by t h e c h art er w it h u npai d w ater r ents and

ll
,

unpaid as sessment s ; it w i be c r ed ited w it h t h e p ayments b y

l
d e inquents b e f or e t he sa e and upon t h e day o f sa e or i mme l l
ll l
,

d iately t h erea fter it w i b e c red ited w ith t h e amount of sa es

34 MUN I C I PAL ACCO UNTI NG § 39

to l
ind iv i dua s and t he amount charged agai nst parce s for l
w hi ch there are no b i d der s o r w h ich are so d t o t he c ity This l
l
.

acc ou nt i s th er eup on ba anced Th e c ity s inter est in unpai d

’

ll R
.

tax es i s show n in t he account ca ed Tax es ecei vabl e

Arrears .

63 . The
nt ca ed Tax es
accou eceivab Arrea rs i s ll R l e—

d eb ited w it h t he amount of tax es w ater rents and a ssessments

l l ll
, , ,

not so d t o ind iv i dua s or p u rc ha sed by t h e c ity It w i be

l
.

c red ited from ti me t o ti me as i t ems inc uded there in ar e p a i d

ll
or can ce ed by cou rt or der or by reso ution o f t he Common l
Counc i l
l l
.

The deb it ba ance show s t h e amount of d e inquent t ax es

o w n ed by t h e c ity and at t h e c ose o f t he fi sca year w i be l l ll
ca rri ed f o rw a rd

ll
.

Tax es Receivable Ar rear s i s a contro ing account and

l l
e

sh ou d be su pp orted by a sub s i d iary ed ger contai n ing an

y
,

account w it h t he arrear s o f tax es o f each ear The bal anc e

'

l
.

o f t h i s acc ount sh ou d c orr espond t o t h e aggr egate o f t h e

l
ba ances o f t he sub si d i ary accounts Period ica proo f of thi s l
l
.

s hou d b e ma d e .

64 nt ca ed D ue t o A ssessment A ccounts may

The accou ll
k
.

somet i mes b e now n as D ue t o some oth er accounts th e spec ifi c

l l
,

acc ou nt be ing na med as f or ex amp e D ue t o Capita A cc ou nt

, , , .

The account i s inten d ed t o sh ow t he tran s f e rs t o t he cu r

rent group o f items from one or more of the othe r group s
ll
, .

The ent ry in Art 60 i u st rat es a tr an s f er o f unpaid assess

.

ment s from t he assessment group t o t he cu rrent group t he ,

t ransf er b eing mad e f or t h e pu rpo se o f b ringing th em all

t ogeth er in t h e Tax S a e account l .

The D ue t o A sses sment A ccoun t s i s cr ed ited w ith t he amount

i

o f a ssets tran s f err ed fr om one or mor e o f t h e oth er gr oup s t o

an ac count in t he c u rrent group w hen t he amount i s not at t h e

s ame ti me o ff set by a tran s f e r o f cash t i s deb ited w ith pay

.
. I
ments due t o accounts in one or more of t he other group s
l
.

The ba ance deb it or c red it sh ow s t he amount due t o or from

account s in other group s and at t h e c ose of t h e fi sca yea r i s , l l
ca rri ed f or w ar d .
§ 39 N
MU I CI PA L A CC U TI O N NG 35

l
A simi ar account i s someti mes e u e c a e
”
D ue fr om r q ir d ll d
othe r account s w h ic h r ecor d s tr an s f er s f r om an account in
,

t he cu rr ent gr oup t o acc ount s in one or mor e o f t he ot h er

g ro u p s Th e entri es a r e t h e sa me a s th o s e a st d esc ri bed It l

l
. .

sh ou d b e r e memb er ed h ow ev er t h at one ac cou nt sh ow s t h e

l
, ,

trans f er t o t he current group w h i e th e other show s t h e ,

tran s f er s fr om t h e current group .

6
5 . T r i al B al a n ce. A T r ia l Bln a a ce of Cu rr ent
A cc ount s is prepa red i n the f or m sh ow n h er ew it h .

TR B I AL AL AN C E —
CU RR A E NT CCO U N TS

Tot a l of E nt r i es B l
a anc es

b
D e it s Cre i t sd b
D e i ts Cred i t s

Current Surp l us .

F
ennes

k
Si n ing u n (1

Cont ri b ut i ons
Req ui red
T R ecei v
l
a x e s

C urrent
A
ab e—

C urren t pp r o

Current Cash .

C u rr en t R ev
en nes — E st i
mat ed
Cu r r e n 1: R ev
ennd e — Unast i
mat ed
C urrent Loans .

Reserve for Cur

r e n t O b li ga
t i ons .

C urrent Cl ai ms

C War
P l
u rr en t
rant s a yab e

T l
.

ot a s
36 M U N I CI PA L A CCO U TI N NG § 39

A CC O UNT S R E COR D IN G T R A N SA C T I O N S on W ATE R

D E P A R T M E NT

66 In c i t i es ow ning and op erat ing a system o f w aterw or s k

ll l
.

t h e management u sua y d ev o v es on t h e c ommi s si on er o f pub

k
h e w or s or may b e c ommi tt ed t o a oar d o f Wat er Commi s B
s i o ner s Th e dep ar t ment sh ou d b e se f su st a ini ng ; and ex c ept l l
l
-
.
,

t o r ecoup o sses o r t o p ay t h e c it y s sh ar e o f t h e c ost o f w ater

’

l
d ev ot ed t o p ub i c u se su ch as str eet c eaning sprin ing et c , l ,
kl ,
.
,

no p ar t o f t h e r ev enu e o f t h e w at e r d ep a rt men t i s d eri v ed fr om

t ax es .

Th e w a t e r i i ia c c ou nts
t h e c u r rent group a r e a s ub d v s o n o f

l
,

i n in d ep en d ent b a anc e a nd w it h a sep ara t e c a sh ac c ount Th e

ll l l
, .

f o ow i ng s mera Led ger ac count s sh ou d b e u sed :

D EB I T S CRE DI T S
Wat e epa rt ment Cash D Wat e
D
R ev enues
l
r r

Wat er Rent s Re ei ab e Reser v e Wat e ment

D
for
Ol
c v r ep a r t

Wat e ep a rt ment E p en s es b i g at i ons

D
r x

Wat er ep ar t ment F u nd

67 E n t r i es R ec or d ing th e T r a n s a c t i on s of th e

l
.

W a t er R en t R o l l —
U p on t h e co mp i
et o n O f the Wat er R ent
l li ll li
.

Rol a nd de ve ry t o t h e t rea su re r f or co i
ec t o n, t h e t ot a s

c er ti fi ed t o t h e c omp t ro ll r
e w ho th er eupon r eco r d s t he sa me
ll
,

w it h entries a s f o ow s :

*
Wat ei Rent s Rec ei vab e
'

l
To Wat er Rev enu es

68 . Wat er r ent s and ot h e r it ems co ll ect e d a r e d ebi t ed t o

Wat r D p rtm nt
e e a e Cash an d c r e d i t ed to Wat er R en t s R eceiv
l
a b e orin th e c ase o f ot h er i t ems su ch as int erest and p ena t i es l
ll l
,

on w at er r ent s c ha rges f or mi sc e an eou s ser v i ces sa e s o f

l ll
, ,

materia s et c ar e c red ited t o Wat er R ev enues in t h e f o ow ing

.
,

manner
Wat er D ment Ca sh
l
ep ar t

To "‘
Wat er Rent s Recei vab e
Wat er D ep ar t ment Cash
To Wat er Rev enues
§ 39 M UN I CI PA L A CC O UNTI NG 37

I f w at er ch arges be cance ed and re f und ed or ll w ater r ents be

re fun ded t h e transact i ons are r ecord ed as in t he ll
f o ow ing
entri es

Wat er Revenues
Wat er Rent s Recei vab e
*
l
To Wat er ep a r t ment Cash D
69 rter prov i sion s requ ir e c erti fi cation s by th e c omp
If c ha

ll
.

tro er o f order s i ssued by t he d epart ment t o v end or s t h e

ll
,

ent ri es ar e a s f o ow s :

Water D ment Ex p enses

D Ol
ep ar t

To Reserv e f or Wat er ep a r t ment b ig a

t i ons

Up on pr esentat i on t o comp t r o ll re of t he c a l im f or au d it
acc o mp ani ed by t h e co py of t h e or d er , t h e r eser v e is ca nce ll de

by r ever sing t h e ent ry l a s t ab ov e as fo ll ow s

Rev erse for Wat e D ment O bl i g at i ons

D m
r ep a r t

To Wat er epa rt ent E x pense s

Payment o c a s a a f l i m g in t s t he Water D epart ment i s recor d ed

as in t h e f o ow ing entry : ll
Wat er D ment E x penses
D
ep ar t

To Wat er ep a r t ment Cash

70 At t h e c l ose o f l p ri d h d bit b l n f
t h e fi sca e o t e e a a ce o t he
ll
.

acc ou nt ca ed Wat e e a t e t Ex r D p rmn p n d e s es is c h ar ge t o an

‘

ac count c a ed W at e ll
e a t e u r D p r m nt F nd d h m an t e sa e a c co u nt
r d it b l n ll d W
,

i s c red i t ed w i t h t h e c e t f h n t ca e at er
'

a a ce o e ac c ou

D epartment Rev enues t e o ow in h f ll ing m nn r a e :

Wate D ment F und

D
r ep ar t

To “
1
Water epa r t ment E x p enses

Water Rev enu es

To Wat er D ep ar t ment F u nd

Th e e ll l h r n
ntri es last desc rib ed w i
nt c ose t e ev e ue acc ou s

( r nt ed r r
s ann ) d b rin
ot h et h r h r n
ev e d u es an g t oge e t e ev e u es an

ex p n e h h p fit
ses so a s l d rin h fi l p ri d
to s ow t e ro or os s u g t e sc a e o

li n h pr p r f h
.

If h h r r mt e crr n a te ak e s w at e e ts a e on t e o e ty o t e
co n mr d pr id
su f e h l f h pr p rty in h
an ov es or t e sa e o t e o e as t e
33 M U I CI PA L A CC N O UNTI NG § 39

c ase o f linq nt
de ue t ax es , t he d eb it b l in h
a ance t e acc ou nt Wat e r
Rn e ts R i bl i
ec e va e s t r an s f erred t o t h T S l e ax a e ac c ount by a n

e t n ry asf ll o ow s
:

Tax Sa e l (y )
l
ear

To Wat er Rent s
‘ Recei v ab e
71 C o mm e n t s on th e F or eg oi n g E n t r i es — Th e
ll d W r R nt R i bl rr p nd
. .

accou nt ca e at e h e s ece v a e co es o s to t e

ac count c a ll d T R i bl e pt th tax es r f rs ec e v a e, ex c e a one e e to

w ater rent s d h th r an d i d
t l p d rdin
e o e t o t ax e s, an s ev e o e ac c o g
to t h m r l
e sa At h e l
e u es f h fi l y r h d bit b l t c os e o t e sca ea t e e a

r r nt n ll
.

a n h
ce s h m nt f
ow s t e a oud o w at e e s u co ect e

W t r R n R i bl i n r ll ing
.

a e e ts nt d i b l
ece v a e s a co t o ac cou an ts a

a n ce sh ld p rr p nd ith h
u co r t f h np i d it m
es o w t e agg ega e o t e u a e s

on t h W t r R nt R ll
e a e e o .

72 Th . nt ll d W t r R n
e ac cou i r dit d i h
ca e a e ev e u es s c e e w t
wa t rr n
e h r d
e n mr
t s c a ge h nb h Wt rR n
t o co su e s as s ow y t e a e e t
R ll nd i h h r ipt f th r t r r n It i d b i d
o a w t t e ec e o o e wa e ev e u es . s e te
w ith m n r f nd d
a ou ts nt f
e u t r r n e th r on accou o wa e ev e ues, o e

h n
t a t r r nt
wa hi h
e ed bi d s W r R nt R i bl
w c ar e e te to at e e s ec e v a e

At h l l r th W t r R n
.

t f h fi
e c ose o t e nt sc a yea e a e ev e u es accou

s h ow s h t m nt f W t r D p rtm n r
e n et a ou n d i
o a e e a e t ev e ues an s

l d int W t r D p rtm nt F nd
c ose o a e e a e u .

73 Th nt ll d W t r D p rtm nt C h W t r
e ac cou s ca e a e e a e as a e

d R
.
,

D p rtm nt E p n
e a e xr f W r D p rtm n
e ses, an ese v e or ate e a e t

O b l i ti n
ga rr p n d
o s, c o i mil r nt r rding rr nt
es o to s a acc ou s ec o cu e

t ra n i n
sac t o l r d d rib d d hi h
s, as a ea ll d C rr nt
y e sc e an w c ar e c a e u e

d R r f C rr nt O bl i
,

C h C rr nt Appr pri ti n
as u e o a o s, a n ese v e or u e ga

l p d l ng imil r l in
,

i n
t o d
s, an d are ev e o e a o s a es .

74 Th nt e ll d W t r D p rtm nt F nd i
accou ca e a e e a e u s

r fl t n i l h p r ti n f h d p rtm nt
.

int nd d
e e to e ec co c se y t e o e a o s o t e e a e

for a fi l p ri d d ill d i l i h r rpl

sca e o an d fi it
w sc ose e t e a su us or a e c

At h l l r th i
.
,

t e c ose o f h fi t nt i d b it d ith h
e sca yea s acc ou s e e w t e
a m nt f h d b it b l n in h
ou o t e e nt ll d W t r D p rt
a a ce t e acc ou ca e a e e a

m nt E p n
e x d i e r d i d ith h m nt f h r d i
ses an s c e te w t e a ou o t e c e t
b l n
a a in h
ce nt ll d W t r R n
t e ac cou A r d it b l
ca e a e ev e ues . c e a
§ 39 N
M U I CI PA L A CC O UNTING 39

nce in t h e Wat er D epa rtment und show s a su rp u s o f

a F l th e
Water Department and a d ebit b a ance reflects a defi ciency l .

75 . T r i al B al an ce. A Tria a ance lBl of the accou nt s of

t he Wat e r Depart ment is sh ow n h e rew ith .

TR B I AL AL A CE
N —
WATE R A
CCO UN TS

Tot a l of E nt r i es B l
a ances

b
D e i ts d
Cre i ts b
De i t s d
Cre i t s

Wat er Rent s Recei v

Wat er Rev enues

Wa t e r ep art mentD
Cash
Wat er D ep a rt ment E x

Reserve for Water De

ment Ol b i gat i on s
D
p art
Wa t e r ep art ment

E NT R I E S D E A L I NG W ITH TH E CO L L E CT I O N A ND R E TU R N OF
STA T E A ND CO UNT Y TA XE S

76 In some c iti es t h e trea su rer i s t h e co ecto r of state ll

l
.

and c ount y t ax es ev i ed by a c ounty boa rd and f or t h e p ayment

o f w h i c h no p rO v i s i on i s ma d e in t h e c i t y bud get Upon cer .

t i fi cat i on t o t h e c i t y auth ori t i es o f th e amount r equ ir ed t h e

ll k
,

inf ormat ion i s ent ered upon t h e comptro er s boo s by an entry ’

as f o ow s ll
T Rec ei vab e— l Co unty
T
ax es

To D ue County r easu r er

Co ll ect oi ns o f st a e and c ou
t nty tax es reported t o the co mp
t ro ll e r by t h e c it y tr easu re r ar e rec or d ed as f o ow s : ll
Cu r r ent Ca sh
To T ax es Rec ei vab e l —
Co unty

I L T 234— 1 8
40 N
M U I CIPA L A CC O UNTI NG § 39

Payment s mad e to t he c ou nty t reasurer a re recorded as

fo ll ow s :

D ue County T reasu rer

To Cu rr ent Cash

A fter t h e ex piration of a period named in th e ch arter many

l
,

c i t i es ar e r equ ir ed t o r etu rn t o t h e county tr ea su rer a i st o f

u npa i d st at e and c oun t y tax es w h er eup on t h e c it y i s d i s

l l
,

c h arged from f u rth er i ab i i ty and sub sequ ent proceed ings ar e

,

c ond u cted by t h e c ou nt y offi c e r s

k
.

Upon ma ing t h e retu rn t o t h e c ounty t reasu r er t he trans

ac t i on i s r ec or ded by an ent ry a s f o ow s ll
D ue Co unty r easur er T
T
To ax es Recei v ab l e— County

77 C o mm e n t s on th e F o r eg oi n g E n t r i es — Th e
ll R l l
. .

acc ou nt ca ed Tax es ec eivab e — County i s S imi ar t o t he

acc ount k
now n as Tax es Recei vab e prev i ous y described l l ,

ex cept that it rec or d s t h e r ec eipt and d i sb u r sement of tax e s

l
b e onging to t h e stat e and c ounty and not t o th e c i ty
l ll
.

Thi s account i s debited w i t h t he tota o f t he c ount y t ax ro

and w ith r e f und s o f erron eou s or ex c essi v e p ayment s a nd i s

ll
,

c r ed it ed w ith c ou nty tax es c o ect ed and w ith t h e amount o f

u npa i d t ax es r etu rned t o t h e county treasu rer

l l
.

Unti ba anced by t h e r etur n t o t h e c ounty t reasu rer t h e

l ll
,

d eb it ba ance in thi s account show s t h e amount o f unc o ected

state and county tax es .

78 . The ac cou nt ca ll d
e Treasurer i s
D ue t o Count y
c red ited w i t h t h e amount o f state and county tax es d eb it d t o
e
l
T ax es Receivab e County It i s d ebited w i th payments t o t he
—

y
.

c ou nty treasu re r on accou nt o f state and count tax es w ith

ll
,

t h e amount of stat e and county tax es c an ce ed and w ith t h e

l
,

amou nt r etu rn ed t o t h e c oun t y treasu r er a s unp ai d Un ess

l l
.

and unti ba anced by r etu rn t o county trea surer t h e acc ount ,

sh ow s t h e amou nt d u e t h e county tr easu r er corresp ond ing t o

h l
t e ba ance in t h e account c a ed T ax es ecei v ab e—llCount y R l .

I f in st ead o f retu rning t h e unp ai d county tax es t o th e county

treasurer t he city assumes th em and pays t h e county treasure r
,
 § 39 N
M U I CI PA L A CC O UNT NG I 41

the a mount of t he tax in f u s e t y w e c r ed ited

w arrant ll thi n r ill b
R i bl C ll
,

to Cu rrent Cash The asset o f T ax es ece v a e ount y w i —

l l
.

then be t he prope rty of t he c ity w it hout any off set t ing iabi ity
ll l
,

and t he ac c ount w i be d evelo p ed as ar e ot h er t ax r ecei vab e

account s d epend ing on t h e tax proced u re o f t h e c ity
, .

A S S E S S M E N T A C CO U N T S

79 A ssessment accounts are those w h i ch record t he

l
.

t ran saction s of t h e c ity that re ate t o a ssessmen t w ork and t h e

l ll
ev y and co ection o f assessmen t s inc u d ing t he fi na nc in g O f l
k ll
,

t h e cost of t h e w or and o f unco ec t ed a ssessment s .

An a s s es s m e n t i s defi ned a s t he ad j ustment Of t h e shares

o f a gr oup o f c on t ri butor s t ow ar d a c ommon ben efi c ia O bj ect l
accord ing t o t h e ben efit s r ec ei v ed

l l
.

The ch arter s O f munic ipa ities outline v ari ou s p an s f or

k
authori z ing ma ing and fi nanc ing assessab e i mprov ement s l
N l ll
.
, ,

otw ith stan d in g t h e v ariation o f d et a i s it w i b e f oun d th at

l l
t h e genera princ ip es O f th i s gr oup o f accou nts may b e m
,

ade

l l
app icab e w ith s uch v ariati on s a s oca c on d i t i on s requ ir e
.
l l .

A s in t he case of t h e account s in t he oth er group s t h e con

ll G l
,

tro ing ac counts w h ere required are in t he enera Ledger

r l B
, , ,
.

w ith sub s i d ia y recor d s in t h e ed ger r ef err ed t o as Ledger

in connecti on w it h t he c urrent group o f acc ounts .

80 E n t r i es i n A s s es s m e n t A ccou n t s.— Ch a rt er s Of

l l
.

so me munic ip a it ies prov id e for t he authoriz ation O f a ssessab e

k
w or w it h out any d efi nite stat ement o f t h e c ost or any appro

p r i a t i on th e re f or T h e w or i s c omp et e d and t k
h e c ost d efi l
l
.
,

ni tely asc ertained b e f or e an assessment i s l ev i ed In t he ev y .

o f t he assessment th er e i s a dd ed t o t h e d ir ect cost a p erc entage

f or engineering ex p en ses w h ic h inc ude t h e sa ari es and mi s l l

l
,

cell aneous ex p en ses o f t h e engineering f orc e o f t h e munic ip a

i t y p aid out o f curr ent appropriati ons Th e c ost o f assessment

k l
.

w or i s met out of t he proceed s o f tempora ry oa n s or assess

ll
,

ment bon d s w hich are paid w hen th e assessment s ar e co ected

ll l
, .

The f o ow ing i s a i st of t he ac count s in t he assessment

g r o u p
42 N
M U I CI PA L A CC O UNTING § 39

D EB I TS R C E DI T S

A m Cash A m L
L l Im A l A m Ol
ssess ent ssess ent oans

m s sessab e Reserv e f or b ig a
A m R l
oca p r ov e ent s s sess ent

ec ei vab e t i ons
A m A A l mA
ss ess ent s

y g a i n st Ci t m C ai ud i t ed

F m A A Py l
s sess ent s s sess ent s

D ue Cu rr ent m W ab e

A m I A
ro c c o unt s ssess ent a r r ant s a

L D ue to Cu r rent
A
s sess ent nt er est on oans c count s

m R
A l
ssess ent ev enues

sse ss m ent S u rp us

Th e foll ow ing ent ri es ex h ib it the d l pm nt f h

ev e o e o t e a s ses s

ment a cc ou nt s .

E NTR Y R E COR D I NG CO NT R A CT S E NT E R E D I NT O OR OR DE R S
I S S UE D

81 Wh en cont ract s a r e ent er ed into or o r d er s ar e i ssu ed

ll
. ,

entries ar e mad e a s f o ow s

L oca l Im p rov ement s A ssessab e l

To Reserve f or A ss ess ment O bl i g at i ons

82 Com m e n t s on th e F o r eg o i n g E n t r i es Th e
k l l
. .

acc ou nt now I mpr ov ements A ssessab e i s d ebit ed

n as L oca
w i t h al l ad v a nce s mad e and ex p en ses or iabi iti es incu rred on l l
ac c ou nt o f a pr oj ec t t h e fi n a c ost o f w hi c h i s t o b e t h e subj ectl
,
ll
o f an a s sessment w h o y o r in p art again st t h e pr op erty bene ,

fi t ed T h i s account i s c r ed ited w ith all ord er s and c ontracts

ll l l
.

c an ce ed o r iqu i d ated on t h e au d i t o f c ai ms w ith r e f u nd s o f

l
,

err oneou s p ayment s a nd w i t h assessments ev i ed Th e debit

l l
.
,

ba anc e sh ow s t he amount o f advances ex p en ses and Ob iga

l k
, ,

ti ons inc urred on account o f as sessab e w or T h i s i s a con

ll l l
.

‘
tro ing account and sh ou d b e supported by a subsid iary edger
c ontaining an acc ount w ith eac h i mpr ov ement Proo f o f t he
l l k l
.

sub s i d iary r ec or d sh ou d b e mad e mont h y In ma ing t he fi na

'

l l
.

c r ed i t en t r y r epr esenting t h e ev y Of t h e a sses sment t h e fi sc a

l
, ,

O ffic er sh ou d see th at t h e amount t h er eo f c orr esp on d s p re

c i sely w i t h t h e c ost o f t h e w or as sh ow n by t h e acc ou nt in k

l
,

t h e su b si di ar l ed ger A ny d i sc rep an cy shou d be ad j u sted

y
. .

83 Th e accou nt ll R
ca ed ese v e r f or A ssessment O bl ig a

ll d h l iq id
.

ti on s i s d ebited w it h t h e reserv es t o be cance e on t e u a

tion o f ord er s or cont ract s w h en c ai ms ar e a u e or oca l d it d f l l
i mprov ement s or assessab e w or in progr ess and w ith orders l k ,
§ 39 N
MU I CI PA L A CC U TI O N NG
and co ntract s ca nc e ll d
r ited w ith the amount
e It is c ed

l
.

reserv ed on acc ount o f t he c ont ingent ob igation and commit

ment s repr esented by order s and contr acts The c red it bal .

anc e o f t h e acc ount sh ow s t h e a mou nt o f outst an d in g or d er s

l
and c ontract s r e ating t o assessab e w or l k .

E NT R I E S R E COR D I NG CLA I M S A UD I T E D F OR PAY ME NT

84 An entry in t he f o ow ing form

. ll is made f or a mount
r eserv ed on t h e ord er or cont ract :
Reserv e f or ssessment A
b i gat i ons Ol
To L oca mp rov ement s
*
lI
ssessab A l e

F or a mount of c a l im d i s au t ed , t h e e ntry is as fo ll ow s :

‘Loc al Im p rov ement s A l ssessab e

A lmA
l

To sses s ment C ai s ud i t ed

85 C om m e n t s on th e F or eg oi n g E n t r i es Th e
ll d R Ol l
. .

acc ou nt s ca e ese v e r f or A ssessment b igations and Loc a

I mprov ement s A ssessab e l ar e de sc ribed in t h e pr ec ed ing
artic es l
ll l
.

Th e acc ount ca ed A ssessmen t C ai ms A ud ited i s d eb ited

w i t h w a rrants d r aw n in p ayment o f aud ited c a i ms and l
c r ed i t ed w i t h t h e amount o f c ai ms a ud ited w h i ch ar e c h a rge l
l
ab e t o any a c count in t h e ass ess ment gr oup The c r ed it b al
l
.

a nc e s h ow s t h e a mount o f c a i ms au d ited w hi ch r emain unp a i d

k l
.

Th e r ema r s in Art s 2 8 and 2 9 c onc erning c ai ms aud ited

l ly l l
.

a nd w arrant s p ayab e app a so t o asses sment c ai ms .

E NT R I E S ON TH E LE VY OF AN A S SE SS ME NT

86 In co nnecti on w ith t he l ev y o f an a sses sment e nt ri es

ll
.
,

a re mad e a s f o ow s

*A ment s Recei vab e l

A A
sses s

ssess ment s g ai nst t h e Ci t y

To ‘L oca l Im p rovement s A s ses sab e l
D ue t o Curr ent A cc ount s

87 C o m m en t s on th e F or eg oi n g E n t r i es — Th e
l
. .

ac c ou nt s A ssessments Rec eiv ab e and A ssessments A gainst t h e

Cit y a r e d eb ited w i t h t he amou n t o f assessments ev i ed and l
 N
MU I CI PA L A CC U TI O N NG § 39

w it h t he re f und s o f erroneous or ex cessive payments

a mount of

ll ll
.

The ac count s are c red ited w i t h assessment s co ected cance ed

ll
, ,

or r ed uced and w i t h assessmen t s tran s f err ed t o t ax r o or

l l
,

Tax Sa e ac count The d eb it ba anc e show s the amount o f

ll
.

u nc o ec t ed as sessment s

R l ll
.

The acc ount A sse ssments eceiv ab e i s a contro ing account

l
a nd sh ou d be supp ort ed by a sub si d i ary r ecor d cont a inin g

accou nts w i t h eac h in d i v i d ua ass essment Th e aggregat e o f l

l l l
.

t h e ba ances o f t h e acc ount s in t h e sub si d ia ry edger sh ou d

c orresp on d w ith t h e b a anc e o f t h e contro ing account l and ll
l l l
,

proo f o f th i s f act shou d be made month y Th e ba ance o f

l l
.

each su b si d ia ry A s sessments R ec e i v ab e acc ount shou d in ,

turn agree w i th t h e aggregate o f the open and unpaid items on

ll l ll
,

t h e a sses sment ro Thi s t oo shou d be proved periodi ca y

.
, , .

88 Th e ll
nt ca ed D ue t o Current A ccounts i s deb it ed
acc ou

l
.

w ith p ayment s t o c u rrent accounts on iqu i dati on o f sums due

t o th at group of acc ou nt s I t i s cred i t ed w i t h cash
l k
.

r eceived from cu rrent acc ount s t o fi nance assessab e w or

l k
,

w ith adv ances f or a ssessab e w or made out of current

“

acc ount s and w i t h en gin eering c ha rges met ou t o f c u rr ent

l l l
,

a cc ou nt s inc u ded in an a s sessment ev y Th e c red it ba anc e .

s h ow s t h e a mount d u e t o t h e c u rrent accou nts

ll l ll
.

A co at era entry in t he c u rrent account s w i be required as

ll
f o ow s
D u e f rom A s s es s ment A cc o unt s

To Cur r ent Rev enues— Une st i mat ed

or

Cu r r ent Rev enu e s— E st i mat ed

E N TR I E S F OR A S SE S S M E NT S C O LL E C T E D

89 When a s ses s ment s are c o ll ec t ed , e nt ries ar e ma de as

ll
.

fo ow s

A ment Cash
A l
sses s

To ‘ ment s Rec ei vab e

A
ssess

ment Rev en ues

l
ssess

( For i nt erest and p ena t i es)

90 Co m m en t s on th e F or eg oi n g E n t r i es — I n t he
ll d A
. .

a s ses s ment gr ou p , t he c ash ac cou nt is ca e ssess ment Cash

 N
M U I CI PA L A CC O UNTING
and is r t t o prev ent i t s ex pend it ure f or oth er t han
so seg ega ed

assessment p u rp oses

ll l
.

The acc ount ca ed A ssessment s Recei v ab e i s d esc ribed i n

Art 8 7
ll
.

Th e account ca ed A ssessment Rev enues i s deb ited w ith

assessment r ev en ues re f un ded and c red ited w i t h r ev enu es w hi ch

l
a r e app i ed t o as sessment pu rp oses Th e c red i t ba ance r efl ect s . l
t h e net rev en ues acc rued or receiv ed and at t h e end o f t h e yea r
l l l
, , ,

sh ou d b e c osed into A ssessment S urp u s acc ount Th e par .

t i c ul ar rev enu es w h i c h are t o go t o th i s a cc ount d ep end on t h e

l l
fi nanc ia p an in each c ity In some c ities all interest and
l k
.

p ena t ies on as sessments a re ta en into t he c u rr ent rev enues

ll
,

in w hic h case th ere w i be no account f or assessment rev enues .

In ot h er s these earnings a r e u sed t o off set t h e interest On

l
,

assessment oan s f or w h i ch no pr ov i s i on i s mad e in t h e b u dget

ll
.

In that case th i s account w i be necessary

l
,

At the end o f t h e yea r t h e ba ance o f t h e A ssessment

Rev en ues account toget h er w ith t hat o f t h e A ssessment Inter
l l
,

est on Lo an s ac c ou nt shou d b e c osed into t h e A ssessment

l
S urp u s account th us in d icatin g w het h er th ese r ev enues w er e
l
, ,

in f act suffi c i ent t o meet t he int erest on oans

, .

E N T R I E S FO R MON E Y B O RR O WE D I N A N T I C I P AT I O N OF TH E
CO LLE C TI O N OF A SS E SS ME NT S O R T O P R O VI D E A F UN D
FO R AS S E S S A B LE WO R K I N P R OG RE SS

91 When money i s bo row ed in ant ic ipat i on o f t h e collec

r

l k in
.

tion o f assessment s o r t o prov i d e f und s f or a ssessab e w or

progress entries ar e made as f o ow s
,
ll
A ment Cash
A
sses s

To ssessment L oans
92 Co m m e n t s on th e F or eg oi n g E n t r i es — Th e
ll d A
. .

a cc ou nt ca men t Cash i s d esc ri bed in Art 9 0

e ssess

ll
. .

Th e account ca ed A ssessment Loan s i s d eb ited w ith assess

l
ment oan s p ai d and c red it ed w it h moneys borrow ed in anti ci
ll l
,

p a t i o n o f t h e c o ec t i o n o f a s s es s ment s a nd f or oan s t o fi nan c e

l k ll
,

assessab e w or w hich a r e t o b e pai d from t he co ecti on o f

l
,

a sse s smen t s t o be ev i ed .
46 N
MU I CI PA L A CC UNTI O NG § 39

The c edr l
it ba ance sh ow s the amount o f unpai d oans This l
l l
.

account i s intend ed on f or th ose oan s w hi ch are mad e t o

y
fi nance a ssessment w or o r unco ected as sessments k
S o ca ed ll ll
l l
-
.

assessmen t bon d s or oc a i mprov ement bon d s w hi c h ar e i s sued

y
, ,

f or t he c it s sh ar e o f assessments and w h ich a re t o be

’

ll
redeemed w ho y by sub sequent tax ation shou d go i n t he l
ac cou nt f or Capita Loan s and not h ere l .

E NT R I E S To R E CO R D PAY ME NT BY CI T Y OF I TS SH A R E OF
AN A S S E S S M E NT

93 The record Of the p ayment of t h e c ity s’

sh a e o f r an

ll
.

assess ment i s mad e as fo ow s :

A ment Cash
A A
ssess

To s ses s ment s g a i ns t Ci ty

94 Com m en t on th e F or eg o i n g E n t r i es
ll d A
. .

a cc ou nt ca e sses s ment Cash i s d esc rib ed in Art

ll
.

Th e ac cou nt ca ed A s sessmen t s A ga in st City i s desc ri bed in

Art 8 7 . .

E NT R I E S F OR A S SE SS ME NT L O A NS TO BE PAID

95 A ssessment
. l oa ns t o be pai d a re e nt ered in t he fo ll ow

i ng manner :
A ssessment L oans

TO A ssess ment C ai ms l A ud i t ed

96 C o mm e n t on th e F o r eg oi n g E n t r i es
ll d A
. .

acc ou nt ca e ssess ment Loan s i s desc rib ed i n Art 9 2

ll l
. .

Th e ac cou nt ca ed A s ses sment C a i ms A u d ited i s desc ri b ed

in Art . 85 .

E NT R I E S F OR I NTE R E ST ON A S SE S SME NT L OA N S TO B E PAI D

97 Th e inte rest on A ssessment Loan s requ ires entri es as

ll
.

fo ow s

A ssessment I L oans
T A l A
nt er est on

0 ssess ment C ai ms ud i t ed

98 C om m e n t s on th e F or eg o i n g E n t r i es — Th e
ll
. .

accou nt ca ed A ssessment Int erest on Loan s i s deb ited w it h

interest paid on a ssessment oans in munic ipa it ies that d o not l l
5 3 9 N
MU I CI PA L A CC O UNTI NG 47

ma k prov i sion s th eref or in th e a ua u e and i s cred ited

e nn l b dg t
at t h e end O f th e y
ear by tr an s f errin g t he d eb it b a ance t o l
l
A ssessment S u rp us account A sses sment Interest on Loan s
k
.

a ccount i s not requ ired in c iti es th at ma e pr ov i si on s f or inte r

est on th ese oan s in t h e ann ua l bu dget The proc edure in l

l
.

such ca se h as been ex p a ined in A rt 9 0

ll l
. .

Th e accou nt ca ed A ssessment C ai ms A ud ited i s d esc rib ed

in Art 85 . .

E NT R I E S F OR PAY ME NT TO CU R R E N T A C C O UN T S

99 P ayment to cu rrent accou nts requires entries as f ol

l
.

ow s :

D ue t o Cur r ent A
A m lmA
cc ount s

To sses s ent C ai s ud i t ed

A co ll r l ntr in rr n
at e a e y cu e t a c c ou nts wi ll b e requ ired as

ll
,

fo ow s

Current Cash
To D u e f rom A sses s ment A cc ount s

1 00 Co m m e n t eg o i n g E n t r ion Th e
th e F or es .—

ll
.

acc oun t c a ed D u e t o Cu rr ent A c cou nt s i s d esc rib ed in Art 8 8

ll l
. .

Th e ac cou nt c a ed A sses sment C ai ms A ud ited i s d esc ri bed

'

in Art 8 5 . .

E NT R I E S F OR W A R R A NT S I S S UE D IN PAY M E NT OF CL A I M S

1 01 When w arrants are i ssued in p ayment of c a l im s, the

ll
.

fo ow ing ent ries ar e requir ed :

A ment C ai ms udi t edl A
A Py l
ssess

To ssessment Warr ant s a ab e

1 02 C om m e n t o n t h e F or eg o i n g E n t r i es — A ssess
l
. .

ment C ai ms A ud ited in Art 8 5

accou n t i s d esc ribed
ll l
. .

The account ca ed Assessment Warrants P ayab e i s d eb it ed

w it h t h e payment s o f asses sment w a rr ants and c red i t ed w i th
a ssessment w arrant s i ssued ; that i s w ith all w arrant s w h i ch
l
,

ar e c h ar geab e t o any acc oun t in t h e a ssessment accou nts

g r ou p A c re d it b a a n c e sh ow s t h e am ou l
nt of u np a i d w a rr an t s

l l
. .

( S e e a s o Ar t s 2 8 an d 2 9 c on ce rnin g c a i m s au d ite d an d w a r

l
.

rant s payab e accounts ) .

43 N
M U I CIPA L A CCO U NTI NG § 39

E NT R I E S TO R E CO R D P A Y ME NT OF W A R R A NT S
1 03 . Th e payment o f w a rrant s requ ires entries as fo ll ow s

A ment Warrants Payab e l

A
ssess

To ssess ment Cash

1 04 C o mm e n t on th e F o r e g oi n g E n t r i es — The
ll d Warrants Payable
. .

accou nt ca e A ssessment i s desc ribed in

Art 1 0 2
ll d A
. .

Th e nt ca ment Cash i s desc ribed in Art 9 0

'

acco u e ssess . .

E NT R I E S F OR U N C O L L E CT E D A S S E S S M E NT S

1 05 l
In munic ipa ities w here sa es are authori z ed f or l
ll l l
.

a ssessment a rrear s unco ected ass essments inc u ding p ena

l
, ,

ties are t rans f erred t o a Tax S a e account by entries as f ol

l
,

ow s ( S ee Art s 60 a nd 6 2 in c u
. rr ent ac c oun t s ) .

D ue f rom Cu rrent A
A l
ccount s

To ‘ ment s Recei vab e

A
s sess

ment Revenues
l
ssess

( Fo r i nt er est and p ena t i es )

A ment S urp l
A I
ssess us

To ssess ment nterest on Loans

1 06 Co m m en t on th e For e g oi n g E n t r i es — The
ll d
. .

ac cou nt ca e from Cu rrent Accounts i s d ebited w ith

D ue
unp ai d assessment s tran s f err ed t o Tax S a e ac cou nt and c red l
i t ed w ith r ec eipts from curr ent accounts t o iqu id at e charges
’

l
a gain st that gr ou p of account s A deb it ba ance show s t he . l
a mount d ue from c u rr ent accou n ts
ll R l
.

Th e account ca ed A ssessments ecei v ab e i s d esc ribed i n

Art 8 7
ll R
.

The account ca ed A ssessment ev enues i s d escri bed i n

Art 9 0
ll l
. .

The account c a ed A ssessment S u rp us ( or d efi c it ) i s deb

l
i ted w ith su rp u s tran s ferred t o cu rrent accou nts ; and at t h e
end of t h e year it i s debited w i th t h e d eb it b a ance o f A ssess
‘

l
ment Interest on Loans account It i s cred ited w ith appro
l
.

p r iat i ons in t h e b udget t o app y on t he d efi c it ; and at t he end o f

§ 39 N
MU I CI PA L A CC U TI O N NG
yea r it i s c red ited w it h t he c e a a ce o ssessment R ev r d it b l n f A
c nu es acc ount A deb it ba anc e reflects a deficit ; a c redit bal l
l
.

anc e r efl ect s a su rp u s in t he a s sessment r oup o f ou nt

g acc s .

CL OS I N G E NT R I E S AT E ND OF Y E AR

1 07 At t h e end of t h e year t h e as sess ment accou nt s are

l ll
.

c osed a s f o ow s
I“
A ssessment Revenue
To A ssess ment S u rp l us

The f ll
o ow ing is a t ri a lbln a a ce o f t he a sse s s ment ac c ou nt s
a f t er the abov e e nt ri es a re mad e

T RI AL B AL AN C E —
A S S E S S ME N T n c c ou N Ts

Tot a l
s of E nt r i es Ba l anc es

De i tsb C red i t s b
D e its d
Cre i t s

A ment Cash
Im
ssess

L O c al p rov e ment s

A ment s Recei v ab le
A A
ssess

s smen t s
s se g a i nst

D ue F ro m Current Ac

A se
s s s ment I nt erest on

A ment Loans
A
ssess

Reserve for ment

O
ssess

bli gat i ons

A m s s
sse ent Cl a i m5

A m Warrant s
Py l
ssess ent

ab e I s 000
D
a , 00 .

u e t o Current Ac

A m Rev enues
A m l
ssess ent

ssess ent Surp us

T l
.

ot a s
50 N
M U I CIPA L A CC O UNTI NG § 39

CA P I T A L A N D SI NK I N G FUND A CCO U N T S

1 08 It i s be li t m o f munic ipa accounts

ev ed that any sys e l
l l
.

i s i nc omp et e w h i ch d oes not inc ud e a r ec or d o f t h e assets o f

ll
t h e c i ty a s w e as o f i t s i ab i i t ies l l
A though pub ic i mprov e l l
l
.

ments are somet i mes fi nanced by means o f t ax es that p an i s

l
,

unf air and inequ i t ab e in th at it i mp oses on t h e ta x p ayer o f

ll
,

t oday t h e c ost o f a con structi on w h i ch w i b e enj oyed by

f uture tax payer s and h ence t h e d esirabi ity O f fi nanc ing such l
k l
,

w or by on g term b on d s
ll l lG
-
.

Th e f o ow ing i s a i st o f t h e ac counts in t h e Capit a roup

l k
,

these accounts being subd i v id ed int o Capita S ect ion and S in

F
i ng un d S ect ion :

CA P I TA L S E CT I ON
D CREDI TS
l lA
EB I T S

Cap i t a Cash
A
Cap i t a i i
lOl
pp r op r at o n s

y P
u t h o r i z ed Co nst ru ct i on Reserv e f o r Cap i t a b i g at i ons
Ci t ro p er t i es l l A
Cap i t a C a i ms u d i t ed

l P l
Cap i t a Wa r r ant s ayab e
P mm B iu ond s

l
re on

Cap i t a Loans
l
Cap i t a S u rp ul s

SI N KI NG F SECTI ON
F k F
UN D

k
S i n i ng und Cash R
S in i ng und
F I
ev enues

k
S i n i ng nv est ment s k
S i n i ng Fund
A k F
und

T l A Tax S i n i ng
Pl
Rec ei vab und

k F
ax es e— r r ear s r r ear s

ed g ed S i n i ng u nd

P ym
to
k
S i n i ng Fund a ent s

E NT R I E S IN CA P I T A L G R O UP ( CA P I T A L SE CT I O N)

1 09 When k
Opened in a c ity that prev i ou s y h as
b oo s a re l
k l
.

ept no r ecor d o f i t s c i t y pr op erty an in v en t or y o r i st o f su c h

ll l l
,

property w i be prepared in w h i ch a va uat ion i s p ac ed ,

on t h e pr op er t y as appr ai sed o r as i t p p e r s o n t h e sse s s

p a a

ment ro s ll
ll l
.

