g" ' ■■■■- 
 
 8061 '12 -HW 1 
 
 •A 'N 'asiiDu 
 
 S.133{BJV 
 
 ■^oj(| pioii: 
 
 -.1( 
 
FORM OF 
 
 INCOME AND PROFIT AND 
 LOSS STATEMENT 
 
 FOR 
 
 STEAM ROADS 
 
 AS PRESCRIBED BY THE 
 
 INTERSTATE COMMERCE COMMISSION 
 
 IN- ACCORDANCE WITH 
 
 SECTION 20 OF THE ACT TO REGULATE 
 COMMERCE 
 
 FIRST ISSUE 
 
 Effective on July 1, 1912 
 
 1 . «.. ^^^ 
 
*< 
 
 The Interstate Commerce Commission. 
 
 Charles A. Prouty, of Vermont. 
 JuDSON C. Clements, of Georgia. 
 Franklin K. Lane, of California. 
 Edgar E. Clark, of Iowa. 
 James S. Harlan, of Illinois. 
 Charles C. McChord, of Kentucky. 
 Balthasar H. Meyer, of Wisconsin. 
 
 John H. Marble, Secretary. 
 
 (2) 
 
At a General Session of the INTERSTATE COMMERCE 
 COMMISSION, held at its office in Washington, D. C, 
 on the 3d day of June, 1912. 
 
 The subject of a Uniform Income and Profit and Loss 
 Statement for the use of carriers making reports to the 
 Commission, and of the Ledger Accounts immediately 
 pertaining thereto, being under consideration, the fol- 
 lowing order was entered : 
 
 It is ordered, That the Form of Income and Profit and 
 Loss Statement, with the classification of the accounts 
 involved in such statement and the text pertaining 
 thereto, embodied in printed form, to be hereafter 
 known as Form of Income and Profit and Loss Statement 
 for Steam Roads, First Issue, a copy of which is now 
 before this Commission, be, and the same is hereby, 
 approved ; that a copy thereof duly authenticated by the 
 Secretary of the Commission be filed in its archives, and 
 a second copy thereof, in like manner authenticated, be 
 filed in the office of the Division of Carriers' Accounts; 
 and that each of said copies so authenticated and filed 
 shall be deemed an original record thereof. 
 
 It is further ordered, That the said Form of Income and 
 Profit and Loss Statement, with the accounts involved 
 in such statement and the text pertaining thereto, be, 
 and it hereby is, prescribed for the use of carriers by 
 rail (exclusive of electric railways) subject to the pro- 
 visions of the amended act to regulate commerce in the 
 keeping and recording of all transactions reflected in the 
 said Form of Income and Profit and Loss Statement; 
 that each and every such carrier and each and every 
 receiver or operating trustee of any such carrier be re- 
 quired to keep all accounts involved in the said Form of 
 Income and Profit and Loss Statement in conformity 
 therewith; and that a copy of the said Form of Income 
 
 (3) 
 
 285615 
 
and Profit and Loss Statement be sent to each and every 
 such carrier and to each and every receiver or operating 
 trustee of any such carrier. 
 
 It is further ordered, That the rules contained in the 
 said Form of Income and Profit and Loss Statement 
 for Steam Roads, First Issue, are, and by virtue of this 
 order do become, the lawful rules according to which all 
 entries in the accounts involved in such statement are 
 defined; that each and every person directly in charge of 
 the accounts of any such carrier, or of any receiver or 
 operating trustee of any such carrier, is hereby required 
 to see to, and under the law is responsible for, the correct 
 application of the said rules in the keeping and recording 
 of all transactions pertaining to, or reflected in, the said 
 Form of Income and Profit and Loss Statement; and 
 that it shall be unlawful for any such carrier or for any 
 receiver or operating trustee of any such carrier, or for 
 any person directly in charge of the accounts of any such 
 carrier or of any receiver or operating trustee of any such 
 carrier, to keep any account or record or memorandum 
 of any transactions pertaining to, or reflected in, the 
 said Form of Income and Profit and Loss Statement, 
 except in the manner and form hereby prescribed: Pro- 
 vided, Jiowever, That nothing in this order shall be con- 
 strued as depriving a carrier of the right to make what- 
 ever analysis of income and profit and loss items it may 
 deem proper for the information of stockholders or of 
 officials who have the management of its property. 
 