Th e f o ow ing ent r y in c ud es inf or mation in d icating th at

u p on op ening t h e a cc ount s c on st r uc t i on O f a c apit a i mpr ov e l
ment w as in progress and t h at t h e aut hori z ati on remain s unem
c umb er ed t o t h e amount o f
 30 N
M U I CI PA L A CCO U TI N NG 51

Cap i t a Cashl
‘Ci t P
r op er t i es

A y
u t h or i z ed Const r uc t i on

To ‘Ca i t a lA i i
lL
p r
pp po r at o ns
*
Cap i ta
l l
oans

Capi t a S u rp us

1 1 0 proper boar d t o ma e f u r
Up on t h e d eci si on of t he k
l l
.

t h er capit a i mp r ov emen t s or t o erect b ui d ings and up on c er

ll
,

t i fi cat i on o f t h e same t o t h e c omp t r o er an ent ry i s mad e as

ll
,

f o ow s :
A ut h o r i z ed Const r uc t i on
lA
.

To *
Cap i t a p p rop ri at i on s

Th e l
i ssu e and sa e o f bond s or ot he r l oa ns t o p ay t h e cos t of

c on str u cti on i s r ec or d ed by t h i s ent ry

:

Cap i ta Ca shl
To Cap i t a
*
lL oan s

If ,
u pon the sa le , t he b on d s b r ing a premi u m , the nt r y
e is :

Cap i t a Cashl
To r emi u mP on B ond s

1 1 1 U p on l et t ing nt rac t s or i ssu ing ord er s ch argeab

co l e to
ll
.

t h e c on st r u ct i on , t h e t r an sacti on i s r ec or d ed as f o ow s :

‘Ca i t a lA p p ro p r i at i ons
p
f

TO *
Rese r v e f o r Cap i ta lO l b i g at i ons

Wh en l im
c apresented f or au d it t he reserv e set up by
s are

ll
,

t h e p r ec ed ing en t ry i s c an c e ed t h e appropri at i on r est o red and

l ll
,

r ed uc ed by t h e amount o f t he c ai m by t h e f o ow ing ent ri es :

R es e r v e l l
f o r Cap i t a O b i g at i on s
To Capi t a
*
lA
p p r op r i at i on s

* Ca i lA p p r op r i at i ons
l l A
p t a

To Cap i t a C ai ms u d i t ed

1 1 2 p ayment o f capi ta c ai ms aud it ed by t h e i ssu e

Th e l l
l l
.
,

o f c api t a w ar r an t s i s t h e sa me a s in t h e c ase o f c u rr ent c ai ms

ll
,

au d ited a nd i s r ec ord ed b y t h e f o ow ing entri es

52 M UN I CIPA L A CC O UNTING § 39

l l
Capi t a C ai ms A ud i t ed

T
0 Cap i t a lW Py l a ab e

lW Py l
ar r ant s

Cap i ta a ab

l
ar rant s e

To Capi t a Cash

1 1 3 . interest on t he bonded debt and the maturing

Th e
mstalment s o f t h e i ssue are pai d from current cash and the
payments are recorded in th e same manner as other cu rrent
payment s Th e interest i s a c urrent ex pensé o f the c ity and
l l
.

upon payment eav es no t angi b e as set P ayments on account o f

l
.

t h e d ebt d ec r ease t h e d ebt o f t h e c i t y and inc rease t he capita

l
su rp u s S uch payments be ing fi rst entered in t he c u rrent
.

r ou p and c h arged aga in st Cu rr ent Appropriat i on s a re tran s

g
l ll l
,

f erred t o t he capit a group by mean s o f a co atera ent ry in

ll
t h e f o ow ing f orm

l
Cap ita Lo ans
To Cap i ta S urp l l us

1 1 4 Upon l
t he comp et ion O f a capita l pr j
o ec t or at t h e

rk
. ,

end o f t nt o f t he fi n s e w o evi denced by

t h e yea r , t o t h e i h d
‘

ex e

t h e p ayments d u ring t h e year t he cost i s added t o t h e v a ue o f ,

l
t he c ity prope rti es a nd A uthori z ed Con struction i s d i mini sh ed
t o t h e same ex tent Upon t h e assu mption t hat proj ects remain
l l l
.

incomp ete at t he end O f t h e fi sca yea r t he comp eted portion i s

ll
,

trans ferred t o City Properties account by the f o ow ing entr y

‘Ci ty P rop er t i es

TO A ut h o r i z ed Const r uc t ion

1 1 5 C om m e n t on th e F or eg oi n g E n t r i es —
The
l
. .
.

acc ou nt resp ect s t h e same as t he other

Capi t a Cash i s i n
'

all

c ash acc ounts ; i t ser v e s h ow ev er t o segregate f u n d s app icab e l l

l l
, ,

on y t o t h e p ayment of t h e c o st o f capita i mprovements .

1 1 6 . The ll
nt ca ed City Properties i s intended t o p ro
a ccou

v i d e a p er manent r ec or d o f t h e pr operty o f t h e c i ty When .

thi s acc ount i s opened it i s deb ited w ith t he apprai sed or

a ss e s sed v a ue o f l
t he prop ert y b e onging t o t h e c ity that i s
— l
l l k
,
l

an d s bui d in gs w ater w or s eta an d w i t h t he cost o f all —

l l
, , ,

new capi t a con st r uct i onw h en comp eted It i s cred ited w ith .
§ 39 N
M U I CI PA L A CC O UNTING 53

t he l
va ue o f al l su c h property so ld or d estroyed Th e d eb it
ln k l
.

ba a ce sh ow s t he boo va u e o f propert y ow ned by t h e c ity .

1 1 7 nt ca ed A uth oriz ed Construction i s a

Th e acc ou ll
l
.

temporary account intended t o w ithho d from City Prope rt ies

accou nt t he units o f c apita con str u cti on not c omp ete d l l .

A uth oriz ed Con struction i s deb ited w it h t h e amount o f capital

c on structi on w or k
aut hori z ed a nd c r ed ited w ith t h e amou nt

comp eted l .

1 1 8 nts ca ed Capita Appropriation s eserv e

Th e accou ll l R
l l l l l
.
,

f or Capita O b igation s Capita C ai ms A ud ited and Capita

l l
, ,

Warrants P ayab e ar e in all respects simi ar t o t he accounts in

t he c u rrent gr ou p ca ed Cu rr ent Appropri ati on s ll
ese rv e f or R
l l
, ,

Cu rr ent O b igati ons Cu rrent C ai ms A u d ited and Cu rr ent

l l l l l
, ,

Warrants Payab e and are all dev e oped a ong si mi ar ines

, .

E NT R I E S IN CA P I T A L G R O UP ( S I NK I N G F UND S E CT I O N )

1 1 9 p ening t he boo s or w h en a sin ing f und i s

U p on o k k
l
.

estab i sh ed by setting a s i d e an amount o f c ash o r inv est ment s

ll
,

t he f act i s rec ord ed a s f o ow s

k
S i n i ng F und Cash
k
S i n i ng F I und nv est ment s
To S i n i ng F und k
I f more than one s k
in ing fund i s in ex i st ence or i s estab
li shed , each sh ou ld be d i stingu i sh ed by f u rth er d esc ripti v e
w ord s as
“
S c hoo lB on d s
”
Water ond s or as t he case
,
“ ”
B ,

may be .

1 20 F r m tim
o e t o t i me as t h e
'

ban kb l na a c es ea n r interest
ll
.

or as interest is co ec ed
t on inv estment s recor d i s made as

ll
,

fo ow s

S in king F und Cash

To S i n k in g F und R evenu es

1 21 Pav ment s f r om t he s k
in ing f und are entered as

ll
.

fo ow s
54 N
M U I CI PA L A CCO U TI N NG 39

k F P
S i n ing und ayment s
To S i n i ng und Cash k F
If any part o f t h e S in ing k F u nd Cash be invested in sec u ri
ties , t he record i s as f o ow s : ll
k
S i n i ng F I
und ment s
F
nvest

To S in i ng k und Cash

If part o f t h e investments a re so d
a ny l liq i d t d
u a e ,

p r eced ing entry i s rev ersed in th i s f orm

k
S i n i ng F un d Cash
To S i n i ng k F Iu nd nvest ment s

1 22 Th e t
st a u s o f t h e sin king f u ll
nd w i be show n at t h e
k F
.

end of t h e yea r b y deb iting t h e S in ing und acc ount w it h

S in kin F
g n d P a ym entus a nd c r ed iting t h e same acc ou nt w it h

t h e a mou nt o f S in ing un d k F R ev en ues . ll

Th e f o ow ing are t h e
entri es

k
S i n i ng Fund

To S i n i ng k F P ym
un d a ent s

k
S i n i ng und R evenuesF
To S i n i ng Fund k
1 23 th oriz ing or requiring t h e setting asi de o f
S tatutes au

k ll
.

a s i n ing f und u su a y c ont ain a prov i si on r equ iring t h e muni c

ll
i pal i ty t o c ontrib ute annua y t o t h e sin ing f un d The amount k
ll
.

o f t h e c ont rib ut i on w i app ea r i n t h e b udget a s an appr opri a

t i on and w i ll
b e c harged out o f cu rr ent acc ounts by an ent ry
l
s i mi ar t o t h ose r ec or d ing oth er c u rr ent p ayment s and i s th er e

k
up on r ecord ed i n t he si n ing f un d s ecti on o f t h e capit a group l
o f accounts by t h e f o ow ing entry ll
k
S i n i ng F und Cash
To S i n i ng k F und

k
A sin ing f und i s estab i shed t o prov i de payment o f bond s l ,

an appr opr i ati on t h er e f o r b eing ma d e in t h e b u dget w h i c h i s

k
,

off set by a deb it t o an ac count in t h e cu rr ent gr oup ca l led S in

'

F
i ng und Contri buti on R
equ ir ed as ex p a ined in Arts 4 0 and ,
l .

45 When t he amount of t he contribution i s trans ferred t o

ll
.

t he cu rrent acc ount s t h e f act i s r ec or d ed by a c o ateral entry

,
§ 39 N
MU I CI PA L A CC U TI O N NG 55

in the cu rrent group d eb it ing Cu rrent Cash and c ed r iting S ink

i ng F u nd .

1 24 Com m e n t s on th e F or eg oi ng E n t r i es Th e
ll d S ink in F
. .

acc ou nt ca g n d
e C as h in t h e s a me w ay as ot
uh er

k F
,

cash ac cou nt s i s d eb ited w i t h th e a mount o f S in ing

,
un d Cash

recei v ed and c red ited w ith t h e amount pai d out t h e deb it

l
,

ba an ce representing t h e cash on h and .

1 25 nt ca ed S i n ing und Investments i s

Th e accou ll k F
k
.

d eb ited w i t h t he amount o f inv est ments ac quir ed f or t h e si n

i ng f und and c r ed ited w ith t h e amount o f t h e same so d or l
l l
iqu id ated Th e deb it ba ance sh ow s t h e amount o f inv estments
k
.

ow n ed by t h e sin in g f un d .

1 26 nt c a ed S in ing und Revenues i s cred

Th e acc ou ll k F
k
.

it ed w ith t h e amount o f ea rnings on sin ing f un d inv estments

k l l l
,
”

int erest on b an b a ances and ot h er r ev enues app icab e t o t h e

k ll l
,

sin in g f un d T h i s acc ount w i show a c red it ba ance r eflect

l
,
.

i ng t h e amount o f rev enu es earned du ring t he year unti t h e

l k F
,

end o f t h e year w h en it i s c ose d into S in in g

, un d account .

1 27 Th e g n d P
accou ay m e nt
nt s i ca
s d ell d S inkin F
b ited e u

k F
.

w ith t h e amount of p ayments from t h e S in ing un d f or

r ed empti on o f bond s and w ith t h e amount o f c ontrib ution s t o

ll l
,

cu rrent ac counts T h i s account w i sh ow a d ebi t ba a nc e

l
.
,

reflecting t h e payments mad e d u ring t h e year unti t h e end o f

ll l k F
,

t he year w h en it w i b e c osed int o S in ing

, un d account .

1 28 Th e
nt ca e ac cou
u s c e ell d S inking F nd i r dit d
w ith t h e
k
.

amount o f sin in g f un d c ash a nd inv e st ment s on h an d w h en

t h e acc ount i s op ened and w ith t h e amount o f c ontrib ution s

from th e b udget
l
.

At t he end o f t h e fi sca year th i s account i s debited w ith t h e

amount o f t h e ba an ce o f t h e S in in
g u nl d P ay m en t s a cc ou n t k F
and i s c r ed i t ed w ith t h e amount o f t h e ba an ce o f t h e S in in
g l k
F un d R
ev en ues account th u s r efl ectin
g t h e stat u s o f t h e S in k
F
,

i ng und .

1 29 T r i al B a l a n c e .— A tria l blna a ce of Capita l and

kin F
.

S in g u nd accou nts i s sh ow n h er ew i t h .

. I L T Z34— 1 9
56 N
M U I CI PA L A CC O UNTI NG § 39

T RI AL B AL ANCE —
C P
A I TAL AN D SI N KI N G FUN D A CCO UNTS

B l
l
Tot al of Ent ri es a a nces

b
Cap i t a Sec t i on
De i ts Credi t s Deb i t s Cred i t s

T l
ota s .

S i nki ng Fund
Secti on
k
Sin i ng F und

16

T l
ot a s 5

T R U S T A CC O U N T S

1 30 .Citi es are someti mes entru sted w ith t he cu stody of

f und s or inv estments in w h ich they hav e no proprieta ry inter
e st and t h e account s r ec or d ing t h e r ec eipt and d i sbu r sement o f

such f und s are now n k as t rust accou nts .

§ 39 N
M U I CI PA L A CCO U TI N NG 57

The fo ll ow ing is a li t s of the acc ou nts in the Trust Gr ou p

D EBI TS CREDI TS
T Cash Pensi on Fund Revenues
F I m T l A
rus t

P ensi on und ru st C ai ms u di t ed

F P ym T l
nv est ent s

P ension und ru st War rant s P ayab e

P F
a ent s

ensi o n und

T ru st A cco unt l
( p rop er y d enomi
nat ed )

E NT R I E S IN T R UST G R O UP

1 31 . Upon receipt h to be he d in trust Tru st Cashof cas l ,

i s d ebited and an account naming t h e cha r acter of t h e trust

l l
f or ex amp e P o i ce P en sion un d T each er s Retirement und F ’
F
R ll ll
, , ,

Contract ors etainer s et c i s cr ed ited Th e f o ow ing i us

’
—

l
. .
,

t r at i v e entri es are based on t h e assumpti on th at a P o ice

F
P ension und i s estab i shed w ith certa in investments o f t he l
l
va ue o f and ca sh t o t h e amount o f Th e
op ening entry i s as f o ow s ll
T Cash
F I
rust

P ensi on und ment s

P l P F
nv est

To o i ce ensi on und

'

Upon r eceipt o f cash o th er than rev enues t o be app ied t o l

t he same pu rpose , recor d i s made as f o ow s : ll
Trust Cash
To l
Po i ce P ensi on F und

Upon receiptinterest ea rned on inv estments or o f other

of

l
revenues p edged t o t h e f und by la w an entry i e th e f o ow in g , lk ll
i s mad e

Trust Cash
To P o i c e l Pensi on Fund Revenues

Upon t he l
sa e or liq id ti n
u a o of in vestments owned by t h e
f und t h e entry i s

Trust Cash
To P o i ce l P ensi on Fund I nv est ment s

U pon t h e p ur c hase o f ad d l
iti ona inv estment s the n t ry
e is
53 N M U I CI PA L A CC O U N TI N G § 39

l
Po ice P ensi on F I und ment s
T lmA
nvest

To rust C ai s u d i t ed

Upon t h e p ayment of pen si on s p er son s ent i t l d th r

e e et o th e

e ntry is :
l
Po i ce P ensi on F und P ayment s
To T rust l
C ai ms A ud i t ed

U pon i ssuing w arrant s in p ayment of t ru st c a l im s th e

entry is
T l
C ai ms u d i t ed A
T Py l
r u st

To rust Warrant s a ab e

Upon p ayment of t r u st w arrant s t h e e nt r y

T War rant s Py l
a ab e

T
r u st

To r u st Cash

l
C osing e ntries ar e

Pensi on F und Revenues

( )
Pl P
a

To o i ce ensi on F un d

P ol i ce P F ensi on und
( b)
TO P F P ym
ensi on und a ent s 35000 0

1 32 T r i al B al a n c e Th e l
f ol ow ing 1 8 a t ria ba ance l l Of

k
. .

t h i s grou p o f ac co unt s a f te r ma ing t h e f oregoing entries

TR I AL B AL ANC E — TR A U ST CCO U NTS

Tot a l of E nt r i es B l
a ances

b
De i ts d
Cr e i t s b
De i ts d
Cre i t s

T
Pl P F
ru st Cash .

o i ce ensi on u nd In
m 2
Pl P F
v est ent s

o i ce en si on u nd Pay
m
P l P F
ent s

o ic e ensi on und R ev

T l
enu es

C ai ms Au d i t ed
T P l
ru s t .

W ay a b

P l P F
ru st arrant s e .

o i ce ensi on u nd

T l
ot a s .
 N
M U I CI PA L A CCO U TI N NG

A P P E ND I X
1 33 I nt h e ll
f o ow ing p age s a re i u strat ion s o f th e st ate ll
l
.

ment s t hat f or m pa rt s o f t h e Annua R eport r equired in c on

nect i on w ith a sy st em o f acc ounts su c h a s has b een d esc ri b ed

in th e prec eding p ages .

S UMM AR O F Y CU RRE NT R E VE N UE S AND XP N

E E SE S

REVE N U E S
l
S ur p us o f p r i or year
T ax es o f c ur rent

Am ount o f l y ear
evy
L ess : Levy f or st at e and co unt y p u r p o se s

Tax r evenues, c i ty

ll p u rp o ses
.

Mi sce a neou s revenues

T l ot a

l l
P ub ic Ut i i ti es— Commerc ia l
M l
uni c i p a w at e r d ep ar t ment
l S urp us o f p r i o r y ear

W dep ar t ment
T l
at er r ev enu es

ota

M ll
unic i p a igh t i ng d epart ment
l S u rp us o f p r i o r y ear

L i gh t i ng d ep ar t ment
T l
r evenues

ot a

T l ot a c ur r nt r ev enues
e
P roceeds o f d efici ency bond s
Cur rent defi c i t
l
G ener a t ax r ev enues
l
Munic ipa w at er d epa rt ment
Muni ci pa ll i ght i ng d epart ment

T l
ot a
60 N
MU I CI PA L A CC U TI O N NG § 39

E X PE N SE S
l
Genera government
P rot ect ion o f p ersons and p rop erty
Conser vat i on o f hea t h l
S ani t at i on and p romot i on o f c ean iness l l
H i gh w ays
Chari ti es and c or rect i ons

E d ucat i on
Recr eation
” l
Fulfil? ut i i t i es non commerci a l
ll
-
,

Mi sce aneou s
l
Munic i pa i nd ebt edness
L ess : Cont r ibuti ons f rom si nk i ng
'

f unds
Const ruct i on and p er manent i mp ro v ement s
T l ota

l
P ub i c i li i mmerc ia l
l
u t t es— co

Muni c i pa w at e r d epa r tment

Muni c i pa ll igh t i ng d epar t ment
T l ot a c ur rent ex p enses

Rese r ve fo r ll ect ed ta x e s p ro v i d ed
D
unc o c u rr en t

efi c i enc i es of p r i o r y ear :
Genera l
l
Munic i p a w at er d epa r t ment
ll
Muni ci pa i gh t i ng dep ar t ment
T ot al

l
.

Cu r rent su rp
l
us

G ener a
Muni c i pa l w at er d ep a r t ment
Muni c i p a ll i g h t i ng d epar t ment
T l ot a
§ 39 N
M U I CI PA L A CC O UNTING 61 .

B AL A N CE S H E ET— CU RR AEN T CCO U N TS

Assets
Cash
Cu r rent cash

Tax ar r ear s cash

Water cash

T ax es recei v ab e l
Curr ent ci t y t ax es
County tax es
A r rears o f tax es

Water r ent s r eceivab e l

A cc ount s r ecei vab e l
D ue f r o m ot h er ac count s

Mat er i a l s and supp l i es

T l ota

Current defici t
Genera l
l
Muni ci pa w at er d ep art ment
ll
Muni ci pa i g h ti ng depart ment
T l ota

L i a bi l i ti es
Curr ent war rant s payab l
l
e

Current c ai ms aud i t ed
Current oans l
D ue to ot h er accounts
D u e to y
l
c ount t r easurer
Reserv e f or cu r rent ob ig at i o ns
Reserve f or arr ear s o f t ax es

I y l
T l
nvent or su rp us

ota

Cu r rent l
l
surp us

Genera
l
Muni c i pa w at er dep art ment
ll
Muni c i p a ig h t i ng d epart ment
T l ot a
62 N
M U I CI PA L A CCO U TIN N G 39

B AL A N CE S H EE T— A S SE S S M E N T A CCO U N T S

Ass ets
Assessment ca sh

A ment s rec ei vab e l

A
ssess

s ses sment s ag ai n st c i ty

l
Loca i mp rovement s autho ri z ed
l
Loca i mp rov ement s assessab e l
D ue f r o m ot her account s

A s ses s m
T l fi
ent
ot a
de ci t

L ia bi l i ti es
A ment w a rrant s p ayab l
A l
ssess e

sses sment c a i ms a u d i t ed

A ssessmen t l oans

A sses sment ap p rop r i at i o n s

A cc ount s pa yab el
D ue t o ot h er ac c o u nt s

Reserve f or ment l i g at i o ns
T l
assess Ob

A l
ot a

s sess ment s u rp u s

B AL A N CE S H E ET— CA P I TA L AND SI N KI N G F UND A CCO U N T S

A ss e ts
Cap i ta l
l
acc ount s

Capi t a cash

D u e f ro m ot h e r a cc o u nt s
A ut h o ri z ed c o nst r uc t i on

Ci ty p r op ert i es
T l ot a

k
S i n i ng f und account s
k
S i n i ng f u nd cash
k
S i n i ng f u nd i nvest men t s
T ax es r ecei v ab e l A l k i ng f un d s
T l
— r rea r s p ed g e d Si n

ot a
§ 39 N
MU I CI PA L A CCO U NTI NG

L ia bi l i ti es
l
Capi ta accounts
l
Cap i t a w ar rant s p ayab e l
l l
Cap i t a c ai ms audi t ed
D ue to ot her account s
l
Cap i t a app rop ri at i ons
Reserve f or cap i ta ob i gat i ons l l
Capi ta oans ll
T l ota

k
S i n i ng f und account s

D ue to ot her account s

TOtal
S urp us l
Cap i t a surp us l l
k
S in i ng f unds
T l ot a

B A LA N CE S H EE T— TR A U ST CCO U N T S

As
T
s e ts

r ust c ash

l
P o ic e pensi on f und i nv est ment s
F i remen p ensi on f un d i nvest ment s
’

l
s

t eac h e r s p ens i on f und i nvest ment s

’
S choo
T l ot a

L ia bi li ti es a nd R es er v es
T war r ant s p ayab l
T l
rust e

ru st c ai ms audi t ed
— t rust acc ount
— t ru st account
’

— t rust account
Pol ice p ensi on f und
Fi remen s
’
i f d
l p en s o n u n

S choo t each ers pensi on

’

T l ot a
 GRAPHS

U S E AN D P R E P A R A T I ON OF G R APE S

P R ELI MI N AR Y R E MA R K S

1 Accordi n g t o t h e Standard Di ctionary gr aphs describe

ll
,

wi th pi c tori al eff ec t and i ustrat e i d eas b y d rawi n gs pi ctures

kk
, ,

or d i agrams B y th eir u se b oo eepers and accoun tants can

l l
.
,

more striki ng y present an an a ysi s of all or p arts of b usiness

st atements and rep or ts th an can be d one in fi gures and for

l l
,

th is purpose th ere I s a most no imit t o t h e featur es of t h e b u si

ness whi ch may b e so ex pressed f t h e many torrns I n use O
l k
.
,

t h e most common are t h e strai ght ine t h e b ro en line and

l
- -
, ,

th e cir c e g p
ra h s .

2 Th e v o lm f u eo sal es , for exa mfl e l

dai y wee kl y m onth y l
l ln k l
.
, , , ,

gr year y or o r o ger f
per i od s may b e so stri in gy shown b y a

l ine grap h as t o b ri n g out t he hi gh and l ow poi nt s and av erage

l
,

and wh eth er or not t h e trend i s continu ou s y u pw ard or oth er

wise l
Other ines may b e ad ded t o th e graph s t o Show features
l l l
.

more or ess re ated t o sa es .

Special features su ch as t h e percentage di vi si on or t otal

ex penses w h eth er for a f actory or store or d ep artment are

l l l
, ,

present ed more c ear y for study b y ci rc e graphs th an perhap s

l
any oth er way ; a so su ch features as an an a ysi s of sa es ei th er l l
ll l
,

wi th d o ars t h e numb er of sa es or t he numb er of cu stomers

l l
, , ,

as a b asi s for ex amp e ; wh at p ercentage of ed ger account s

k k ll
,

ta e a di scount p ay in 3 0 days ta e more th an t h e a owed

l
, ,

time gi v e not es or fi n al y b ecome worthl ess In anoth er form

, , .
,

C O P Y R | O HT CD D V I N TI R N ATI O N A I .
‘’
I I XT I O O K C O MPA N Y A LI. R I O HY O l l ' l l Vl D
 GRAPHS 41

th ey mayshow what percentage of accounts rep resent s 1 2 3 , , ,

4 or more years conti nuous b usiness or new b u si ness w h at

, ,

prop ortion of t h e total sal es are charge cash C O D s and , , . . .

,

approv al et c

lk
.
,

It i s i rnpossi b le t o giv e here anything i e t h e number of u ses

t o which all or any kind of graph i s ad apted or t h e comb in a
l
,

tions in wh ich they may be u sefu or h ow much or how far ,

all or eac h may b e used Th e ex tent t o wh i ch graph s may b e

l
.

v alu ab e in any lin e of b usin ess d epends on t h e in gen ui t y of

t h e user .

S TR A I G H T LI N E G R A P E S
-

S I MP LE T FOR M S

3 prep are a strai gh t li ne graph a u nit of measurement

To
l
-
. ,

must first b e d ec ided on and then th i s unit must be mul tip ied
k
or d i vi d ed t o ma e u p t h e comp arati v e lines th at form t h e grap h

l l ll
.

Th ese ines can be run eith er horizontal y or verti ca y b ut ,

all must h av e t h e same d irec ti on an d be of t h e same comp ar ati v e

I
Nt
o
.

l n th
e g .
g r a ph m
Su ch
ay b e u s e
ad t o S h ow t h e earn in gs o f a

comp any year b y year month b y month or any oth er com , ,

p ar at i v e p er i od or t o Sh ow t h e gr ow t h of a b u s in ess b y p e ri od s ;
l
,

in fact t h e re ation of any set of fi gu res t o any other set can be

l
,

sh own b y these strai ght in es .

g4 1 GRAPHS
For ex a l
mp e Fi g 1 show s t h e growt h of a ci ty Th e first
l
. .
,

y e a r o f w h i c h t h er e i s a r ecord t h e p op u a ti on w as U si n g
th i s as a b asi s and adoptin g a scal e of some conv eni ent si ze
l l
,

say 1 5 in ch t o
1 popu ation t h e fir st ine may b e dr awn thi s
l l l
, ,

engt h Th e second l ine t o Show a p op u ati on of wil th en

l
.

h av e t o b e whi ch i s 92 in ch on g Th e
l
. .

third ine t o Sh ow a popul ation of mu st b e

l ll
,

or inch es ong B y t h e same meth od it w i b e found th at

l ll l
.
,

t h e oth er in es wi b e and inches ong ;

l l l
t he ast ine show s t h e pop u ation of t h e city at t h e b egi nnin g
of t h e year 1 9 1 4 This graph shows t he tot a pop u ation at
. l l
I S SO

1860

1 87 0 M

1 880

21 3 4 1

1914

FI G 2
.

any Of t h e gi v en p eriod s ; t o d etermi ne t h e growth d u rin g any

period , sub tract t h e fi gures of t h e precedi ng per iod from th ose
of th e requi r ed period .

4 . To k
ma e a ch a rt , Fi g 2 t o
.
, period sS how t h e growth b y ,

find t h e fi gur es showi ng t h e growt h for each period as ju st

d escrib ed th en d et ermi n e u p on a uni t of measur ement say
l ll
, ,

inch Th en for t h e fir st year t h e ine w i be i inch

l l l
,

on g To fin d t he en gt h of t h e secon d ine sub trac t

l
.
,

from wh i ch w as t h e total prod uc tion ; th i s eav es

as t h e in crease in p op u ati on for t h e peri od l Drawn t o t h e
ll l
.

ad opted scal e th i s wi gi v e a lin e in ch es o n g F or t h e th ir d .

period sub tract f rom whi ch gi v es as t h e

l ll l l
,

g ro wt h ; d raw n t o sca e t h i s w i gi v e a in e in c h es on g .
4 GRAPHS 41

B y the me method t h e other li nes wi b e

sa ll
l
,

and inch es ong

y l y l y
.

A stu d of Fi g 1 wil Show that t h e cit had a good hea th

l
.

g ro wt h d u rin g t h e w h o e term gi v en as eac h peri od sh ow s a good

increase in popu ation l H
owev er a stu d y of t h e secon d ch art

l
.
,

w i ll Sh ow that w hi e t h e ci ty in creased ev ery period d uri ng t h e ,

period 1 870 t o 1 880 t h e increase w as onl y ab ou t 50 per cent .

that of t h e precedi ng period Th e period between 1 880 and

1 890 sh ows an unu su al increase of 2 3 0 p er cent over t h e p re
y
.

ced in g 1 0 ears Th e t wo foll owi n g peri od s show normal

.

Th e l
t line shows an in crease for on y a portion of a per iod
as l
ll
.

To comp are th is wi th t h e other period s it wi b e necessary

t o red u ce t he fi gur es t o one tenth of a period or 1 year -
To do .

thi s t h e fi gures mu st b e di vi ded b y 4 whi ch giv es

l
,

Thi s sh ow s that thi s period compares v ery fav orab y wi th t h e

b est of t h e preced in g period s for if thi s same growth i s con
y l
,

t i nued for t h e remai n der of t h e 1 0 ears i t wil gi v e an i ncrease

for t h e period of

5 Var i a t i on s i n A r r a n g em en t —
Whil e the ch arts gi ven
in Fi gs 1 an d2 h av e t h e fi gur es and dates printed ov er each
lin l
.

e, fi gures may b e p aced at. th e t op and si des of th e ch art

and li ght rti cal l ines sp aced at uni form di stan ces repre
ve

sentin g fix ed sums dr opped from t h e t op figu res For

l l
.

ex amp e ines may b e sp aced at uni form d i stan ces rept e

sentin g I n creases of 500 and t h ese sp aces cou d b e su b d iv i d ed l
b y four l ines representi ng 1 00 Th e li nes of th e graph cou d l
l l
.

then b e ai d out ac ross these v erti cal ines and ex tend p ast t h e
nearest 500 sub di vi si on t o t h e number requi red ; if t h e graph
l l
i ne sh ou d rep resent a frac ti on of 1 00 t h e sp ace b etween th e
1 00 su b di v i si on s may b e di vi ded b y t he eye .

B LOC K S AS G RAPE S

6 S trai ght lin es can be han ged into b oc s b y Si mp y

c l k l
lin l k
.

wi d enin g t h e es Th e b oc s may then b e u sed t o rep re

l l k
.

se nt t he sa me things as t h e p ai n lin es b ut t h e b oc s will h av e

,
 41 P S
G RA H

t he adv a
nt age that eac oc a h bl k m y b
e di v i ded int o sec tion s

l
b y co oring or cross sectioning A ch art made of b oc s i s l k
k
-
.

shown m Fi g 3 ; thi s ch ar t gi v es t h e resou rces of b an s m t h e

l
.

reser ve di stri ct s Th e t ota resources of each di strict are

l
.

d ivi ded into three secti ons rep resenti n g cash oans and

k
,

other resources As it i s necessar y to now in wh at form th ese

l l k l
.

resources are t h e comp ete b oc s whi ch represent th e tota

,

resou ces of eac

r h d istri ct , are sec tioned to rep resent t h e p ro

b y t h e key Th e ch ar t tion p aper wi th

c oul d b e dr awn on sec

k
.

amount s mar ed i n t h e mar gi n t o ind i cate t h e amount s th at

t h e di fferent items represent When thi s i s done t o find t h e

l k l
.
,

t ot a amount of each i nd of resource t h e cash wi l b e read ,

direct from t h e ch art fi gu res ; t h e amoun t of loans i s fou nd b y

ci ding with t h e t op of l
t h e oan sec tion ; th e amount of t h e other
 GRAPHS g4 1

resources is found b y sub tracting t h e amount coi nc id ing with

th e t op of l
t h e oan secti on from t h e amount op p osi te th e t op
of t h e b oc l k .

Another way of indi cating t h e amou nts i s t o print t h e fi gures

eith er in or opposite eac h sec ti on Th e b est method t o
k
.

i s t h e one th at wi ll mak e t h e most stri i ng comp arison

.
.

l
Ita y .

Separately $ 39 1
,

FI G 4
.

7 Bl k
oc s or lin in many oth er w ays ; Fi g 4
es can be u sed

l k l k l
. .

sh ows b oc s u sed as step s Th e si ze of t h e b oc s are re a

l
.

t i v el y proporti oned b y th eir cu b i c contents ; in es coul d b e used

in t h e same form b ut usin g onl y proportionate ength s Another l
l k
.

manner in wh i ch t h e b oc s can b e u sed t o adv antage i s as sh own

.
,
l k
in Fi g 5 w here t h e b oc s represent t h e proportion th at t h e
 41 G RAPHS
di fferent it ems of t bear to one another and to th e t otal cost
cos

ll
and se in g p rice of a manu fac t ured produ ct Th e first b ock . l
represent s t h e cost $2 5 of materi al u sed in th e manufac ture
l l k
, ,

of an arti c e Step p ed on thi s i s a b oc that represents

l
.

t h e cost of t h e ab or $50 enteri ng i nto t h e manu , ,

fact ure Together these t wo items form t h e primary cost $75

O l k
.
.
,

n t op of th e primary cost i s add ed th e b oc representing

in d irect expenses $50 ; this with t h e primary cost mak es t h e
l
, , ,

fi n al fact ory cost of t h e produ ct $ 1 2 5 To th e fina fact ory

l k ll
.
,

cost i s ad ded t h e b oc representi ng t h e se i ng and admi nistra

tiv e ex penses $25 whi ch with t h e final fact ory cost mak es t h e
, ,

F rc 5
.

tot al cos t of the product

$ 1 50 To thi s total cost t o
to sell ,

l l k k l
.

sel i s ad d ed a b oc for t h e profi t $25 whi ch ma es t h e fina , ,

step an d gi v es t h e selli n g pri ce of t h e prod u ct $ 1 7 5 , .

B R O K E N - LI N E G R AP E S

8 . B r ok en - l i n e gr a p h s , or l i n e ch art s , are useful in

show ing t h e fluctu ations in any b usiness or p art of a b usiness
l l
.

Th is st y e of graph compares t h e resu ts of a b u siness and i s b est

construc ted on secti on p aper Th e uni ts of t h e b u si ness are
ll l ll
.

u su a y p ac ed verti ca y at t h e si d es of t h e ch art and t h e period s

of time arran ged h ori zontall y are sh ow n at t h e t op and b ottom

, ,

of t h e chart as in Fi g 6 , In thi s case t h e period s of time are

. .
,

th e cal end ar month s of t h e years 1 91 3 and 1 91 4 ; therefore ,

I L T 234— 20
 G RAP H S § 4r

are hundreds of do ll ars, so th e sp ac e b et ween eac h hori zontal

9 . As a n tructing a ch art it will b e assumed

b as i s for co s

th at t h e fi gu res on p age 9 show t h e railr oad rev enues and

ex p enses p er mil e of road for t h e period s sh own .

1 9 13

1 913 FI G 6.
1914

Fir t s t h e r ange of t h e fi gu res mu st b e co nsid ered in order th at

l
, ,

t he scal e t o wh i ch t h e c h art mu st
made sh al b e of a con be
veni ent siz e Th e range of t h e fi gures for t h e period s of time
J l y
.

i s anu ary 1 91 3 t o D ecemb er 1 91 4 inc u si v e maki ng twent

ll
, , , , ,

four p eri ods each represented b y a v erti ca ine For t h e

, .
g4 1 GRAPHS

M arch

Jl u y
August
Septemb er

uni ts meas urement b y do ars t h e owest i s 1 70 and t h e

of ll l
l
,

high est B y mak in g t h e sp ace b etw een each h ori zonta

l i ne represent $ 1 00 ; it i s p ossi b e t o start from zero an d mar l k
l
up four t een in es so as t o gi v e a margin at t h e t op and b ottom

ll
.

St artin g from t h e b ottom t h e h ori zonta in es may th erefore

, , ,

b e n umb ered 0 1 2 3 et c an d at t h e t op of ea ch v erti cal

'

, ,
.
, ,

l ine t h e month may b e w ritten and ab ov e t h e month s t h e

‘

l
,

y e ar m ay b e d esi gn at ed W it h t h i s d on e t h e in e for op er atin g

l
.

rev enues may b e p otted Th e fi gu res sh ow th at t h e op erating

J l
.

rev enue for anuary 1 9 1 3 w as th erefore on t h e ine

J ll
, , ,

representi ng anua ry 1 9 1 3 t h e h ori zont a ine representi ng

J l k
, ,

i s fou nd and on t h e anu ary ine a p oint mar ed ofi

nine tenth s of t h e di stan ce b etw een t h e ine and t h e l
l
-

ine as 90 i s ni ne tenth s of t h e d i ff erence b etw een

ll F
-
,

and On t h e v erti c a in e rep resentin g eb ruary p oint off

ll l l
,

th is w i b e ocated one tenth of t h e sp ace ab ove ine 1 0 -

.
10 G RAPHS 41

For March t he poi nt i s

ocated ei ght t enth s of t h e di stance l
l l
-
,

b etween t h e ines 1 0 and 1 1 For Apri sev en tenth s ab ov e l ine .

,
-

1 0 ; for M ay fi ve tenth s or mi dw ay b etw een 1 1 and 1 2 and

lk l
-
, , ,

i n i e manner for all t h e month s i st ed After t h e point s are

l l
.

oca ted strai ght in es connec tin g t h e ad j acent p oint s sh oul d b e

ll
drawn ; thi s wi gi v e t h e graph for t h e op erat i ng rev enu es
I l
.

n t h e case of t h e O perating ex penses p er mi e t h e points are

l
,

ocated in t h e same mann er as w ere t h e p oint s for t h e op er atin g

rev enues ; connecting ines are then d rawn as before t o com l , ,

p l et e t h e graph .

1 0 . p r ting rev enues are t he di ff erence b etween

Th e net o e a

t h e gr oss O peratin g rev enu es and t h e gross op erating exp enses .

For any month thi s i s equ al t o t h e di stance b etw een t h e p oi nt s

d esi gnating op erating rev enu es and op erating ex penses on t h e
li ne representing th at p articul ar month Th e to tal net rev e
r
.

nues i s equal t o t h e sp ace b etw een t h e Op e ating rev enue graph -

and t he operating ex p enses graph Thi s space t o show t h e

l l l
-
.
,

net rev enue c ear y can b e shad ed or co ored as in Fi g 7

, ,
. .

1 1 . Us e of Li n e C h ar t s
—
Gr ph a s can be u sed for co m
p ari son of pri ces of di fferen t commodi ties et c and to sh ow
k k
.
,

h ow th ese prices fl uctuate wee b y wee and year b y year

I
.

n Fi g 8 i s shown a compari son of t h e rates of forei gn exchange

y l
.

for t h e ea rs 1 90 4 1 90 5 and 1 909 A reference t o t h e k ey wil

l kl k
, , .

sh ow t h at t h e h eavy b ac ines represent t h e prices wee b y

k l
wee for 1 904 t h e li ght ful l in es gi v e t h e p ri ces for 1 905 and
l l l
, ,

t h e d otted ines t h e pri ces for 1 906 These ines cou d be shown
l ll
.

b y di ff erent co ors as we as b y d i ff erent constru c tion or ad di

l l
,

t i onal ines v ar yi ng i n constru ction or co or may b e ad d ed t o

t h e ch art t o sh ow sub sequ ent year s pri ces Thi s ch art i s ’

l
.

di v i d ed i nto three p art s one d ea ing with t h e p ri ce of sterli n g

k
, ,

one wi th t h e pri ce of francs and one wi th t h e pric e of mar s

k
, ,

b ut all p art s are con structed from t h e w ee l y exchange quota

tions N
otice th at t h e pea s or hi gh p oint s po int t o t h e p ar k
l k
.
, ,

v al ue ; th at i s t h e fi gu res in t h e ch ar ts for ster ing an d mar s

,

are arranged in an ascen d in g ord er as th ese prices are at a di s ,

count whil e t h e fi gures for t h e p ri ces of fran cs are arran ged

,

in a descendi ng order as francs are at a premi um , .

 41 GRAPHS 11

1 2 Hi h
g and l
low graph s are u seful in i sti ng hi gh and l ow
k
.

prices for stoc s b ond s or oth er commod ities TO con struct

l
.
, ,

thi s sty e of graph t h e high qu otation s are charted

,
th e sa me
as in t h e prev i ous exanml es and th en t h e l ow pri ces , the p
s ace

l
between t h e t w o graph s i s then sh ad ed or co ored so as t o form
l l l
,

a wi d e in e Th e intersection of t h e t op of thi s in e with a ine

.

rep resenting any p eri od will then sh ow t h e h igh prices and

lik ewi se t h e intersec tion of t h e b ottom w ill sh ow t h e low prices
for that peri od Such a graph i s sh own in Fi g 9
. . .
 41 G BAPHS 13

C I R CLE G R A P E S

1 3 rep resent di ff erent p hases of b u si

C i r c u l a r g r ap h s

l
.

ness activi ty and sh ow t h e re ation of t h e v ari ou s items t o t h e

l
b u sin ess as a wh o e To con struct one of th ese grap h s a cir c e i s l
l
.

dr awn t o any conv eni ent sca e t o represent t h e tot al b u sin ess .

To redu ce t h e di ff erent items of t h e b u sin ess into th eir p ro

p o r t i on at e n u mb e r of d e gree s all t h e it ems m u st b e ad d ed
l l
,

toget her t o get t h e tota b u siness ; t h e re ation th at each it em

b ears t o t h e t ot al b u siness wi l b e sh ow n b y a su b di vi si on l
l l l
.

b earin g t h e same re ati on t o t h e c omp et e c irc e or For

l
,

ex amp e i f a b u si ness con

,

si st s of fou r d ep artment s ,

one of wh i ch h as a net
rev enue of an oth er

h as a net revenu e of
a th ird h as a net rev enu e

of and t h e fou rth a

net revenu e of t he
l
tota n et revenu e wi th en ll
be
Th e co l
mp ete c ir l c e, or

l
wil
th en represent
t t l
m
the o a b u si n e ss of
“ f
i g
efi
Th e section of it
th at will represen t d ep art F ; 10

l l l
“

ment 1 will b ear t h e same re ation t o t h e comp ete c irc e or ,

as b ears t o B y prop orti on d rop p in g t h e

ll l
,

h un d red s th i s section wi
, b e 65 1 70 x 3 60 or mul tip y ,

65 6
9
ing the ex tremes and di vi din g b y t h e mean ,

573
5
For d ep artment 2 t h e section wi , ll b e 70 1 70 x 3 60
70
573
5
60
.

For d ep artment 8 t h e sec ti on w i b e 2 1 =

1 70 x 3 60
, ll
2 1 x 3 60
1 70
For d ep artment 4 t h e sec tion wi be , ll
1 4 x 360
1 4 1 70 x 3 60 This grap h i s shown in Fi g 1 0
_

. .

1 70
14 GRAPHS 41

Top rov e these section s shoul d be added together and thei r

,

sum shoul d equ al 3 60 ; These

l
d egrees are ai d off on t h e ci r cumference wi th a p rotractor
and rad i al l
ines d rawn from these point s t o t h e cent er ; t h e
l
.

sp aces b etw een th ese in es w ill th en rep resent i n proper p ro

t h e diff erent items of net rev enue .

FI G . 11

1 4 A p p r ox i m at e M et h od of P r ep a r i n g G r a p h s
—
In
case a protrac tor i s not at h and or if i t s u se i s not un derst ood
l
, ,

an easy approximate meth od of ayi n g ou t th ese graph s i s t o

l
di vi d e t h e ci r c e into ei ghth s Thi s can b e done b y fi rst draw
l
.

i ng a i ne throu gh t h e cen ter cu tting t h e ci r cumference on each

ll l l
,

si d e ; th i s wi di v i d e t h e ci rc e into h a v es Draw a linethrough

l l l
.

t h e center perpendi cu ar t o thi s first ine t o di v i de t h e ci rc e

B l
, ,

into quarters i sect t wo of t h e arcs not di ametri cal y opposite

.
, ,
 41 G RA P HS 15

and d raw lin

from these points th rough t h e center cuttin g
es

ll
t h e c ircumference ; thi s wi di v i det h e ci rc e int o ei ghth s Wh en l .

thi s i s done proceed b y t h e u se of proportion as w hen u si ng t h e

l
,

d egrees b ut in st ead of u si n g 3 60 for t h e ast extreme u se 8

l
.
,

For examp e u sin g t h e same fi gur es as : For d ep artment 1

,

G S
65 : 1 70 = x : 8
T
Q 3 of th e f sp ac es . For 2 , 70 : 1 70

7
32
8
3§ of t h e f sp ac es . For 3, 21 : 1 70 = x : 8

21 X8
1 of t he 1 paces
s . For 4 , 14 : =
1 70 x : 8
1 70
% Of a sec tion .

To prov e , sec ti ons .

1 5 U se An0 th er p an i s t o di v ide t h e
0 1 P e r c en t a g e —
l
l
ci rc e int o one hun dr ed p art s as in Fi g 1 1 Th e re ation of l
ll
. .
,

each p ar t of t h e b u si n ess wi then b e found b y di v idin g each

l
item b y t h e tota b u siness thu s red uci ng each item t o i t s proper
ll
,

percentage ; thi s wi giv e t h e number of hundred th s t o lay off

on t h e c ir cumferen ce . Li nes are th en drawn from th ese points

t o t he center as shown .

1 6 . C om p a r i s on b y C i r c l e G r a p h
it i s desi red t o s
—
If
show t h e net rev enu e wi th i t s fac t ors for t wo or more p eriod s

l k l
,

a circ e of conv eni ent size i s ta en for t h e b ase and other circ es

l
are mad e arger or small er th an thi s b ase c ir c e in t h e same p ro l
portion s as t h e net revenues for t h e di ff erent period s bear t o
c PA . . .
QUESTIO N S A ND ANSWERS
( PA R T 1 )

P R E LI M I N A R Y R E MA R K S

1 A numb er of qu estion s ta en from t h e C P A ex amina k

ll k
. . . .

ti on s gi v en in d i ff erent states h av e b een fu y w or ed ou t in ,

p rece di n g Sec ti on s B u t as t h er e i s no b
. e tt er pr ep a rati on for

th ese ex aminations th an a stu d y of su ch qu estion s and th eir

an sw er s th ese Section s are d ev ot ed entire y t o th i s w or l k .

To get t h e greatest b enefi t h ow ev er each qu estion sh oul d b e

l k l
, ,

c areful y stu d i ed and w or ed ou t b efore t h e p u b i sh ed an sw er

i s stu d ied It i s not necessary t o u se t h e ex act forms of stating

l k l
.

t h e an sw ers sh own h ere b u t care sh ou d b e ta en th at on y

l
,

t h e pri n c ip es of correct accounting are u sed .

2 . One of from a c ose stu d y of

t h e b enefi t s t o b e d eriv ed l
su ch qu esti on s and an sw ers as are gi v en h ere i s t h e trainin g in

l
an a yz in g t h e qu esti on s Anoth er b enefi t i s t h e d r i in assum
. ll
i ng b ases or starting p oints w h ich mu st often b e d on e in ord er
l
, ,

th at t h e qu estion s may b e an sw ered at all at east if t h e ,

an sw ers ar e t o meet t h e i d eas t h e e x amin er inten d ed t o b e

b rou gh t ou t
ll l
.

A t h e qu estion s giv en in th ese Sec tions inc udi ng th ose

k
,

g i v en in t h e E x am in ati on Q u es ti on s h av e b een t a en fr om ,

C P A ex amin ation p ap ers of v ariou s states Th ey may

l l
. . . .
,

therefore b e c on sid ered typ i ca questions and sh ow t h e genera

,

meth od s ad op ted b y t h e ex amining b oard s Th e stu d ent wh o

l l l
.

h as f ami i ari zed h i mse f wi t h t h e princip es and meth od s

l
cov ered b y t h e essons u p t o th i s p oint wi fi nd no d iffic u l y in ll
k
w or ing ou t th ese typ i c a prob ems l l
R E R RE ER E
.

CO PY I G HT D . V I N T E R N A T l O N A L T l XT B O O K C O MPA N Y . A LL I G H TS S V D
 C . P A Q UE STI. . ON S AND AN SWE RS § 42

Q U E S TI O N S A N D A N S WE R S
3 Q u es t i on into b usiness as con
1 -
A B and C go
ll
. .
, ,

tractors on M arch 1 1 91 3 w ith assets as fo ow s : Cas h

l l
, ,

p ant and too s stores 1 630 Th e inv es tment of ea ch

B
.
,

is A C Th e profi ts are t o b e di v id ed
ll F l
, , ,

equ a y ( )
a ro m. t h e foll owi n g d et ai s c on struc t a t r i al b al
an ce as at Feb ru ary 2 8 1 9 1 4 :

l
,

Pl
E x p enses 550 Sa es
Wages
Sa l ari es
l ,2 50
1 75
ant and
St ores
t ools

P mm
R ent
u rch as es
l
1 45
OA
Cash
ffi ce fu rni t ure
l
Co

D
i ssi ons p ai d on sa
B ad d eb t s
i scou nt s on p urchases
es 78
35 A cc ou nt s rec ei v ab e

l
cc ou nts p a yab e
Cap i t a ac count s March 1
l
38 ,

DD AB
rawi ngs,
0
5 70 Cap i t a ll accou nt s, B
D rawi ngs,
rawi ngs , C 304
Capi ta a c c ount s, C

( )
b Prep are a statement of income and ex pendi ture (0 ) Pre .

p are a statement of receipts and di sb ursements (d) Prep are a

l l
.

p r ofi t an d oss ac cou nt ( )
e Prep are a b a an c e sh eet (f) Pr e

l l
- -
. .

p are i n ed ger form t h e cap ita account s of t h e p artners

l l
.
, ,

M E M O RA N DA Accounts p ayab e in c u des $250 wages and

—

$ 1 00 ex p enses D ep reci ate offi ce furnitur e 1 0 p er cent Inter

l l
. .

est at 5 per cent on capita and oan ac oun ts for 1 year

‘

c
F l l
. .

Inv entory stores eb ruary 2 8 1 91 4 p ant and too s

F
, , , , ,

Feb ruary 28 1 9 1 4 accru ed w ages eb ruary 2 8 1 91 4

F y
, , , , ,

$33 ; accr ued ex p ense eb ruar 28 1 91 4 $50 , , , .

4 A n s w er t o Thi s i s one of four questions Q u es t i on 1 —

l
.

th at w ere requi red t o b e comp eted b y candi dates in h ours .

Th e qu estion th ou gh not d iffi cul t requi res a th orough grasp of

l l
, ,

ac cou nts and t h e c assifi cation of detai s for sati sfactory answ er .

Th e statement of receipts and d i sb ur sements h as reference t o

t h e rec eipts and p ayments of c as h Th e statement of in come
ll l l
.

and ex p en di tur es i s p ractica y i d enti ca wi th t h e p rofi t and oss - -

st atement as it compri ses t h e sal es p ur ch ases ex pen ses et c , .

, .
§ 42 c . P A Q UE ST ON S AN D AN SWE S
.
“

. I R
Th e p rofi t and - -
l
t may cont ain t h e same inf ormation as
oss accoun

t h e statement of income and ex p endi tures Assuming that t h e .

exami nin g b oar d may h ave requi red a sp ec ifi c di v i si on b etw een

th ese t wo statements onl y su ch items are p aced in t h e p rofi t l

l
,

and oss ac coun t as p ert ain t o t h e d i vi si on of profi ts A stud y

ll k l
-
.

of t h e exhi b its wi ma e t h e meani ng c ear and sh ow t h e d iv i

si ons refer red t o .

It will b e noted that thi s i s a p artnership firm in t h e b u siness

of contrac tin g and th at t h e inf ormati on giv en p ert ain s entire y l
y l
,

t o t h e fi rst ea r s op eration Th e sa es accoun t represents t h e

’
.

aggregate b u siness d one wh il e t h e p u rch ases h av e reference t o

l
,

t h e materi a stores et c p ur ch ased As th ere are no contract s

ly
.
, , .

in Op eration ad j ustment s of process costs or p art earned

l
,

profi ts are not necessary Th e stores are materi a and

l
.

su pp i es on h an d at t h e b eginni n g ; and thi s togeth er w ith t h e

l
,

purch ases ess t h e inv entory of stores on h an d at t h e

l
c osi n g gi v es as t h e am ou nt u sed i n t h e c om
p l e t i on of c o ntr ac t s

l l
.

Th e oan from C may b e treated t h e same as a oan from t h e

b an k b ut si n ce interest i s accrued on it su ch interest sh ou d b e l
l l
,

credi ted t o C s p erson a accoun t or e se t o in t erest accr ued

’

,
’

account This interest i s sh own in t h e di vi sion of profi ts b ut

.
,

th ere i s no ob j ection to i ncludi ng it in t h e expendi tures .

5 pital accounts and p ersona accounts of t h ep art

Th e ca l
k l
.

ners may be ept sep arate At t h e time of c osin g t h e capital

l l
.
,

accou n t s may remai n in tac t w h i e p erson a d raw in gs accou nts

ll
,

may b e u sed t o sh ow t h e profi t s and d raw ings A items ar e

l
.

ad j u sted i nto t h e capita accou nt s in t h e aCCM p anyi ng

l
,

an a ysi s in ord er t o ex hi b it all t h e d et ai l s n ecessa ry and t o

l
,

sirnp lify t h e b al an c e sh eet Th e accounts p ayab e

l
.
,

inc ud e wages and exp en ses w h ich amount s are sep arated ,

th er efrom in t h e b al ance sh eet in order t o present cond itions in a

l
true igh t Th ere i s a di ff erence between w ages d ue and w ages
.

accru ed th erefore th ey are sep arated i n t h e st atement s Inter

l
.
,

est ou c api t a i s not an ex p en se of t h e b u sin ess b u t a p art of

t h e p rofi ts and it i s so regard ed in t h e p rofi t and oss accou nt

,
- -
l .

Th i s i nterest i s d ed u c ted from t h e net earnings h ow ever b efore , ,

 c . P A Q UE STI
. . ON S AN D AN SWE S R § 42

l remai ning profi ts i s made Th e profi t and

t h e fin a di v ision of
l
-
.

oss accoun t sh ow s t h e di stri b u tion of profi ts t o p ar t ners at t h e

d at e of c osi ng l
The si x exh i b its call ed for are as fo ows : ll
T I A B A A N
.

R L L CE
Y R
EA
F R A
I B
F BR R
M or
E NDE D E
, ,

UA
AND
Y
C
28 1 91 4
,

E xp enses
Wages
Sal ari es

P mm
Rent
Co
u rc h as es
i ssi ons p ai d on sa l es
B a d d eb t s
Di sc ou nt s on p u rc h ases .

DD
Lo an from C
ra w i ngs , AB
D ra w i ngs ,
ra w i ngs , C
.

S t ores .

FA
Cash
u rni t u re .

l
A c c ou nt s rec ei v a
c cou nt s
ll pa yab lA
b
e
e

Ca p i t a
Cap i t a
Cap i ta l
ac c ou nt ,
ac c ou nt ,
acc ou nt ,
B
C

S TAT E ME NT OFFR IN OAM B A N D C E EX E P N DI TUR E

Y R F BR R
I
E NDE D
M OF , ,
AN D C
UA Y 28, 1 9 1 4

I
EA E

Sa l es for year
N CO ME

E X PE N D I TURE S

P
S t ores on h a nd a t b egi nni ng
u rch ases
Less d i scou nt s
Less i nv ent ory at c osi ng l
TW Cost of sa es
ra d e exp enses
l
Sa
R
l a ges

ent
ari es

Commi ssi ons

AD
B ad d eb t s
ccrued expenses

T l
ep reci a ti on on fu rni t u re
ot a ex pend i t ure
and fixt ures
N et p rofi t from op erat i ons
§ 42 C . P A QUE STI
. . ON S AN D AN SWE RS
S TAT E ME NT OF R E CE P S I T A N D DI B UR M NT S SE E S
F I RM O F AB AN D C
Y F BR
, ,

E AR E N DE D E U ARY 2 8, 1 9 1 4

RE CE I PTS OF CASE

F
Cash i nv ested
ro m accou nt s
at March
rec ei v ab e l 1 , 1 91 3

00
T ot al recei p ts

D I S B URSE ME N TS or CAe
E xp enses
Wages
R
l
Sa ari es
ent
P
AW
u rch ases
c c ou nt s p a
ages and exp enses
ab e y l
D
O mm i sc ou nt
ffi ce furni t u re

DD
Co i ssi ons p ai d on sa es
rawi ngs , A s a cc ou nt
’
l
D T l
rawi ngs , B s ac cou nt
’

rawi ngs , C s ac c ou nt
’

ot a di sb ur sement s

Cash balance, F eb ruar y 28, 1 91 4

PROFI T A ND LO A OU T SS CC N
FR A
- -

I M OF B, AN D C
Y F BR
,

E AR E N DE D E UARY 28, 1 91 4

FI
N et p rofit from op erat i ons
rom w hi c h d ed u c t
l
AB
nt er es t on ca p i t a
, 5 p
er c ent on $ 2 , .

:
5 p er c ent on $ 1 ,500 00 . .

IC , 5 p er cent on
nt erest on oa n from C
5 p er cent on
l .

l
.

N et b a anc e for di v i si on

D A i v i si on of P ro fi ts

B one th i rd
-

,
t h i rd
one -

C , One t hi r d
-

h b l di
N OT E — Th e i nt er est on t h e l oan from C i s s o n in t h e
.

t ere i s no o jec t i on t o i nc u ng i t i n t h e exp en t ures

hdiw .
di v i sion of fi
p ro t s , b ut
 C P. . . I
A Q UEST ON S AN D AN SWE S R § 42

B A LA N CE S H T EE

FI RM or AB AND C

B
, ,

Y EAR E ND E D F E RUARY 28, 1 9 1 4

bl
Li a i i t i es and Cap i tal

A ccou nt s recei vab e l 2

00
00
AW
ccou nt s
ages d ue
pa yab e l
Wages accrued
OP
0

S t ores 33 8.

ffi ce fi xtures E xp enses d ue 1 00 8.

l ant and t ools 1 00 0

50 8.

C
Li abi i ti es
A s cap i tal
’
l
B s cap i tal
l
’

C s capi t a
’

N et worth of firm

AP I T AL
C O T
ACC UN S OF PAT R N E RS

Y E AR E NDE D FB E RUARY 28, 1 91 4

A
’
A s CCO UN T

D rawi ngs I nv est ment

B
'
s A CCO UN T

Bl
a ance
3 II nv es t
nterest
ment

Bl a ance

C
’
s A CCOUNT

3 II nv es t ment
I l
’
nt erest
nt erest on oan

Bl a ance
§ 4z C P . . A Q UE STI N S
. O AN D AN SWE S R 7

6 . Q u es t i o n tri al b a ance and

2 -
Fr m t h
o e fo ll owi n g l
m
notation s prepare a anufac turi ng and tradi ng accoun t profit
—

l
-
,

and oss accou nt and b al an ce sheet as at D ecemb er 3 1

-
,
1 91 4 , ,

TR LI A BA AN
L CE
G LO B M AN UF ACTURI N G CO MPANY
Y D B
E

E AR E ND E D E CE M E R 31 ,
1 91 4

Cash

BM l y
Land
ui di ngs

TH m l m
ach i ner
ool s a nd i p e ent s .

OB fi orses , wagons , and h arness

l
f ce fu rni t ure .

AI m l
ill s recei v ab e
cc ou nt s recei vab e .

O
nv es t
Sal es m
ent s
en s accou nt s , ad v ances on sa ari es
’

rgani z at i on exp enses l less 2 p er

cent

BA ll y l l
i s pa ab e

l
S p eci a
R
y
cc ount s

eserve
pa ab e .

ac c ou nt s , Offi c ers and c er

for b ad d eb t s, less
l ks
accou nt s

Reserve
cent
for d ep rec i a t i on b ui di ngs 2 } per l
Reserve for d ep reci at i on, machi nery 6 p er
c ent
Reserve for d ep reci at i on, h orses , w agons
et c
Cap i t a st oc ,
.

ll
1 0 p er
k
cent
sh ares at $ 1 00
Sal es , ess ret urns and a owances ll .
.

IP Dl
Rent of p art of b u si ness p remi ses
nv ent ory , ec emb er 3 1 , 1 91 3
u rch ases , i nc u di ng frei gh t and cart age

l
Lab or, fa c t ory p ay ro s
Sa ari es of offi cers , c eri ca forc e
ll
l l
.

II nsu rance
nt erest and d i sc ou nt

E xp enses , offic e, ega , and u nc assi fi ed l l l l

P l
M ai nt ena nce, rep ai rs , b ui di ngs , et c
rofi t a nd os s , 1 9 1 3 su rp u s l .

a nd u n
M E MO
fi
R ANDA
ni sh ed ,
.
—
I nv ent ori es ,
fact or p ay ro s,
Dyece mb er 3 1
ll , 1 9 1 4 , merch and i se , fi ni sh ed
a cc rued b u t not p ai d ,

u nexp i red i nsu rance, $ 9 1 2 ; i nt erest accrued on i nv est ment s,

1 L T 234— 2 1
 C . P A Q UE STI N S AND A
. . O N SWE RS
w h i ch i s t h e nd fi sca year of t h e comp any s
end of the seco
‘

l ’

op eration s . k
M a e t h e same reserv es for d epreci ation as were
made at t h e end of t h e preced i ng year Write off 1 0 p er cent
l ll
. .

from b a ance of organization exp en ses A ow 2 p er cent of

ll l l
. .

b i s and accou nts recei v ab e as a prov ision agai n st p ossi b e

losses S h ow t h e p er cent of gross profi t and net profi t Sh ow
l l
. . .
,

as a fi n a b a an ce at t h e cred it of u ndi v i d ed p rofi t s ac cou nt t h e

l l
-

profi ts av ai ab e for d i strib ution .

7 An s w er t o Q
Thi s question i s a fai r samp e
u es t i on 2 —
l
k rk h ll
. .

of t h e i n d of wo t e accou ntant i s c a ed On t o d o th ou gh ,

t h e informati on gi v en in it i s v ery b ri ef comp ared w ith t h e

l l k
,

quantity of detai s th at i s t o b e fou nd in an actu a set of b oo s .

When t h e accou ntant h as access t o all accounts et c of t h e con

l
.
,

cern b ein g ex amin ed h e ca n v erify in v entori es ist p roperti es

k l l
, ,

on h an d and ma e a p erson a in sp ec tion of all d et ai s

, Wh en .

prep ari ng rev enu e and fi n an ci al statements t h e accountant

l l
,

sh ou d rememb er th at th ey are mad e t o Sh ow resu ts a nd th ere

l
,

fore sh oul d b e arranged in t h e sirnp lest manner p ossi b e w ith out

sacrifi cing c earn ess l
Th ere i s no set ru e t o fo ow h owev er l ll
ll
.
, ,

so th at t h e accou nt ant i s at l i b erty t o fo ow t h e ar ran gement

best su ited t o hi s in d iv i d u a n eed s l .

8 t t ments th at fol ow are giv en as fai r samfl es of

Th e s a e l
k l k
.

t h e in d requ ired b y t h e qu estion it se f In ma in g anal yses

l k
.

of accou n t s account ant s general y u se w or i n g sh eets or p ap ers

l l
,

con t ai ni ng from si x t o tw enty or more co umn s Thi s enab es

l
.

th em t o ana yze and sep arate t h e v ariou s accounts into t h e

l
co umn s u n d er th eir resp ec ti v e c assifi cation s l .

Th e items in t he comp ar ati v e p ercentage statement are

k
ta en t o t h e nearest d ecima of one p ace and il u strate t he l l l
meth od of d etermining p ercentages Th e tu rnover means t h e
l
.

c ost of good s so d b u t as t h eex act cost of good s manu

fact u red i s so h ard t o determin e t h e sa es are frequ ent y u sed , l l
as a b asi s for p ercent age ex hib it s Comp arativ e statement s
ll
.

are u su a y v ari ed t o meet t h e requ irement s of t h e man agemen t

l
,

and in some c ases c onta in a c on si d erab e amou nt of inf ormati on

p e rt a inin g t o t h e b u s in ess o f t h e cu rrent m onth and ea r as y

comp ared with as t year l .
10 C . . . I
P A Q UE ST ON S AN D AN SWE S R 5 4 2

PR OF I T A N D L O S A O U N T S CC
G B M
- -

P CO M
Y D B
LO E AN UFACTURI N G AN Y

E AR E N DE D E CE M E R 3 1 , 1 91 4

D e it s b
G l l Ofi
enera exp enses
G
AI
Sa ari es , f ce
d v ert i si ng
n terest a nd di sc ount Rent
ross p
acc ou n t
of
ro fi t for t radi ng
of m
p rt
a p re

R
l l
E xpenses , offi ce and
ega
eserve for b ad
I i ses
nt erest
i nv est ments
acc rued on

O d eb t s, 2 per cent
rgani z at i on exp en
ses 1 0 p er c ent
.

Tfi l
.

ot a exp enses
N et p ro t car ri ed d own

Bl
a a nce of p r ofi t s av ail
’

N et p r o fit b rough t
ab l e for di v i d end s
Su rp u s
1 91 3
l
d ow n
p ro tfi from

B ALA N H T CE S EE
B M
G LO R C OMP ANY
Y R D BR
E A N U F ACTU I NG

EA E N DE D E CE M E 31 , 1 91 4

Cu rrent asset s
A SS E TS

BA
Ca sh on hand
ill s recei v ab e
cc ou nt s recei v ab e
l l
II
M erch andi se, fi ni sh ed
nv est ment s
and u nfi ni sh ed

Sa l m
nt erest accrued

T
es en , ad v ances

FL
i xed
ot al cu rr ent asset s
asset s

BM l y
and
ui di ngs

TH l m l m
achi ner
oo s and i p e ent s

OT lfi
orses , wagons , et c .

ffi ce fu rni t u re

IO
Good wi ll
ot a
-
x ed asset s

nsurance u nexp i red

rgani zat i on exp enses
L
ess 1 0 per c ent .
§ 42 C P . . A QUE STI N S AN D AN SWE S
. O R 11

l l LI A B I L I TIE S

BA l l l
Cu rrent i ab i i t i es
i l s p ayab e
c count s p ayab

l
e

Sp eci a ac c ount s

W ages ac crued , y fac t or ro ll

R
T l
ot a l l
cu t rent
eser v e ac c ount s
i ab i i ti es
pay

DD
For b a d d eb t s
l
ep reci a ti on of b ui di ng
m
D ep reci at i on of achi nery
ep r eci a t i on of h ors es and wagons

Tl l k l
ot a li ab i i t i es
Ca p i t a st oc
U ndivi ded profi ts

C OMPARAT IV P E E R CE N TAG TAT E S E ME NT

G B M
.

LO E AN UFACTURI N G C O MPANY

Base d on Sa l es B ase d on Tur nov er

Labor ,

E xp enses ,

9 Q u e s t i on 3 —
Th e D av i son Comp an y and t h e Lew i s
l
.

CM p any ma gamate un der t h e name of Th e D av i son Lewi s

a

l
-

Comp any w ith an au thori zed capita of of whi ch

k
,

i s 7 p er cent preferred stoc and t h e remai ni ng

k
.

common stoc It i s agreed th at preferred

k k l
.

stoc an d common stoc sh al b egi v en for t h e D av i son

Comp any s b us iness and

’
preferred S toc and k
common stoc k
for t h e Lew i s Comp any s b u siness It i s a so ’
l
k ll
.

agreed th at common stoc i s t o b e a ot t ed t o A D av ison

l m
.

in consideration of h i s serv i ces in connection with t h e ama ga a

tion F ll
rom t h e fo ow i ng b a ance sh eets ma e t h e requi red l k
k
.

entri es in t h e b oo s of t h e new comp any .

12 C P
. . A Q UE STI
. ON S AN D AN SWE RS § 42

BALAN H T CE S EE
THED PA VI S O N CO M AN Y

BM l
il ly l
p ayab e
s

A l ky l
ort gage p a
c c ou nt s p a
Cap i t a st oc
ab e
ab e

THE LE WI S CO MPAN Y

bl
Lia i i t i es

B l ly l k
il s p a ab e
Cap i t a st oc

1 0 . A n s w er to Qt of t h e
u es t i on 3 .
—
Th e net asse s

D av i son Cornp any as sh own b y i t s b al ance sh eet amou nt t o

, ,

Th ey are t o tran sfer th ese assets for in

stoc k
con si stin g of preferred and commo n

k
.
,

Th e ex tra st oc issu ed in excess of t h e net assets mu s t

b e ch arged t o good wi ll Th e comp ete entry will th erefore b e
-
. l
BB ll k
Cash
oo d eb ts
i s recei v ab l
e
M erch and i se
Machi nery
G B ll
Real
ood
i
es t at e
-
will
yab e l l
s pa

AD
M ort gage p ayab e
c c ou nt s p ayab e
av i son Comp any
l
A sset s and l mli ab i i t i es
en t of
of D
J y
the av i son Comp any t a
1 5, 1 91 4
k en

D
ov er as p er agr ee anu ar .

avi son
Cap i ta
Cap i t a
ll kk
mCo
s t oc
p a n

, p re
y
fer red
mmon
l D
st oc , co

St oc k i ssu ed t o st oc kh o d ers of avi son Comp any .

§ 42 C P . . A QUE S T ON S AND AN SWE
. I RS 13

ll
It w i b e noticed that t h e Cap ita Stoc Account must be l k
k k
-

di v i ded in su ch a w ay as t o eep preferred stoc and common

st oc k
sep arate Simil ar y in t h e Sh are ed ger sep arate accounts l l
k l
.
, ,

mu st b e op ened for preferred stoc ho ders as di sti ngui s h ed from

l
h o ders of common stoc k .

1 1 To b ri n g t h e Lew i s Comp any t int o t h e b usi

’
s net asse s

l
.

ness th e fol owing entry must be mad e :

BL lli s
ew i s
p a
m
l
Co
yab e
y
A l l
p an
sset s and L
i ab i i t i es of ewi s Comp any t a k en ov er
as p er agree m ent .

m
L ewi s Co
Cap i t a
Cap i t a
ll kk mmy p an
st oc
st oc
, p ref erred
on

k l
, co

k
S toc i ssu ed t o s t oc h o d ers of Lewi s Comp any i n
accord ance w i t h agree ent m .

1 2 . Common mountin g t o i s i ssued t o

t
s oc k a

A D av i son in consi deration of hi s serv i ces i n b ringing ab ou t t h e

l l
.

ama gamation Th e pre imi n ary ex p en se sh oul d b e ch arged

l
.

w ith thi s and it may b e ca rried temp orari y as an asset b u t

ll
,

if th is i s done it sh oul d b e written d own grad u a y so as t o

d i sapp ear entire y b y t h e end of from 3 t o 5 year s l It may b e
l
.

entered as fol ow s :

P lm l y
re ii na r exp ense
Ca p i t a st oc , common k
After all of t h e foregoing entries h av e b een p osted , t h e
accou nt s op en ed for t h e D av i son Comp any and t h e Lewi s Com

p an y sh ou d b a an c e S l
t oc c ertifi ca t es of t hle n ew c om p an y k
ll l
.

wi b e i ssu ed t o t h e sh areh o d ers of th ese resp ec ti v e c oncern s

in prop ortion t o th eir interest s in t h e same in p ace of t h e sh ares l
l l
,

prev i ou s y h e d b y th em w h i ch are now surrend ered The

l y l
.
,

op enin g b a an ce sh eet of t h e D av i son Lew i s Comp an wi l be

l
-

as fol ow s :
14 C P . . A QUE S TI N S AN D AN SWE RS
. O 5 42

BL A AN CE SHE E T
THE DW A SO N -
LE WI S CO MP ANY

BMll i s p a ab e
ort gage p a
y ly l ab e

Ca i t a l st oc k , p re

Rea l est at e Capi t a

erred
l .

st oc k , co mmon

1 3 . Qu es t i o n 4 .
—
A manuf acturi ng comp any req ui res a
t ment showi ng t he ou tcome of 7 mon th s Op er ation s It ’
st a e .

l
menced w hi e t h e p ant and t h e power dev e opment were l l
l
incomp ete frequent st op p ages t oo pl ace so that t he prod uc k
l l
, ,

tion was much be ow cap acity w hi e t he costs of produ ction

l l
,

were ab norma l y high Assumi ng actua running time at .

4} month s net w h at w ei ght shoul d b e attac hed t o these c i r

k
,

cumst ances t h e di rec t ors h avi n g as ed that th ey b e tak en into

ll
,

ac cou nt i n d etermi ning t h e d isp osi tion of t h e fo owi ng items :

Ma teri a s lll
B
Pay
Pay
ond
ro
ro ll ,

i nt ere st
op era t i v es
non -
p rod u
accr ued
c t i v e labor
3 7, . 00

IG l
Sal ari es
nsu ra nce

I
Sa l enera
for p eri od
es
nv ent ori es of
expenses

manufact u red ood s at cost to

1

g ,

p rod u ce

1 4 An s w er to Q
Accordi ng t o th e quest ion
u es t i o n 4 —

ll
. .

t h e cornp any s ou tpu t w as ac tu a y manuf ac tured in 4 3 month s

’

of runnin g time al th ough 7 month s w ages and ex p enses w ere

’

paid If t h e aud itor i s sati sfi ed as t o t h e truth of t h e inf orma

.

tion giv en him in th is respect h e i s j u stifi ed in preparing a

ll
-

statement th at w i Sh ow t h e normal profi t in contras t wi th th e

ac tu a l
profi t Th e gross ex pen ses for t h e p eriod ou tsi de of
l l
.

materia were of t h i s amou nt on y nin e fourt eenth s or -

,
 § 42 C P . . A Q UE ST
. I ONS AN D ANSWE RS 15

l
norm a charge agai n st t he ou tpu t for this
i s t he
period ; t h e d iff erence i s t h e oss d ue t o st opp ages l
l
, .

Th e fi gures gi ven in t h e statement as per qu estion Sh ow a oss

l
,

of t h e d iff erence b etween th ese t wo oss amou nts show s

a p rofi t for t h e p er iod of w ithou t ta i ng in t o con si dera k
tion t h e fac t th at und er normal condi tions t h e ou tp u t wou d l
l
hav e b een arger and t h e profi t proportion ate y increased l
l
.

With t he proportionat e increase of ou tput there wou d be for

ll
,

t h e 7 month s a net profi t of 42 as shown b y t h e fo owi ng .

,

ll
I n b ri ef t he poi nt s t o be a owed for are ( 1 ) d ecrease of runni ng exp enses
m s t i me, whi ch will gi v e th e net p rofit for 4 m
a b asi s of 4
} h 4
’
to on t ont h s ,

( 2 ) t h e i ncrease of ou t pu t from t h e amount gi v en i n t h e qu est i on t o t h e

l
or

amou nt t h at woul d h ave b een p rod u ced u nd er norma condi t i ons i n

7 mont h s A l l l
si mp e ca cu a t i on wil sh ow t h a t t h esa es i nst e
. l
a d of b ei ng l ,

for 4 % mont h s or for 1 mon t h woul d b e $2 83

, , ,

for 7 mont h s a nd t h at t h e i nv ent ori es , i nst ead of bei ng

T l
,

woul d h av e b een h is wou d of nec essi t y increase t h e

l
cost

of t he mat eri a from Th e first ment sh own

l
to st at e

be ow i s b ased u pon t he supp osed nor .

mal cond i t i ons and Sh ow t h e normal
fit
A FA TURING A OU NT
‘
net p ro .

M NU C CC

b
De it s

T
Mat eri a
ot al
l
exp en ses as I
Sal es
nvent ori es
p er

N et p rofit

The st at ement c onst ruc t ed in su ch a w ay t o Sh ow

l
as

for t h e peri od wou d a p pear as foll ows :

M A NUFA CTUR ING A OU NT CC

d
Cre i t s

T l ot a exp ense I
Sal es
nv ent ori es

N et l oss
 C . P A Q UE STI
. . ON S AN D AN SWE RS
1 5 Q u es t i o n 5 —
O A n t 1 19 2 l n mp n
u gu s 1 a oa co a y
l nd
. .
,
,

e s at 6 p er cent nn m p emp
r a d int r t u co oun e es to
l n l i n t lm nt Th i h
.
, ,

be rep aid i n th ree equ a an ua s a e s e nst a n ent s

d 9 5 r p ti l
.

are rec eiv ed on Augu s t 1 91 3 1 9

1 14 an 1 1 es ec ve y
kk in ntri f h b th h
.
, , , ,

Pass t h e necessary b oo eep g e es or t e a ov e r oug

l
t h e oan comp any s j ou
’
rn l d p t
a an h l d r os to t e e ge .

1 6 . A n s w er t o Q
mpoun d amount of
u es t i o n 25 .
—
Th e co

at 6 p er cent p er a nnum for 3 years i s . To

fi nd t h e amou nt of each annu al p ayment t h e amoun t of t he
l
,

oan and t h e comp oun d i n terest on it for t h e 3 years

l
,

mu st b e di v id ed b y t h e sum of t h e v a ues of $ 1 p ai d at each

l
,

st ated time p u s t h e c omp ou n d interes t on t h at $ 1 from t h e

l
,

d ate of p ayment t o t h e du e d ate of t h e oan and interest .

E ach $ 1 p ai d at t h e end of t h e fi rst year wi th comp ou nd

l
,

interest t o t h e du e d ate wh i ch i s 2 years aw ay w il at th at d ate , ,

amou nt t o $ 1 1 2 3 6 E ach $ 1 p aid at t h e end of t h e second year

l
.

w ith i nterest t o t h e d u e d ate w il amou nt t o E ach $ 1

p a i d at t h e d u e d at e i s d u e t h e n a nd c an n ot a c cum u at e int e re st l ,

so i s w orth $ 1

l
.

t h e sum of each annu a p ayment

l
.

It i s a comp arativ e y easy matter t o determine wh at p art of

.

ea ch p ayment i s intere st and w h at p art i s prin cip a The l

l
.

i nteres t on t h e entire oan at 6 p er cent for 1 year i s $ 240 ;

l
.

th erefore t h e first insta ment of consi st s of $240 inter

l
,

est and princip al and a j ou rna entry t o corresp ond ,

w ith th ese amount s mu st b e mad e Th ere remain s at t h e end .

of t h e fi rst year p ri nc ip al un p ai d ; t h e interest on th is

at 6 p er cent gi v es . wh i ch i s t h e interest for t h e second
,

y ea r D ed u c tin g t hi s i nt er es t fro m t h e w h i c h i s t he

l
.

annu a p ayment gi v es , w hi ch i s t h e amou nt p ai d on

t h e p r in cip al t h e secon d year Th ere i s now of t h e

ll
.

ori gi n a oan unp ai d ; t h e int erest on th i s at 6 p er cent amou nts

k l y
.

to togeth er th ey ma e up t h e p ayment for t h e as t ear

l
,

th u s prov ing t h e accuracy of t h e ca cul ations .

1 7 Anoth er proof can be mad e as fol ow s : As t h e oan l l

l l l
.

and interest i s t o b e p ai d in th ree annua insta ments there wil

§ 42 C . P A Q UE STI
. . ON S AN D AN SWE RS 17

be a savi ng t o t he p r in th t h int r t ill

aye a m t e e es w not a oun t
ld if h nti l n r l l d
,

t o so mu ch as it w ou t e e re oa we e a ow e t o ru n t h e
3 fu ll y ea s r mp nd d
co ou6 nt f 3 e at p er c e or years

m k in th nn l p m nt
. .

a mou nts to By g a ree a ua ay e s of

t he is retu rned w ith

interest savi ng ,

t h e p ayer i n i nterest Th e fi rst p ayment c on si sts of

l
.

$1 princ ip a and $240 i nterest ; t h e second of

p rr nc i p al a n d int er es t ; t h e t h i r d of p r in c ip al
an d interest If t h e first p ayment of w ere
k l
.

ep t t h e remainin g 2 y ears it w ou d ea rn in interest

k
, .

If t h e second p ayment of h ad b een ept t h e remain in g

y e ar it
, w o u l d h av e ea rn ed int eres t .

t h e amoun t sh own as sav ed b y t h e p ayer .

1 8 . Th e l
j ou rna entries mu st b e mad e in such a w ay as wi l l
c red it I nterest Ac cou nt for t h e amou nt of int erest ac cru ing d u e

each year oth erwi se t h e prop er i nt erest earnin gs on t h e c om

,

p any cannot b e Sh ow n After ch ar ging up t h e account rep re

ll l
.

sentin g t h e ori gin a oan w ith t h e cash an entry sh ou d ,

b e mad e ch argin g it w ith t h e $ 240 du e at th e end of t h e fi rst

y ea r W
. h en p aym ent i s m ad e t h e Lo a n A c c oun t i s c r edi t ed ,

for t h e amou nt of same ; th i s process i s continued th rough out

t h e 3 year s Th e entries ar e shown b e ow :
. l
JOURNAL NTRI E ES
Loan account
Cash
Wh en oan i s
Loan account
l mad e

I I nt eres t
nt erest d ue at end or first year
Ca sh

F Loan account
i rst a nnu a p ayment
‘

l
I
Loan accou nt
I nt er est
d ue at end of sec ond y ear
nt er es t
Cash
Loan accou nt
Second annu a l p a yment

I I
Loan account
nt erest
nt eres t
du e at end of t h i rd year
Cash
Loan accou nt
18 C P. . A Q UE ST O S AND AN SWER S
. I N § 42

1 9 l
A g ance at t h e edger entries , giv en be ow will Show l l
l l
.
,

that t he net resul t of t h e who e transaction i s th at t h e oan

c omp any s cash account i s m
’

gr ea ter w hi c h a oun t h as

l
.
,

b een p ai d as i n t erest on t h e oan

DG R NTRI
.

LE E E ES
L AO AN CCO UN T

Cash
240 00 Cash
Cash

I N TE RE ST

Cred i t s

Bl a ance Loan accou nt

Loan account
Loan account

Cred i t s

Bl
Loan account
a ance

Bl a a nce

20 Q u es t i o n 6 —
D H mil t n
a o and W J k ac son purchased
l
. . . .

a h ote b u sin ess for former investing and the

l
t h e atter t h e remain d er and agreed t o sh are profi t s and osses
’

, l
in th ese prop ortions Th e b u siness h as t wo di stinc t b ranch es
k H
.
,

one of w h i ch i s t a en ch arge of b y amil ton an d t h e other b y

J k
ac son k
E ach eep s sep arate account of h i s receipts and d i s
H l
.

b ursement s for t h e term of t h e p artnersh ip ami ton s t otal

’

J k H l
.

receipts w ere and ac son s ami ton s

’ ’

di sb ursements were and ac son s At J k ’

t h e end of t h e p eriod t h e b u sin ess was so d for of wh i ch l

was receiv ed in cash and b an ed t o th eir j oi nt credi t k .
 ON S AN D AN SWE RS
'

§ 42 C P . . A Q UE S TI
. 19

A note of w as a en or t e a a ce an e a t erward s t k f h b l n d th n f
H l
transferred t o ami ton at a di scount of 1 0 p er cent on i t s face
l l k
. .

A fina sett ement i s th en mad e and each receiv ed a ch ec for h i s

F k
,

sh are of t h e in d t h e amou nt of t h e resp ectiv e chec s .

21 . A n s w er t o Qu e s t i on 6 .
—
Mak e th e fo ll ow in g en try
t o credi t each p artner for hi s investment :
Cash
DW HJ mk
.

.
a
ac
il t on
son

Th ep urch as e of t he b usi ness for at t h e time it w as

l
d on e d oub t ess requ ir ed a numb er of entries b u t for t h e p ur
ll
, ,

pose of th i s question t h e fo ow ing entry i s suffi cient :

B u si ness
Ca sh

As p artner p ersonal y contro s and i s resp on sib e for t h e

ea ch l l l
receipts and di sb ursements of a certain p art of t h e b u siness from
i t s commen cement unti t h e d ate of sett ement each mu st b e l l ,

d eb ited for t h e cash receipt s retained b y h im and credi t ed for

t h e di sb u r sement s mad e b y h i m and as th ese receipt s and di s ,

b ursement s are on accou nt of t h e b u sin ess it self th ey mu st go

t o t h e credi t and d eb it resp ec tiv e y of b u si ness account l
D BH m l
.
, ,

. a i t on

B D H ml u si ness
u si ness

WJ k
. a i t on

B
BWJ k
.

usi ness
ac
u si ness
son

. ac son

Th e b u siness w as so ld for of wh i ch w as
receiv ed i n cash and a no te of for t h e b al an ce therefore
ll
,

t h e fo owin g entry i s n ecessary :

B llB
Cash
i s rec ei v ab
u si ness
l e

note i s d i sp osed of t o ami ton at a d i scoun t Of

As t h e H l 1 0 p er
cent B
u sin ess Ac c ou nt sh ou d b e c h arged w ith t h e l and

H l l ll
.
,

D ami ton for t h e b a ance as fo ow s

BD H m l
.

usi ness

B ll .

i
a
s
i t on
recei v a b l e
20 C P . . A Q UE STI N S
. O AN D A N SWER S § 42

Th e
foregoin g entries wh en p osted w o u e wi th ou t ill pr d c
l ll
,

inc udi ng t h e inv estment entr ies t h e fo ow ing statement : ,

DR . CR .

04

Th e foregoin g sh ow s tha t t h e b u s iness h a s p rod u c ed

of w h i ch
i t n forti t s x ee mu st e h s or t w o fi ft h s g o t o t her it of c ed

H l J k ll
- -

ami ton a nd t h e remai n der t o t h e c red it of son as fo ow s

BD H m
ac

usi nes s

WJ k
. a il t on
ac son

ll H l
.

T h is wh en p osted w i l eav e ami ton s acc ou nt w ith a net ’

c red it of $8 a nd a c son s w it h a net c red it of J k ’

ll l
,

I t w i be noticed th at th ese amou nt s represent t h e net ca pita

of ea ch p artn er a nd ex i st i n t h e form of c ash E a ch one
l l
.

i s of c ou r se e n t it ed t o hi s net ca pita t h e entry requ ir ed b e in g

ll
,

as fo ow s :
DW HJ mk
.

. ac
a il t on
son
Cash
k on
Jamil
c s

B
a t on
u si ness

Th i s entry w h en posted wi ll b l
a a nce a ll of the accou nt s .

22 Q u es t i on 7 ‘ —
A i s t h e own er of a b u s iness t h e b a l a nce

B l
. ,

sh eet of w hi ch i s h ere Sh own and C are admitted as equ a .

p artners w ith A u p on each pu tting into t h e b u siness

c ash and each p ay ing A p erson a y c ash Sh ow t h e ll
l
.

b a an ce sh eet of t h e new fir m on commencin g b u sin ess .