 It is further ordered. That July 1, 1912, be, and is here- 
 by, fixed as the date on which the said Form of Income 
 and Profit and Loss Statement for Steam Roads, First 
 Issue, shall become effective. 
 
 By the Commission: 
 
 [seal.] John H. Marble, 
 
 Secretary. 
 
INTRODUCTORY LETTER, 
 
 Interstate Commerce Commission, 
 
 Division of Carriers' Accounts, 
 
 WasMngton, June 27, 1912. 
 To Carriers Concerned: 
 
 It has seemed essential, for the completion of the 
 system of accounts to be used by carriers by rail (exclu- 
 sive of electric railways), subject to the act to regulate 
 commerce as amended, that a Form of Income and 
 Profit and Loss Account Statement be issued for the 
 government of such carriers. 
 
 This Form of Income and Profit and Loss Account 
 Statement for Steam Koads, First Issue, is therefore 
 promulgated for the use of carriers engaged in transpor- 
 tation by rail (exclusive of electric railways), and, together 
 with other classifications and accounting forms previ- 
 ously issued and now in effect, practically completes the 
 S3^stem of accounts for such can'iers. 
 
 It is intended that the accounts provided herein 
 shall be used, so far as they may be applicable to each, 
 both by lessor companies and by operating companies. 
 
 It is proper to acknowledge the cooperation of the 
 accredited representatives of the Association of Amer- 
 ican Railway Accounting Officers in working out the 
 rules in this form. Wliile the rules as now promulgated 
 do not in all respects conform to the recommendations 
 of that association, the assistance of its representatives, 
 in the consideration of the questions involved herein, 
 has been invaluable. 
 
 To the end that substantial uniformity in the inter- 
 pretation of these rules be maintained, carriers are 
 requested to submit all questions of doubtful interpre- 
 tation to this office for consideration and decision. 
 
 Charles A. Lutz, 
 Chief Examiner of Accounts. 
 
 (5) 
 
GENERAL INSTRUCTIONS. 
 
 1 . Income Account Defined. — The Income Account 
 brings together those accounts that show the total 
 amount of money that a company receives or becomes 
 entitled to receive from its transportation and other 
 operations during a given fiscal period, the return 
 accrued during the period upon investments, the dis- 
 bursements and obligations incurred that affect the 
 amounts so received or accrued, and the disposition or 
 allocation of the net income accrued. The net balance 
 shown by the Income Account should be carried to the 
 Profit and Loss Account. 
 
 2. Profit and Loss Account Defined. — The Profit 
 and Loss Account summarizes the changes in the corpo- 
 rate surplus or deficit during a' given fiscal period result- 
 ing from the operations and business transactions during 
 that period as well as changes effected by appropriations 
 of surplus made at the option of the company, by account- 
 ing adjustments not properly attributable to the period, 
 or by miscellaneous losses or gains not provided for else- 
 where. The Profit and Loss Account is the connecting 
 link between the Income Account and the General Bal- 
 ance Sheet. The Profit and Loss Account balance should 
 be shown in the General Balance Sheet Statement under 
 account B 27 or account B 50. 
 
 3. General Ledger Accounts. — The titles of the 
 accounts in the general ledger pertaining to the Income 
 Account and Profit and Loss Account should substan- 
 tially conform to the titles of the accounts prescribed 
 herein. Carriers may, however, subdivide any of the 
 prescribed accounts, provided that the subaccounts do 
 not impair the integrity of the accounts prescribed and 
 
 (6) 
 
that the titles of the subaccounts in the general ledger 
 give reference (by number, title, or both) to the accounts 
 prescribed herein of which they are subdivisions. 
 