B A LA N CE S H TEE

Asset s

A
Cred i t ors
,
ca p i t a l

23 An s w er Q u es t i on
‘
7 —
Th e b a ln
a h t Shows
ce s ee

l B
.

A
’
s net ca pita to b ut as and C p ut into t h e con
§ 42 C . P A Q UE STI N S AND A
. . O N SWE RS 21

ce rn each t h e a g t n ibl
e net asset s of t h e b u sin ess are

l
,

rai sed t o of w h i ch one th ir d or b e on gs t o

-
,

each p artner Prov i d ed t h e fir m d oes not w i sh t o rai se a good

l ll
.

wil ac count t h e c a sh p ai d t o A p erson a y w i ll not aff ec t

l l ll
,

t h e qu estion and t h e new b a an ce sh eet wil ap p ear as fo ow s :

B A LA N CE S H T EE

Assets b
Li a i li t i es

AB
Credi t ors
, ca p i t a ll
C,
, c ap i t a
ca p i t a l
I

24 Un d er t h e ircumstances howev er t h e new fi rm w ill

c

ll
.
, ,

b e j u stifi ed in O p ening a good w i ac cou nt E ach of t h e new

-
.

p artners h as p aid in cash for a one th ir d i nterest in t h e

l
-

new b u si n ess It i s p ain th erefore th at on t h e same b asi s

l l
.
, ,

of v a u ati on t h e w h o e b u sin ess i s w orth of w h i ch

l
con si st s of t h e t angi b e net asset s th at represent ed t h e

l
aggregate of t h e capita ac cou nt s in t h e foregoin g b al an ce sh eet

l l
.

Th e oth er i s t h e v a u e of t h e good wil and an accou nt

l ll l
-
,

may accord ing y b e op ened for it Th e good w i v a u ation may .

-

al so b e ob t a in ed b y comp arin g t h e amou nt p ai d for a one th ir d

l
-

interest i n t h e b u siness ; n ame y w ith t h e

l
sh own in t h e foregoin g b a an c e sh eet t o b e each on e s sh are in
’

t h e b u sin ess Th e di ff erence i s ev i d ent y t h e amou nt l

ll
.
,

p ai d b y t h e pu rch aser for h i s sh ar e in t h e good w i Th e total

l ll ll
-
.

v a u e of good wi wi th erefore b e th ree times th i s amount

l
-
, , ,

or Un der th ese c irc umstan ces t h e b al an ce sh eet wil

ap p ear as fo ow s : ll
B A LA N CE S H T EE

Asset s b
Li a ili t i es

A
Cred i t ors
, c
ap i t a ll
B , ca p i t a
C, c ap i t a l
 C P
. . . O
A Q UE STI N S AN D AN SWE S R 5 4 2

25 Q u es t i o n 8 —
Th l d r f
e e ge o t h e fi rm of Cu tter
Fitl er , l
retai dea ers in e s c ol g mn l thi n
’
and fur ni shi ngs sh owed

ll
,

t h e fo owi n g b al ances on D ecemb er 3 1 , 1 91 2 :

DR .

AB ll ccounts rec ei v abl e

i s recei v ab e lfi
5

1
14

AFurni t ure
cc ou nt s
h
and
l ya
xt ur es
b le

I
l
nv ent or
ya l
y ,

C ot h i ng d epart ment
J a nuar y 1 , 1 91 2

H
Sh oe d ep art ment
ab erd ash ery d ep art ment
Purchases
l
C ot hi ng d epart ment
Sh oe d ep art ment
Hl
aberd ash ery d ep art ment
Sa es
l
C ot hi ng d epart ment
Sh oe d ep art ment

W
H
aberd ash ery d epart ent m
l ages
C ot hi ng d epart ment

H
G l
Sh oe d ep art ment

enera
ab erdash er y d ep art ment
expenses
Ofi c e sal ari es

TI
R ent
axes
nsu rance

AHm m F l
B ad d eb t s
os Cu t t er , ca p i t a account ll
AHm m F l
i ra

i ra
i t er, ca p i ta acc ou nt
os Cu t t er , wi t h dra w a account
i t er , wi t h d rawa accou nt
ll

In t i
v en or es on D ecemb er 3 1 , 1 91 2 are as fol l ows :

l
,

C othi ng d ep ar t ment

H
Sh oe d ep art ment
ab erd ash ery d ep art ment

Prep ayments on th at date are

TI axes
nsurance

l l
Th ere are no accrued i ab i ities Depreci ation of 1 0 p er cent . .

i s t o b e wri tten off from furni ture and fi x tures E ac h p ar tner

l
.

i s t o b e cred ited wi th 6 p er cent i nterest on hi s capi t a NO

l
. .

interest i s t o b e charged on p artners wi thd rawa s N et profi t ’

.
 C . P A Q UE STI N S A D A
. . O N N SWE RS
or l oss i s t o b e d iv id ed
in t h e prop ortion : Cut t er t w o third s ;
Fitl r ll
-
,

e one third Prep are t h e fo owi ng : Tradi ng account for

l
-
.
,

each d ep artment p r ofi t an d o ss accou nt ca pital a cc ou nt of

l
- -
, ,

each p artner b a an ce sh eet , .

26 Fi rst A n s w er to Q u es t i on 8 —
There is no
li h d m th d f k pi d p rtm nt l
. .

es ab
t s e e o nt o h ee ng e a e a accou s , as eac

t r i l ik l
s o e s h pl ne y tit d
o u se ti p rti l r n d e a su e to ts own a cu a ee s

or in rd n i th h i d
ac co a f h m n
ce r w It m t e eas o t e a age s see s

d ir b l h l k h
.

es a e, tto say nt in
t he ea s to eep t e accou s su c a w ay
ill hi b it h in m
,

as w ex d p n t f h d p
e m nt co e an ex e ses o eac e art e

an d h t pr t r l tin fr m tr d in
e net ofi p i l l i thi tr
esu g o a g; es ec a y s s ue

if h t tir t r i ntir l
e en b i i d d int d p rtm nt
e s o e s eT e y su d v e o e a e s o

n r l
.

pr i d thi i f m ti n r q ir
ov e s f
n or r th t h a o e u es , o cou se , a t e ge e a

an d rh d
ove p h ll b
ea ti n d
ex h di f r nt
enses s a e app or o e to t e f e e

dep art m t in m it b l m
en s r f so mm i pr p re eq u a e ann e ; or ex a e, n o o

ti n
o fl r
to h
oo r l
sp ace , h p id to th e g oss sa es , to t e w ages a to t e

th r r r n d p l n
,

gr oss pr fi t rdi n
o m or acco g t o so e o e p ea r a ge a

APPORTION M NT PROFIT
.
,

E OF S

D eb i t s Cre i t sd

N et p rofit

'

l
Anoth er p an i s t o di sregard t h e apportionment of ex pen ses t o
l
.

d ep artment s and t o u se on y t h e di rect ch arges as p u rch ases ; ,

freigh t inb ound and w ages ; th ese w oul d b e set up ag ai n st t h e

sal es and t h e resul tin g b al an ce after d ed u c ting inv entor i es

woul d exh i b it t h e gross d ep artmenta profi t Th e gross profi ts l

l l
.

ar e th en car ried t o t h e c redi t of t h e genera p rofi t and oss

l
- -

ac cou nt and t h e p rofi t and oss accou nt i s th en ch arged w ith

l
- -

al l of t h e gen era and admini strati v e ex p en ses Th e resul ting

l
.

b al ance must of cou rse b e t h e net profi t or net oss

, Thi s ,
.
 C P A
. .
'

. Q UE STI ON S AND AN SWE RS § 42

see l
ms t o b e t h e p an required b y t he prob em under consid era l
ll
tion b ut for i u strativ e p ur p oses both p an s are shown Th e l
l
.
,

manner of sh owing interest on capita shoul d b e noted ; it h as

b een regard ed as p art of t h e profi ts and not an op erating exp en se .

C A P I T AL A O U N T CC S
CUTTE R A ’
S CCO UN T

D ebi t s d
Cre i t s

Wi t hdrawa s
Bla ance , net
l wort h
. 68 II nvest ment
nt erest on c ap i t a lfi
Two t hi rd s net p ro t
-

Bl a ance, net wort h

F I TL E R ACCO UN T
’
S

d
Cre i t s

Wi t hdrawa s l I nv ast ment

I nt erest on c ap i t a lfi
One t hi r d net p ro t
-

Bl a ance, net wort h

.
B LA NR FH RT
A CE S E E

AT CLO SE B
C UTTE
D B I TLE
3 1 , 1 91 2
A
OF U S I NE S S , ECE M E R

S SE TS

BA ll
Cash
i s r ec ei v ab e l l
PP
cc ou nt s rec ei v ab e
rep ai d t axes

FLrep ai d i nsu rance

u rni t ure an d fixt u ras

I les s I O per cent d ep reci at i on

-
.

nv ent ori es
C ot hi ng d ep art ment

H
Sh oe d ep ar t ment
ab er d a sh er y d ep art ment

T l ot a asset s

AB ll l LI A B IL I TI E S AN D CAP I TAL
cc ou nt s
i s pa yab e
pa
l yab e

Capi t al
AHm m F l
os
i ra
Cut t er
i t er
N et wort h of firm
 C P A Q UE ST ON S AN D AN SWE S
. . . I R
27 Th e ca pit a l
nts of t h e p artners af t er p aci ng
accou l
therei n t he with dr awal s and profi ts are as here S hown Some
l l
.

times t h e withdr aw a s and p rofi t s are contai ned on y in t h e

prop rietor s account i n w h i ch case t h e capita ac count contains
’
l
l
,

on y t h e inv estment and remain s un t ou ch ed .

28 S ec o n d A n s w er t o Qu es t i o n 8 -
The fol l owi
ng p an l
ln li l
. .
‘

is v er y much a o r p ai ned
g t h e n e al ead y ex , app orti oni n g

ex p en ses t o t h e v ari ou s d ep artments Thi s method i s i nterest .

m

i ng and represents another i dea of apportioni ng ex p en ses and

g e n e r al c h a rges T h e b ad d eb t s an d d ep rec i ati on mi ght h av e

l
.

b een app ortioned a so t o d ep artments b ut th en there w oul d

l
,

hav e been no u se for a p rofi t and oss accoun t w hi ch i s req ui red

l l
- -
,

b y t h e question Th e interest on capita i s regard ed as a genera

l ll
.

ex p en se Th e b a an ce sh eet and cap i t al accounts are prac tica y

.
-

t h e same as t h e ones alrea d y shown and therefore need not b e ,

i i n
D AT T T ADFI G A O T
g v en a ga .

E P R ME N R N CC UN S

FO R
CUTTE R
Y E AR E N DE D D B I TLE R
E CE M E R 31 1 91 2

DPR
,

CL O THI NG E A TME N T

I nv ent or y ,
J anu ar y 1 ,

I y D m
Sal es

PW 1 91 2
ur ch ases
nv ent or
31 ,
1 91 2
, ece ber

Bl ages
a anc e , gross p rofi t

SHOE DP
E ARTME N T

I nv ent or
1 91 2
y ,
J anuar y 1 , Sa
I l es
nv ent or y D ec emb er
,

P u rch as es 3 1 , 1 91 2
Wages
Bl a ance, gross fi
p ro t

HB A E RD A S HE R DPR
Y E A TME N T

I nv ent or
1 91 2
y ,
J anuar y 1 ,

I nv ent or y D ece mber

,

Pur ch ases 3 1 , 1 91 2
Wages
B alance, gross p ro t fi
 C . P A Q UE STI
. . ON S AN D AN SWE RS
P ROF I T A N D L O A O U N T
—
SS CC
R R
-

C UTTE PI TI E

Y R D BR
.

FO R EA E N DE D E CE M E 31 ,
1 91 2

b
D e it s d
Cre i t s

GOenera
ffi c e
ll
e xp enses

sa a ri es
G l ross p r o fit
from
C ot h i ng d ep a rt ment

TI
Rent
ax es , net
nsu rance, net
Hm Sh oe d ep a rt me nt
ab erd a sh ery d ep a rt
ent

D
B a d d eb t s wri t t en OH
ep reci at i on of fu rni
t u r e and fi x tu res
T fil
Net p ro t
ot a

29 Th is question ca s for a trad ing account for each ll

l
.

d ep artment B u t as t h e sa ari es ex p en ses rent s and tax es

l
.
, , ,

are giv en as a w h o e w ith ou t r eferen c e t o t h e amou nt th at

,

i s t o b e ch arged t o each d ep artment it i s n ec essar y t o assume

l
,

‘
th at t h e exp enses Sh al b e ap p ortioned in t h e ratio of t h e
l
b u sin ess as a wh o e th at t h e v o ume of b u siness b ea rs t o t h e l
total ex p ense It i s th erefore prob ab e th at a j u st d i v i sion l
l ll l
.

of t h e ex p en se gi v en S h ou d b e show n as fo ow s : C oth ing

,
l
d ep artment one h a f ; sh oe d ep artment one th ird ; h ab er
-
,
-

d ash ery d ep artment one S ix th Th e amou nts as sh own on

l ll
-
.
,

t h e ed ger are as fo ow s :

T AXE S I R NSU AN CE E X PE N SE S AL A R IE S RE N TS

A p rop ortion ate p a rt Of th i s ch a rged to each d epartment i s

as fol ows :l
D PARTM NT
E E S
CL O THI N G S HOE
§ 42 C . P A Q UE STI
. . ON S AN D AN SWE RS 27

RE CAPI TULATION
A MO UN TS APP R
l l
O TI O N ME N T

C m ot h i ng d ep art ent ,
one ha f-

Sh oe d ep a rt me nt , one

H t h i rd
ab er d as h ery d ep a r t
ment , one si xt h -

D PARTM NT TRR DFING RA OU NT

E E A CC S

Y R FOR D BR EA
C UTTE
E N DE D E CE M E
I TL E
31 1 91 2

DPR
,

CL O THI N G E A TME N T

I
nv ent or y ,
J y a nu a r
I l
1 ,

y D m
Sa es

PW1 91 2
u rc h ases
nv e nt or
3 1 , 1 91 2
, ec e b er

Bl
ages
a anc e, gross p ro t fi

S ecti on 2

l
E xp enses G ross fi
p ro t

TI
Sa a ri es
axes
nsu ra nce
R
Bl
ent s
a anc e, net p ro fit

SH OE DPR
E A TME N T

S ecti on 1

Inv ent or y ,
J anu ar y 1 ,

I
Sal es
D
PW 12
u rc h ases
nv ent or
31 ,
y
1 91 2
, ece mb er

Bages
al ance , gross p ro t fi

S ecti on 2

l
E xp enses G r oss fi
p ro t 52

TI
S a ari es
ax es
nsu rance
R
Bl
ent s
a anc e, net p ro fit 75 8 5
28 C P . . A Q UE ST
. IONS AN D AN SWE S R 5 4 2

H AB E RD ASHE RY D E PARTME N T

S ecti on 1

I nv ent or
1 91 2
y , J anuar y 1
I nv ent or y D ece mb er
,

Pu rch asas 31 , 1 91 2

Bl a ance, gross p rofi t

E enses
S ari as
G ross p rofi t

IR
Taxes
nsu rance

Bl ent s
a ance, net p rofits

PR O F IT -
AN D -
OSS ACCOUNT
L
CUTTE R F I TLE R

J AN UARY 1 To D B 9 2
E CE M E R 31 , 1 1

N et p rofit from tr adi ng

I
B ad d eb t s wri t t en off
nt erest on $ 20 ,000 ; 6
er cent Cu t t er S cap
’
l account s
C ot h i ng d cpart ment
p .

Sh oe d epart ment
I nt erest on
Fl 1 0 ,000 ; 6 ab erd ash ery d ep art
ment
l it
’
er cent er s cap
p .

I ta
0 per c ent . dep reci a
t i on, f
' urni

d fi xt ures
Bl t u re
a ance,
an

di st ri b ut i on
net p rofit for

30 Q ing e entr set of boo s for 1 9 1 2 i s

u es t i o n 9 —
A s l y k
l
-
. .

sent t o you w ith an ord er t o st ate a p rofi t and oss account for

l
- -

t h e year and a b a ance sh eet at D ecemb er 3 1 Th e starti ng

l
.

capit a w as

AA ccounts rec ei vab e,

l l J J y anuar 1, DD ecember 3 1
ecemb er 3 1
, 00

M
ccou nt s

PFl erch andi se,

p
m
y
J
a ab e,

y J
y
y
anuar
anuar
1,
1 , 00 ;
00 ; DD ecemb er 3 1
,

,
9,750 00
.

ant and
urni ture and J y
ach i ner y
fi xt ures ,
, anuar
anuar
1 ,

1 ,
00 ;
700 00 ;
. D ecemb er
ecemb er
§ 42 C P
. . A Q UE ST
. I ON S AN D ANSWERS
A su mmary of t he cas h b kf h y r h w
oo or t e ea s o s as fol l ow s :

A l
R ecei v ed
cc ou nt s rec ei v ab e l
DB k
Cap i t a p ai d i n
i sb ursed
Jl
AG l
an ov er d ra ft ,
cc ou nt s p ay ab
enera exp ense
e
anu ar y 1 3
12
5
W
P l ages
ersona accou nt 1

Leavi ng a b ank accou nt of and currenc y on h and $ 50 .

Prov i de 5 p er nt interest on capita di sregard ing add itions

ce l
l
.

and p erson a d raft s d ed uctin g 1 0 p er cent for

d uring t h e year
l
.
,

p ant and machinery dep reci ation 5 p er cent for furniture and , .

fix tures and 5 p er cent for b ad d eb ts reserve

, .
-
.

31 An s w er to Q thi s prob em
u es t i on 9 —
At fi r st g an ce l l
l ll
. .

may seem t o b e v ery sirnp le b u t a Sh ow th at it c ose stud y w i

l
,

i s not M any con cern s are still using a sing e entry system
ll l k
-
.
,

or one th at i s so ca ed b ecau se it req u ir es ess wor than t h e

l l l k k
,

d oub e entry Th e p u re y sing e entry set Of b oo s eep s

l
-
.

record onl y of p ersona accounts b ut t h e desire for more detail s

l kk
,

h as grad u al y b road ened t h e b oo eep i ng system into a com

p ro m i se b et ween t h e si n g e an d t h e d ou b e entr s st el
m a nd l -
y y ,

i s neith er one nor t h e other

l l l
.

E v en wi thou t t h e tr ia b a an ce cert ain nomi n a accoun ts

k l l
,

may b e ept v ery accu rate y so th at requ ired d etai s may be

l l ll
,

av ai ab e for u se in fi n an ci al st atements A accoun ts may or

k ll l
.

may not b e ept in t h e genera ed ger b ut if not th ey can u sual y

be compil ed from t h e cash b oo entr ies and fromot her sources k
,

I l l
-
.

n t h e ex amp e under consi deration t h e assets and iab il ities ,

at b eginni n g and en d ing are st at ed so th at t h e net worth at eac h

l
,

peri od can b e readi y d etermined Thi s i s ill u strated in t h e t wo

l J
. .

b al ance sh eet s shown h erewi th

m
Th e net capita on anu ary 1 .
,

1 9 1 2 was and on D ecemb er 3 1 it was incr eased t o

l
, ,

Th e b u siness i s evi d ent y th at of an in di v i dual trader

l l
,

and interest on in v estment i s se d om con si d ered un ess th ere

are t wo or more p artn ers t o sh are in t h e d iv i si on of profi t s

F l l
.

oll owi ng are t h e b a an ce sh eets j u st referred t o t h e atter

l
,

contai ni ng an an a ysi s of t h e capit al account .

30 C P . . A Q UE ST
. I ONS AND AN SWE S R § 42

B A LA N H T CE S EE S
B E G I NN I N G O F Y J E AR , AN UARY 1 , 1 91 2

Asset s

AM ccou nt s rec ei v ab e l AB ccou nt s

ko
pa ya b e l
PFl erc h andi se
ant and
urni t ur e and
machi nery
fixt ures
an
Cap i ta l
v erdr a ft

E ND or YEA RD , E CE M E RB 31 , 1 91 2

Asset s

AM ccount s rec ei v ab e l AR cc ou nt s ay ab l e

PFl erch andi se

ant and machi nery D
es erv es
ep reci a t i on
or

Cash
urni t ure and fixt ures 7
Cap i t al
B ad d eb t s

Bl Ja ance, an . 1

m
I ve
s

lfi
t
n t e r e s t on
ca p i t a
ent

N et p ro t

L
T
ass
l ot a
d rawi ngs

In rd r pr p o t t m nt f
e to t d l i b ili ti
e are a s a e e o asse s an a es

( b l n h t i
a a ce s ee d ir b l t rm in n ti n
s not a w i th es a e e t o u se co n ec o a

S ingl try y t m) it i n
e en ry t k in nt i
s s e d s ecessa to a e ve or es an to
mpi l fr m ri d l i b il iti
-
,

co e ll f h
o t va f
ous sour ces a o t e asse s an a es o

h
t e co n n Wh n thi h cer b n d n h w rth e s as ee o e, t e net o can

r d ily b d t mi n d d h
.
.

ea e pr fi t f
e er i n p i d e an t e net o or a g ve er o can

b e Ob tained b y a comp arison of t h e net capital at t h e b eginning

and t h e en d th ereo f as i s sh ow n in t h e st at ement s gi v en h ere

l
,

wi th Then by n i deration of d rawi ngs ad di tiona invest

a co s

l
. ,

ments , et c .
, t h e ac tua net profi t can b e st ated .

32 question as s for a p rofi t and oss accoun t b u t as

Th e k -
l
y
-
. ,

man of t h e ex pen se items are giv en it remai ns t o determi ne t h e

pur chases and sa es on t h e p an h ere i ustrated l
f there h av e l ll I
l y
.

b een cash p urch ases and sa es d urin g t h e year the can b e

k
,

O b t ained b y an in sp ecti on of t h e c ash b oo .

 C P
. . A Q UE ST
. I ONS AND ANSWE RS
D SAL E S 1 91 2
Al ly D
E TE RMI N I N G THE FOR

cc ou nt s recei v ab e, ec e mb er 31 , 1 91 2
d uri ng
T
Col ec t i ons ear

L
ot al
ess a cc ount s recei v ab e, as on l J 1 1 91 2
l l
anua ry ,

Ba ance , sa es for year

D P
AP ym
1 91 2
l
E TE RMI N I N G THE URCHASE S FOR

c c ou nt s pa yab e year
, end of
on accoun t d u ri ng y
T l
a ent s ea r

L
ot a
yab e l J y
Bl
ess a c c ount s p a , a nu a r 1 , 1 91 2
a an ce , p u r ch as as
°
for year
When t h e purchases and l k w
sa es are no n , t h e p rofi t and l oss

l mpi l d fr m d t
- -

accou nt can read i y b e co e o a a submitted b y t h e

ex ami n ers It i s here stated in th ree di vi sion s b ut one or t wo

.
,

d i vi sions w oul d no d oub t h av e se rv ed t h e p u rp ose Atten tion i s

ll l
.

c a ed t o t h e fac t th at interest on capita i s considered as a p art

P R OF I T A N D L O A O N T SS CC U
Y D B
- -

FO R E AR E NDE D E CE M E R 3 1 , 1 91 2

I nv ent or y ,
J an u ar y 1 Sa l es for yea r
P 12
u rch a ses for year
Les s i nvent ory ,
b er 3 1
D ece m

G
Cost
ross
of sa as
ro
lfi t carri ed
p

GW lenera
ages
exp ense p rofit b rough t

PFl
ep rec i a t i on
ant a nd
u rni t u re a nd
mach inery
fi xt ures
Reserve f or b ad d eb ts

P Ifiro t s a p p ort i oned

lfi
Bl nt erest on c ap i t a
a a n ce on net p ro t
for d i v i si on
N et p rofit b rough t d own
for app ort i onment
32 C P . . A Q UE STI N S AND AN SWE
. O RS § 42

of t h e p rofi ts and not as an exp en se of t h e b u sin ess A cash

y l l
.

accoun t for t h e ear can now b e compi ed easil y from t h e d etai s

g i v en Th e
.
p rofi t and - — l oss accou nt ca ll d f
e or in t he ques tion
i s sh ow n on p age 3 1 .

3 3 Q manufacturi ng comp any owning

u es t i o n 1 0 —
A
l
. . ,

many p atents and const ant y ac qui rin g new ones some b y way
l k
,

of ou tr ight p urch ase and ab ou t an equ a n umb er b eing ta en out

as t h e resul t of t h e eff orts of i t s own exp erimenta d ep artment l

k l l
,

as s you t o ou t in e t h e b est meth od of d ea in g w ith th is accoun t ,

h avi ng in min d t h e ascert ainment of cost s of manuf actu re an d

l
t h e annu al b a an ce sh eet th at i s su b mitted t o stoc h o d ers and k l
t o t h e general p u b l i c u t in e ful y your v i ews on th i s sub j ec t
. O l l .

34 .
°

A n s w er t o Instead of b uyi ng all of Q u es t i o n 1 0 .

—

i t s p atents from oth ers t h e comp any d eci des t o h ire comp etent ,

workmen and mai ntai n an ex p eri mental d ep artment wh erei n ,

new inv enti on s are dev i sed comp i et ed t es ted and p atented
'

I
.
, , ,

n every case how

,

ev er wh ether t h e p atent i s p u rc h ased or tak en

y l l
, ,

ou t b y t h e comp an it se f there i s a ways t h e prob ab ili ty of i t s

l l
,

b eing sup ersed ed or rend ered ob so ete b y a ater and more

l
sui tab e in v enti on th ereb necessitating i t s ab andonment for y
t h e more desirab e arti c e l
N ow whether t h e comp any b uys l
l k
.
,

i t s p atent s from oth ers or gets them ou t it se f as a resul t of wor

in i t s experi mental dep artment there i s u sual y consi derab e l l
l
,

ou t ay in conn ection th erew ith .

35 ll
A p atents p urchased of other s shoul d be ch arged t o
lk
.

p atents accoun t at t h e cost p ri ce thereof A i e di sposition .

sh oul d b e mad e of sub sequ ent ch arges ex p en ses of pr otec tiv e

l
,

itigation and t h e cost of secu ring p atent assignments and Sh op

,

ri gh t s from oth er p erson s Su ch c osts sh oul d b e ab sorb ed b y

l l
.

annu a d ep rec i ati on ch arges d u rin g t h e ife O f t h e p atent s An .

av erage amou nt coul d b e assumed w h ere th ere are sev eral

p atents costi ng different amoun ts and h av ing v aryi ng years

O f mat urity b ein g careful t o a oca te th e h eav i er p ortion t o t h e ll
l ll k
,

ear i er years Of t h e p atent A p atents ac qui red or t a en out

l k
.

sh oul d b e record ed sep ar ate y in a b oo or on c ard s d esign ed for

that pu rp ose with approp ri ate ad d en da for any v al u es attach ing

,
§ 42 C P
. . A Q UE ST
. I ON S AN D AN SWE RS
to matured or ob so e e lt
It i s true that man
p atent ri gh ts y
l l
.

pat ent s h av e a c on si d erab e v a u e ev e n afte r m at ur it y w hi c h

l
, ,

might b e worth consi dering b u t in th at case a rev a u ing or

l k l
,

apprai sement cou d be made Sp ea i ng general y it i s b etter

l l
.
,

to w rite O fi all p atents dur in g th eir ega exi stence Th e

l l
.

accoun ts wil contain t h e fol owi ng

PATE NTS A CCO UN T

D eb i t wi t h Cred i t wi t h
l
Th e cost of

p u rch ase
p at ent s ac q ui red by Th e sa e
p at e nts
or t ransfer
p revi ou s y l of
c h arged
any

Subseq u ent ch a rges for p rot ect

i n g t h e p at ent s
Th e c os t of sec u ring assi gnment s
Dt h eret o
ep reci a t i on of p at ent s b ased on
t i me t h e y
h av e t o ru n or on
and sh op ri gh t s some ot h er sa fe b asi s and
Th e c ost of p at ent s ob t a i ned i n
l O l
ch a rged t o p rod u c t i on c os t s
th e exp eriment a d ep a rt ment b so et e or wort h l ass pa t ent s
Ch a rged O R t o p rofi t a nd os s - -
l
Bl
acc ou nt
a ance, b ei ng t h e net c ost or
k
b oo v al u e of p at ents owned

36 . perimenta dep artment w ith all exp endi

Ch arge t h e ex l
tures in connecti on therewi th for cost of equ ipment mai n
l
,

t enance sa ari es cost of secu rin g p atent ri gh t s et c Thi s

l
, , , .

mi gh t ev en be in c uded in t h e p atent s account or an accoun t

l
,

might b e maintai ned and call ed p aten t s and exp erimenta

l ll
- -

ac cou nt B
ecau se t h e ann ua cost of thi s d ep artmen t wi b e
ll
.

practi ca y t h e same or i ncreasi ng if anythi ng and b ecause it i s

l
, ,

maintained b y t he man agement wi th ou t any assuran ce of asting

l l
resu t s it w ou d seem ad vi sab e t o charge t h e entire running l
l l l
,

ex p en ses th ereof t o profi t and oss Thi s w ou d inc ud e a

l
.

reason ab e d ep rec iation on equipment Th e cost of main

l
.

t enance may of course be Off set b y retu rn s from t h e sa e of

l
, ,
.

p atent s or ri gh ts or from royal ties rec ei v ed It Shoul d a so

k
.
,

b e cred ited w ith p atent s t a en out and ch arged t o p atents

accou nt l l
Th e vaue p aced u p on such p atents S h oul d b e d eter
.

mi ned b y apprai sement or b y t h e estimated cost t o prod uce

th em ; or it may b e b ased u p on t h e roya ty income th at w oul d b e l
d eri v ed from su c h an inv ention In ord er h owev er th at t h e
l l
.
, ,

annu a ch arge t o p atent s accou nt may not fl u c tu at e t oo sev ere y

l
,

it w ou d seem good practice t o cap ital ize a p art of t h e exp eri

l l
menta ou t ay from year t o year Th i s coul d b e retained in t h e .
 c P . ON S AN D AN SWE RS
. A Q UE STI
.

ex p i m t l d p rtm nt
er en a nt l b hr d tn
e a e acc ou or e se e c a ge to p a e ts
d l
-
,

accoun t h r m ind r h l d b h r d
; t e e pr fi
a e s ou e c a ge to o t an oss

f ll
.

Th n ?m y p
e accou t a ap ear as o ows

P R D P
D
EX E I ME N TAL E AR TME N T
ebi t
Cost
wi t h
ofm m
eq ui p l m l ent m
at ti e of
Cred i t wi t h
Sa e of p at ent ri gh t s or i nco e

V l
p u rc h ase fro roy a t i es , et c .

m
l
Cost of ai nt ena nc e
Sa ari es and exp enses
D
a ue

p a
of
t en
p a t ent s ch arged t o
t s ac c ou nt
Cost of sec uri ng p at ent
l m ri gh t s ep reci at i on
c h arged to
of q iep e n
p rofi t and oss ac
-
t u
-

I y y
c ou nt
nv ent or at end of ear , carri ed

B ll d own
a a nce
oss acc ou nt
ch a rged t o p rofi t
.

-
and

37 Th b k l e ppr i d l oo f p t nt d q i
v a u e or a a se v a ue o a e s an e u p
m nt f h
e o p i m nt l d
t e ex rtm nt h l d pp r in h
er e a ep a e S ou a ea t e

b l n
a a h t Th
ce s eeh l d b l i t d b t f ll
. P t t
ey S ou e s e a ou as o ow s : a en s

an d p t nt i hta e p im nt l d
r g rtm n q i pm nt Th
s ; ex er e a — ep a e t e u e e

n in l d
.

seco nd it m mi ht e rt in m
g t f h m in
ev e c u e a ce a a oun o t e a

t enance p n if it i d m d d i b l
ex e ses r i d in h s ee e a v sa e, p ov g su c

ex p n e b
ses can f ly pr i d Ind d e sa e m f h p t nt ap a se ee so e o t e a e s

l bl n h
.
,

secu er d th r h h d p rtm nt m
ou g pr t e e a e ay not ov e v a u a e e oug

to j tif th ir b in in l d d m n
us y e h t In t d
e g c u e a o g t e asse s s ea

f in l d in p t nt ri h t i n l y th fr q ntly i l d d
.

o c u g a e g s s g ey ar e e ue nc u e

d i ll p t nt
,

w i th m th rso eo nt e ac cou p t n as goo w a e s , et c or as a e ts

d i ll
-
, , .
,

an d goo S m tim
w th p rmitt d r m in in
o e h es , ey are e e to e a su c

pl n
-
.

accoun s t With t d pr i ti n b th t i ou Wi e ec a o ut a s not a se a to

n r ll
,

ad pto Th d d ti n f
ese d pr i ti n e uc o s or e ec a o ar e ge e a y
h n d l d th h h l
.

a e d
rou g i nt th h
t m tim
e oss an ga n ac c ou ; ou g so e es ,

ld m if r
- -
,

th h r d
ey ar e c m n f t rin
a ge p n b to a u ac u g ex e se , u t se o ev e

m d i b l in
, ,

ar e t h tr t d ey r r ea e It as ese v es see s a v sa e, any case,

l f t r th r th n d pt
.

to u nd r t t h
e s a e t e v a ue o asse s a e a to a o an

opposite course .

38 Q u es t i o n 1 1 —
M essrs B r wno Wil son hav e ap p l ied
l N lB k l
. .

t o t h e Penn sy tiona an for a oan of v ani a and a

hav e sub mitted t h e accomp anying p rofi t and oss accoun t and l
l k
- -

b a ance Sheet Th e b an d esires an opini on as t o t h e ad v i sa

k l
.

bili t y of ma in g t h e oan and as t o t h e form in whi ch t h e

accou nt s are p resented .
W C P . . A Q UE STI
. ON S AN D AN SWE RS 35

PR O F I T A N D LO A O U N T
Y J
SS CC
- -

ly
FO R E AR E N D E D UN E 3 0, 1 91 2
k
PW
St oc

l
u rch ases
at Ju 1 , 1 91 1

OM llages and sa ari es

ffice exp enses

I l
i sc e aneou s exp enses
nt erest on
B ad d eb t s
oans

l kl J
Sa es , ess ret urns

D
S t oc a t u ne 30 , 1 9 1 2
i vi d end s on i nv est ment s

B A LA N CE S H T EE

AB sset s
Y E AR E N DE D J UN E 30 , 1 9 1 2

kd
oo eb t s
St o k
I c
nv est
as
ment s
p er i nv ent ory
at c ost

l
Li ab i i t i es

PP
Loans
art ners
ro fit
’

for
c ap i t a
yea r
l J
at ul y 1 , 1 91 1

Less drawings during year

39 A n s w er to Qq ipp ed b an
u es t i o n 1 1 —
Th e w e
0 ll e u k
l
-
. .

of tod ay h as i t s credi t d ep artment in whi ch ap p i cation s for

l oan s are carefu l y scrutini z ed l

Th e h ead of th i s d ep artment
k l l
.

i s nown b y some offi ci a tit e as cr edi t man assi stant cashi er

k
, ,

or v i ce pres i d ent Th e cred it man may of cour se ma e a care

l
-
.
, ,

ful ana ysi s of t h e st z t ement presented and even hav e addi tional
.
,

information from t h e b orrow er t o sub stantiate i t s v al id ity

l
,

b ut onl y an ex amination of t h e accou nt s wil d etermine w h eth er

or not t h e fi gu r es presented are tru e and con servativ e Su ch
ll
.

an ex amin ati on must b e mad e b y some one fu y comp etent t o

r
p e for m t h e wor k
In thi s resp ect t h e certifi ed p ub i c accou nt l
l l
.
,

ant c an b e of v a u ab e assi st an ce t o t h e cred it man as i s ,

36 c P . . A QUE STI
. ON S AN D AN SWE RS § 42

evi denced question und er consi deration With ou t

in the
k k
.

ma ing an examin ation of t h e b oo s it i s i rnp ossi b le t o giv e a

l
,

c orrec t O pini on as t o Wh eth er or not t h e oan of Sh oul d

be made ; in thi s case therefore it i s necessary t o assume su ch

l l
, ,

con d ition s as wou d ordi n ari y be d etermin ed b y an ac tu al

ex amin ati on of t h e accou nt s

y k
.

Th ere are man th i ngs in t h e statement sub mitted th at ma e

l
it seem in adv i sab e t o ma e t h e oan and unl ess th ere are good k l
l
,

p ersona reason s such as t h e stand ing and connection s of t h e,

p artners there i s not much t o fav or an affi r mativ e rep ort

l
, .

If however t h e i nv estments amoun ting t o cou d be

l
, , ,

t urned ov er as secu rity there wou d b e no question wh atev er

'

ll l l
,

regardi n g i t s a ow an ce prov i d ed t h e secu rities are as v a u ab e

B l k
,

as rep resented ank s u su al y requi re th at t h e q ui c assets be

l l
.

at east twi ce t h e amoun t of t h e oan b ut i n thi s case t h e

l
,

margin i s far from t h e desired ratio Th e oan of

l y
.

a re d ou tst andi ng mu st no d ou b t b e sati sfi ed fi rst and p os

a
l l
,

si b ly it i s sec u red b y t h e col atera Th e amount owin g t o

y l
.

trade cred itors i s b e ond al l reas on One mu st b e carefu in

l l
.

an ex amin ation of a b u si ness t o see th at al l iab i ities are

l
inc ud ed and th at t h e asset s giv en are not ov erst ated or
l l l l
,

ov erv a u ed Th e person a ac coun ts receiv ab e and p a yab e are

l l
.

entire y t oo arge w h en comp ared wi th t h e fi rm s somew h at

’

l l
p a try capit a and t h e v o ume of b usin ess transac ted Th e l .

capital 1 yea r ago w as and now it i s wi th interi m

d rawi ngs of again st profi t s Th i s amount Sh oul d hav e
l l
.

b een eft in t h e b usiness as i t s w ith d raw a in d i cates an

l
,

app ar ent wilf ul attempt t o use t h e firm for p ersona gai n .

40 nt Shou d b e presented in such

Th e p rofi t and l oss accou l
l
- -
.

a w ay as t o S h ow t h e cost of good s so d t h e gr oss p rofi t and t h e

l
, ,

net profi t as in d i cated in t h e accou nt here Sh ow n It wil be

l l
.
,

seen th at t h e cost of good s so d i s onl y wh i e t h e sal es

amount t o ov er fi v e times th at amount Th i s I s evi dent y out l
l
.

of proportion or e se t h e good s are of su ch a n at u re as t o com

l l
,

mand extraordi n ari y h igh p ri ces It i s singu ar th at out of .

worth of merch and ise onl y one si x th of th at amoun t

l l l
-

Sh ou d be so d dur in g t h e year Th e inv estment s are evi d ent y .

§ 42 C P . . A Q UE S TI N S AND AN SWE S
. O R 37

p y
a in g we l l
n ses seem out of reas on esp ec i a y t h e
b ut t h e exp e ll
ll
, ,

O ffi ce an d mi sce an eou s which amount t o Th e

l ll
,

interest on oans ind icates th at addi tiona oan s h av e been

eff ec ted b u t p ai d off d u rin g t h e year Th e b ad d eb ts wr itten
l l k
, .

off Sh ou d no d ou b t be grea ter on su ch a a rge amount O f boo

ll l
, ,

d eb ts esp ec ia y as th ey h av e b een standi ng so ong E v en

l
.
,

1 p er cent or wou d b e a con serv ati v e estimat e in any

.

b usiness
P OF IT O A O NT
.

R A N D L SS CC U
Y R J
- -

E N DE D 30, 1 91 2
l lJ ly
EA UNE

Sa es for yea r, ess ret u rns

P
St ock on h and
ur ch as es
u 1 , 1 91 1

Less st oc k on h and J 30 , 1 9 1 2
l
une

Cost of good s d
G
so

ross rofit
Add di vi d end s on i nv est ment s

D T l ot a
ed uct
earni ngs

Th e v ari ou s exp enses sh own i n t h e q uest i on, and

m ore if d esi red amount i ng t o

Bl a ance, net p r o fit for year

41 Th e b a ance l Sh eet
t nd c ose t t ment
s a e l
wil not s a l
l tp
-

in sp ection Cash i s red uced t o i t s ow es oint and furniture

ll it f l l
.

and good w i are wort hl ess as secur y or oan s Th e ease i s

l l kind f
-
.

no d oub t v a uab e b u t it i s not t h e o an asset on whi ch a

l
,

oan c an b e b ased Th e inv estment seems t o b e p ayin g di vi

.

d en d s and migh t b e good secu rity b u t t h e i nv entory i s no d oub t

l
,

ov erst ated j u d gin g from t h e u nreason ab e prop ortion s of items

,

in t h e merch an d i se accou nt As wort h of good s w as

l
.

on h and at t h e fi r st of t h e year wh y w ere ad di ti on a p ur ch ases

l l
,

mad e and i ab i ities in curred if onl y worth was di sp osed

k k
,

of ? Th e b oo d eb ts are th ree times t h e sal es ; thi s ma es it

seem th at t h e O b j ec t h as b een t o ma e sa es b u t no c ol ec ti on s k l l .

E v i d ent ly s ome of th ese d eb t s h av e b een owi ng for years and

l l
,

as t h e terms of c red it se d om ex ten d ov er so ong a time it mu st

b e assumed th at th ey are not co ectib e Th e trad e c red itors ll l

l k
.

sh ow ev ery in d i cati on a so O f h av in g stood for years Th e stoc

l l l
.

hand ed i s onl y w h il e t h e i ab i iti es ow in g are ab ou t fou r

times th at amount Possib y t h e d eb tors and cr ed itors are t h e
. l
38 C P . ONS AN D AN SWE RS
. A Q UE STI
.
§ 2 4

sa m p r n th in d i tin
e e so s, r d it b l n
us f ca g a net c e a a ce o

t h p rtn r m
e a n b i n l d d th r in
e s ay ev e di t r f h e c u e e e as cre o s O t e

fi m r At r t l i b il iti
any r l h a e, b p id ath es , as a u e, av e to e a so ey

l b m d th t b th rtn
.
,

m t b dmitt d It m
us e a e ay a so e assu e a o p a ers

in l d d in h pit l d d
.

are c u e in
t e ca a an r aw gs .

TAT M NT OF ON D ITION FOR H BAN

S E E C T E K
B W RO WN

J
IL S O N

UNE 30 , 1 91 2

BM k oo d eb t s
Q A UI CK SSE TS

I m Cash
erc h and i se
nv est ent s at c ost
on h and

T l k ot a
L B
u
q ci asset s

T
I A I LI TIE S
rade credi t ors

T ll
ns

i ab ili t i es
Fm
ot a
'
ir s net wort h

It ill b w th t nly h q i k
e seen t in l d d
a o th i t e u c asse s are c u e as s

t ll b nk r f
,

i b
s a ou a th
a h h pr
a nt rth f h
c a es or , ou g t e ese wo o t e

fi m ill in l d
r w ll h c u th r t Fr m h i f m ti n
e a t e o e asse s o t e n or a o

r nt th l n
.

g i n h
ve r itow ev em in d i nt see s ex p e e to g a e oa

B nk lly r ir f b rr r f ll i f rm ti n r rdin
.
, ,

a s u su a eq u e o o ow e s u n o a o ega g
th ir b in
e ff ir
us ess all r t t t m t f th i r
a s as we as a cor ec s a e en o e

t
as se s an d l i b il iti F m a i n b rr res b fill d or s are g ve o owe s to e e

p l f ll
.

in , d han r h in q ti n
t e sea c b n r d g ues o s to e a sw e e , su p y , u y,
i nf ormation regardin g the co ncern and i t s b u siness progress .

42 Q u es t i o n 1 2 Prep are a sam e st atement of an

—
m
l
. .

admi ni strator s fina account for present ation i n a prob ate

’

cou rt .

43 . A n s w er t o Q
nt Of an u es t i o n 1 2 .
—
Th e fin a l accou

admini strator i s t h e st at ement ren d er ed b y h i m t o t h e prob ate

l
court up on t h e comp eti on of h i s O ffi c i a du ti es as admini strator l
of an est ate In t h e meantime h e may or may not hav e ren
.

d ered one or more intermed i ate accou nts of matters p ertai n

ing t o t h e estate Th e i u stration giv en b e ow i s b oth t h e fi rst ll l
l l
.

and t h e fi n a wh i ch i s simi ar in ev ery w ay t o t h e account sub

l
,

mi t t ed b y an executor In Pennsy v ani a t h e court h avi ng .

,
§ 42 C P . . A Q UE STI
. ON S AN D ANSWE RS 39

jurisd ic tion ov er su c h m tt r i k n ha h e s s n ow as t e orp ans

’
c ou rt
Y k h rr t rt
,

and in N ew or as t e su oga e cou .

Th i p r n
e execu tor p r n n m d by h t t t
s a e so or e so s a e t e es a or

in hi s l t wi ll d t t m nt
as ttl l l m tt r p rt i i ng
an es a e to se e a a e s e an

to hi t t d ir t d b y h w i ll
s es a e as In wil l h
ec e be n t e case no as e

ttl
.

execu e t d d mi i i
an a p int d b y h rt
n s trator s a p o e t e cou to se e

w i ll i m d
,

h d d nt ff i r In i th t
’
up t e ece e s a a s case a s a e w ou

n m d d l in
.

n min
a g t r i
an e x ec u o h , or n case t e one a e ec es to act ,

th rt pp int
e cou d mi i
a o wi h wi ll
s an a d Th ns s trator t annexe e

ll y indi t d b y h l tt
.

ph r i h wi ll
ase w t d i annexe s u su a ca e t e e ers

C T A m m cu testa ento annexo

It i ll b n ti d th t h f rm f
. . . .
,

w e o ce nt r q ir d in P a t e o o accou e u e enn

sly i i f h impl t ki d h in d b it d d it
v an a s o t e S es n S ow g e s an cr e s

r p tin prin i l d h
,

es ec g m c pin m
a an In m t t t e sa e as to co e so e s a es ,

h d l
.

th m i e nt n i t f
a n accou mm ry f r t
co s s s o a su a o sep a a e sc e u es

R l t t m t b r rd d r t ly h n in h m
.

ea es a e us e eco e sep a a e , as s ow t e aeco

p anyi ng accou nt . E v ery item in t he ad mini strator s ’

accoun t
FINAL A OU NT OF ADM INI TRAT ION IN
CC ORPHA N S T HE S
’

OURT FOR
C ITY A N D OU N TY OF PH I LAD LP IA
THE C C E H
F F JA
I RS T AN D
D R R D B A
I N AL
OF O HN
T A
CCO UN T O F
D OE ,
I CH A D
E CE AS E D ,
R OE ,
E CE M E R
D MI N I S TRATO R
1 8, 1 9 1 2
C . . .

P P DR
m l
—
RI N CI AL .

m
ll
Th e acc ount ant
m
app rai se ent as fo
y
ch a rges
ows :
hi se f wi t h t h e a ount of i nv ent or and

U G I
P l Pl R T y sh a re
s
hi ad e
of

p hi a C
.

i t
. . at
4 s
90
’
at par

N l500 sh ares of
ot e rec eiv ab e, not d u e
. . . at 2 7

y
G T
Cash fou nd on person of d eceas ed
m
Cash d ep osi t ed I n i rard ru st Co
an 25
p

F 2 h orses and 1 carri age

ku rni t ur e , b oo s , et c

T
.

m ot al ap p rai se ent

m
l Th e
owi ngm
acc ou nt a nt al so c h arged
ou nt s rec ei v ed in
h i self wi th t h e fol
ad di t i on t o t h e ab ov e

G l l
a

ai n on sa e of h ors es
so d for
V y
al u ed i n i nvent or

G k ll U G I ai n on sa e of . . .

V l
st oc so d for
y
a u ed i n i nv ent or

I L T B 4— 23
 C . P A QUE STI
. . ON S AN D AN SWE RS § 42

P PAL CR
lam ll
—
RI N CI .

Th e i s c redi t as fo ows :

l
account ant c

BA
Regi st er of will s for grant i ng
ond of a dmi ni st rat or
l
ett ers

FD unera l
dvert i si ng et t ers, et c
exp enses ai
p d
.

JJ d eceas ed , Sp eci fied

eb t s of
u d gment s agai nst est at e
oh n Smi t h , E sq , p rofessi onal . ser
v rc es

A
Regi st er of wi ll
for fi i ng account
d ju di ca t i on of court
s l
Commi ssi ons t o accou nt ant , 3 per
c ent .

l
Loss on sa e of b ooks and fu rni t ure
Il nv ent ori es
So d for

Bl T l
o tal
a ance of for di st ri b ut i on
p ri nci p a

ADM INI TRATOR A OU NT OF IN OM S

’
S CC C E
I DR
l
N CO ME —
.

Th e m m
ac count an t ch a rges hi self wi t h i nco e rec ei v ed a s fol ows

DD UGI k
i v i d end s . . . st oc

( at es )

II nt erest on Ci t y 4
d eposi t s
’
s

I
nt eres t on

CR
l ll
—
N CO ME .

Th e acc ount ant c a i ms credi t s a s fo ows

Commi ssi on t o ac c ou nt ant , 3 p er

Bl c ent
a ance of
.

i ncome for d i s t ri b u t i on

RE CAPI TUL ATI ON

BB al ance of
ala nc e of
p ri nci p a
i nc ome
l
P m ay ents on acc ou nt t o wi d ow of

P yma
d eceas ed
ent s
d ecea sed
on account to son of

Bl a ance
Consi st i ng as foll ows

P P Rl T y
Cas h on h and

500 Sh ares
hil ad e p h i a Ci t
. . .
4
’
s

A OU NT OF R AL TAT TRA N A TION

CC E ES E
A DB
-
S C S
R E AL TY CCO U N T—
E IT

Th e m
acc ou n tant c h a rges hi self wi t h t h e p ur
ch ase
725 N m y
ort h
one
l of
S econd S t ree t so d for
§ 42 C P A:
. . QUE STI ON S AND A N SWE RS 41

RE ALTY A CCO UNT CRE D IT

A
—

ccou ntant as ks
for t h e fo
Commi ssi on t o oh n Smi t h , 1 per cent
a llJ ow anc es ll owi ng
.

Commi ssi on t o acc ount ant , 3 p er cent

Bl .

A( k l l
a anc e

c now edged b efore regi st er of wi ls or not a r y)

RI CHARD R OE ,
Am d i ni st rat or .

s oul d
h ntry though d ates hav e b een omitted in
b ear d ate of e ,

t h e accounts ill ustrated h erewith

l
.

Th e accounts might ev en remain untou ched when tit es are

p assed or b e transferred t o a di ff erent edger If mort gages l
R l l
.
,

are receiv ed t h e accoun t Mor tgages ecei v ab e Sh ou d b e

k y
,

d eb ited li ew i se if some other secu rit i s p assed

, .

44 Q
Th e Amer ican G as Light Comp an
u es t i on 1 3 —
y
l
.
0

h ad Op erated a gas p ant si nce t h e b eginni ng of t h e year 1 9 1 4

l
.

For t he purp ose of ac qu irin g thi s ind u stry , t h e N ation a

G as Comp any was rgani zed Apri 1 1 91 7 w ith a capita of o l l
l k
, ,

and after p ur ch as in g all of t h e capita stoc of t h e

American Comp any i ssu ed of first mortgage 6 p er

'

l l l
- -
, ,

cent go d b on d s d a t ed Apri 1 1 9 1 7 du e Ap r i 1 1 94 7 int er est

y l J y J y
.
, , , , ,

p a ab e anuar 1 and ul y 1 of each ear In acquiri ng t he

k
.

stoc Of t h e Ameri can Comp an y ; p ayi n g organiz ation ex p en ses

N l l k
,

t he ation a Comp an y u sed a l of i t s capita stoc and

et c
l
l
.

of t h e fir st mortgage b on d s ho din g in reserve -

,

of b on d s for improv ements

k l k
.

Ma e t h e necessary journa ent r ies t o op en t h e boo s of t h e ‘

new comp any and prep are a b a an ce sheet d at ed une 3 0 1 9 1 7 l J

l l
.
, ,

A so prep are a p rofi t and oss account sh owi ng t h e av erage

l l
- -

ann ua resu ts of t h e op erations of t he ol d comp any Th e

ll l k
.

inv entory was as fo ows : Coa $400 ; co e $ 1 50 ; t ar $ 1 00 ;

l J
,. , ,

tota $650 u ne 3 0 1 9 1 7 t h e t wo compa ni es were u nited

k
.
, , ,

b y a certifi cate of merger and new boo s Were Op ened The

‘
‘

accounts of t h e Ameri can G as Li ght Comp an h d n t b n

y a o ee

l
c osed at any time dur in g th at comp an y s exi sten ce an d at t h e
’

ll
,

d ate of t h e merger stood as sh own on t h e fo owing p age

l l l
.

Wh i e t h e tria b al ance gi ven in t h e prob em i s Shown in

ledger for m t h e st atement s in t h e answer ma
y b e sh ow n
l
,

in edger form or in statement form .

42 C P . . A Q UE STI
. ON S AN D AN SWE RS § 42

DB C RE D I TS
l l
E I TS

Land b ui di ngs, ma
,

ery , mai ns , and BA ll y l y l

Ca p i t a
i s pa ab e

l
fra nch i ses
Mat eri a s and t oo s
l l
Coa , i nc u di ng frei gh t
l c cou nt s
G as
k
pa
ac cou nt
Co e acc ount
ab e

Lab or Tar account

Rep airs
Wat er and Sup p i es l
Su p eri nt end ence
S ari es , c er s and col l k
OI fi
f
ect ors
ce ex p enses

TI
nsu rance
ax es
nt erest
Cash

O l m
Consu er s account s
’

t h er a c count s recei v
ab e

45 A n s w er Q
to u es t i on 1 3
M A N U FA T UR ING A OU N T
. .

C CC
J 30 , 1 91 7
l
UN E

Coa M anu fac t uri ng 0 O s t

La b or t ransferred t o t rad
Rep ai rs i ng a cc ou nt
Wa t er
IT
Su p eri n t endence
nsu ranc e
ax es

Coa
Co e
lk
Less i nv ent ori es

Tar
M anuf act uri ng cost
A OU N T
CC

G
M anufact u ring cost l
Sa es
ross
and
p
-
r
l
o fit s t o p rofit
oss acc ou nt
G as accou nt
k
Co e ac cou nt
Tar ac cou nt

PR O FI T A N D LO A O U N T
SS CC
l G
- -

fi
O
Sa ari es ross p r o ts
ffi ce ex penses

O rdi nar
i t s, b a
y
l b u si ness p rof
anc e d own
§ 42 C P . . . O N
A QUE STI N S A D AN SWE RS 43

NET PR OF I T A O N T
S CC U
I Bl
-

n terest
N et p rofit s t o
ac c ount
l
surp us
a anc e d own

BA L A N CE S H T OF OLD OM PA NY AFT R LO IN BOO

EE C E C S G KS
Land ,
b uildi ngs , ac
ery , mai ns, and f ran
h i n m BA ll y l l i s pa ab e

chi ses
l l l l c c ou nt s
Cap i ta
p
st oc
a ab e

I
M at eri a s and t oo s
nv ent ori es
Consumer s a cc ou nt s
S u rp us

O l
’

t h er accou nt s recei v
ab e

O P E N I N G N TR I O F
E ES NE WC M O PA NY

ll
Sundry asset s, as per l
Li ab i i t i es , as per b al
b a ance sh eet
Ca p i ta st oc Ol d comk ,
anc e sh eet
Ca p i t a ll st oc k
k
,
new

p any und er merger

t hi s i s new t rea sury
.

st oc k
of new c om
BI
Ca p i t a
ond s
nt erest on
s t oc ,

b ond s
Old

TO p a
reasu r
n y
y b ond s
rgani za t i on account
6 p er cent , on
3 mont h s
Reserv e accoun t
.

O OLI DAT D BA LA NC SHEE T

C NS E E
As AT J UNE 3 0, 1 91 7

TT
Sundry asset s
y st oc k
l
Li ab i i t i es
k
reasu r
reasu ry b ond s BB
Ca p i t al st oc
ond s
ond i nt erest
R eserv e acc ount
C P A. UESTIONS AND ANSW
. . ERS
(PA T R 2)

Q U E S T I O N S AN D A N S WE R S —
( C o n t i n u ed )
1 Q u es t i on 1 4 —
A a nd B are p artners ca rrying on a
On J n
. .

b u siness in Winnip eg ry 1 1 91 4 a ua after ad d i n g

l
.
, ,

profi t s for t h e p ast h al f yea r A s capita amounted t o ’

O k
,

an d B s t o n that d ate th ey t a e into p artner

’

shi p C u p on t h e fol owi n g term s : l

He i s t o b rin g in capital
amountin g t o an d each p artner i s t o b e cred it ed w ith

interest on hi s cap ita at 6 p er cent p er annum Al l profi t s l . .

(af ter d eb iting interest ) up t o are t o b e sh ared b y A

and B l l
ex c u si v e y in prop ortion t o t h e am ounts of th eir capita l
at J
anu ary 1 1 91 4 Al l profi t s in ex cess of are t o b e

ll
.
,

sh ared equ a y b y t h e th ree p a rtn ers Accounts are t o b e p re

l l
.

p ared and profi ts and in terest credi ted ha f year y C i s t o b e

l O J
.

credi ted w ith a sa ary of p er a nnum n u n e 3 0 1 9 1 4

l l
.
, ,

t h e profi t s di v i sib e af ter d eb itin g C s sa ary w hi ch h e h as

’

l
,

dr awn b u t b efore ch argi n g interest on p artner s c apita

’

l
, ,

amounted t o $7 Th e p artners w ith dr aw a s w hi ch are

’

l B
,

not ch argeab e wi th interest were A an d , , ,

C Draw up partners sep arate accoun ts as th ey shoul d ’

Jl
,

stan d on u y 1 1 91 4
l
.
,

Ass ume th at instead of a profi t a oss of h as oc cu rred ;

how sh oul d thi s b e treated i n t h e account s in t h e ab sence of any
di rec t provi sion in t h e p artnershi p agreement re ativ e t o osses ? l l
2 A n s w er to Q u es t i on pita 1 4 —
Th e f ll
o owi ng ca l
l l
. .

ac count s and p r o fi t an d o ss acc ou n t s a r e c ea r en ou gh w it h

l l l
- -

ou t ad di t i on a comment C s sa a ry of for t h e h a f year

’
.

i s cred ited as p e r c ontr ac t a n d hi s d r aw i n gs a r e a ssu m ed t o

l
,

h av e in c ud ed t h i s amount
R E ER R RE E R E
.

CO PY I G HT D RY INT N ATI O N A L TE X T E O O K C O MP A N Y . ALI . I G HT S S V D

 C . P A Q UE STI
. . ON S AN D AN SWE RS § 43

In the nt of a oss of
ev e l
as su ggested i n t h e qu es

tion thi s l
amount p u s in terest on capit a aggregat i n g l
l
.
,

woul d b e ch arged in equ a prop orti on s t o t h e th ree p artn ers ,

i in each Thi s i s on t h e assump tion th at no

‘

g v g to

PA T N A A O N T
R E RS CC U S
A
’
s
’

CCO U N T

JJ
1 91 4

u ne 30 ,Bl
une 30 , Cash
a ance JJ
J B
IG l an
1 91 4
. 1,
u ne 3 0 ,
a an c e
nt erest

G u ne 30 , ai n
ai n

J ly B l
A
u 1 ,
a ance

B
’
s CCO U N T

JJ1 91 4

Bl
u ne 30 , Cash J B
IG l an
1 91 4
. 1, a an c e

J G
une 3 0 , a ance u ne 30 , nt erest
u ne 30 , ai n
ai n

J ly B l 1
A
u ,
a ance
'
C s CCO U N T

JJ 1 91 4

Bl
u ne 30 , Cash J
l an
1 91 4
. 1 , Cash
u ne 30 , a ance

J
J G I y u ne 30 , S a ar
u ne 30 ,
u ne 30 ,
nt eres t
ai n

J ly B u 1 al ance

DI TRI BJUTION OF PROFI T

,

S S

P Lfi
ro
l
t s for d i st ri b u t i on
UN E 30 , 1 9 1 4

II AB
ess i nt erest on ca p i ta
nt eres t d u e

Int e res t d u e
nt erest d u e C

B Dl
a ance
A B
for d i st rib u t i on

AB m
ed u c t a ou nt s d u e
D u e , t h ree fift h s O f
and
-

Bl
D u e , t w o fif t h s of
l
-

a an ce for eq u a d i v i si on
As t h i rd sh are
’
one -

t h ir d sh are
’
B s one -

’
Cs one -
t h i rd S h a re

d irec t p rov i sion h as b een mad e in reference t o osses l E ach

l l
.

p a rtn er w ou d of c ou r se b e c r ed it ed w it h int er est on c ap ita

p er ag ee r ment . With reference t o t h e assu med l oss , if th e
 C . P A Q UE STI
. ON S AND AN SWE RS
.

i ti n
ex s g r m nt b t
ag ee n h p rtn r imp l i d
e e w ee imil r t e a e s e a s a

ap p l i ti ca in
on f lca se o th n h m tt r f pp rti i n
osses , e t e a e o a o on g
sa id l osses ld pr i d i t r tin pr b l m
w ou ov e an n e es g o e .

3 Q u e s t i on Th Z b l G m nt C mp n h
1 5 —
e e ey ar e o a y w o

fi l d ith
. .

we r b rn de u e h ni h t f S pt mb r
out on t e 19 g o e e e 16 1 2, e w
l im f
,

t h in e sur an mp ni
ce co a h i h it i
es a c a or w c s

n ecessa r y t o rif ve d i pr yTh f ll

or in b l ns h t
ov e . e o ow g a a ce s ee

w as f nd ou fA
as O t 1 19 2 ugu s 1
B ALA N H T
, :

A UG UST
CE S
1 ,
EE
1 91 2

b Li a i li t ies

AB ll
Ca sh
l A
B ll y l
y l ccou nt s p a ab e

M
i s rec ei v a b el
c cou nt s re cei v ab e

er ch and i se i nv ent or y l l k
i s pa
Ca p i t a st oc
Sur p us
ab e

FP
M a chi ner y
urni t u re a nd
rep a i d
fi
t ax es a nd
x t u res
in

T l
su rance
ot a T l ot a

At h l t e c ose o f b in
‘

S p t mb r 1 6 t h ir l d r h
us ess d e e e e e ge s ow e

h f ll in b l n
,

t o ow

L DG R A OU N T
e g a a c es :

BR
E E CC
P
l l k
Cap i t a s t oc
Su rp u s
SE TE M E 1 6, 1 9 1 2

AB l Cash

l l
c cou nt s rec ei v ab e

AB ll y l y l
il

i
s recei v ab e
ccou nt s
s
p a
ab e
ab e

pa

FIM y
ach i ner

y A
u rni t u re a nd fi x t u res

Dl nv e nt or

Sa
i v i d end s
es
,
u gu st 1 , 1 91 2

M erc h an d i se p u rc h ases

PF yl
L ab or
ow er , i gh t , and h e at

OO l ac t or
ffi ce
ex p ense
sa a ri es

IT llffi ce
Se i ng
nsur ance
ex p enses
ex p enses

ax es
 C . P A Q UE STI
. . ON S AN D ANSWE RS § 43

Th e cog r o mp any
ss o s on sa es as
’
ees v e y u ni fo rm pr fi t l h b n r ,

avera gin g 2 0 p er cent ev er sin ce t h e b u si n ess w as st arted ; .

1 0 p er cent for d eprec i ati on h as b een written off ev ery year

l
.

from mach inery and fur nitur e and fi xtur es In sur ance p o i ci es .

cov erin g merch andi se mach inery fur niture and fi x tur es aggr e , , ,

g at e a n d a ll cont a in t h e 80 p er ce nt c o i nsu r an c e

l
.

c au se Th e merch andi se and fu rni tur e and fi x tures w ere a

ll l l
.

tota oss Th e sa v age in mach inery i s v a ued at at

l
.

w hi ch v a ue t h e in sur ed d ec i d ed t o ret ain it Prep are state

l
.

ment of c aims again st t h e in surance comp ani es

4 A n s w er t o Q u es t i on 1 5 —
Th e q u estion as k s o n ly f or

l
. .

t t ment of c aim against t h e i nsuran ce comp ani es b u t this

a s a e

l
,

nec essit ates t h e d etermini ng of v a ues at t h e time of t h e fire

l
.

To do thi s requ ires an ana ysi s of t h e fi gur es presented and

l
t h e estab i shment of an equ itab e v a u ation of t h e prop erti es l l
d estroyed In a manufactur ing b u siness t h e direc t manu
.
,

fac t ur i ng ch arges form a p art o f t h e cost of good s d estroyed

l
and sh oul d b e in c u d ed ; t h i s i s p arti cul ar y t h e case w ith good s l
in t h e process of manufactur e The d ir ect costs sh own in
l
.

t h e qu estion h ow ev er are app i cabl e t o good s th at h av e b een

l l l
, ,

comp eted and so d as w el as t o th ose still in process t h ere ,

fore these good s must b e consi dered in t h e aggregat e I nst ead

l l l
,

of sep arate y In t h e manu facturing costs are in c uded ab or

l
.
,

p ow er ight and heat and factory expenses as i s shown b y

l
, , , ,

t h e accomp an yin g statement It w ou d b e proper no d oub t

l
.
, ,

t o add a p orti on of t h e in suran ce and tax es a so if t h e p orti on

l l
app i cab e t o t h e l i month s of op erati on cou d b e d etermined l
l
.

D ep reciation of mach inery for Li month s w ou d b e a proper

l
v

ch arge if con si d ered ; it i s i nc u d ed h ow ev er in t h e in v entory

l l
, ,

v a u ati on it sel f so it i s in ad v i sab e t o w rite Off furth er d epre

ll
,

c i at i on Th e fac t th at 1 0 p er cent h as b een w ritten off ann ua y

k
. .

d oes not mea n th at t h e b oo fi gures present a true v al u ation ;

it may b e w orth consi dering more th an t h e amoun t sh own .

Th e inv entory of fu rnitur e and fi x tures i s admitted at b ook

l
va u e th ou gh it i s pru d ent t o write it d own In an ex t raor
l l l
, .

d i nary case such as th i s it w ou d seem ad v i sab e t o in c u d e

l
,

in t h e cost of manuf ac tured good s a p or tion of t h e genera and

§ 43 C . P A Q UE STI
. . ONS AN D AN SWE RS
ad mi n istrativ e ex pen ses o N d b t p rti
ou l a o on , at eas t w ou d l
l l lbr
.
,

b e d ir ec t y app l i cab e th ereto in t h e sa me manner as a o

and d irect fac tory ex p en ses .

5 . matter of d oub t i n t h e consideration of a case lik e

Th e
thi s suggests t o t h e accountant t h e desi rab ili ty of a conser
v at i ve d ec i sion in ma in g up t h e cl ai m for good s d estroyed k
l
.

It migh t ev en b e c aimed by t h e manufacturer th at t h e good s

were w ort h more th an t h e b are manu facturi ng cost on t h e
m l
,

assum i on th at if p ur ch ased e sew h ere a hi gher price woul d

h av e t o b e p ai d It i s ev i dent that t h e comp any s c aim for ’
l
l
.

cont ain s eith er esti mated p rofi t s or con si d er ab y

l
more oadi ng th an w e h av e admitted as it seems i mp ossi b e l
l N
,

t o recon c i e it w ith t he i nf ormati on sub mi tted o d oub t .

t h e accoun tant after in v estigati on d etermi ned th at t h e gross .

.

profi t for t h e p ast years av eraged 20 per cent wh il e t h e com

l l
.

p y
a n s o ffi c i’
a s w ere estim ating di ff erent y Th e gross pr ofi t
l
.

on sa es woul d h av e t o b e estimated at ab ou t 3 5 p er cent t o

l l
.

resu t in a c aim such as t h e one presented b y t h e company

k l
.
,

Th e 20 p er cent gross profi t i s t a en on t h e cost of sa es and

l l
- -
.

not on t h e se l in g pri ce as i s so freq uent y d one in trad ing con

l l
,

cerns Where costs are wel estab ished as in a manufacturi ng

.
,

busi ness p ercentages may b e b ased on t h e cost price instead

l
,

of on t h e sa es In arrangi ng t h e gross profi t how ev er con

l l
.
, ,

si d erab l e care sh ou d b e ex erci sed t o see th at t h e e emen t s of

l
.

cost are maintain ed uni form y from year t o yea r Th e ad j ust

k
.

ers are th erefore as ed t o d etermin e or estimate t h e amount of

loss Th e in sur ed on t h e oth er h an d i s not boun d t o accept

l
.
, ,

t h e d amage c aim d ec i d ed u p on b y t h e ad j u ster in w hi ch case

l
,

some oth er ex p edi en cy mu st b e resorted t o Possi b y account

l l
.

ant s and apprai sers may h av e t o b e emp oyed or some equ i t ab e

l l
p an of sett ement d eci ded upon Sometimes th e courts are .

resorted t o for deci sions .

I n r n mp ni
6 lly r r h i ht r pl
su a ce co a es u sua ese v e t e r g to e ace

r b il d d m d pr p rt i n bl ttl
.

or e u r h a age o e y n case easo a e c as se e

m nt enn t b m d Th
s ca mp i int r t d in
o e a e e co an es are e es e p re

nti g l l rg iti wh t
.

ve b fi d th r f r m in in i
n oss y r e , an e e o e a ta n a ec es a
 ON S AN D AN SWE RS
C . .
§ 3
P A Q UE STI
4 .

are kn n fi p tr l nd r rit r tr l l
ow as rp
re a o , u e w e s
’

p a o , sa v age co s,

et c It i th ir d t i it h
s n f h fi e d u y t o v s t e sce e o t e r e an to sav e

p ib l
.

m h pr p rt Th n f m int n n
d th ir q ipm
as uc o e y as oss e . e exp e se o a e a ce

is m b y h d iff r nt mp ni
et t e nt i in e e co a es , an e e u e s

ev e r y wd pt d
ay l d ty S l h r f r n
a a e to sa v age u a v age as e e e ce

d fr m l mp l it m nt
.

to t h d e goo b fi i thi
s sa v e o oss y re ; n s ex a e, a ou s

to It i pr m d f th t h b k drs rd esu e , o cour se, a t e oo s an eco s

hav e all r
b een secu ed .

Th e aggregate in suran ce
r is w hich i s con ca ri ed

l
si d erab y ab ov e t h e v a ue of prop erty own ed at t h e time of t h e l
fir e .Sometimes a b an et or O p en p o i cy not t o ex ceed a l k l
S TA T E ME N T C LA I M F O R L O
OF SS B Y FI R E
BR SE PTE M E 1 6, 1 9 1 2

l y A
Va ue of merch andi se i nv ent or
M erc h an di se
and Sep t ember
p u rch ases A
b e t ween
1 6, 1 9 1 2
,
u gu st 1 91 2
1 ,

u gust 1 , 1 9 1 2 ,

Ad d
Tm l m ot a erch andi se
anuf a ct uri ng ch arge s

PF yl
L ab or
ow er ,
a c t or
p d
a i
i gh t , and h eat

T
exp ense

D l ot a
ed u ct c ost O f
c os t Of
ood
merch and ise
s so l d
g
Sal es 1 20
Th e gross p rofit h as b een uniform for sev era l
ll
years at 20 p er cent
Va ue of merch and i se d est royed
Add v a u e of p rop ert i es d est royed
.

k
A
M achi nery , b oo v al u e

AA u gu st 1 , 1 9 1 2
d di t i ons b e t W e e n
u gu st 1 and Sep
t emb er 1 6
Less sa v age ret ai ned l
F urni t u re and fix t ures , v a ue l A u gu st

A 1 , 1 91 2
d d i t i ons b et ween
t emb er 1 5
A u gu st 1 and S ep

T l ot a damage l c ai m
CE RTI FI CATE
I
lm h ereb y cert ify t h at t h e a b ov e st at ement of
k
c ai s i s i n ac c ord ance wi t h t h e b oo s , and t h at i n
my ju dgment i t rep resent s a fai r b asi s for sett e l
ment .

R J
B E N N E TT, Cert i fi ed
.

Sep t emb er 1 8, 1 9 1 2
.
,
P l Aub ic c countant
§ 43 C . P A QUE STI
. . ON S AN D AN SWE RS
sp ecifi ed amount is mad e
r t h e v a u e of good s on ou t to cove l
h an d at any time Th i s i s d esir ab e w here good s are not main
. l
t ai ned at any fix ed amount or qu antity and in ca se of fir eth e
l
,

amount of oss mu st b e d eterm in ed It seems ev i d ent th at

l l
.

t he case un d er con si d erati on in c u d es t h e O p en p o i cy t h ough

l l
,

it i s prob ab e th at an ordi nary p o icy h ad b een tak en out on

machi n ery and fi x tur es .

7 . Th e l
prob em cal s for onl y a statement of fir e cl aim l
again st t h e in su r an ce comp ani es w hi c h i s presented h erew ith

l l
, ,

b u t a p rofi t and oss statement and b a an ce sh eet h av e b een

ll l l
- -

ad d ed as t h ey w i i n crease t h e v a u e of t h e an sw er as a esson
l
,

in accou nt ancy Th e statement of c aim woul d no d ou b t b e

l l
.

accomp a ni ed b y t h e accoun t ant s ett er t o t h e c i ent w h o

’

engaged h i s serv i ces .

B A LA N H T CE S EE

As SE PTE M BR A A F LO SS WI TH
I R
E 1 6, 1 9 1 2 , D JU STME N T r I RE
ON F TE R
q
THE N S U A N CE

Asset s b
Li a ili t i es

AB l
Cash
l AB llc c o u nt s p a
l y l
ab e

i ls l
ccou nt s rec ei v ab e

l recei v ab e
i s pa ya b e
M

C lm l
ai
y
a ch i ner

l
v a u at i on
s
,

for
8 a

fi re
v a g

oss
e

i i nsu ra r c e
’

n s t
a
m
g a
r
T l TP l l l
co p a ni es

ot a asset s ot a
res ent
m of co
i ab i i t i es
ne t
a n y
c ap i t a l
p

A NALY I OF APITAL A OU NT S S C CC

l
.

k
l A
Cap i t a st oc p aid up
S u rp us, ugu st 1 1 9 1 2
Less di v i d ends p ai d
,

N et p rofi t f or I % mont h s
P res ent c a p i t a l
Th e b oo k h
s s oul d be ad u s ed
j t to ag ee r w ith t h e resu ts here l
 C . .ON S AN D AN SWE RS
P A Q UE STI
.
§ 43

OP RATING A ND PROFI T A N D LO A OU N T
E SS CC S
F A B
- -

RO M P
UG U ST 1 ,
1 91 2 , To SE TE M E R 1 6, 1 9 1 2

l
F l
Sa es for 1 } mont h s
ir e c ai m ap p rai sed b y i nsuranc e comp ani es
CRE D I TS

F ll
for good s d est royed
i re c ai m for mach i nery , ap p rai sed
Fi re c ai m furni t ure and fix t u res , app raised
T l ot a c red i t s
R
Merch andi se i nv ent ory ,
h
A CHA G E S
ugust 1 , 1 9 1 2

fia
cha ndi se p u rc ases

Power
F act or
r
ly
,
i gh t ,
ex p ense
a nd h eat

OO l m
Cost of erch andi se
ffi ce sa ari es

IT l
ffi ce exp enses
Sel ing exp enses
nsu rance

FF ll m
ax es
i re oss , fu rni t ure and fix tures
T l
i re oss , a ch i nery
ot a c h a rges

fi
N et p ro t

8 Q u es t fo owi n g i s ab stracted from an

i on 1 6 —
Th e ll
l
.

agreement of merger and con so i d ation mad e D ecemb er 3 1

l
,

1 91 2 b etween t h e Imp eri a Iron Comp any and t h e Central

I y B
,

ron Compan oth c omp ani es w ere organized u n d er t h e

l l l
.

aw s of P enn sy v ani a and agreed t o merge and con so i d ate in to

l
a sing e corp orati on Th e n ame of t h e corp oration formed b y
l I
.

said con so id ati on w as t h e mp erial Iron Comp any

l k
.

Th e amount of cap ita stoc of t h e new corp oration i s

all of wh i ch sh a b e c om ll
mon stock di v id ed into
l
,

sh ares of a p ar v a ue of $ 1 00 Th e manner of di st r ib uting

l k ll ll l k
.

capit a stoc sh a b e as fo ow s : Th e capita stoc of t h e

I l ll
mperia Iron Comp any sha b e exchangeab e for cap ita stoc l l k
of t h e new c orp orati on sh are for S h are and t h e b a an ce Of t h e l
l k ll
,

capita stoc of t h e new corp oration h ereb y formed sh a be

k l
d i strib uted t o t h e stoc h o d ers of t h e Central ron Comp an I y
l
,

in proportion t o their present ho di ngs

l l
.

Th e Imp eri a Iron Comp any w as in corp orated short y before

t h e d ate of t h e merger and h ad tran sacted no b u siness excep t
l k
,

t h e i ssu an ce of t en sh ares capita stoc $ 1 00 each for which

y
, ,

pa ment of $ 1 000 h ad b een recei ved and whi ch was in t h e

, ,
§ 43 C . P A Q UE STI
. . ON S AN D AN SWE RS
treasur y of t h e comp any on t h e date of t h e merger Direc t y . l
af t er t h e merger th i s sum w as tran sferred t o t h e b ank d esp osi t

l
-

account of t h e conso i d at ed c an y and credi ted t o an account

”
call ed Su sp en se
“

l
.

Th e Centra Iron Comp any h ad for a numb er of years b een

l
acti ve y engaged in b u s in ess I t s fi sca year en d ed S ept em l
ber 3 0 1 91 2 at W k
.

h ich time an inv entory w as t a en and i t s

l l
, ,

account s h ad b een prop er y c osed At t h e d ate of t h e merger

l l k
.

t h e fol owin g tri al b a an ce w as d rawn from t h e b oo s :

R L L CE T IA B A A N
D BE CE M E R 31 ,
1 91 2

AM
Cash
c count s recei v ab e
erch and i se
l
i nv ent ory , Sep t emb er 3 0 , 1 9 1 2
Merch andi se p u r ch a s es

Al
E x p enses
c count s p a yab e l
Sa es
l
Capi t a st oc k
U ndi vi d ed p rofit s, b a l ance Sep t emb er 30 , 1 9 1 2

Th e k
nt b oo s of thi s concern were not c osed at t h e d ate
accou l
of t h e merger an d no in v entory w as t a en A th ough t h e k l
k
.

ex ch an ge of capit al st oc w as eff ected and all b u sin ess after ,

Decemb er 3 1 1 9 1 2 w as transac ted u nder t h e n ame of t h e

l l
, ,

Imperi a Iron Comp any it w as not unt i M arch 3 1 1 9 1 3 th at an

k
, , ,

accou nt ant was as ed t o st at e t h e accounts of t h e n ew comp an y

from t h e d ate of con soli d ation O

n M arch 3 1 1 9 1 3 b efore t h e
k k
.
, ,

account ant h ad commen ced hi s w or an in v entory w as ta en

l
,

wh i ch sh ow ed t h e v a u e O f merch andi se on h and as at th at d ate

t o be ll l l
Th e fo ow in g i s t h e tr ia b a an ce of th at d ate :
R L L CE T IA B A A N
M R A CH 31 , 1 91 3

AM
Cash
c c o unt s rec ei v ab e
erch andi se
l
i nv en tory , Sep t ember 30 , 1 91 2
M erch and i se p urch as ed

Al
E x p enses
c c ou nt s
Sa es
p a yab e l
Su sp ense
l
Cap i t a st oc
U nd i v i ded p rofi ts
k
10 ON S AN D AN SWE RS
C .
§ 3
P A QUE STI
. . 4

Pr p r b l n
e h t f ha e a n l i d t d mp n a a ce s ee o t e co so a e co a y as at

d l
,

M rh 3 a c 9 3 d fi 1 nt r n d
1 1 an a p r o t an oss accou ar a ge to
n l i d t d mp n f
- -

, ,

sh h pr fi t
ow f h t e h 3 m nth
o s o t e co so a e co a y or t e o s

end d M r h 3
e d f h C ntr l Ir n C mp n f
a c h 1 ; an o t e e a o o a y or t e

3 m nth nd d D mb r 3
o l t t m nt h in h di
s e e ece e 1 ; a so s a e e s ow g t e s

p iti n f pr fi t t k n
os o r b ho mp n St t o s a e ov e y t e new co a y a e

l f
.

w h t b i
a d i d t mi in
as s h ppr im t
w as u se n e er n g t e a ox a e v a ue o

merchandi se on h and Decemb er 31 .

9 A n s w er t o Q
this question t h e req ui re
u es t i on 1 6 —
In
l l
. .

ments are a b a an ce sh eet of t h e con so i dated comp an y on

M arch 3 1 1 9 1 3 ; a p rofi t and oss account for t h e consoli d ated
,
- -
l
comp any for t h e 3 month s en de d M ar ch 3 1 1 9 1 3 ; a p r ofi t
l l
,

and oss acc ou nt of t h e Centra Iron Comp an y for t h e 3 months

-

en d ed D ecemb er 3 1 1 9 1 2 ; a st at emen t Sh ow ing d i sp ositi on of

k
,

p r o fi t s t a e n o v e r b y t h e n e w c om p a n y ; an d t h e b a s i s O f d e t er
mining t h e approx imat e v a u e of merch afid i se on h an d D ecem l
b er 3 1 1 9 1 2 Ad j u sting j ourna entri es migh t a so b e of ad v an l l
l
.
,

t age in p rov i di ng a c earer exh i b it of t h e necessary adj u stm ents .

Th e I mp er ial Iron Comp any h ad j u st b een in corp orated and

h ad not b egu n op erati on s I t s au th oriz ed cap ita stoc i s not . l k
g i v en b u t ,
h a s b ee n su b sc ri b e d an d p ai d in a n d i s st ill in ,

t h e treasur y ; thi s amount i s t o b e tu rn ed ov er t o t h e new com

p a n y a n d c re d it ed t o a su sp e n se a c c o u n t an d a n e q u a l a m o u nt
k
,

of t h e new comp an y s stoc recei v ed It i s credi ted t o thi s

’ Q

l l
.

account t emp or aril y an d a prop er ad j u stment w i l b e mad e ater

l l
.

Th e Centra Iron Comp any i s an est ab i sh ed comp any and

l k
,

i t s fi sca year en d ed Sep t emb er 3 0 1 9 1 2 It h as a cap ital stoc

l k l
.
,

Of a nd a surp u s of ma ing a tota c apital

of O
n D ecemb er 3 1 1 9 1 2 t h e consol i d ation too k
l
, ,

p ac e t h e ex c h a n g e h av i n g b ee n e ff e c t ed o n t h e b a s i s o f a cc o u n t s

l l l
,

sh ow n b y t h e tri a b a an ce of t h at d ate wi th ou t c osing t h e

l ed ger B y t h e terms O f t h e ama gamation t h e stoc h o d ers l k l

k
.
,

of thi s comp an y are t o h av e al l of t h e stoc b ut an d w ill

receiv e certifi cates for in ex ch ange for of t h e

k
stoc of t h e ol d comp any ; t h i s i s a n in c rease of

1 0 . Th e cap ita and l l

sur p u s of t h e Central Iron Comp any
increase from on S eptemb er 3 0 t o , on Decem
§ 43 CI ON S AN D ANSWE RS
. P A QUE ST
. .

b er 31 Th in r f pit l fr m
e c ease o m y ca a o to a

l
.

b e ad j t d int us e h wn in h mp ny in t t
o sur p us , as s o t e acco a g s a e

m nt m yb d w il l
'

e h s , or t h r d
e nt a e c a ge t o goo accou

If h l tt r pl n i f ll rpl J ry 1 1 91 3
-
.

t e a ed h a s o ow e t e su us on anu a

i ll h Ap i l 1
, , ,

w S r di t f
ow a c e d o E ith r an on r e

pl n m b f ll w d In h fi r t p l n h C tr l Ir n C m
,

a ay e o o e t e s a t e en a o o

rp l
.
,

p ny t rn
a r u f
s ov e r d b a su h m nt us o ov e an a ov e t e a ou

of t kr s oc i d Thi i w
ece v e n d by h n l id t d m s s no ow e t e co so a e co

t kh l d r i h f rm r mp ny w
.

p n b
a y h u t as t e s oc i o e s n t e o e co a o n p ract
ll ll f h t k f h d m l m t d
,

ca y a o t e s oc m ny o t e new an a a ga a e co p a

th y e l in nythin by m king h l ib r l d n ti n
are not os g a g a t e e a o a o

of r l pr fi t
su p Eus pt f h p r
o sf r r i in d x ce or t e u p ose o eo gan z g an

pit l t k p ib l f
.

in r in i
c eas g ts ca h r o a f s oc or oss y or t e pu p se o

i n i ll h C ntr l Ir n C m
,

ch n i i n m
a g ng t s a e , no ga w accr ue to t e e a o o

p ny b h
a ll d m r r d n lid ti n It ld h
y t e so ca e e ge an co so a o cou av e

d l r d p i l t k di i d nd p bl p l pr fi t
-
.

ec a e a s ec a f s oc v e ay a e ou t o sur us o s

an d h pr i d d f
av e m by ov in r ef pit l kor sa e an c ease o ca a st oc .

1 l Th q ti n k f e ppr im t
ues l ti n f
o as s or an a ox a e v a ua o o

inv entory as on D ecemb er n 31 , 1 91 2 . Th e fi rst t p

s e , as s ow h
b y t h e merch andi se accou nt i s t o d etermine t h e gross gain ,

for t h e entir e 6 month s en d ed M arch 3 1 1 9 1 3 whi ch amount s , ,

to It w ill b e noted that thi s gain i s j ust one fourth

l l
-

of t h e sa es or one thir d of t h e cost of good s so d ; th erefore t h e

-
,

g a i n s for t h e fi rst 3 m o nt h s may b e c on si d ered as h a v i n g b ee n

in t h e same proporti on Th e sa es for t h e 3 month s ended . l
Decemb er 3 1 1 9 1 2 were and if one four th of thi s

l
-
, ,

amount represent s profi ts t h e cost of good s so d mu st h av e ,

b een Dedu c ting th is amount from t he

cost of all good s t o th at d ate gi v es as t h e v a u e of l
merch andi se on h an d B y addi n g togeth er t h e gross gain in
l ll
.

trad ing and p rofi t and oss accounts it w i be found th at th ey

l
- -

equ a t h e amou nt sh own b y t h emerch an di se account $ 1 7 1 2 50

“

l l
.
, ,

Th e su rp u s account i s in c u d ed for t h e p urp ose of show ing

t h e di sp osition of profi t s ta en ov er from t h e Central Iron k
CM p any It i s presumed that t h e b oo s former y used b y
. k l
t h e Central Iron Comp any are continued ; t h e ad j u sting
entri es th at fo ow are mad e on ll
thi s p resumption Th e .