 4. Income Account on Basis of Accruals. — The 
 text in general provides that items affecting the Income 
 Account shall be stated upon the basis of accruals. 
 Exceptions will, however, be noted in a few instances in 
 which it seems that to require the accrual basis would 
 lead to erroneous results, or perhaps involve unwarranted 
 refinements in accounting. 
 
 5. Sinking Fund Accruals. — A separate account has 
 been provided m the Income Account for showing in- 
 come from securities and other assets held in sinking and 
 other reserve funds. Entries are to be made in this 
 account for income accrued on cash, securities, and other 
 assets held in such funds, with the exception of securi- 
 ties issued or assumed by the accounting company. No 
 entry is to be made, either in this account or in accounts 
 representing interest on funded debt or dividends on 
 stock, for interest or dividends on such securities as are 
 issued or assumed by the company and held by or for it. 
 
 Accounts are provided both in the Income Account 
 and in the Profit and Loss Account for appropriations 
 of contributions and of accretions to sinking funds, 
 the amounts of which are to be credited to balance-sheet 
 account B 49, ''Reserves from Income or Surplus." 
 
 6. Appropriations. — Accounts are provided in the 
 Income Account for the appropriation of net income and 
 in the Profit and Loss Account for the appropriation of 
 surplus. Whether appropriations shall be charged to 
 Income or to Profit and Loss is thus left to the discretion 
 of the accounting company. 
 
 7. Cancellation of Conflicting Previous Instruc- 
 tions. — The rules provided in this Form of Income and 
 Profit and Loss Statement supersede any conflicting in- 
 structions in other classifications and accounting forms 
 previously issued. 
 
INCOME STATEMENT. 
 
 List of Accounts. 
 
 I. Railway Operating Income: Page. 
 
 I 1. Rail Operations — Revenues 10 
 
 I 2. Rail Operations— Expenses 10 
 
 Net Revenue (or Deficit) — Rail Operations. 
 
 I 3. Auxiliary (or Outside) Operations — Revenues... 10 
 
 I 4. Auxiliary (or Outside) Operations — Expenses.. 10 
 
 Net Revenue (or Deficit) Auxiliary Operations. 
 
 Net Railway Operating Revenue (or Deficit). 
 
 I 5. Railway Tax Accruals 10 
 
 Railway Operating Income (or Loss). 
 II. Other Income: 
 
 I 6. Income from Lease of Road 11 
 
 I 7. Hire of Equipment — Credit Balance 12 
 
 I 8. Joint Facility Rent Income 12 
 
 I 9. Miscellaneous Rent Income 13 
 
 I 10. Net Profit from Miscellaneous Physical Proper y. 14 
 
 I 11. Separately Operated Properties — Profit 14 
 
 I 12. Dividend Income 14 
 
 I 13. Income from Funded Securities 15 
 
 I 14. Income from Unfunded Securities and Accounts 15 
 
 I 15. Income from Sinking and Other Reserve Funds. 16 
 
 I 16. Release of Premiums on Funded Debt 16 
 
 I 17. Contributions from Other Companies 16 
 
 I 18. Miscellaneous Income 17 
 
 Total Other Income. 
 
 (iross Income (or Loss). 
 III. Deductions from Gross Income: 
 
 I 19. Deductions for Lease of Other Roads 17 
 
 I 20. Hire of Equipment — Debit Balance 17 
 
 I 21. Joint Facility Rent Deductions 18 
 
 I 22. Miscellaneous Rent Deductions 18 
 
 123. Miscellaneous Tax Accruals 18 
 
 I 24. Net Loss on Miscellaneous Physical Property.. 19 
 
 (8) 
 
9 
 
 III. Deductions from Gross Income — Continued. Page. 
 
 I 25. Separately Operated Properties — Loss 19 
 
 I 26. Interest Deductions for Funded Debt 19 
 
 I 27. Interest Deductions for Unfunded Debt 20 
 
 I 28. Amortization of Discount on Funded Debt 20 
 
 I 29. Transfer of Income to Other Companies 21 
 
 I 30. Miscellaneous Deductions 21 
 
 Total Deductions. 
 