I L T 234— 24
12 C P
. ON S AND AN SWE RS
. A QUE STI
.
§ 3 4

va rious ffi i l
O t p r q ir d in h
c a s e s n l i d ti n f h e u e t e co so a o o t e

t wo co rp r ti o a h tr n f r f
ons , t d l i b i l iti
t e a s e o asse s an a es , et c

l tt r Th t p will
.
,

must be r i d
’

ca r e h out to t e e e ese s e s not

l
.

va ry t o an ea y g r
ex e t tont fr m
ose th r
e u re q i d in h
t e a a ga m
mation of t wo un incorporated concerns into one corp oration
Th e ad j usting entri es ar e mad e on t h e d ates in di ca ted b ut t h e
l
u su a routin e entries h av e b een omi tted .

A DJU TING NTRI S E ES

D BR E CE M E 31 , 1 91 2
Cash
Su spense

I l
F or amount of cash t u rned ov er b y
mp eri a Company , per agree

P l l
ment th i s d ay
rofit and oss
.

T
Surp us
ransfer of p rofi t s of mp eri a ron I lI
Surp u sl
Company

k
Cap i tal st oc
.

l
For t ransfer of su l u s p rofi t s t o

I l I
ca p i t a
mp eri a
accou nt
ron
or acc ou nt of
Comp any , p er
agree ment .

Susp ense
Cap i t a st oc
F or t ransfer
l k
of a mou nt cr edi t ed to
susp ense accou nt .

MARCH 31 1 91 3
Profit
,

and l oss

mont h s
t o surp us account l
For t ransfer of net gai n for 3
.

M E RC HA N DI A O NT SE CC U
M R A CH 31 , 1 91 3

b
D e it s d
Cre i t s

I
nv ent or y , Sep t emb er T ml ot a sa es l for

P 30 1 9 1 2
,

u rch ases
onth s

Less i nv ent ory March ,

G
Cost
7

of sa esl
ross gai n

Bl a ance, g oss
r gai n
 C . ON S AN D AN SWE RS
P A QUE STI
. .

T ADING AN D PROFIT AN D LO A OU NT
R SS CC S
I
- -

P CE N TRAL CO M
D B
RO N ANY

E CE M E R 31 ,
1 91 2

Inv ent or y , Sep t emb er Sa l

es for 3 mont h s

P 30 , 1 9 1 2
u rch ases

L
T
ess
l ota
i nv ent ory , D ecem
b er 3 1 , 1 9 1 2
Cost of
G ross gai n
good s so l d
7

E xp enses
N et gai n 00
G ross
d own
gai n b rough t

Carri ed t o su sp ense
account 7

B LA N H T
A CE S EE
CE NTRAL I P CO M
D BR
RO N ANY

E CE M E 31 ,
1 91 2

Asset s bl
Lia i i t i es

AG
Cash on h and
l A cc ou nt s p a ab el
cc ou nt s recei v ab e
ood s on h and
Cap i t al st
l
Sur p u s , Sep
t emb er 30 ,
1 91 2
Add net gai n

Thi s hib it sh ows t h e condi ti on of t h e comp any at t h e

ex

l
time of conso idation Th e cap ita and su rp us of l l
k
.

i s giv en in ex ch ange for of stoc of t h e new comp any

l l k
.

Thi s does not ch ange t h e actu al tota v a ue b ac of t h e

sh ares al t h ou gh it d oes ch ange t h e b oo v a u e of each S h are k l
l
.
,

On a b as i s of equ a earni ngs d uring any p eriod t h ere woul d b e

t h e same amou nt t o d i stri b u t e in d i v i d end s Thi s d istri b u ti on
l l
.

woul d retu rn t h e same amou nt in d ol ars t o eac h sh areh o d er

b ut t h e p er c ent on t h e t ot a f ac e v a ue of t h e sh ar es h e d l l l
l l l l
.

wou d b e ess ; t h ere b eing now sh ares h e d t o t h e v a u e of

in p ace of l
14 C . O . N SWE RS
P A QUE S TI NS AN D A
.
§ 43

TR DING AN D PROF IT LO A OU NT
A AN D SS CC S
IP IR
- -

P M E RI AL ON CO M AN Y

T M M
HRE E ON TH S E NDE D ARCH 31 ,
1 91 3

b D e it s d Cre i t s

I nv ent or
1 91 3
y J
,
y anuar l m 1 Sa es for 3 ont h s

P urch ases

Less i nv ent ory March ,

31 1 91 3

G
Cost
ross
,

of
i
g
n
ood s so l d
ga

E xpenses G ross gai n b rou gh t

N et gai n
Carri ed t o surp us l 3
d own

Th e in i s carried t o surp u s account wh ere it wi l

net ga l l
aw ait t h e d i sp osi ti on t o b e mad e of it b y t h e d i rect ors If .

t h e fiscal year i s t o remain as b efore t h e p eriod h as arri v ed

‘

l
,

for t h e semi an nua di v i d en d

-
.

C ON OLI DAT D BALA

S E N CE S H T EE
IP I M E RI AL RON CO MPAN Y
MARCH 3 1 , 1 91 3

bl
Lia i i t i es

GA
Cash on h and A l
c c ou nt s
k
p a ya
ood s on h a nd
cc ou nt s recei v ab l e
Ca i t a
m
I I ron
p
st oc
e r
00
i a
.
1
000
,

Cent ral ron

Surp
A l us
cq ui red
E arned

If gooll h d b n id r d f
d wi a ee cons e e increase of stock
or the
h C ntr l Ir n C mp n l
-

of t e e th n
a o o a y e g ood w i ll w ou d
pl
-

a pp ea r m n h a to d g t e asse s an sur u s woul d b e in creas ed t o

 C P A Q UEST
. . . IONS AN D ANSWE RS
SU RP LU A O T S CC UN S

To cap i ta
ment
lD p er a
mb er
d ust j B m al ance , Sep t e b er 30 ,

Bl1 91 2
, ece 31 ,

gg
D m
1 91 2
Ad r e , ece ber 3 1
a ance
A Mr l l
d d ed , a ch 31 , 1 91 3
50

The term u nd iv i ded profi t s as u sed in t h e question may be

l l
, ,

used in stead of surp u s If good wi l h ad b een con sid ered

l l
-
.
,

t h e present b al ance t o su rp u s account wou d b e in creased b y

1 2 Q u es t i on 1 7 —
Th e foll ng fi gur es are ta en from
owi
‘
k
k B r wning St y
.

th e b oo s of t he o ov e Comp an on December 3 1
II nv ent ory of ni sh ed good s fi
l J
J ,
1
anu a r y
P
Sa
nv ent ory of ra w

l
urch ase of raw
es
a t eri a s
m
m
l at eri a s
,
anua ry 1

DD
Rent
ll
i scount s recei v ed on p urchases
l
PLi scount s a owed on sa es
ower , li gh t , a nd h ea t
i gh t and h eat for
Rep ai rs
FG yla ct or ex p ense

FG ylenera
a ct or i nsurance
ex p ense

T mlm
M
oo s
y
achi ner l
enera i nsu rance
and p ant

OI
Co
l l
i ssi ons
ffi ce sa ari es

Sal es m l
nterest on oans

y l
en s sa a ri es
’

L
D oans
l
i scou nt
p a ab e
ost

NN y l
l
ot es recei v ab e di scounted

AA ot e
s

y l
p a
l
c count s rec ei v ab e
ab e
1 01

OF
ccount s
ffi ce furni t u re
urni t ure and fi x t ures
p a ab e

Cash on h and
k
Cash i n b an s
R
l l
et urned sa es
Capi t a
Reserv e for d ep reci at i on
 16 C P . . A Q UE ST
. I ON S AN D AN SWE RS § 43

F l
Reserve for b ad d eb t s
rei gh t and ca rt age i nw ard s

HP
Stab e exp enses
orses , w agons , and h arnes ses
ost a e and ex p ressage
g
T
Sup errnt end ence
ax es

A l
St a t i onery and p rint i ng
d v ert i si ng
Surp u s, p rev i ou s year

Prep are fr om th ese a trial b al ance arranged in systematic

l l
,

ord er as t o b al an ce sh eet accounts asset s and i ab i ities and

l
-
, ,

p ro fi t and -
oss ac cou nts ex
-
p en ses an d rev enu es t h e exp en ses, ,

di vi d ed b etw een commerci al and manuf ac tu ri ng so as t o fac il i ,

tate t h e prep aration of financi al or b u si ness st atements Draf t

l l k
.

j ourna entries for c osing b oo s Prep are manuf acturing

l
.
,

tradi ng and p rofi t and oss account s and v erif y t h e resul ts

ll
- -
, ,

h ere sh own b y a b al an ce sh eet Th e fo owi n g inv ent or ies

k
.

and ad j u stment s are t o b e ta en into consi d erati on b efore

prep aring t h e stat ements as ed for : k

FT l R aw mat eri a
i ni sh ed good s
l
oo s

F Ofii ce fu rni t ure

u rni t u r e a nd fix t ures
St at i onery and p ri nt i ng 300 .

All fow or d ep reci ati on :

p ant 5 p er cent on machinery and l , .

on h orses w agon s and h arn esses 1 0 p er c ent ; reser v e for b ad

l
, , ,
.

d eb t s 3 p er c ent on accounts receiv ab e onl y Th e item of

ll
. .
,

rent i s t o b e app orti on ed as fo ow s : 53 p er cent for

l
.

factory 22 p er cent for sa esrooms and 2 5 p er cent for offi ce

,
.
, . .

Th e item of su p erin ten d en ce i s t o b e di v i d ed t hree

fifth s t o fac tory and t wo fift h s t o general exp en se
,
-
.

1 3 .
-
A n s w er to Q
Thi s question p resent s
u es t i o n 1 7 —

many i nteresting p oin ts and no d ou b t w as d esi gned to test t h e

l l l l
, ,

app i cant s ab i it y in c h arting and p ann in g t h e ed ger accounts

’

ll l
,

as w e as in settin g forth t h e requ ired inf orm ati on in su i t ab e

b u sin ess statement s Th ere i s u su al y t oo much di sregard on l

kk
.

t h e p art of b oo eep ers for t h e syst em a ti c arran gement of

l l
,

ed ger ac cou nt s an d i n man y cases t h e ed ger represent s

l l
.

a j umb ed mass of accou nt s op en ed on ed ger p ages regardl ess

 § 43 C . ON . N
P A Q UE STI
S A D A N
. S W E R S 7 1

o f l ocati n p o r q i r d l ifi ti n
s ace l i l di i i n
e u e c ass ca o or og ca v s o

B f r h l d r i p n d r h ld b t k n in p l n i n
, , , , .

e o e t e e ge s o e e ca e s ou e a e a n g
nt h l d b h n th r in
,

t h e o rd r i e hi h h n w c t e ac c ou d s S ou e S ow e e an

ll tt d
,

t h n mb r f p
e u e b o ages h A to nt th t e a o e to eac ccou s a are

l ik l h l if f h l d r
.

e y r q ir
t o e u m r p e d rin
t wo or o e ages u g t e e o t e e ge

h ld b
,

s ou i n ffi i nt p
e g ve summ d t h r c e rd S ac e to ac co o a e t e eco s

o f said nt
accou ith t h i n s b tr n f rr d t
w ou n th r av g t o e a s e e o a o e

p t f h l d r
ar o t e e ge

h n in h t i l b l n
.

Th rr n m nt f
e a a gnt
e e o ac cou s as S ow t e r a a a c e,

i s so co n ni ntl p l nn d th t h
ve e y l t t m nt a e b a t e u su a s a e e s c an e

m d a e up ith ry l ittl f t Th l
w ve ti n f nt m
e ef or . e oc a o o accou s ay

not b ti f t ry
e sa m
s ac o t nt d h di i i n m
to so e accoun a s , an t e v s o ay

not pl i
ease ll bn a th t i imm t i l c ases , ln h ut a s a er a as o g as t e

o bj t i r
ec s h d d
eac ti f t r r l t tt in d Th i rd r
e an sa s ac o y es u s a a e s o e

n id r b l m rit d i
.

or a rr n m nt h
a ge r h
e ow ev e rth as co s e a e e an s wo y
i nt p l n m y it j t
, ,

o f d pti n th
a o o h th r n ou g any o e co v en e a a su us

ll
,

as we

1 4 Th l d r e nt b i e geith h t
accou rr n d s eg n w t e asse s , a a ge
il b il it
.

in h rd r h
t e o h r in
e S d li t d
own rdi n e e an s e acc o g t o ava a y
il b l
,

in case o f r l i ti n eaC h i fi t b
za o it i . as d s rs ecau se s av a a e an

r dy f
ea or u se at an y tim A nt d n t f t me r ccou s an o es o cu s o e s

m t r di l
.

co m n t e ex th as n rt d int
ey are h Th
os ea y co v e e o c as e

li b iliti f ll
.
,

a es d
o rr n d in h rd r in h i h th
ow , an are a a ge t e o e w c ey

w i ll r k in h m tt r f p m nt
an t e liq id ti n n t d
a e o ay e or u a o ; o es an

accou nt ll fi t d m nd d it l t k h ry
s are u su a y rs e a s , an cap a s oc t e ve

l t F ll in th
as o ow h g p n ese nt hi h
ar e t e ex e se ac cou s, w c are

ll in d n r l Th
.

di i d d
v e m n m n f t rin
as a o g a u ac u g se g an ge e a ese

ill r tl y f il it t h r p r ti n f b in
.
, ,

di i i n
v s o s w g ea ac d a e t e p e a a o o us ess an

fi n i l t t m nt
na c a s a e d d i bl e h r s an r t n mb r are a v sa e w e e a g ea u e

o f accou nt r q i r d Th
s are p n e u nt m e b e ex e se accou s ay e

rr n d in l ph b ti l rd r
.

a a ge a h a e n nd r ti n f n r l
ca o e , as S ow u e sec o o ge e a

ex p en ses

r l r l l ft bl k in h ti n f y
.

A S a u e, sev e a a
p ges ar e e an eac sec o or an

a d di ti n l o a nt th t m b r q ir d d rin h
accou s a re f ay e e u e u g t e cou s o

b inus ess F in t n or h il l pp r s a p ce , c as d d w a ea on age 1 an goo

i ll 20 t h n k i pin bl
.

w p
on age f ; p en t p S p g a ew ages , o es ay a e

w ill f ll o ow p 3 Th
on p n age r ti 1 . nt e ex e se or op e a n g accou s
18 C P . . . O
A Q UE STI N S AND AN SWE S R § 43

T I A L B ALA N D
R CE , B
A
E CE M E R 31
S SE TS

NA ot es rec ei v ab e, l l
p e r sch ed u e l
II c coun t s
nv entor y of fi ni sh ed good s, J
recei v ab e , p er sch ed ul e

lJ y
anua r y 1

TF l
nv ent ory
oo s
u rni t ure and
of raw m
a t eri a ,

fi xt ures
anuar 1

HM
Offi ce furni t ure
orses ,
achi ner
wagons,
y and l
an d
a nt
h arnesses
p

B
NN ot es pa yab ll
e, p er sc h ed ul e
LI A IL I TI E S

l
AL y l
d i scount ed , p er
ot es rec ei v ab e,

l
ccount s p a ab e, p er sc h ed u e
oa ns p ayab e, p er sch ed ul e
l sch ed u e

Reserve for dep reci at i on

l
Reserve for b ad d eb t s
Su rp us, p rev i ous year
Cap r

D l
Sa es
i scount s received on u h ases
RE VE N UE S

p rc

MAN UFACTURI N G E X PE N S E S

FW rei gh t a nd cart age i nward s

85
7 2 7 00
.

PF yl ages
ower , i gh t , and h eat
. 88

F y act or
i nsu rance
act or
“
exp enses

S uperi ntend ence, fact ory

Rep airs
Rent of factory
COMME RCI AL E X PE N SE S
A dv ertisi ng
S al esmen s sa ari es
’
l
Commi ssi ons

D
Ret urned sa es
i sc ount on sa es
l l
Packi n
Rent
l 0 l
sa esroo ms
S ta b

DG
e exp enses

l G E NE RAL E X PE N SE S

GI
i scou nt
enera ll ost
ex p ense
enera
nt eres t on oans l
i nsurance

OP l
Li gh t and h ea t , Ofi ce
ffi ce sa ar i es
os ta e a nd exp ressage
g
Rent or of ce fi
Su p erint end ence, genera l
T
St a t i onery and p ri nt i ng
ax es
§ 43 c . . . I N
P A Q UE ST O S AN D AN SWE RS 19
0

may then begi n on p age 5 1 and so on For conv eni ence , .

,

t h e sec tion s are often giv en 1 00 p ages each i n wh i ch case ,

J O U A L N TR I
RN E ES

P
Manufact uri ng
urch ases
ac coun t

M
FWanufact uri ng account
rei gh t i nwards

PF ages
ower, ly
i gh t , h ea t

F act or
act or
Superintend ence
exp ense
y i nsurance
s

ent factory
fip ,
e arrs

T
TM
Reserve for dep reciati on
ool s account
radi ng account

lR
Sa
anuf act uri ng account
es account
et urned sal es
2 1 7 , 1 1 1 42
.

TA radi ng account
dv ert i si ng
Salesmen s sa ari es
Commi ssi ons
’
l
D i scount on sa es l
Pack i n
Rent
St ab le ex
0 l
sa esroo
uses
ms

Reserve or d ep reci ati on

DM T radi ng a ccou nt
iscount on u r h as es
p c

P Dfi l anufac t ur i ng account
’

ro t and oss

GG ll l
i scount
enera
ost
ex p ense

IL l
enera
nteres t on oans
i nsurance

PR l
i gh t and
h ea t
cc sa ari es
ost age and exp ressage
ent
Sup eri nt end ence

TO
Stat i onery and p ri nt i ng
a xes

FR ffi ce furni t u re
urni t ur e a nd fixt u res

Su rp l
P fi
eserv e for b ad d eb t s

ro
us a cc ou nt
t a nd l oss

NM IL — To l
sa v e sp a c e. ex p a nat i ons mi t t e d
o . l
a so ent ri es d eal i ng wi t h i nv ent ories
.
20 C P. . A Q UE STI
. ON S AN D AN SWE RS § 43

t he manuf actu ri ng accou nt h s h r in

own i ll b p
e e 5 w e on age 1
or 1 01 acc o rdi ng t o t h e a p l n f ll d In h
o ow e f m d rn t e u se o o e

l l l
.
,

oose -
eaf and card ed gers of r
cou se th ese su gges tions may be
di sregard ed .

1 5 ll
It wi b e noti ced th at t h e inform ation contained in
l
.

t h e b a an ce Sh eet i s su bd i v i d ed u n d er approp ri ate h eadi n gs ;

l ll
.

th i s p an migh t b e fo ow ed in t h e rev enu e st atements al so if

l
th ough t ad vi sab e In many cases such d iv i si ons ar e t o be
l k ll
.

recommended as they enab e t h e u ns i ed p erson t o compre

l
,

h end t h e statement s more read i y w ith ou t b ei ng requi red t o

an al yze for h imsel f Thi s matter of sub d ivi di ng st atement s
l
.
,

h ow ev er may eas i y be ov erd one and th erefore sub di vi si ons

l y
, ,

sh oul d not b e used t oo free y nor w h ere unn ecessar .

MA N U FA TUR ING A OU N T
C CC

D BR E CE M E 31

D e it sb Credi t s

I nv ent or
J y raw mat e Cos t of good s manufac

PF ri al
u rch ases raw
rei gh t
a nu ar

i nwards
y 1
mat eri a l t a r ed carr i ed
t o t rad
di ng accou nt

DD ed u c t
i sc ount
on p ur
ch as es
Raw ma
t eri al on
h and
Mat eri a
Wages
l c onsu med

PF o w er , ly i gh t , a nd h eat

F a c t or
ac t or y i nsurance
Sup eri nt end ence,
ex p enses

fac
t ory
R ent of fa ct or y
D
Rep ai rs
ep reci a t i on
On
p
On t oo
l l machi nery
a nt ,
s
5 p er
a nd
c ent .
§ 43 C P A Q UE ST
. . . ION S AN D ANSWE RS 21

TRADI NG A OUNT CC

b
D e it s d
Cre i t s

I J
nv ent or
y
y ,
fI n i s h e Sa
L
l es for yea r
good s , 1
ll
anu a r ess ret u rns
M a nufa ct u red d u ri ng
y
T l
ear 1 95 1 1 04 9 7 Bl N et
a a nc e,
sa es
oss ,
l
carri ed

DF ot a t o p rofi t and - oss ao

-

ed u c t count
i ni sh ed good s on
h and

Al m l l
Cost of good s
d v ert i si ng
So d

Sa es en 5 sa ari es
’

DP k
Co mm
l
i ssi ons
i scount s on sa es

R
ac i ng

l l m
ent of sa esroo s

DH
St ab e expenses
ep reci a t i on
orses , w agons, and
h arness

P ROF I T A N D L O A OU N T
- -
SS CC

b
D e it s d
Cre it s

Loss from t rad i ng ,

sh own b y t ra d i ng ac
as Bl
a ance, net l
t o t h e d eb i t of l
oss ca rri ed
su rp us

DG count
i sc ou nt
ll l ost
ac count

GI enera
enera
s t on
nt ere
ex p ense

l
i nsu rance
oa ns

OP
L
l
i gh t and h eat , 0 6
ffi ce sa ari es
ost age and ex p ressage
Rent for O ce m
Su p er i nt end ence, gen
1
St at i onery and
p rint i ng
Less i nv en~
TD t or
ax es
y
ep reci at i on of fi
O f ce

FRu rni t u re and

eserv e for
fixt ures
b ad d eb t s ,
3 p er cent on a c
count s rec erv ab l e

. 26
22 C . P A Q UE STI
. . ON S AN D ANSWE RS § 43

B A LA N H T CE S EE
DRR B AR
CU
E CE M E
E NT
31
SS E TS
Cash on h and
Cash i n b ank
NL ot es rec ei v ab e
ess not e
s und er
l di scount

Ac cou nt s recei v ab e, l sch ed u e l

F
R aw m l
at eri a on h and
i ni sh ed good s on h and
p er

PRO PE RTY
TL l
oo s i n fact ory
d ep reci at i on
PE RSO N AL

FL
ess

urni t ure a nd fi x t u res

ess d ep reci at i on
Ofii ce fu rni t u re
Less d ep reci at i on
St at i onery and sup p li es

HM F I XE D A SSE TS
orses ,
ac h i ner
wagons ,
y and l
a nd h arness

T l l p a nt

ota t angi b e asset s

CU R RE NT LI A B I L I TI E S

NA p a ab
ot e
s y ly le,
ab e ,
pe r sch ed ul e
h d l
l
ccou nt s p a p e r s c e u e

Loans payab e
For d ep reci at i on
RE SE R AVE CCO UN TS

On h orses , wagons , and h a rness , 1 0 p er

On machi nery and p ant , 5 p er cent l .
cent .

For b ad d eb t s
On account s recei vab l e, 3 pe r cent

F B
.

I XE D LI A I LI TI E S

1 6 Q p roposition h as been made for t he

u es t i on 1 8 —
A
k
. .

ta ing ov er of th ree corporations ch artered b y t h e sta te of

l
Pennsy v ani a b y a fourth corporation t o b e ch ar tered b y t h e
same st ate . ll
Th e fo ow in g statement of aff airs has been sub
mi t t ed b y t h e three corp orations prop osed to be ab sorbed and ,

fou nd t o b e correct :
§ 43 C P . . A Q UE STI N S AN D AN SWE S
. O R 23

CO RP O RATI O N N o. 1

TB
Ca p i t a
reas u r
ly st oc
st oc
k
k
, per l
v a u e of sh ares $2 5

TA ond ed i nd eb t ed ness
reasu ry b ond s
l
B ll
ccount s p ayab e
i s p ayab e l
AB c cou nt s recei vab e
l l
P l
ill s
Sup p i es
recei v ab e

la nt and franchi se

CORPO RATI O N N o 2

l l
.

k
BB ll
Cap i t a st oc
p ar v a

ly l
ond ed i nd eb t ed ness
, ue of sh ares $50

A i s p a ab e
ccou nt s
y
pa ab e

AB ll
Cash
ccou nt s rec ei v ab e
l l
Pl
i
ls recei v ab e
Supp i es
a nt and franch i ses

CO R PO RATI O N N o 3
l l
.

Cap i t a st oc k , p ar v a u e of sh ares $ 2 5

Th e proposition made t o t h e th ree cor porations i s as fo ows ll

ll
E ach corporation sh a p ay i t s own d eb ts and di strib u te among
k l l
,

i t s own stoc ho d ers wh atev er amou nt sh al app ear t o t h e credi t

l l
of profi t and oss in c osin g i t s b oo s treatin g t h e statements k
l
,

ren d ered as b ein g correc t as t o v a ues Th e remain in g assets .

are t o b e t u rned ov er t o t h e promoters of t h e new corp or ation

ll
on t h e fo owi n g terms : Th e capit al stoc of corp orati ons k
N os 1 and 2 at 2 0 p er cent premi um in cash and in
k
. .
,

cash t o be p ai d for t h e capit al stoc of c orporation N o 3 Th e

l
. .

b on d s of t h e t w o c orporations w il be purch ased at a premium

of 5 p er cent Th e proposition w as accep ted i v e c osing G l
k O
. .

entr ies for t h e b oo s of t h e Ol d corporati on s rganize t h e .

new corporati on w ith a capit al of and in c rease t o su ch

an amou nt as may b e d eemed nec essary carry in g t h e ex p en ses

l l
,

of incor porati on t h rou gh cash i nc u d in g cou n se fees , .

P rov id e for an i ssu e of bon d s suffi ci ent t o carry out th i s agr ee

ment said b ond s t o be so d at 1 0 per cent d i scou nt and a so
, l .
, l
prov i de for b ond s in treasu ry and giv e a b al ance sheet ,

of t h e new corp oration after t h e organi z ation .

 C P
. . A Q UE STI
. ONS AN D AN SWE RS § 43

1 7 A n s w er to Q
Thi s proposition i s an
u es t i on 1 8 —

ll l
.

ex ce ent one for d raw in g ou t t h e candi d ate s ab i it y i n t h e

’

an al ysis of intricate corporate ad j ustments M any in ter

l
.

esting fac t s are inv o v ed and some of th em are h ard t o in terp ret .

For instance w h at d eb ts are t o b e p ai d b y each comp any i s

,

su b j ec t t o conj ec tur e because th ere i s not suffi ci ent cas h on

,

h an d in ei th er of t h e cornp ani es t o carry ou t t h e agreement .

To meet this requ irement it i s assumed th at enou gh of t h e

l
accou nts receiv ab e h av e been co ec ted t o prov i d e suffi c i en t ll
l
funds for sett ement of current l i ab i ities and for t h e di st ri b u l
l
tion of surp u s profi ts If more of t h e accou nts receiv ab e l
l l
.

h ad b een rea iz ed u pon th ere woul d be an equ i v a ent amount

of cash on h an d t o b e tu rned ov er t o t h e new comp any .

Th e b ond ed i nd eb ted ness of eac h of t h e fir st t w o comp ani es

i s giv en as b ut as Corporati on N o 1 h as un so d b on d s l
l
.

of it i s assumed th at onl y h as been so d If .

t h e term ind eb ted ness i s interpreted t o mean outs tand i ng th en

O
,

t h e amou nt mu st be in creased t o n thi s b asi s t h e

l
,

pur ch ase pri ce at 1 05 w il be i n stead of

as shown in t h e so uti on l .

Th e qu estion says t o rein corporate t h e new comp any f or

such an amou nt as may be d eemed n ecessary and t o i ssu e b on d s

k
,

sufii ci ent t o c arry ou t thi s agreement Thi s i s ta en t o mean

k
.

t h e amou nt requir ed af ter t h e in c rease of ca pital st oc t o p ro

v id e t h e fu n d s need ed t o comp ete t h e p urch ase of stoc s an d l k
l
b ond s contrac ted for in c ud i ng treas ury b on d s exp en ses et c
l k
.
, , ,

TO omp ete t h e in corp oration of t h e comp any t h e c apital stoc

c
i s th erefore i n creased from to and a b on d .

issue prov i d ed for t h e same amou nt Th e bond ed d eb t migh t

ll l
.

w e h av e been i n creased b u t t h e v al u ation of p ant whi ch con

l
, ,

St i t u t es t h e secu rity for bon dh o ders i s not suffi c i ent t o j u stify

k k k
.
,

Treasur y Stoc N o 1 h as b een ta en as stoc th at h ad not

l
.

been i ssu ed th u s eav in g a capit al ou tstand ing of

lk
,

Treasur y bond s w ere treated in i e manner and interest ,

accrued on same not con si d ered .

1 8 It i s assumed th at t h e conso id ation w as b rought ab ou t

. l
by promoters th rou gh wh om t h e tran sfers of securities and
26 C P . . A QUE STI
. ONS AND AN SWE RS § 43

t woul d be mad e and t h e adj u sting entries hav e b een mad e

as se s

l O
,

accord i n g y t her meth od s of ad j ustment may b e assumed

l l
.

as read i y w ith simil ar resu t s Indeed t h e promoters b y

l
.
, ,

means of good will mi ght hav e grea t y in creased t h e v al ue of

-
,

r
p po e rti es t u rn ed o v er t o t h e n ew M p an y T h e b on d d i s .

cou nt of t h e th ree comp ani es h as b een charged t o t h e sep ar te

a
fr an chi se ac counts in prop or tion t o cost b ut it w ou d not b e
.

, l
wr ong t o op en a sep arat e accou nt for b ond di scount In t h e
l l
.

comb in ed st at ements of t h e th ree comp ani es t h e c eared co umn ,

of eac h M p an y S h ow s t h e s ta t u s of t h e ac cou nt s t ur n ed ov er

t o t h e promoters of t h e new comp an y t h e stoc at 1 20 and t h e , k ,

b ond s at 1 05 All ou tstandi n g d eb ts h av e been p ai d as agreed

l
.
,

on b u t t o d o so p art of t h e accou nt receiv ab e h ad t o be s

ll l
,

co ec ted t o prov i d e suffi ci en t cas h as b efore exp ain ed If

l l l
.

more had b een rea ized from accounts receiv ab e t h e c ea red

l l
,

co umn s wou d sh ow cash on hand and an equ iv al en t

red uction in ac cou nts receiv ab e on d s ou tstan di ng lof B
k
.

Comp any N o 1 are t a en as on t h e p resumption

l
.

th at t he amoun t au th ori zed i s It wi l b e seen

th at Comp any N o 3 h as no assets ist ed and tha t t h e l
l
.
,

su rp us of CM p any N o 1 and Comp an y N o 2 had b een

k l
. .

p ai d t o stoc ho d ers .

B OO OF O PO ATIO N O KS C R R N 1
R
.

S UMMA Y

k
l m
m

l l l
Th e ca sh p ai d b y t h e p ro oters d i d no t go t h rou gh t h e b oo s of th e
i q ui d at i ng c o p ani es b u t t o t h e i nd i v i d u a h o d ers of t h e st oc s and
m
k
ll
b ond s i n p roport i on t o t h ei r h o di ngs Th e a ount s t o b e di v i d ed are
.

PP
as fo ow s

ai db y p romot ers

PP u rch ase of b ond s

remi um on b ond s
k
P urch ase of stoc
remi um on st oc k
T l
ot a i nv est ment

CA S H A CCO U N T

BA la anc e
l BA ll i s pa yab l l e
c c ou nt s rec ei v ab e
l cc ount s
S u rp
st oc
us
k
p ayab

l
di v i d end t o
h o d ers
e
§ 43 C . P A QUE STI
. . ONS AN D ANSWE RS
A R
DJU S TI N G E NT IE S

P ro mot ers
S undr y
of new co
asset s
mp any
$l

A
B
'

recei v ab e
ccou nt s recei v ab e
l l
l
BP m
Cap i ta st oc
ond ed i nd eb t ed ness
k
ro ot ers of new co mmny
t u rned ov er t o p romot ers of new comp an , p er
For asset s
for cap i t al st oc k l k
cance ed and ta en , and for assu mp t i on
y agree
of
ment
b ond ed
,

T l
i nd eb t ed ness
Cap i t a
.

stock
k
BT reasu ry st oc
ond account
reasur y bonds

B OOK S OF CORP R O A T I O N No 2
A
.

S UMMARY OF D JU STME N TS

Th e cash p ai d b y promot ors di d not go th rough th e b oo s b ut t o k

l
h o d ers of t h e sec uri tres and t rea ted as i n N O 1 , and as fo ows : . ll
PP
Cost t o p romot ers
urch ase of b onds

PP
remi u ms on b ond s
urch ase of st oc
remi u m on st ock
k
T
ot al i nv est ment

CASH A CCO UNT

BA la ance
l BAill s p ayab ly l
e
c count s recei v ab e
l
ccou nt s
Su rp u s,
p a ab e
d i vi d end to

A E N TRI E S
P m y
D JUS TI N G

ro o ters of new co mpany $1

Pl l Su nd r
ant and
asset s
franchi se

BA l l l
Su p p i es
i l s rec ei v ab
cc ount s recei v ab e
e

BP m l k
Cap i t a st oc
ond ed i nd eb t ed ness
ro ot ers of new comp any

For asset s t u rned ov er p er agreement , and for assump t i on c f cap i t a

k
l
b y sa i d p romot ers from t h e h o d ers t h ereof
,

l
and b ond ed i nd eb t ed ness b ot h st oc s and b ond s h avi ng b een p urch ased
.

I L T 234— 25
28 C . NS AN D AN SWE RS
P A ; QUE STI O
.
§ 43

B OO OF ORPO ATION NO KS C R 3

l
.

k
r ec ent lyl
E v i d ent y
T
b een i ncorp orat ed
ass e s i st ed m
l
no b oo s h a v e b een O p ened
k
h ere i s a
Th e p ro oters p a i d k l
m
.
and no
c ap i ta
to
d oub t t h e c o p any h as
st oc of b u t no
t h e s t oc h o d ers for t h i s
i
.

st oc
A D JUS TI N G E N TRIE S
P Dmfi
ro m y
l
ot ers of new co p an

Cap i t a
e
l ci t , or asset s
k
P m l k m y st oc
ot ers of new co
wi t h h e d

ro p an
For c ap i t a s t oc t ransferred as p er
m ent

I
agree .

S UMMARY OF NVE S TME N T

Am ount
p b y p rom
ai do t er
ownershi p t h erei n i s acq ui red :
s t o t h ree C
orp orat i ons b y wh i ch t h e ent i re

CASH I N VE STME N T

P mml
Cap i t a
iu
st oc
of
k of Corpo ati on N o
2 0 p er cent
r
‘

. 1

l
re .

k
P mm
Cap i t a
iu
st oc i n Corp ora t i on N O 2
Of 2 0 p er c ent
.

BP m m N
re .

ond s of Corp orat i on o. 1

BP m m
iu of 5 p er c ent

N
re .

ond s of Corp orat i on o. 2

iu of 5 p er cent

l
re .

P mm
Cap i t a st ock of Corp orat i on N o 3
or b onu s
. 1

T l
re i u

ot a i nv est ment

lm
I t wil be not i ced t h at p remi ums on st oc s and b ond s and th e st oc
h i s may b e ent ered i n t h e b oo s T k k f
k of
O
N O 3 a ount i n a ll t o
.

t h e new c omp any as good wi , or f ranchi se -

ll .

1 9 Thi s purch ase forms a b asi s on whi ch t o i n corporate

.

t h e new c omp an y and may b e h an d ed ov er b y t h e promoters

l k
,

at t h e pri ce p ai d or at an in creased v a u ati on Th e boo s of

ll
.
,

t h e new comp any are as fo ows :

BOO OF ORPO ATIO KS C R N NO 4

OP D
.

E N I NG ATA

t o t h e amou nt d ee ed ad v i sab e
m l
Th e comp an i s t o i nc orp orat e for
y
m
and t h en i ncrease i t s cap i t a
Th e ent i re a ou nt p ai d for t h e st oc s
.
lk
p an i s t o sel i t s ill
nc r ea
m
se d l km
and b ond s of t h e t hr ee c o p a ni es i s
y ca p i t a s t oc , a l so t h
To p ay for th i s , t h e com
e b on d i ssu e t h at i s t o be
float ed and so d at 90
l Th e b ond i ssu e

l y
.

req ui r ed f or sa e , t h u s p rov i di ng t h e t reasu r

k
u st b e f or
b ond s cal ed for
more t h a n
I t is l .

i ssu e for a so l
ssume t h at all of t h e ca p i t al st oc
l
d eci d ed t o i ncrease t h e ca p i t a st oc t o

A ll .

b ut
a nd p rov i d e a b o nd
,

Th e b ond s are so d at 90 p er cent of face v a u e

k
h as b een so d at p ar
.

l l
-
.

and fu y p ai d for .
 § 43 C . P A QUE ST
. . I ON S AN D AN SWE RS
OP E N I NG J O URN AL E N TRI E S
Su bsc rib ers
Cap i t al st oc k
For i ncorp ora ti on of comp any and
su b scri p t i on t o cap i ta st oc
Sub scri b ers
l k
k
I
Cap i t a st oc l
U nsub scri b ed st oc
ncrease of ca p i ta st oc
k
from l k
l
Cap i t a au th ori z ed
to

Su b scri b ed for and p ai d up

TB
U nsub scri b ed
r eas u ry b ond s
l
BB l ond s p ayab e
ond s au t h ori z ed

T ond sa es
reas u ry b ond s on

B h and
ond s l d di sc ou nt of k
A
were so at a 1 0 p er cent . as p er cash b oo .

CA S H CCO U N T

S ub sc ri b ers I n c or p ora t i on ex

TD
S u b scri b ers 1 p nses ,
e fee one t hi rd
-

reasu ry b ond s on

( i scou nt cont ra) Ch art er fee

OB t h er ex p enses , sa y

P
ond s di sc ou nt , 1 0
p er cent of sa e
romot ers
.

of com
l
p any for v a u e of l
and asset s of

p ot at
and
i ons N Cor
OS 1 .

T l m ymy
2, 3
ot a
pa ent s

(
Blj l
See acc o p an i ng

a ance
)
ou rna ent ri es

Bla ance

OP J E N TRI E S— ( Conti nued )

PPl
E NI NG O URN AL

a nt and franch i se N o 1 .

FBranch i se O 3 Nl
l ant and franch i se N O 2
.
.

A ill s recei v ab e

lm
c c ou nt s rec ei v ab e
Su p i es
l
B ro
ond
ot ers new co
di scount
mp any

For t urned ov er b y t h e p romot ers of t h e

asset s
l co mp any , i nclm u di ng
m
D
t h e a ou nt add ed for p remi um, et c
h ead ed , et ai ls of rop ert P
ecei v ed
a u es p er
yR .
. V at t a ch ed st at e ent
30 C . . O AN D ANSWE RS
P A Q UE STI N S .
§ 43

INV NTORY VA LUATION E S

P ant lO lm l k
franchi se Corp orat i on
and N o . 1

PP
ri gi na v a u a t i on
remi u on st oc p u rchase
remi um on b o nd p u r ch ase
Sh are of b on d d i sc ou nt , p ro
rat ed t o c ost of ent i re p ant ,
‘
l
lO
et c .

P ant and franchise Corp ora ti on N o

PP ri
gi na v a u a
remi u m on st oc
t i on l l
u r h se k
. 2

p c a
remi um on b ond p urch a se

FO Sh are of b ond d i sc ou nt

l
ranch i se Corp orat i on N O 3
r i gi na cost
.

Sh are of b ond d i scount

BB lll i Comp any N O 1
s recei v ab e , ll N .

AN ils rec ei v ab e Comp any

ccount s recei v ab e,
o 2
Comp any
,

l .

AN o
ccou nt s
. 1

2
recei v ab e , l Comp any

l NN
o .

Supp i es from Comp any o . 1

Sup p li es from Comp any
T l l
O . 2
ot a v a u a t i on

Th e b ond di scou nt i s p rora t ed t o t h e t h ree co mp ani es i n p rop or ti on

A B
cost .

LI A
A
STATE ME N T OF S S E TS AND I L I TI E S

PPll
S SE TS

franch i se N o
ant and .

F a nt and franch i se N o
ranch i se o 3 N .
.

BA ll
Sup p l i es
i s recei v ab e
0

l
TI
c cou nt s rec ei v ab l e
reas u ry b ond s
nc orp orat i on exp enses
Cash

LI A B
l
IL I TI E S

Cap i t a st oc k au t h ori z ed

OB
U nsub scri b ed
u t st and i ng
ond i s su e

20 Q fo ow ing question h as b ee n
u es t i o n 1 9 —
Th e ll
l l
. .

se ect ed as an interestin g stu d y in an a ysi s rath er th an as a prob

l em in accou ntan cy R edr aft t h e fo owi ng st at ement s if th ey ll

l
.

are in correc t ; interest o n capit a i s at 5 p er cent per annum . .

 C . P A QUEST
. . I ONS AN D AN SWE RS
PR O F I T A N D L O A O U N T
D B SS CC
- -

FO R 6 M O N THS E ND E D E CE M E R 31 , 1 91 4

Cre i t sd

St oc , k D ece mber
l
I k J ly
Sa es
nt erest on capi ta l
PR 1 91 4
art ners
’
d rawi ngs
S t oc
Comm
, u
i ssi ons
1 , 1 91 4

Sa
W
l ent
a ri e
s

GI l l
ages
enera exp enses

Bl
nt ere
s t on oan
a ance, net p ro fit

B A LA H T
D BR N CE S
E CE M E 31 ,
EE
1 91 4

b
D e its Cre i t sd

BP
Cred i t ors
l D eb t ors
ill s recei v ab
a rt ners
’
e
accou nt s, J ul y
Cash on h and
Cash i n b an k
k
1 ,

Net p rofit
1 91 4 Loa n from b an
St e , k
ecemb er
a
D 31 ,

Bl 1 14
i l s p ayab e l
21 A n s w er t o Q u e s t i on 1 9
DRAFDT D BBRALA N H T
. .

RE E CE S EE
E CE M E 31 , 1 91 4

b Li a ili t i es

Cash on h and
k
AL m y kl
c count s pa ab e

BA ll
Cash i n b an
i s recei v ab e l l B ll y l
oan
i
fro
ab e
b an

T ll l l p
s a
c count s rec ei v ab e ot a i ab i i t i es

Im
Ca p i t a
nv es t
acc ou nt s

ent
Less d raw
i ngs

Add
I nt erest
N et gai n
P resent ca p i t a l
 32 c . P A Q UE STI
. ON S AN D AN SWE RS
.
§ 43

RE D A T D PR OF I T A N D L O A O U N T
R F E SS CC
D B
- -

E CE M E R 31 , 1 91 4

IP
nv ent or
u rch ases
y ,
J lyu 1 , 1 91 4 8,2 50 00
00
. Sa l es

W age
s 4 7 50 00

DI ed u ct
nvent or y D ece mb er
,

31 1 91 4
l
J,
_

G
Cost
ross
of sa e
s

gai n, carri ed d own

l
Rent G mm
ross ai n

G l l
Sa ari es
enera
I nt erest
exp enses
Co rssi ons

T l
on oan

I ot a
nt erest on ca p i ta
N et ga in
ch arges
l

22 Thi s qu estion i s not d ifi i cult b ut it cont ains some ‘

l
.
,

points of interest and Sh oul d b e careful y stu di ed as t h e items

are mix ed up more th an one w oul d ex p ec t t o fi nd in st atement s

l
.

Th e fac t th at b oth of th em b a an ce b y an app arent net profi t

Of l
may ead one t o su pp ose th at thi s h ad someth in g t o
d o w ith t h e fin a resu t b u t it h as not l l
Th e b u si n ess h as b een
l
.
,

run ning for 6 month s Interest on capita for 6 month s amou nts
m F
.

t o $2 50 in stead of $500 as sh ow n in t h e state ent rom t h e

l l
.
,

figu res a st atement of asset s and i ab ili ti es can b e easi y com

p i l
e d t h e b a an ce of l
w h i ch gi v es t h e present capita of t h e l
ll
,

rm It w i b e noted th at t h e inv estments w ere

l l l
,

w h i e t h e w ith d raw a s w ere eavi n g a net

inv estment of To th i s amou nt sh oul d b e ad d ed i nter

l
est on ori gin a inv estment $2 50 gi v i n g a t ot a of Th e l
l
, ,

d iff eren ce b etw een t h i s amou nt and t h e capita is the

net profi t for t h e p eri od or $ 3 2 50 If interest on capita i s l
l
.
,

con si d ered a profi t t h e net gain I s In so v ing t h e prob

l
,

lem t h e fi rst step i s t o d etermin e t h e net capit a and th en t h e

l
,

net gai n after wh i ch t h e matter of prep aring t h e p r ofi t and oss

,
- -

stat ement i s v ery sirnp l e Commi ssion s amountin g t o .

 C . P A Q UE STI
. . ON S AN D AN SWE RS
are evi d e l
nt y earned th ough th ere i s noth in g in t h e qu estion t o
l l
,

si gnif y th i s con c u si on oth er th an b y t h e b a an c e Ob t ain ed .

It i s necessary h owev er t o secure a net gai n of

, t o get ,

w h i ch amou nt t h e items of t h e statement mu st b e arran ged

in such a w ay as t o prod u ce t h e required resul t O accrued . N
i nterest or d eprec i ation h as b een con sid ered b ut it w oul d b e ,

prud ent t o prov i d e for such .

23 Q u es t fo ow ing i s t h e tri a
i on 20 —
Th e ll lbln a a ce O f

ll
. .

t h e Ro ins M anufac tu ring Comp any at D ecemb er 31 , 1 91 2 :

k
AA l
Cash i n b an

y l
c count s recei v ab e
a nd on h and

Pl l mk y
ccount s
a nt and
pa ab e
a chiner

IP
Ca p i t a
y
nv ent or
l m
st oc
account , at eri al s

Sa l m
u rch ases ,
es
Wages foreman and genera
at eri a s

l
TM l m l
,

Rent t axes p ower and i gh t

, , ,
l
sa ari es a nd ex p enses
l
’
rav e ers
a nage ent , O ffi ce sa ari es and
ex p enses

D
M anufac t u ring
ut y
wages
a nd frei gh t

Inv entory of materia s Decemb er 3 1 1 9 1 2 d epre l

l
, ,

ci at i on of p ant and mach in ery 1 0 p er cent

l
,
.

Wh en a p rofi t and oss accou nt i s su bmitted t o it t h e com

l k
- -

p any c aims th at th ere mu st b e some mi sta e b ecau se th eir

op erati on s are so simp e t h at th ey ar e ab e t o estimat e c ose y l l l l
w h at t h e resul t sh oul d b e ; and t h e profi t sh ow n i s ab ou t one
l
h a f th eir estimate Th eir practi ce in p ri cing good s i s t o ad d
'

l
.

1 0 p er cent for factory ex p ense t o t h e cost of ab or and mat e

l ll
.

ria and th en add 40 p er cent t o cov er se ing man agement

k
.
, ,

and profi t Th e factory foreman eep s a record for h i s own

l l
.

sati sfac ti on of t h e qu antiti es and v a u e of all materi a s u sed

and hi s fi gu r es are c orrec t Prep are a p rofi t and oss

,
.
- -
l
ac count and r econ c il e it w it h t h e estimated p rofi t s an ti c i
,

p ated b y t h e man agement .

24 An s w er to Q u es t i o n 2 0 —
Th e ac l
tua resu ts of thi s l
l l
. .

prob em can b e eas i y ob a t ined as ex h ib ited in t h e ac comp anying

 C . P A Q UE STI
. . ON S AND AN SWE RS
p rofi t and l
t t ment which sh ows a net profi t of
oss s a e

l l
- -

In order t o reconci e t h e ac tua resul ts w ith th ose estimated b y

t h e management certain assumptions h av e t o b e mad e as i nd i
,

cat ed i n t h e mM p an i
y gn comm ent It i s not at all un u su al s

k
.

for assumption s of thi s i n d t o be made i n a man uf ac turing

l
estab ishment and t h e foreman or su p er inten d ent after years

l l l
,

of ex p erien ce i s en ab ed t o estimate v ery c ose y t h e prop or

l l
tions of materi a s abor and manuf actur ing expen ses Ind eed
k
, , .
,

after a few yea rs of careful record eepin g t h e wi d e awak e

l l k l
-
,

foreman Sh ou d b e ab e t o ma e estimates th at wil not fluctuate

t o any great ex tent from actu al O p eratin g resul ts In t h e pres .

ent case h ow ev er h e erred b y omittin g frei gh t and d uty from

l
, ,

t h e cost of materi a s and b y u n d erestimatin g t h e fac tory exp en

ses If t h e freigh t and d u ty are omitted from t h e cost of mate
l l l
.

ri a hi s est imate of materi a u sed i s ab ou t correct ; t h e prob em

l
,

st ates th at t h e of materi a used i s cor rec t b u t it i s

l k
,

found th at thi s flu ctuates from t h e actua figures ta en on t h e

same b asis b y $500 .

It i s stated th at 40 p er cent i s added t o t h e cost of prod uc

ll l
.

tion t o cov er se ing and genera ex p enses and profi ts ; but as

t h e prop orti ons are not sta ted it i s M p ossi b l e t o d etermi n e
h ow mu ch of thi s i s estimated for exp en ses and h ow muc h for
profi t In ord er t o estab i sh a b asi s on wh ich t o wor it w ill
. l k ,

b e assumed th at t h e ex p enses in each c as e amount t o

on thi s b asi s th ere i s an estimated p rofi t Of or

i n ex cess of t h e actua net profi t To recon ci e thi s amou nt l l

l
.

w ith t h e actu a resul ts it i s n ecessary t o d ed u ct t h e gain of ,

ob t ain ed from t h e estimat ed amou nt of sal es from t h e

of u n d erestimate in prime cost and factory ex p en ses .

25 An ex ami nation of t h e accomp anyin g exh ib its w i ma e ll k

t h e matter mu ch clearer ; th ese exh i b its con si st of materi al
account st atement b ased on estimates recon c i i ati on of profi ts l
l l
, , ,

manuf acturing and p rofi t and oss statement and reconci ia

k
- -

tion statement In cases of th i s ind wh ere t h e accountant

ll k
.

i s ca ed up on to ma e an ex amination hi s wri tten rep ort fol

l l k
,
.

ow s as a n at ur a sequ en ce ; th erefore in ord er t o ma e th i s

l l l
,

so u tion comp ete a w ritten rep ort sh oul d b e in c u d ed .

§ 43 C . P A Q UE ST ON S
. . I AN D AN SWE S R 35

M AT R I A L A O U N T
E CC
IP
nv ent or y , J
y 1 1 91 2 anu ar ,

DM ur ch ases d u ri ng year
ed uct

I at eri al used
y D duri ng yea r
ecemb er 3 1 , 1 9 1 2

I l
nv ent or ,

ncrease i n mat eri a

Th e foregoing presumes that freight and duty h av e not been
con si d ered in materi a costs Th e correc t con di tion of t he l
l ll
.

mat eria accoun t shoul d be as fo ow s

M AT R I A L A O T
E CC UN
IP
nv ent or y , J anu ar y 1 ,
1 91 2

FD
u rch ases
rei gh t and dut y i nb ound

M
ed uc t
at eri a
Mat eri a
ll u sed
h and
l
on

Sh ort age of mat eri a

A comp arison of these t wo materi a accounts ma es it evi l k
dent that t h e freight and d uty h av e not b een con sid ered in t h e
foreman s estimate of
’
l
of materi a u sed .

TA T M N T S E E
BA D ON TI MAT OF MANAG
SE ES ES EME NT
Cost ofm
M anufact uri ng
l at eri a u sed

P
wages
ri me c os t
Add 1 0 p er for fac t ory
T lm
cent . exp ense
s

ot a
Ad d 40 p er
fi
anuf ac tu ri ng c ost
c ent . for se ll i ng, management , and

A l
p ro t s
E st i mat ed i ng p ri ce
amou nt of sa es
se ll l
l
ct u a

E x ces s of sa es ov er est i mate

26 n th at t h e actua sa es exceed t h e estimate b y

It is see l l
l
.

and it seems as if th eir p an of estimatin g h ad b een u sed

more as a mean s of estab i shi ng a se ing p rice th an anything l ll

l
e se . Th e r ati o of p rofi ts i s not stated b ut i s in c u d ed in t h e l
40 p er cent ad ded t o t h e man uf ac turin g cost s ; th i s amounts
l ll
.

to inc ud ing se in g ex p en ses man agement exp en ses , ,

and profi ts Wh at portion of it i s profi t Th e correc t state

?

ll
. .

ment shows th at se in g and general exp en ses amount t o

d ed ucting thi s from t h e 1 60 giv es wh i ch mi ght
b e con sid ered t h e estimated profi t As t h e comp any c aims . l
 c . P A Q UE STI
. . ON S AN D ANSWE RS
RE C ON I L ING PROF IT
C S
E STI MATE D PROFI TS W A
HARMO NI zE D P
PA fi l fim
I TH CTUAL RO F I TS

ro m ts e
s ti at ed by anage ment
ct u a p ro t s ar e

A I l ym m
E xcess of est i a te over act ual
na si s of ch arges

A ml m m m
t e s u nd eres ti at ed
c t ua a nu fact u ri ng exp enses
E st i a t ed anufac t uri ng exp ens es

Am y m
m
Ad d frei gh t
ou nt u nd er es t i
and du t
at e
i tt ed
l mm
o

E x cess of a ct u a anufac t u ri ng ex

DP fi p enses ov er t h e
ed u ct
est i at ed

m
m
lro ts not est i

m
E xcess of sa es
at ed
ov er

I m
a
ncrease
ac count
ou nt es ti
in
at ed
at eri al

Amou nt t o b e d ed u ct ed from
es t i mat ed p rofit s

M AN FA T R ING AN D PROF IT A N D LO TAT

U C U E ME NT
D BR
- -
SS S S
R M O LL I N S P AN UFAC TURI N G CO M AN Y , E CE M E 31 , 1 91 2

l
M at eri a
J h and ,
s on Sal e of good s for

PF anuary 1 , 1 91 2
u rch as es for year
rei h t a nd d ut y
i n ou nd
L
ess m
h andD a t eri al s on
ec emb er

3 1 , 1 91 2
Cost of mat eri a s
M anufac t u ri ng wages
l u sed

P
Wa g e s
ri me c ost
foreman,
et c .

R ent , t ax es , p ow er ,

D m ly
et c

and
.

ep reci at i on,
a c hi ner
p a nt

G fi
l
Cost of good s s d
o
t c arri ed d ow n
r oss p ro

T l l
rav e ers
’
sa a ri es G ross p ro fit
O l
a nd ex p enses
ffi c e
exp enses
sa a ri es a nd
b rou gh t d own

N et p rofit
38 c . P A Q UES TI N S
. . O AN D A N SWE RS § 43

that timated profi t i s abou t tw ice t h e

the es sh own b y

t h e statement t a e thi s k
as t h e profi t and u se it as a
,

b asi s for recon cil ing t h e t wo sta tements .

Th e ex cess of estimat ed profi ts amoun tin g t o $7 660 i s

accou nt ed for b y omi ssi on O f frei gh t and u n d erestimati ng t h e

manufacturing ex p en ses ; on t h e oth er h and th ere i s an unex

p e c t ed profi t on sa es of ov er t h e am orml t es tim a t ed an d
l
a so an in crease in t h e v a u e of materi a l
Perh ap s th i s item of l
l
.

$500 came ab ou t b y an i rn p rop er v a u ati on of inv entories

l
.

Th e sa es are $ 1 44 0 ov er t h e amou nt est imated

, Th e p rime .

cost i s and factory ex p en ses u n d er t h e actu al , .

27 Q u es t i o n 21 -
t t M essrs Smith Jn
o es , a chi ec s ,
r
l
.

w ant st atement s Sh ow in g t h e fin an c i a con di ti on of th eir fi rm

l
,

th eir re ativ e position s as p artners th eir b usi ness profi t and , ,

th eir i ncome for t h e year Their agreement prov i d es th at

J
.

Smith i s t o recei v e t w o fift h s and on es th ree fift h s of t h e

l
- -

profi ts ; t h e agreement i s si ent on t h e sub j ec t of interest charges

on capit a and dr aw in gs l On D ecember 3 1 1 9 1 2 t h e tri a l
l ll l
.
, ,

b a ance i s as fo ow s ; t h e ind ex etters refer t o t h e n otes mad e

on ex aminin g t h e b oo s k
0
b
PB et t
an
y
k of H ml
c ash ac cou nt
a i t on
6
d
8
J
Ofli c e
ones
k
S toc s ac cou nt
’
fix t u res

h ou se accou nt

f E
lU
x e
p’ nse a c c oun
C i ent s acc ou nt s :
t

Bl D k
g
h Im
p
ngav a
er i a ep
i S w ansea Ch ur ch
o
an
si t Comp any

k Ci v i c ab b at oi r

I
OM asoni c h al
m ffi ce u i d i ng Comp any
l
B l ll
n C i t y fi re h a
0

9 X
M anor
est at e
h ou se

J m
m
0

S i t h , d rawrngs accou nt
ones , d r aw i ngs acc ou nt

q
r JM ll
S i t h , c a p i t al a cc
ones , c ap i t al a c c ou nt
ou nt

5
m l
i sc e aneou s fees acc ou nt
t S i t h , oa n acc ou nt
 C . P A Q UE STI N S
. . O N SWE RS
AN D A

( )
a Th e p etty
S ow s t e a a ce c as h
a at b oo k h h b l n in h nd
Decemb er 3 1 1 9 1 2 t o h av e ee , an a a y s s o, t e b n n l i f h
p ayments sh ow s $ 1 00 t o h av e ee b n ad n d Smith d $5
'

v a ce to an

J
p ai d for ones ; t h e b a ance can e c arge t o ge e a u s ess l b h d n r l b in
'

exp en ses .

( ) Thi s i s cu rrent accoun t after cred iting t h e p roceed s of

b
l
a c ient s n ot e d i scou nted b u t not mat ured
’

(c) 7 § p er cent i s t o b e wri tten Off

J
. .

Th e p ayment s on accou nt of M r on es h ou se h av e b een

’

k k
.

mad e th rou gh t h e fi rm s b an and h av e b een ept sep arat e from ’

hi s d raw in g accou nt for t h e p u rp ose of sh ow ing h im t h e cost

of t h e h ou se
ln Jn
.

( ) e Th e b a a ce at a ua ry 1 1 9 1 2 , was furth er
l
,

purchase r d ur ing t h e year

of sh a es p ro c eed s of sa es

and int erest and di v i d end s recei v ed Th e

k
mar et v al u e of t h e fir m s h o d ings D ecemb er 3 1 1 9 1 2 w as
'
’
l
k l
, ,

and t h e b oo s are t o b e ad j u sted t o th a t v a u e .

( f) E x penses account cov ers rent p aid $ 1 00 b eing

ou ts tandi n g sa ari es of st aff
, l and genera ex p en ses l
(g) T h i s i s a ch a r ge m a d e in t h e pr e v i ou s y ea r f o r p a n s ; l
t h e c harge st ated th at it i s recov erab e l
l
.

( )
h A c h a r g e m a d e in t h e pr e v i ou s y ea r ; irr ec ov e r ab e

ll
.

()i A o w a n c e t o b e m a d e

l l
.

( )
k R es u t o f a n e rr or in su b m itt i n g ac c o u nt ; r e c o v e r a b e .

() ( ) ( )
l m n ( o) T h e se a r e a m o u nt s r e ce i v e d d u rin g
l l
, , , ,

t h e year Th e tota ch arge aga in st th ese c ient s t o d ate as

k l
.
,

p e r c h ar ges m e m o r a n d u m b o o n o t p o s t ed t o c i ent s a c c o u nt s
’

l
, ,

is n ame y (l) $62 5 (m) , (n) $ 750 (0 ) $900

, , ,

and (p)

(q) a n d ( )
1 T h e se w er e b a a n c e s a s p e r b a a nlc e s h ee t l ,

December 3 1 1 9 1 1
ll
.
,

( )
3 T h e am o u nt sh o w n i s t h a t O f m i sce a n e ou s f ee s re c e i v ed
d ur i n g t h e year ; in ad d ition th ere i s $ 1 7 5 ou t st an d in g
Jl
.

()
t An a d v a n c e b y M r S m it h t o t h e fi r m m a d e u y 1
l
.
, ,

1 91 2 ess rep ai d Sep t embe r 30 1 9 1 2 t o b ear

l l
, , ,

interest at 6 p er cent p er annum ca cul ated quarter y ; no .

,

interest h as yet b een cred ited or p ai d .

40 C ON S AN D AN SWE RS
. P A Q UE STI
. .
§ 4 3

28 Q A n s w er t o I ill b n th t th i u es t i o n 21 —
t w e see a s

q ti n r l t ll i l i nt h
. .

ues o fi m th t
e a es i to a r a se s ts ser v ces to c e s; t e

acco u nt k in m t n eep ril b d iff r nt fr m th t f

g us ecessa y e e e o a o

tr d in
a m n f t in
g or n n aTh nt nt i
u ac ur kd g co cer s e ac cou a s as e

t t m nt h in h fi m fi n n i l p iti n
.

to mk a e a s a e e s ow g t e r
’
s a c a os o as

o f D mb r 3
ece 9 2 th i e f r h r f r n
1 1 h b l
1 ; s o cou se as e e e ce to t e a

H i r q ir d l
,

a n ce sh t ee mk t t m nt h in
e s e u e a so to a e s a e e s S ow g
h r l ti
.

t e p iti n f h p rtn r h b in
e a ve os pr fi t
o d s o t e a e s, t e us ess o , an

t h in m f
e h co r Th b i n
e or pr fi t
t h b in
e yea e us ess o or t e us es s

m nt rn d fr m pr f i n l
.

ea rnin h r f r n gs h
as e e e ce to t e a ou ea e o o ess o a

r i i
se v ces ; n o th r rd h t l f h m n ki ll
e wo s, t e aggr ega e sa es o t e e
’
s s

f or h p ri d n d r r i
t e e Fr m t h i m t b d d t d h
o u e ev ew . o s us e e uc e t e

d irect rges and expen ses necessary for cond ucting t h e b u si

ch a

ness such as rent sal ar ies et c Th e gross earnings th en min us

, , .

these d irect ex p enses mu st giv e t h e b usiness profi t or net ea rn

O
,

ings from b usiness activ ities f course apart from thi s th ey

l
.
,

may and in thi s case d o h av e oth er sour ces of income as w el

l k
, ,

as oth er ex p en ses wh i ch mu st a so b e t a en into c on si d erati on

,

in d eterm inin g t h e fi rm s net income for t h e year In t h e st ate ’

.

ment of i nc ome and ex p enses sh own h erew ith t h e d ivi sion

l l
,

h owev er ; may b e ch an ged s igh t y .

29 trial b al ance of th is firm w h en t h e account ant

Th e
l
.

b egan t h e ex amination i s sh own in t h e qu estion A c ose

l
.

in sp ec tion of t h e v ariou s ac cou nts and items h owev er di sc oses

l
, ,

th at sev era ad j u stments w ere necessary i n ord er t o h av e ea ch

accou nt exh i b it i t s correc t st atu s Th erefore t h e v ari ou s in d ex
l k l
.
,

etter s w ere mad e b y t h e ac cou nt ant in ma in g an ex p a n a

tion of t h e v ariou s items requ iring ad j ustment s in th eir resp ec

tiv e accounts This p an of eying not ati on and necessary l k
ll l
.

ad j u stment s i s fo ow ed b y most professi on a ac cou nt ant s as

l
it enab es th em t o mak e on sep arat e Sh eets ful ex p anati ons l l
of necessary ch an ges It enab es th em a so t o note any oth er
. l l
features of interest t o th em in making ad j ustment s and after
k
ward s in ma ing up exh i b its and sch ed ul es .

Th e st atement of earni ngs and ex p en ses shown i s of sp ec i al

interest b ecause it Sh ow s in sep arate d iv i sions t h e professi on a l
ll
, ,

earnin gs and ex p en ses i n ci d ent th ereto as we as t h e o th er ,

§ 43 C . P A Q UE STI
. . ON S AN D AN SWE RS 41

l
income and ou t ays re atin g t o t h e fir m s b usiness It sh ow s l ’
.

th at t h e aggregate income Of t h e fir m consi sts of from

l k
-

profess iona servi ces and from inv estment s ma ing ,

an aggregate in come of Th e net b u sin ess earn

ings amounted t o b u t thi s w ill be red u ced S igh t y l l
if d eprec iation on furni ture and interest on oans are entered l
as a d irec t ex p en se It w i b e noti ced th at th ese t w o items ll
l
.

have b een p ac ed in t h e second section b ut th ere i s no great

l
,

ob j ec tion t o th eir b ein g p aced in t h e fi rst Th e interest on .

money b orrow ed w as not a necessar y b u sin ess ex p endi ture

b ecau se th at w as cau sed b y t h e h eavy w ithdr aw a s of t h e p art l
ners It w oul d seem onl y fair t o charge interest on t h e w ith
ll
.

d raw al s and esp eci a y on t h e h eavy p ayment s for t h e ac count

J
,

of on es b u t as t h e agr eement i s sil ent in thi s resp ec t th at d oes

.
,

not seem necessary

k
.

Th e inv estment in stoc s prod u ced an income of

l
b ut th ere i s a oss b y reason of S hrink age in v a u e of l
so th at thi s p arti cul ar inv estment h as rea y n etted a oss of
'
ll l
Th e Imp eria D ep osit Comp an y accou nt of $2 50 l
i s an old acc ount and sh oul d not aff ec t t h e b u sin ess earnings
of th i s year Th e accou nt ant i s ad v i sed t o ma e an a ow ance
. k ll
from t h e Sw ansea Ch urch account ; h e h as therefore d edu cted
l
, ,

$ 1 5 for thi s p urpose th ou gh a arger amount mi ght b e

l
,

ad v i sab e Th e fir m s net in come or net profi t for t h e year

’
.

then i s as ex hi b ited b y t h e st atement .

30 questi on ca s for a b a ance sh eet and t h e p artners

. Th e ll l ’

accou nts b oth of w hi ch are sh own h erewi th Th e int erest d u e

l
.
,

Smith on h i s oan of now amou nt s t o $ 1 92 and h as b een ,

cred ited t o hi s accou nt th ough it mi gh t not b e wron g t o cred it

l J
,

it t o interest p ayab e Th e h ouse account Of ones amoun ti ng .

to h as b een ch arged again st h i s accou nt in t h e exh i b it s ,

th ough it w oul d not b e w rong t o Sh ow it among t h e asset s of

l
t h e b a an ce sh eet ; it d oes seem h ow ev er th at t h e qu esti on
ll
, ,

itself requ ires that thi s sh a b e d edu cted from h i s accou nt in

ord er t o S h ow h i s ac t u a interest in t h e fi rm f cou rse in a l . O
case of emb arras sment t h e pri v at e p rop erty of t h e p artners

ll l l
w i b e i ab e for t h e deb ts of t h e fir m .
42 C . P A QUE STI
. . ON S AN D AN SWE RS § 43

Th e a ll
nce of $ 1 5 of t h e Swansea Ch urch accou nt h as
ow a

l
b een c redi ted d irect y t o t h e accoun t th ou gh it woul d n ot b e
l
,

w ron g t o op en a reserv e for al ow ance or for b ad d eb t s Th ere

l l
.

i s a contingent i ab i ity of as sh own u n d er ( b) and as

l
n oted on t h e b a ance sh eet Th e question st ates th at it w as .

d i scounted at t h e b ank b ut as th ere i s no accou nt for d i scou nt

ll
,

p erh ap s t h e amou nt a owed w as ch arged t o exp ense Th e .

ad j u stment of p ett y c ash accou nt i s int eresti ng as it sh ow s h e

t
l k
,

c are es s w ay in w h i c h t h e p ett y cash b oo w as maintai ned .

TRIAL BALAN AFT R ADJU TM N T CE , E S E

D BR E CE M E 31 , 1 91 2

PB ky H m l
e tt
an
cash acc ou n t
at a i t on

J k fi
Ofli c e
ones
’
x t u r es
h ou se acc ount

I m m
S t oc
nco
s a c c ou nt
e fro s toc ks
U
Im D B
ngav ak an
Comp any
p eri al ep osi t
S w ansea Ch u rch

M ll
Ci v i c ab b a t oi r

O B l
asoni c h a
ffi ce u i d i ng Comp any
Ci t y fi re h all

X
M a nor h ou se
es t a t e
Serv i ce earni ngs
Rent owi ng

J
Smi t h d rawi ngs
ones d rawi ngs
Smi t h c ap i t al

M i sc el ll
aneou s c l i ent s

IP
S mi t h
nt eres t
rofi t a nd
oa n acc ou nt

l oss

And yet thi s i s trange for professiona men do not p re

not s l
k
,

tend t o b e b ook eep er s and are more con cern ed in t h e p r ofes

si onal ac ti v iti es th an in accou nt eep in g k

l
.

Th e accomp anyi n g j ourn a entri es Sh ow t h e v ari ous ad j u st

ments necessary t o b ring t h e accounts in h ar mony with t h e
fin di n gs of t h e accoun t ant Th ere migh t b e some oth er di v is i ons
.
§ 43 C . P A Q UE STI
. . ON S AN D AN SWE RS 43

mad e in the prep arati on of accou l

nt s b ut t h e sp itting of
l Th l l l
,

h airs i s h ardl y worth whi e e tr ia b a ance of t h e edger

ADJ TI NG JO URNA NT I
.

L E R ES
’

US
D B E CE M E R 31 , 1 91 2
S mi t h dr awi ng
JP
ones drawi ng
ett y cash
For adv ances mad e and not rec ord ed .

P
E xp ense

l
et t y cas h

l
For b a anc e of p et t y ca sh ac cou nt
l
-

P
O l
c osed i nt o genera exp ense
rofi t a nd oss
ffi ce fixt ures
.

l
For 7 i per cent d ep reci at i on on $ 540
- -
. .

P rofi t and oss

k
S t oc ac cou nt
k
l
Sh ri n age i n v a ue of st oc s b ot h
t h ose so d and on h and
l k
E xp ense

P
ARent owing
ll
mou nt owi ng at end of year
rofi t and oss for ast y ear l .

P
I
rofit and oss
mp eri a lD
ep osi t Comp any

ASwansea Ch u rch
cc ou nt
a n y i
of
rrec ov
mp eri a
e rab e
I an
ep osi t Com
d a ow a nc e l l D ll
p ,

on ch ur ch account .

Cli ent s
Serv i ce earni ngs
For ch a rges agai nst c i ent s t o d a t e, p er lk
ll H ll
memorand um b oo not y et p os ted ,
as fo ows :

O FB lH l
M asoni c a
ffice ui di ng Comp any

X
M anor H
Ci t y i re a l
ouse

T
es ta t e

M lot al

ll
i sc el aneous accou nt s
M
ll
i sce aneou s fees ac cou nt s
For i sce aneous cont ract s comp et ed
m l
I m a nd not y et ent ered or p ai d
nt erest
.

S i t h , d rawi ng

ll
For 6 p er c ent i nt eres t
-

as fo ow s :
-
. on oan l to fi rm

m
for 6 ont h s ,
for 3 mont h s ,

lt ot a

after ad j u stment i s sh ow n h erewi th a so Th e ed ger accounts l l

l ll
.

are in c u d ed as w e in order t o Sh ow their status af ter t h e

,

I L T 234
 c . P A Q UE STI
. . ONS AN D AN SWE RS § 43

variou s entries were p osted Th e accounts h av e not been c osed l

l
.
,

as thi s coul d b e eas i y d one b y setting up t h e j ournal entri es

S T AT E ME NT OF ARNING A N D XP N
E E E SE S
J AR
S
SMI TH
Y R D BR
ONE S , CH I TE CTS

FOR EA E N DE D E CE M E 3 1 , 191 2

E xp enses

l
Rent of offi ce 1 , 200 00 F ro m p rofessi ona l ser

G
Sa ari es

ly
eneral exp enses Mi sc e ll
v i c es rend er ed
aneous fees for
G enera
p et t
-
exp ense
s
cash a d u st j
p er
ment M i sce ll
serv i ces ,

servi ces ,
aneous
p ai d
fees for
ou t standi ng

B usi ness earni ngs

OLt h er out l
oss on ad u st
ays
ment of N et ea rni ngs for year
j
k market

D l
st oc
v a ue
s to

ep rec i a t i on of ofli c e
O b rough t d own
t h er i ncome
I nt erest and di vi dends
fu rni t u re on s

AI ll b
l
B ad d e t s w ri t t en Off

l
ow ance f or c i ent

T ml fi
nt eres t on oan

ot a
N et i nco e, p ro t

T l
ot a i ncome for t h e year is
A PP R O TI ON ME N T
t h ree fif t h s,
-
OF I N CO ME —
Smi t h , t wo fif t h s,
-
J ones ,

B AL A N H T CE S EE
J AR
D B
S MI TH O NE S , CHI TE CTS

1 91 2
A
As OF E CE M E R 31 ,

S SE TS

PB l y
Current
et t
a anc e i n
asset s
cash
b an k
ll
Cli ent s accou nt , d ue
’

M i sce aneou s fees , d ue

Current ac cou nt s wi t h c i ent s l
T
I mk l
nv est
ot a
ent s

FO fi
S t oc owned
i x ed asset s
ffi ce x tures
§ 43 c P A Q UE STI
. . . ON S AN D ANSWE RS 45

LI A B CA PI TAL
l
IL I TIE S AN D

Current li ab i i t i es

F L lm mRent owi ng
i x es li ab i i t i es
oan fro S i th

P m T ot al

l
’
a rt ners acc ou nt s

J l m
S i th
’
s ca p i t a
’
ones ca p i t a
N et wort h of fir
$1 4
b hh
,

Nd U
l bl
— d di scount ank a c li ent s not e for firm is
'

0
u
g n er at on w ic th is con
t rngent l y ia e.

and p os ting them in c osin g it mi ght beacco rdi ng y l E v en l

l l J l
.

ad v i sab e t o eav e ones h ou se accou nt st an d sep ar at e y Th e

’

l l
.

cap it a accoun t sh oul d b e eft int act and al l d raw in gs of t h e

l
profi ts sho u d be p aced in t h e d raw ings account l .

A OU NT WITH PARTN
CC S E RS
D B 31 1 91 2
A
E CE M E R ,
'
S MI TH
I
S CCO UN T

nv es t ment i n t h e b us i ness

I
Sh are
l
of p rofi t s , t wo fi ft h s -

D
n tere
s t on oan

ed uct
Cas h d rawi ngs for year
Smi t h
’
s net wort h
J ’
A
I
O NE S CCO U N T

nv est ment i n t h e b usi ness

Sh are of p rofi t s , t hr ee fif t h s -

Cash d rawi ngs for yea r

Cash adv anced t o p ur
ch ase h ouse

J ones
’
net wort h
N et wort h of fi rm t h i s d at e

There woul d riou s ob j ection t o carryin g ones

not be any se J ’

hou se accou nt among t h e assets instead of ch arging same t o

h i s accou nt ; in order t o Sh ow t h e re ativ e p osition s of t h e p art l
ners h ow ev er it seems necessary t o enter it as a w ith d raw a l
l
,

of fun d s t h at I S ch argeab e t o h i m Th is ind i cat es of course

J
.
, ,

that t h e h ou se i s t o b e t h e prop erty Of ones and not an asset

of t h e p artn ersh ip Th i s charge practica y wip es ou t ones
. ll J ’

inv est ment ; wheth er or not h e i s t o replace it i s not a part of

t h e prob em l .
46 C P. . O . RS
A QUE STI N S AND AN SWE § 43

LE DG R A OU NT WI TH ADJU TM NT
E CC S S E S
P A E TTY -
CA S H CCO U N T

Am ount gi v en
PG l J
ai d for ones

Bl
enera
a a nc e
b usi ness exp enses

Bla ance

B AN K OF H AMI L TO N

Bl
a ance

O F FI CE F I X TU RE S

ep r eci at i on

JoN E s
’
H O U SE A CCO U N T

S TOCKS A CCO UN T

Bl
a ance, J anu ar y Cash l
sa es
k
Loss
M arket
, sh ri n
l age
v a u e of st oc k
l
Va ue of st oc k
I N CO ME FR OM S TOC K I N VE S TME N TS

E X PE N S E

Rent p d
a i

Sal
Rent
PG y l
owi ng
ari es
cash ad ust ment
et t j
enera exp enses
§ 43 C P
. . A Q UE STI
. ON S AND ANSWE RS 47

U N G AVA B AN K

Bl a anc e P fi l ro t and oss

S WAN SE A CHU R CH

Bl a ance P ro fit a nd l oss

CI VI C A BB ATO I R

Bl a ance

M ASON I C H ALL

Ser vi ces Cash

O FF I C E B UIL DI NG CO MP AN Y

CI TY FR H
I E ALL

Servi ces Cash

M AN O RH O USE

Servi ces Cash

X E STATE

Servi ces
C P
. . A Q UES T
. I ONS AN D ANSWE RS § 43

S ER VI CE E A RN I N G S

Sundry c l i ent s

RE N T OW ING

O wing end o f yea r

SMI TH D RAWI N G S

I nt erest on oa n l

J ON E S D RA WI NG S

SMI TH CAP I TAL

Bl a ance

J ON E S CA PI TAL

Ba l ance

MI SCELLANE O US FE E S A CCO UNT

N ot yet p a i d

SMI TH LO AN A CCO UN T
 C P
. . A Q UE ST
. I ONS AN D AN SWE RS
M I SCELLANE O U S CLI E N TS

Servi ces rend ered

I N TE RE S T

On loan t o Smi t h

PROFI T
 I ND EX

b h l
N O TE — I n t i s Vo ume, eac h y
S e c t i on i s com e t e i n i t se f and h as a nu m er T i s li l h dli
b h
b g h i bd bgl l g i
d
.

n um er i s p r i n t e p age of t e S e c t on I n t h e n e op p o si t e t h e
.

a t t h e t op of e v e r

bd dg d b kl
ea
g d
p a e n um er , a nd t o i st i n ui s t h e S ec t on n um er f r om t h e p a e n um er , t h e S e c t o n g
i d h l
n um er i s p r ece ed a s ec t i on mar I n or er t o fi nd a r e f er en c e, the

b gh l
an ce a on
i ns i e e e s of t h e

l
e ad l i n e s u n t i
n um er s of t at S e c t i on u n t i
t h e d e s I r ed S ec t on I s f oun
t h e d e s rr ed p a e 1 8 f oun
t en a on th e p a e
Th u s , t o fi nd t h e r e f er e n c e g
i kd h d g g ,

h g
.

”
Ac c ou n t i n , Mu n i c i p a , 539, p l , t u r n t o t h e S e c t on mar e 539, t e n t o p a e 1 o f
“

dl g
t at S ec t i on .

y
bb l A A c coun t s Han in of p r i mar f or .

, ,

d d in g d
A r ev i at i on s in st oc k

ll l 534 65
us e r ec or r oa s, ,

sa e s , 533 , p6 I us t r a t i v e g y ex a mp e of mi n i n -
co mp an ,

A ccoun t , I nc ome a nd ex p e n se , of fi re i n 537 p1 0

mp an y 538
,

p1 9 I n come ,
bl h d m
s u r an c e co of st e a
, , r oa s, 536 pl
g mi n i n g
,

I nc ome an d Op e r at i n , of co m I t e ms i n d a an c e - s ee t , of st e a m r oa s,

p an y . 537 91 3
.
536 D7

l
.

of mi n i n g
l
I nc ome , co mp an i e s 537 p? I t ems i n i nc ome, d m
, , of s t e a r oa 536 p 4 s,
mi n i n g comp an i es
,

Pr ofi t -
an d - os s , of , I t ems i n p r ofi t d -
and - oss, o f s t e am r o a s ,
537 , p1 3
l y
536, p ?

ly g d y
Re v e n u e , of i f e i n s ur an ce
-
co mp an , M i ne g-
op e r at i n 537 p4

l dfi
, ,

53 . 91 2 of a c oa -
mi n i n co mp an , 537 , p3
d
l
Ti t e and e n i t i on of , for s t ea m r oa s, Pr i mar of s t e a m r oa s, 534 pp 4, 7

h k
,

b
,

$36 . 93 Pr ofi t -
d
and - os s , of s t ea m r oa s, 536 pl

hh dd
,

A ccou n t i n g d met o s of 53 1 p l an s, , d g
r e c or in W t r an sac t i on s of a t er D ep a r t
met o s g of mi n i n c omp an i e s 537 p l , , ment 539 p 36

hd l kb k g
, ,

l
me t o s L i fe ,
-
i n s ur an c e 538 p6 , , Th e, 539, p21
y
b
met o s S t oc ,
-
ro e r a e 533 p l , , Ac tu a r ep or t of a mi n i n g comp an 537 p 1 6

l
, ,

Mun i c i p a 539 , , pl A dd i t i on s a nd et t er men t s o f s t e am r oad s

b k
,

p an f or c i t i es, S39 , p 20 S34. 96

g y
mi n i n g
h k d
A ccou n t s a nd oo s of co mp an i e s , A enc r e cor s, L i f e i n sur an ce ,
-
538 p8

k
,

537. 9 2 A g
l
’
en t s c as b oo , L i f e i n su r anc e ,
-
538 p?

q
,

Co e ex p en s e, 337, p6 A n nu a r ep or t s an d s t at e me n t s , F i r e i n s ur -

Con s t ruc t i on and e u i p men t , of s t e am an ce , p 20 538 ,

fi d
r oa s , 53 4, p 2

D e n i t i on of , 539, p2
d An s
r e p or t t o s t a t e , L i f e i n s

w er s , C . P . A . q
-

ue s t i on s
u r a nc e ,

and
538 p 1 3
542 p l,
,

l l
D i v i si on of , f or s t eam roa s 534, p4 , 543 pl
m
.

g
E n i n eer i n , of s t ea g
r oa s 534 p ? d , , d
A p p en i x ( Ann ua Re por t Mun i c i p a A c
g d
comp os i n , s t e am g
hd h
E nt r i es for r oa s . c oun t i n ) , 539, p 59

536. 9 2 A p p r ox i ma t e met o of p r ep ar i n r ap s, g g
F i r e i n su r anc e, 538, p 1 7
b 541 p1 4
-
,

f or i n sur an ce comp an i e s , 338, p l

f or op er at i n
g
f or mi n i n comp an i e s , 37, p l
g
e x p en se s of s t ea m r oa s
£
d
g
r i at i on s
g
A r i t r a e, 532, p 1 1
A r r a n emen t of s t r a i
in 541
g hl
t -
i ne g r ap h s, Va
, , , p4

f or
535 .

s t ea
93

l bl m ro a d s,

h
534 p l ; 535, p l ;
, 536 , pl
A ss e s sme n t acc oun t s ,

A ss et s, Cu rr en t , of st eam r oa s, 536, p 1 0
539
d,

d b k
p 41

Gen er a
536 . pl
a an c e - s ee t , of s t eam r oa d s,

Au i t d of
d
a bk
D ef err e , of s t e am r oa s, 536, p 1 0
ro er a g e fi rm s
’
oo s, 533 , p 45

I L T 234 — 27
 N
I DE X
d
Au i t i n g oi p ay ro ll s f or st e a m r oa d s, B y
u

B yi g
’
e r s an d s e llll er s o
’
pt i on s , 532 ,

k 53 3 , p6

l d d h
,

535 , p1 2 u n a nd s e in g on t h e N e w Y or S to c k
Av era g e c au s e f or re uce -
ra t e nrc i nsur -
Ex c a n ge , 532 , pl
ance, 538 , p1 6

B l
a an c e - s h ee t acc oun t s , Gen er a l of st e a m
Cap i t a
539
l
, 9 50
an d si n k in g fun d accoun t s ,

-
h s
r oa

ee t
d s, 536
ac coun t s ,
, pl
I t e ms i n , of s t e a m r oa d s,
s t oc k

h b k
p r e mi u m on ,
of s t ea m
536 ,
roa

p1 2
d s, D i sc oun t an d

h b d
536 D7 Ca s
bb kk g L i f e i n su r an c e a en t s , 538, p ? ’
oo -

y
. ,

s eet , Com i n e of mi n i n g co mp an oo

h g
L i f e i n s ur an c e f or e i n 538, p 7
-
, , , ,

hh 537, p 1 9
d b
oo

b k L i f e i n su r an ce ome oth ee, 538, p 7

- -
,

s e et , F i r e i n s u r a n c e , -
538, p 1 9 is ur se men ts oo , L i f e i n s ur a n c e ,
-

hh
s

g ll
ee t ,L i fe i n su r an c e , 538, p 1 3 538
l p?
-
.

Rece i v i n t e er s , 53 1 , p9 j
h fi h k gk
Li f e i n s ur an c e, 538, p ?
’
s ee t , our n a
,
-

hh ee t s t at emen t of st e am r oa s , 536, p9 d Cas i er s c e c r e i s t er , 53 1 , p 37

’
-
s -

s
d
ee t of s t eam r oa s , 536, p8

hh y g ll d d l y
g
e et of mi n i n
mp a n i es 537 p p8 1 4 co , , , fifi d h k
Cer t i c at e s of st oc , 532, p l ?
Ce rt i c at i on , 532, p 1 3
s

h
s
e e t of

eet Pa i n t e er s a i
,
s t e am
r oa s 536 p 8

53 1 p 1 3
’
, ,

, ,
Cer t i
-
h
hg y d
c kec
e

g re
c ec

i st er ,
s, 53 1
53 1
,

,
p1 1
p 39

Bl
s

l eet Pr ep ar at i on of 533 p 43 C ar e s,

l
d D i v i s i on of st ea m r oa 53 5 p12
-
, , , , ,

Bl
a an c e tria Li f e i n s ur an ce 538 p9
, ,
-
, ,
f or p r op er t r et i r e an d r e p ac e d , D is
a an c e s

B k b kk
d r oa
g
s,
in
535,
Op er a t i n

p4
r e se r v e s of st ea m
C hh t r i b ut i on of ,
ar t s ,

k
L i n e , 541 ,
535 p3
p p 7, 1 0
,

an

ex a
g
mi nat i on 53 1 p49
oo ee p i n

,
,

,
53 1 , pl C
h lk g h fi d
ar t er s of N e w Y or c i t i es , 539 , p ?

C ec s, Cer t i e , 53 1 , p 1 1

g h b
s t at eme n t 53 1 p 47 Ci r c e r ap s , 541 , p 1 3
B 5 32 p l
,

y
,

ear , r ap s, Comp ar i son 541 p1 5

B t m t d dd i i
, , ,

et er

Bid d fi
pa
f
en s an a t on s o st ea m r oa d s,

ll g k g
Ci t i es , O r an i z at i on of ,
C a i m R e i s t er , 539 , p 21
, p6 539

B
ll k l h
n
s an

B i d p 532 p21
p 8 ; 533 p S
oo
o

,
e r s,

,
,

l fid
C as se s of s t oc , 532 p l ?
C a s s i c at i on , N e w i n v e s t men t
,

of stea m

B t
B
ll oc

C
o t er as a Bh k
g p 541 p 4
s as

533 p 1 3
ra

as
s,

oo
,

, , C l gk
ear i n
r oa

l
s, 534
Hou se
, p3
an d E ar C -
e ar i n g H o u se

Bl
Th 533 p 1 1
ot t er s , e, s t oc s, 532 pS
B d 532 p 1 8
, ,

B
on

ookk b kk
y mf
pi g B
s,

53 1 p l
ee
,

n , an , ,
Hou se
o p er at i on s,
ot t er ,

53 1 ,
533
p43
, p19

B
s

ook st e

Li f i ,
53 1 p3

h db
g h or

e -
n su r an c e
an s,

a
,

ent s
'
cas 538 p 7
, ,
Hou se p r i c e s 532 p 1 9

ll
Hou se Th e, 531 , p42 ; 533 p48
,
‘
, ,

y
L i f e i n s ur an c e c a s is ur s emen t s
bg k y dg
g
C os i n en t r i e s at end of t h e e ar , 539 p 49
-
, ,

538

h
.

g h
D7

h
L i f e i n sur an c e f or e i n c as , 538, p 7
-
l g
C o s i n t h e oo s , 533 , p41
Coa mi n i n comp an , Le er
-
a c co u n t s of ,

B k
Li f e i n sur an c e ome offi c e c a s , 538 p7 537
l p3
- -
, ,

g
oo s an d a cc ou n t s of mi n i n comp an i e s , Co i n suran c e c au se , 80 p er - -
c en t .
, F i re

B d
537
or r ow e
,

d B k
p2
a nd Loane oo , Mon e y , Co kll l l
i n s ur a n c e ,
e
p1 5
ex p e n s e accou n t s ,
538 ,

537 , p6

dB k k
5 533 , 34 Co a t er a f or oan s , 532 , p1 5

B
B dg
a nd

l
os t on dg
l
Lo ane

l e er ,
oo

53 1 ,
,

p 32
S t oc s, 533 , p3 2

m
Co
of
ll d d dd
n ot e s ,

ec t i on
53 1 , p 24
ep ar t men t 53 1 , , pl ?
ri es , t rest es, an d cu v er t s of st ea ivi en s, 532 , p1 2

h l
d
g h
534 p8 g
hk g d b y b k
i s t er , 53 1 p18
“
‘
r oa s, , re ,

B k
B r ok n -
i ne r ap s, 541 , p 7 Commi ss i on s c ar e ro er s , 532 , p6

B dg
ro

u l
er ,

et
Th e, 532, p 22
O u t i n e of , 539 , p 1 7
,
Common
Compar at i v e
s t oc , 532p1 7
s t a t e men t
,

of op e r a t i n g ex

B ll
B
Th e
u ,

u s i ness
,

l
532, p 2 1
539 ,

of
p13

a if e i n s ur an c e
-
co mp a n y
p en se s of
Comp a r i son
Con st i t u t i on a
c i rc e r ap s,

i mi t at i on s
bly l l
mi ne 537 ,

g
, p a)
h 541
on
, p1 5
mu n i c i
,
,
“

538 . 06 p a l i t i e s , 539, p ?
 I NDE X
Con st ruc t i on and eq u i p ment a ccoun t s of D i str i bd u t i on of c hl ar g es f or p r op e r t y re

st ea

d dg y
I n t er e s t
m r oa

d
d
ur i n
s, 534
, of
, p2
s t ea m roa s, 534 , p1 3
y
t i re
535 , 93
and rep ace d of st e a m r oa d s,

of s t eam r oa men t for 534

s, Pa pl s st e

dl ll
ms S t eam road s pow er 534, p l o
-
, , ,

ll gq
Con t r act s ,
Cont r o i n
C P A w
I ns uran c e 538 p l
ac count 539 p 22 ,
,

a nd
,
, D iv i d en

hg
Cu mu at i v e , 532, p l ?
s,

D i v i s i on c ar e s of st eam
Co ec t i on of , 532 , p 1 2

d
. . . ue st i on s an s er s , 542, p l ; r oa s, 535 , plz
543
Mun i c i p al
. pl
, 539, p S D oc
. k
of ac c oun t s of s t e am r oa

s an d w h arv e s of
d s, 534
s t ea
,

m
p4
r oa d s,

Corpo r at i on s ,
l
Cor p or at e surp u s
k k d
539, p 3
of s t ea m 536 p 1 2
r oa s, ,
534 .

D r af t , D e n i t i on
p9
fi of , 531 , p 37

Bl h
d
Cr e i t i n t h e st oc mar et U se of 532 p 1 3
, , , re gi s t er , 53 1 , p 37
d
Cr e i t s, a anc e -
s ee t , of s t e am
.
road s,

£ 36. 9 8
I n come ,
l dof s t ea m r oa s, 536, p 4 Ei h
g ty p -
er - c en t c o i n sur a n c e l
c ause , F ire
Pr ofi t
d d d
a nd- os s , of s t ea m r oa s, 536 p?
l yw g
i n su r an ce , 538 p1 5
-
,

d
Un a just e , of s t ea m r oa s, 536 , p1 1 E mp o es , O p e r at i n g e x p e n se s on a c c ou n t

l d b dg
g
Cr os s i n s
Cu v ert s ,
g
l
a nd s i

ri
d
es,
n s of s t ea

and t rest
m roa

es
s,

of
534
s t ea
, p8
m En
of

lg y g
d w o l me n t
a e s p a i , on

p an ,
d
538 ,
st ea

pl
m r oa d s, 535 , p8

lb k d d d
roa s, 534
Cumu at i v e i v i e n s, 532, p 1 7
Cur mar et , 532, p 25
, p8 po i c
E n i neer i n
534
, 538 , pl
ac c c ou n t of s t ea m r oa d s,

, p7
Cur r en t account s , 539, p 23 E ntr ies co mp os i n g ac c ou n t s of s t e a m r oa d s,

Ap p ropr i at i ons 539, p 26

l bl
a s se t s of st e a m r oa s , 536, p 1 0
,

d
!
En lh k h g
536
gi s
. 92
s t oc ex c an es , 532 , pl

Cus t omer s Le er , 533 p25

’

g
Mar i n Recor , 533 , p9
dgd
i a i i t i e s of st e am r oa s , 536 p l
,
d ,

d l
E n t r i es
ea h y ll a fi e c t i n g ap pr op r i a t i on s ,

i ng w i t
s t at e a nd
th e co ec t i on and r e t u r n of
539 , p 28

c oun t t ax es , 539 , p 39
S t at e men t , 533, p28
0
f or
ll d l
as s e s s d
men t j oan s t o b e p a i 539 p 46
f or as ses s men t s co ec t e 539 p44 , ,
, ,

b l h d
1) f or i n t er e s t on a s ses s men t oan s t o b e
B
y b wd
De i ts , a an c e - s eet , of ste a m r oa s, d
pa i 539 p46 . .

fr om
536 .

r oss
98
g
i n come of st ea m r oa d s,
f or mone
ll or ro e i n an t i c i p at i on of
t h e c o ec t i on of as s e s s me n t s 539 p 45
y
, ,

S36. 96
I nc ome ac coun t of s t e a m roa s 536, p l
-
, d , ll
f or p a me n t t o cu r ren t ac c oun t s 539 p 47
d
f or unco ec t e
y l
a s se s s me n t s 539 p 48 ,
,

,
,

ld
i n p a y , S t eam r oa s, 535, p 1 1 d
d f orw d
ar r an t s i s sue i n p a me n t of c a i ms
-
,

Pr ofi t a n d os s , of s t e am r oa s 536 p7
ll g
539 947
ll
- -
, ,

D ef err e
d
d
ia i i t i es l bl
U na ju s t e , of s t eam roa s , 536 p 1 0
of s t ea m roa
d ,

d s,
i u s t r at i n

l g
t ax e s ,
t r e at me nt

l 539 ,
of un c o e c t e d

p 32

fil y d
536 , p1 1
D e n i t i on of accoun t , 536, p3
in
539
l
0 50
c

.
ap i t a

k g d
r ou p ( Cap i t a sec t i on ) ,

l y k b k l
D e a e i t e ms of s t e am r oa s , 536 p 3
D e i ver of st oc s , Ti me of , 532, p 1 1
d ,
i n c ap i t a
539 , p 53
gr oup ( Sin i n f un s e c t i on ) ,

d g l
D ep ar t men t s of a an , Re at i on of , g
i n t ru st r ou p , 539 p 57
y
,

63 1 94
k fi d r e cor d d
in c ai ms au ite f or pa men t
‘
. ,

D epos i t t i c et s, 53 1 pS 539 . p43

d i ng p y m nt
,

D ep r ec i at i on of

of
st ea m
mi n es 537
r oa d s, 53 5
xe

, p4
i mp rov emen t s of r ec or

r ec or d i ng n d y
d i ng t h u g
su
a

bd
r
e s, 539
r ec e i p t s ,

539
, p 30
539 , p 27
, , p1 5 r e c or e et , , p 23
re

b
gi s t er

S t e am r oa s , 535, p S
of
d b k d
st ea m r oa s, 535 , pS r e cor

l
Ren t Ro
d i ng t h t n
y
ll ,
e

539
ra

, p36
s ac t i on s of the Wat er
D i s ur se ment s oo , L i f e i n sur an c e , 538, p7 on ev of a n a s ses s

by
men t 539 p 43
h
-

ym y
, ,

D i scoun t 536, p l z ,

and p r emi um on cap i t a

d
roa s , 536, p 1 2
l k
s t oc of s t e am
t o r ec or
of an as s e s s

d
d pa

ym
m
en t

en t ,

of
539 ,
ci t

p 46
of i t s s ar e

t o recor pa en t w ar r an t s , 539 p 48
y
,

D i spos i t i on of net i n come of s t e am r oa s , d E n tr r ec or d i ng c on t r ac t s e n t er e d i nt o or

$36 , 96 or d er s i u d
ss e , 539 , p 42
 IND E X

E q l uai z at i on of e x p en s e s on s t e am r oa s , d G en er a l e x p en d i t ur e s of st ea m r oa d s,

53 5. P4
E q u i p me n t ac c ou nt s , S t e am roa
t i on a nd , 534, p 2
c on s t r uc -
d l dge
534

537
er
, p p S. 1 2
ac c oun t s , Coa l -
mi n i n g co mp a n y ,

, p3
-
d
ep r e c i a t i on r e i st er of s t e am r oa s , g d Ledg er , 533 , p4 1
535
S t e am r oa s
,

-
95
d i n v es t men t in r oa d and , ll
L dg
-
dg
dg
e

e
er

er b k
ac ou n t s , p 21
ook e ep e r , 53 1 , p 3 7
539 ,

534, p l e er, L i f e i n s ur an c e, 538,

-
p?
S t e am r oa s , 534 , pp S, 1 1
-
d G ro ss i n come of s t ea m r oa d s, De d u c t i on s

E st i mat e
E x ami n at i on ,
d
R ev en u es ac c oun t , 539, p 25

l ll
an , 531 p 49 B kg ,

y
G r oup A
B
f r om,

hh h c
536 ,

ar t er s ,
p6
539 , p7
E x amp e i u s t r at i n mi n i n c omp an g ac c ar t er s , 539 p 10
!
-

E xc hl g g
coun t s,

an e,
537,
Tr a i n
532 p7d g
p10

lk
on t h e ,

B
,
C c

Gov e r n me n t a l
ar t er s, 539
g
,

r an t s
pl
to st ea m r oa d s,

ld g
E x C e ar i n Hou s e 533 p 1 8 536
l
‘

ot t e r p1 1
-
, , ,

C e ar i n Hou s e s t oc s 532 p S
l G r an t s to s t ea m r oa d s, Gov er n me n t a
-
, ,

E x p e n i t ur e s G en e r a of ,s t e am , r oa d s, 536 , 01 1
534 9 9 5 1 2
k h
t o s t e am r oa d s, Lon gt er m 536 p1 1
-
, , ,

E x p e n s e ac c oun t s Co e 53 7 p6
ac c ou n t s F i r e i n sur a n c e
, i n c ome
,

-
, ,

an d ,
G r ap 541 p l
s,

A pp r ox i ma t e me t
,

hd o of p r ep a r i n g , 54 1 ,

538 p 1 9 ,

E x p en ses , A c c ou n t s f or op e r a t i n g , of s t e a m B
B
l kk l
p1 4
oc 541 p 4
s as , ,

q lr oa d s, 535, p 3 ro

l by l en i n e 54 1 p 7
-
, ,

E ua i z at i on of , f or s tea m r oa d s, 53 5 , p4 Ci r c , e 54 1 ,p13

of mi n e s by
M a i n t e n an c e of s t e am r oad s 53 5 p 3 ,

mon t s Comp ar a t i v e s t a t e h ,
, , Comp ar i son
S t ra i gh l
c i r c e , 541 , p 1 5

t i n e , 54 1 p 2 -
,

on
men t of op er at i n g 537 p 20
a cc oun t of

S t e am r oad s 535 p 8-
w a ge s p a i d e mp o e s
, ,
, ,

ly ,
U s e a nd p r ep ar a t i on o f , 54 1 , p l
U s e of p e r c e n t a e i n p r ep a r i n
Var i at i on s of s t r a i t i n e , 541 p 4
54 1 p 1 5 g
g hl -
g , ,

Op er a t i n g r ev e n u e s an d of s t e am oa d s
r
‘ , , Gr os s p r e mi ums, F i r e i n su r a n c e , 538 p 1 8
’ -
,

53 5 p l

lh d g l
11
,

O r g an i z at i on of s t eam r oad s 534 p 1 3

d
, , ,

H a n i n i f e i n s ur an c e
-
co mp an i e s

l
,

F Me t of ,
o 538 p6
y
,

F i c t i t i ou s sa e s , 532 , p9 of p r i ma r a c c ou n t s of s t ea m r oa d s,
F i r e i n s ur a n c e , 538 p1 4
l 534 p 5
h b k
-
,
.

80 p er c e n t c oi n s ur an c e c aus e, 538 p1 5 H ome offi c e L i f e i n s ur an c e ,

- -
, cas oo
. - -

l
,

538 pl?
h
i n s u r an c e a c c ou n t s ,
538 p ?
-
,

y
,

i n sur an ce and s t at e
-
an n u a r ep or t s
H pot ec a t i o n of c u st o me r ’
s s e c ur i t i es ,
me n t s 538
i n s ur an c e
,

bg l , p 20
538 p 1 9 h 532 , p16

ll
a an c e s eet , , I
r o s s p r e mi u ms
i n su r a n c e
i n s ur a n c e ,
538 p 1 8
p r e mi u ms r e ser v e s an d r e i n ,
,

,
,
I u s t r at i v e ex a mp le of mi n i ng -
co mp an y
a c c oun t s , 537 p10

l
,
538 p 1 4
fi
s ur an ce ,

i n s ur an c e re u ce
,

d d r at e g c au s e ,
‘

I mp r ov e me n t s of s t ea m r oa d s, D ep r e c i a
av e r a e
d
-

t i on of 53 5 p4

kl b l
xe , ,

538 p1 6 w
of m d Fi x e d 535 p 3
.
s t ea r oa s, , ,
i n s u r an c e ris s, 538 , p1 4
I n c ome a c c ou n t s of mi n i n g c omp an i e s ,
i n s u r an c e t r i a a an ce , 538 pl ?
537
97
,

Fix e d i mp r ov emen t s , D e p r e c i a t i on of , on
ac c ou n t s
,

of st ea m d 536 pp l 4

l gb k h b k
r oa s,
s t ea m r oa d s, 53 5 , p4
and e x p en se ac c ou n t of
,

fi r e i n s ur a n c e
-
,

F oor ro er , 532 , p9
mp an y 538 p19

h k k
co , ,
F or e i n L i f e i n s u r an c e , 538 p?
c as oo
g mi n i n g m
-

of
, ,
and op er a t i n ac c ou n t co
mar
Fr e n c 532 y
l lddg b kk
s t oc et , pl
537
,
p an , , p1 3

ld b l h G d d
I n ivi ua e er oo e e p er , 533 p 31
-
,

G en er a a an c e s -
ee t a c c ou n t s , S t e am I n c ome , De uc t i on s f r om gr os s , of ste a m

bl h r oa

a an c e s
s,
-
536
e et
pl
,

s t at e me n t , S t e am r oa d s,
r oad s ,

D i s p os i t i on
536 ,

g
p6
of n e t , of s t e a

of m
m r oa

d
d
536
s, 536 , p6
836. D9 N on -
op e r a t i n , st ea r oa s, , 176
 N
I DEX

I ncom e O p er at i n

me n t
g ,

m
of s t ea m

d
r oa d s, 536, p 5 I i f e ~i n s ur an c e
.

i n suranc e
cas hh db b ook ,

is
538 p ?
ur s eme nt s
,

b k
s t at e of s t e a r oa s, 536 pS ca s oo
-
, ,

I n s t r u ct i on s
536
bl
, 912
for s t ea m r oa d s, S p ec i a l ,
-
538.
i n sur an c e
D7
co mp an i e s , A ccoun t i n g h
met
I n sura e i n t eres t , 538 pl od s of , 538 p6
B
,

mp an y
,

I n sur an ce, 538, pl

-
i n su r ance co , us i n es s of a,

comp an i e s Ac coun t s f or 538

con t r a c t s 538 p l ,
,

,
, , pl
-
538 .

i n s ur an ce
96
co mp an i e s , Me t hd o s of con

p er i ll y
L i f e 538 p l
,

538 p l
,
,

,
-
du ct i n g
i n sur an ce comp an i e s,
, 538 , p2
Met hd o of h an
po i c 538 p l
p r emi um 538 p l
.

,
,

,
-
d l i ng , 538, p6
i n sur ance c omp an i es, Mi x ed l -
p an , 538,

ris k
r e s er v e 538 p 5

538 p l
,

I n s ur ed 538 p l
,

,
,

-
p9 2. 4
i n suranc e co mp an i es , Mut ua ll -
p an , 538 ,

, , 92
I n s ur er 538 p l
l
i n sur ance co mp an i e s N on p ar t i c i p at i ng
- -
, , ,

I n t er est
534, p 1 3
bl
d ur i n g c on st r u c t i on , S t e am r oa d s,
-
p an ,

i n s u r an c e
538 . p3
co mp an i es Par t i c i p at i n g
,
-
p l an ,

I n sur a
I n st r umen t s,
e,

W ll
538

l
,

a
pl
S t re e t , 53 2, p 1 8 -
538 .

ll
i n sur an c e
94
l y
mp an i es Pop u ar i t of mu
co ,

I
ll k
n t er e s t r a t e s on oa n s , 532 p 1 5 t ua p an 538 p4 -

y
, ,

y
,

Ru e f or p a me nt of ,

l
533 , p 29
k l
i n sur an ce c omp an i e s Prop r i e t ar 538 133
-
, , ,

I n t er oc er s and si g na s of s t ea m r oa d s,

h b k
i n sur ance c omp a n i es S t oc p an 538 p 2
- -
, , ,

534, p 1 0
l fi l l d
i n sur an c e f or e i gn c as oo 538 p 7
-
, ,

I nv e s t me n t
New,
534, p3
c as s i c a t i on of

q
s t ea m r oa d s,
i
-
hl b l
n s u r an c e g e n e r a

h k
e

i n s u rance ome offi c e c as boo

g e r 5 38 p ?
538 p7 -
, ,

, ,

I nv est men t s i n r oa d an d e uip me n t S t eam

l yh l l d
i n sur anc e i a i i t i es 538 p8
-
, , ,

d
l 534 i n su r an c e p o i c o d er s e gers 538 p8
’
r oa s, pl
-
, , ,

Or i gi n a of s t e am r oa d s, 534, p 6
ll b l
i n sur an c e r e v en ue a ccount 538 p 1 2
a
, , ,

S t e ad -
r oa d s, 536, p9 -
i n sur anc e s amp e s t at emen t s 538 p 1 2 , ,

i n suranc e t r i a 538 p9
l h
-
a an c e
J , ,

Lon g t er m g r a n t t o s t eam r oad s 536 p 1 1

k
-

J L i f e i n su r an c e , 538, p ?
, ,

h g b k
ourn a c as
g
-
,
Li st i n of s e c ur i t i es S t oc Ex
,
on th e

Lam bg , 532 , p21

L
Lo an s
c

lld l h
an

at
e,

th e
532 ,

an
p4
, 532 , p1 3
Lan
La i n y g
ua g e of

t r ac k
t h e S t r ee t ,
s a nd
532
s u r f ac i n
, p 21
g of s t ea m
Co

k
f or , 53 2, p 1 5
at er a

ma e i n t h e E x c an e , g 532 , p1 5

Le
r oa

dg er
d s, p8 534
ac c ou n t s of
,

coa l -
mi n i n g co mp an y ,
S t oc , 532, p 1 0

M
537
Cu s t o
. p3
me r
l
’
s, 533, p25 M ac i ner h y of s t e am r oa s Pow e r p a n t d ,
-
l ,

G e n er a , 533 , p 4 1
L i f e i n s ur anc e en er a , 538, p ?
-
g l 534 p 1 1 ,

Ma i n t en anc e ex p e n s es of s t eam r oad s ,

Pr i v at e , p 40 535 P3 ,

S e c ur i t i e s , 533, p 30
Le dg
ers L i f e i n s ur a n c e
, po i c
-
l yh ld o er s
’
,
M ar g i n
r e c or d

l q
p2 1 ,

Cu s t ome r s 533 p9
,
’
, ,

bl
538
L i a i i t i e s,
, p8
Curr en t , of ste a m r oa d s,

of
h d gl
Mar g i n a re u i r e me nt s 533 p9
Me t od Li f e i n s ur a nc e ac count i n g 538 p6
,

uc t i n
-
,

i f e i n s ur anc e
,

mp an i
,

536. p l l c on -
co e s,

D ef er r e ,

b l dy
d
Li f e i n s u r anc e , 538, p8
-
of s t ea m roa d s 536

bl
,

h
, p1 1
of h dl g l
538 .

an
92
in i f e i n suran ce
-
co mp an i e s ,

Li a i i t
r oa
s i e of

s,
a an c e

536
d
, p1 0
s e et of s t ea m
of
538 .

pr e p a r i n
D6
g g r ap h s, Ap p r ox i mat e ,
Li f e i n su r an c e , 538, p l
i n s u r a n c e a en c
-
r ec or s 538 p8
h
g
b k y d , , M i ne by
541 , p 1 4
hg
Comp ar at i v e s t a t e me n t
mon t s,

l g
.

oo , 538, p ? of op er at i n e x p e n s e s of 537, p 20
’
i n s ur an c e a en t s c as
- -
,

i s ur an ce
~ n a an c e s e e t , 538, p 1 3 bl h
i n s ur a n c e an n ua r ep or t t o s t a t e, 538, p 1 3 op er at i n g
ac c oun t s 537, p 4
D ep r ec i at i on of , 53 7, p 1 5
,
 N
I DE X

Mi n i ng co mp an i es , Ac coun t i n g me t hd
o s O p er at i ng
h g
on th e N ew Y or k S t oc k Ex
oi , 537 , pl c an e, 532 , pl
mp an i es A ccoun t s f or 537 p l
bB l k h g
‘
co , , , r e v en u e s and op er a t i n e x p e n ses of

compa ni e s 537 p p8 1 4 m d
h llg
'
a a nc e s e e t , , , st ea roa s, 535 , pl
c omp an i es oo s an d ac cou n t s of 537 O p er at or s on t h e E x c an e, 532 p6
B y
, , , ,

Op t i ons ,
k
’
u er s a nd s 533 p6
’
p2 se er

B
, ,

co mp an i es
c omp an i es
,

,
I n c ome ac c ou n t
Mon t hl y st at e men t s
of , 537 ,

of ,
p7
537 ,
O r er d oo , 533 , p 2

g
Re i s t e r , 539 , p
l m
co
p?
mp an i e s Pr ofi t an d ,
- -
l os s ac c ou n t s of , Or
to
g
b uy
an i za t i on
or s el ,

ex p en se s
532 , p 24
of s t ea m r oa d s,

537 p 1 3
c omp an y
,

acc oun t s I ll , ust r at i v e ex a mp l e

534
of c i t i e s ,
, 91 3

l 539 , p6

co
f 537
o

mp y
mptmy
,

an
,

,
p10
A ct ua
Com i n e
lb d b l r e p or t of a 537
, ,

h p1 6
of ,
O r i g i na

O v er
534
d
. D6
r af t s ,
i n v es t me n t s

N ot i c e of ,
of s t ea m r oa d s,

co , a an ce s ee t 53 1 , p 35
537 p19
y
,

co

Mi x ed
mp an
of 537,

l l ,
,

p1 3
I nc ome a nd op e r a t i n

mp an i e s
g ac c ou n t

Pa r t i c i p at i n gp -
l an co m
i f e i n s ur an c e 538 p a ni c s , 538
‘

-
p an
-
co , , , p4

Mon e y
9 92. 4
B orr ow e d an d Loan e d B oo k ,
P av i n
P ass
y g ll
b k g ac c oun t of s t ea

oo , 53 1 , ps
‘
m ro a d s, 534 , p1 0

Mon t hl y
533 . 9 34
s t at e men t s of mi n i n g co mp an i e s ,
Pa in
Pa y men t for
te er , 53 1 , 9 1 0
c on s t r uc t i on of st ea m r oa d s,

537
Morn i n g
Mun i c i p a
.

ll 97
oa n s at th e
g
b k an , 532 , p1 4 Pay
llll ll
534 p l
ro d ,

d d d dg
s of s t e a
s of s t e a

m roa s
m roa s,

Au i t i n
53 5 , p9
a c c oun t i n , 539, p l ro , , 535 , p12

Mut ua ll
corp or a t i on s ,
-
p an l
539 , pS
i f e i n su r an c e
-
co mp a n i e s ,
ro

ll g 53 5
s

,
of

p1 1
s t e am r oa s, De uc t i on s i n,

538. 92
N P
ro

e r c en t a
d s

g h of s t ea

e in
m roa

p r ep ar i n
s, R e por t s
gr ap
of ,

s,
, 535
U se
, pl 1
of

N et i n c ome
i n c ome l hl fi of
of s t e a

t e ep o n e
m r oa d s 536
comp an i e s ,
, , p6
534, p 3
P er i l
l g hd l
541
,

P an E n ow men t 538 p l
, p15
I n s u r an c e ,
538 p l ,

N ew i n v e s t me n t c a ss i c a t i on of s t ea m , , ,

kl k h g
d 534, p 3
l y dw
S tr a i t i f e 538 p l -

r oa s, , ,

Po i c E n o ment 538
0

Y or S t oc E x c an e, 532 , p 2 , , , pl

k gm gh l
I n s ur an c e 538 p l
N ew s s i p s, 532 , p20 , ,

532, p
l yh ld l dg
S t ra i t i f e 538 p l -

t ic er , , ,

d Po i c Li f e i n s ur ance , 538,
’

N on -
op er a t i n i n come of st e a m r oa s,
o er s e er s , -

-
536
g l
.

l 96
p ar t i c i p a t i n p an of i f e i n su r a n c e
-
co m Poo l g h y
Pos t i n
p8
, 532 ,

mac
p2 1
i ne s st e m of acc oun t i n g
p an i e s , 538, p 3
-
,

w d b
r e v en u e r ec e i p t s 539 p16 53 1 . p 34
y
-

d
, ,

ms S t eam
ll gi Po er - i str i u t i on s st e r oa s,
N ot e 53 1 p 25
-

re s t er , ,

l d hk y
,

te e r, 53 1 p 23
S34 . 910
y d
,

N ot e s , Pr omi s sor
-
p an t mac i n er S t e am -
roa s, 534 pl 1
p 24
, ,
,

Pr e f er r e s t oc , 532 , p l ?

b ld
0 Pr emi u m, 536, p 1 2
O ffi c e ui in g s of s t ea m r oa d s, S t at i on F i r e i n su r an c e r os s,
-
g 538 , p1 8

l k
‘
a nd , 534 , p9 I n sura n c e, 538 , pl
O p e r at i n g -
e x p e n s e ac c ou n t s of s t e a m r oa d s, on c ap i t a s t oc of s t e a m r oa d s, D i sc oun t
535
e x p en s e s
, P3
mi n e
of mon t by h s, Comp ar a
an d , 536
r e ser v es , a nd re i ns ur anc e ,
, p12
F i r e i n sur an c e,
-

t ive
e x p en ses
s t at e me n t of

on
537 p20
a c c ou n t
,

of
,

wa g es p ai d e m
538
P r e p ar at i on
. p14

ll of gr ap h s, U se an d , 541 , pl
p l oy e s m r oad s 535 p8
of

i n c ome of s t e am road s 536 p S

s t ea

,
,

,
,

B l
of
Pr ep ar i n
p ay ro

g g
s

r ap h s ,
f or s t ea m
A p p r ox i mat e
roa d s, 53 5
me t
,

hd
p10
o of ,

r e s er v es

534 p 4
of

.
s t e a m r oad s a an c e s in , ,

g r ap
541
h , p1 4
s, U se of p er cen t a g e i n, 541 , p15
 INDE X

y
l
Pr i ce s C ear i n g House, 532, p 1 9 R oa d an d e q ui p men t a c coun t s , S t e am
Pr i mar
9 0 4. 7
ac c ou n t s of st e a m r oa s , 534, d roa

Re t i r e
d
d
s,

a nd
534 , pp l , 4
rep a c e lb d p rope r t y
h of ste a m
Pr i v at e Led er , 533 p40
Profi t and oss accoun t s of s t e am roa s ,
- -
l g ,

d
r oa

535,
d s,

93
D i st r i u t i on of c ar ge s f or ,

l
536. p p l , 7
an d os s acc ou n t s of mi n i n
- -
comp an i e s , g
l
l y
537 . 9 1 3 S amp
lh e ment s L i f e i n sur anc e 538
s t at e p12
-
, , ,

a nd oss s t at e men t
- -
53 3, p 41 , S a es , F i c t i t i ous 532 p 9 , ,

b k
Promi s sor not es , 53 1 , p 24

b yl k
Proof oo , 53 1 , p3
S or t 532 p9

hg
,

l
S ec ur i t i e s Le dge r 533 p 30
,

, ,

ook c er , 53 1 , p29

b S or t Sa e s 532 p9
-
, ,

h gy l
Pr op er t of s t e a m r oa s , D i s t r i u t i on of

c ar e s f or , 535, p 3

Prop r i et ar i f e i n sur an ce c omp an i e s ,

d
5
Si
Si gn
534
l
n at u r e car

a s and
d ,

i n t er
53 1
l k
,

oc
pS
er s of st e a m r oa d s,

38, . 910
p3
Prot e st , 53 1 , p28
g
k
S i n s an d c r os s i n s of s t e am r oa
S i n i n f un gac c ou n t s ,
-
Cap i t a d
g
l d s,

an d ,
534 ,

539
p8
,

of

Pur c h l B kl
i t ems
a se a nd sa e ,
un d er $1 0 53 1 ,

Recor i n
,

d g
p40
a, 532 , p22 F un
p 50
d
l Con t r i b ut i on s Re q u i re d , 539 , p 25

P
and

y ra dg Sa
mi i n
es

,
oo

532,
,

p22
533 pS ,
S p ec i a
536 ,

S t a t e , A n nu a
p12
i n s t r uc t i on s

l r e p or t
f or

t o, of
s t

l
e a m

i f e i n s ur a nc e
r oa d s,

Q comp an i es 538 p 1 3 , ,

w
Q uest i on s and C P A 542 pl ; S t a t e men t Cu s t omer s 533 p 28
l
’
an s er s , . . .
, , , , ,

543 . pl S t a t emen t s A nn u a r epor t s and of fi re

, ,

i n s ur an c e comp an i es 538 p m
ll h l hl y h
R
B
, ,

Rec e i v i n
dd g te er , 53 1 p4
l a an c e s e e t of s t e am r oad s 536 p9
-

, , , ,

R ecor i ng a p ur c a s e an d s a e , 532 p 22 Mon t of mi n i ng comp an i e s

, 53 7 p ?
g y
, , ,

R ec or s, Li f e i n sur an ce
l a en c 538 p8 of op e r at i n g e x p e n ses of mi n e Comp ar a
-
, , ,

R ed uce d r at e av e r a g e c a u se i n fi r e i n sur
l l
t i v e 537 p a)
- -
, ,

an c e, 538, p 1 6
d q S amp e i f e i n su r an c e 538 p l z
b l
-
, ,

Re
d
g i s t er s of st e a m

e p r ec i a t i on , 535 , pS
r oa s, E uip men t S t a t i on an d offi c e u i d i n g s of s t eam r oad s
534 99 ,
,

R e i n sur an ce , F i re i n sur an ce ,
h 53 8 p1 3 S t e am r oad s ac c ou n t i n g 535 p 1 5
-
, , ,

R e mi t t an ce s ee t , 53 1 , p 39 r oa d s Accoun t s f or
, 534 p l ; 535 p l ; , , ,

R oom t r a
Re p l ace d
d
,
er s ,

y
D i st r i
532
b
, p6
ut i on of c h ar g es f or , t oa
536 p l
d
,

s, A ccoun t s f or op e r at i n g ex p e n s es

p r op er t
R e port of a
ll
mi n i ng c omp an
o f s t ea m r oa d s,

y
535 p 3
, 537 p 1 6
,

, r oa
of ,

d s,
535 ,

A
p3
d d i t i on s an d b et t er me n t s of ,

Pa y ro of s t e am r oad s 535 p 1 1 534

dd B ld 96
ll
-
‘
, , , ,

Ti me of s t eam road s 535 p9

R e p or t s
,

t o s t at e L i f e i n s ura nc e 538
,

a nd
-

s t at e men t s
,

,
,

, p1 3
F i r e i ns ur an c e,
-
r oa

r oa

roa d B l
s,

s,

s,
A u i t i ng p a y
a an c e s e e t of ,
a an c e s
h
in
ro

op er at i n
s of ,

536,
g
535
p8
r e se r v e s
, p1 2

of ,

of
538
bk
ro
. 9 20
er s, 532 , p1 1
y
r oa
535
d B i dg
,

s,
D4
r es , l
t r e s t e s , an d c u l v er t s of ,

R e s e r v es ,
d Bl
R eq u i s i t i on f or
a anc e s
mon e
in
, 53 1 ,

op e r a t i n
pl ?
g , of ste a m r oa
534
d
,

s,
98
Con s t r uc t i on an d e q ui p men t ac

r oa 535 p4
I n sur an c e 538 p S
s,

Pr e mi ums and r e i n s u r anc e

,

,
,

of fi re in
,

r oa

r oa
c oun t s of ,

dd
d s,

s,
Corp or a t e
Cr os s i n s
534

g
, p2
s ur p u s

and
lg
si ns
of ,

of
536 p 1 2
534 p 8
,
,

s ur an c e

Re v e n u e
538 p 1 4 ,

ac c oun t ,
,

L i f e i n s u r an ce ,
-
538 , p1 2
r oa

r oa d
d
s,

s,
Cur r e n t
Cur r en t
De du c t i on s
l bl
a s se t s of ,

i a i i t i es
f r om g
536
of ,
, p10
536 ,

i n come
pl ! of ,
r ece i p t s , 539, p16 r oa s, r os s

Ta x Re i s t e r , 53 3 p 22 g
R e v en u e s and op e r at i n e x p e n s es of s t e a m
,

g r oa
536
d
,

s,
D5
De d u c t i on s i n p a y of , 53 5 p l , !
d
l
r o a s , Op e r at i n , 53 5, p l

R i s k s , C as s es of fi r e i n sur anc e , 538, p 1 4

I n s ur a nc e, 538, p l
g
-
r oa

r oa

r oa
d
d
d
s,

s,

s,
D e fe r r e
D ef er r e
De l a
d
yd
d
e
l bl
a s s e t s of , 536, p 1 0

i a i i t i e s of , 536, p l
i t ems of , 536, p 3
!
 N
I DE X

S t e am roa d
s , D ep r ec i a t i on

fi
of , 535, pS S t e am -
r oa d s
‘

po w di er - s tr i but i on s y ste m ,

d
r oa s , D ep r e c i at i on of
me n t s of 535, p 4
xe d i mp r ov e
-
r oa
534
d
,

s
p10
p ow er p
.

-
ly ant mac h i n er y , 534 , p1 1
r oa d s,

k b
D i scoun t s and p re mi ums on c ap i r oa d s p r i mar
ll
ac count s 534 pp4, 7
-
, ,

t al s t oc 536, p 1 2
of ,

h r oa d s, P rofi t an d - os s c re

b d i t s of , 536, p 7
-

d
l d g d
dg l d
“

r oa s, D i st r i ut i on of f or p r op c ar es r oa s, Pr o fi t -
an d - os s e i t s of , 536, p ?

y
et t re t i r eda n d re p a c e of 53 5 p 3 r oa d s r oa

l k ac cou n t s , 534 p4
-
, , ,

ro a d s, D i spos i t i on of n e t i n come of , r oa d s, Si na s and i n t er oc er s

r oa dd
536
s,
, 96
D i v i s i on of

h ac c ou n t s of , 534p4 ,
r oa
534
d
.

l
s,
p10

b l
S p ec i a i n st r uc t i on s f or , 536, p 1 2
r oa s, D i v i s i on of c ar g e s of , 535, p 1 2 r oa d
k s d g
s t at i on and offi c e ui i n s , 534, p9
-

r oa d s, g
E n i n eer i n g ac c ou n t of , 534, p 7 -
r oa d s s t oc , 536, p 1 0

r oa d s, E nt r i es co mp os i n g ac c oun t s of , r oa d
k l s t i me r e por t s , 535, 1 1 9
-

y g
336. 9 2
q l r oa d s t r ac g a in an d s urf ac i n 534, p 8
-
,

d db
r oa d s, E ua i z at i on of e x p en s e s of , -
r oa d d d
s un ad ju s t e cr e i t s , 536, p 1 1

535. 9 4
qq r oa d d
ll b l
s un a ju s t e e i t s, 536 p 1 0
-
,

d h d k
d
r oa s , E u i p men t of , 534, p S -
r oa d s u n co ec t i e i t ems , 536 , p4
d
r oa s , E u i p men t ep r e c i a t i on d re g i st er r oa

kb k g s w
hd ar v e s a nd o
c s, 534 p9
- -
,

of , 535, p S S t oc -
ro g er a e a c cou n t i n me t o s, 53 3 ,

r oa d s, F i x e d
l
i mp r ov emen t s of , 53 S p3 pl
l
-
,

r oa d s, Ge n er a e x p en dit u r es of , 534 D i scoun t a nd p r emi um on c ap i t a , of

r oa
99 5, 1 2
d
d
s, Gov ern me n t a
l
r an t s t o, 536, p 1 1

d g
lg y ll fi
c er t i
st e a

532
m roa

c at e s ,
d s, 536, p 1 2
, pl ?
r oa s, Ha n i n pr i ma r ac coun t s of , C as s e s of 532 , , pl ?

r oa
S34
d s,
. 95
I n come
b cr e d it s of , 536, p 4 p l ld
oan s

an
532 p 1 0 ,

of
,

i f e i n su ran c e
-
co mp an i e s 538 , , p2
ro a d s, D e i t s of , 536, p4
l S t e am roa s 536, p 1 0-
,

r oa d
ld
s, I n come, p r ofi t and o ss , an d gen Tr a n s f er Re i s t er , 533 , p 37 g
- -

er a b a l an c e sh ee t ac c oun t s of , 536, p l
k
t r an sf e r s , 532 , p 1 2
k
o

B d B
r oa s i n come s t at e me n t , 536, p S
bl h S t oc s orr o wd e an d Lo a n e oo 533
-
, ,

r oa d s, I t e ms i n a an c e s e et ac c oun t s -
,
p 32
of . 536 P7 S t op or d er s , 53 p3
ym
. ,

r oa d s, I t ems in i n c ome ac cou n t s of , pa

lh l l en t c ar d s, 53 1 p1 6
-
,

r oa
536
d s,
. p4
I t e ms
'
i n p r ofi t -
an d -
l os s ac c oun t s
S tra
S tra
dd
ll g l yh
ig
e,

t i f e p an , 538, p l
i f e p o i c , 538, p l
-
532 , p2 1

of , 536, p 7 -

r oa d s, I n t er e s t du rin g c on s t r u c t i on of ,

l h
i n e r ap s p2
-
,

334 . 9 1 3
q i n e gr ap s, Var i at i on s i n arr an g e me n t s
-

d
r oa s ,

men t
I nv e st men t
of , 534 , pl
in r oa d a nd e ui p

kh h ll
of , 54 1 , p 4

St r i e s ee t , 53 1 , p3
d i n v es t men t s, 536
! bb d y 53 1 , p ?
’
-
r oa s , p9 s ee t , Te er s ,

r oa

dd
d s, Lon gt er m gr ant t o, 536 pl Su si

ll i ar
l ac cou n t s , 539 p 22
-
, ,

r oa

r oa
s,

s,
Ma i n t en a nc e e x p enses of 535 p 3
N e w i n v e s t men t c a s s i c at i on of l fi , ,

,
Su
g
S ur f ac i n kl y g
s t i t ut i on s of co

an d t r ac
at er a

a in
, 532
,
, p16
S t eam -
r oa d s,

r oa
534
d s,
, p3
N on -
op er at i n g i n c ome of , 536 , p6
y
l
534 D8

d b
,

S ur p u s , Cor p or a t e of st e am r oa s , 536, p 1 2 , d
r oa d s, O p er a t i n g
ly
e x p en s e s on ac c ou n t of S s t em of po w e r i s t r i u t i on , S t eam r oa s , d
-

wa g es p ai d e mp o es of , 53 5 , p8 534, p 1 0
r oa d s, O p er a t i n g in co me of , 536 p S , '
l ‘
r oa d
of ,
s, O p er at i n
535 , pl
g r e v en u e s and e x p e n s es

Ta x e s Rec e i v a bl e, 539 , p 26
r oa

r oa
d
d
s,

s, g lg
Or g an i z a t i on e x p e n se s of 534 p 1 3
Or i i n a i n v e st me n t s of 534, p6 ,
, ,

Te ll yer ,
g
Tax Re i st er , Re v e nue,
N ot e , 53 1 , p 23
53 , p 22

r oa

-
d
d
r oa
s,

s p ay llll
Pa v i n ac coun t of , 534 p 1 0
ro s, 535 , p9
, Pa i n , 53 1 151 0

k
g
R ec e i v i n , 53 1 , p 4 g
,

d
r oa s p ay r o r epor t s , 53 5 p1 1 T i c er , Th e , 532, p 1 8
l k
- -

y y
,

ro ad s, Pa men t f or c o n s t r u c t i on T i me of e i v er of d s t oc s, 532, p1 1
334. 9 1 r ep or t s , S t eam r oa -
d s, 53 5 , 1 19
 N
I DE X
ly g
Tr a c k a i n an d su r f ac i n of s t e am g roa d s,

l h
U se an d p r e p a r a t i on of gr ap h s, 541 , pl
534, p8
d g
Tr a i n on t h e E x c an e , 532, p ? h kg of

of
i n e c ar t s 54 1 p l o
p er cen t a g
,

e
,

in p r ep ar i n g g r a p h s,

l d b dg
g
Tr an s f er s of st oc , 532, p 1 2 k
Tr an sf er R e i s t er S t oc , 533 , p 37
,

l
541 , p 1 5
V
Tr es t es , ri es , an d cu v e rt s of s t ea m
Vau l t Li s t , 533 p39

l b l
,
r oa s, 534 , p8

bl
Tr i a F i r e i ns ur a n c e, 538, p l ?
a an ce ,
W
-

a an ce , L i f e i n s ur anc e, 538, p 9

d ly d
-

Wage s
d ll b k
Tr us t accoun t s , 539, p 56 p ai e mp o es of s t ea m r o a s,

Tw o o ar r o er s, 532 , p6
ll
53 5 98
-
,

Wa S tr eet s i ns t rumen t s 532 p 1 8

bl
’

Warr ant s Pay a e R eg i st er 539 p2 1

, ,

d d h l
U
, ,

Was sa es 532 p22

db
U na just e d cr e its of s t ea m r oa d s, 536
, p1 1 , ,

Un coll b l its
ect i
of st e a

e
m road s 536 p 1 0 ,

i t ems of s t eam r oa d s 536

,

, , pl
Wat er D ep ar t ment acc oun t s 539 p 36
h dk
W ar ves and oc s of s t eam roa s 534
,

d
,

, , p9