 Net Income (or Loss). 
 
 IV. Disposition of Net Income: 
 
 I 31. Appropriations of Income to Sinking and Other 
 
 Reserve Funds 21 
 
 I 32. Dividend Appropriations of Income 22 
 
 I 33. Appropriations of Income for Additions and 
 
 Betterments 22 
 
 I 34. Appropriations of Income for New Lines and 
 
 Extensions 23 
 
 I 35. Stock Discount Extinguished through Income.. 23 
 
 I 36. Miscellaneous Appropriations of Income 23 
 
 Income Balance Transferred to Credit (or 
 Debit) of Profit and Loss. 
 
 41393°— 12 2 
 
TEXT EXPLANATORY OF ACCOUNTS APPEAR- 
 ING IN THE INCOME STATEMENT FOR STEAM 
 ROADS. 
 
 RAILWAY OPERATING INCOME: 
 I 1. Rail Operations — Revenues. 
 
 This account should include the total operating revenues 
 stated in accordance with the Classification cf Operating Reve- 
 nues for Steam Roads, 
 I 2. Rail Operations — Expenses. 
 
 This account should include the total operating expenses 
 stated in accordance with the Classification of Operating Ex- 
 penses for Steam Roads. 
 I 3. Auxiliary (or Outside) Operations — Revenues. 
 
 This account should include the revenues from auxiliary 
 (or outside) operations stated in accordance with the Classifi- 
 cation of Revenues and Expenses for Outside Operations. 
 I 4. Auxiliary (or Outside) Operations — Expenses. 
 
 This account should include the expenses of auxiliary (or 
 outside) operations stated in accordance with the Classification 
 of Revenues and Expenses for Outside Operations. 
 I 5. Railway Tax Accruals. 
 
 This account should include Federal, State, county, muni- 
 cipal, school, and other taxing-district taxes of all kinds, 
 relating to railway property, operations, and privileges, 
 whether the assessment is based on the valuation of the 
 property; on the amount of stocks and bonds issued or out- 
 standing in respect to such property; on the gross or net 
 earnings; on dividends; on the number of passengers or the 
 amount of freight carried; on the length of line operated or 
 owned; on the rolling stock; or otherwise. 
 
 This account should be charged each month with the amount 
 of taxes accruing during the month. "When it is not possible 
 to determine the actual accruals, the amount of the annual 
 taxes should be estimated and one-twelfth of the estimated 
 amount should be charged to this account monthly. The 
 monthly charges should be adjusted from time to time during 
 the year as the actual tax levies become known so as to include 
 as nearly as may be possible the total amount of the taxes in 
 the accounts of the fiscal year to which they apply. 
 (10) 
 
11 
 
 If the terms of lease obligate the operating company for 
 the taxes assessed in connection with property leased outright, 
 the accruals of such taxes should be charged by it to this 
 account. If such taxes are actually paid to the government 
 authorities by the lessor company, the payment should be 
 charged directly to the lessee and it should not enter into 
 the taxes account of the lessor. 
 
 Accruals of taxes to be paid by the lessor company, if the 
 terms of the lease do not obligate the lessee company, should 
 be charged by the lessor company to this account. If such 
 taxes are actually paid to the government authorities by the 
 operating company, the payment should be charged directly 
 to the lessor and it should not entfer into the taxes account 
 of the lessee. 
 
 Note A.— If property other than railway property is so inti- 
 mately connected with railway property that the taxes thereon can 
 not be separately ascertained, such taxes may be included in this 
 account; also when it is impossible to ascertain from the taxing 
 authorities the distribution of taxes between (1) railway property, 
 operations, and privileges, and (2) other property, operations, and 
 privileges, the taxes 'on the latter may be included in this account. 
 When it is possible to ascertain the taxes on other property, operations, 
 and privileges, they should be charged to account I 23, "Miscella- 
 neous Tax Accruals." 
 
 Note B. — Special assessments for street and other improvements 
 and special benefit taxes, such as water taxes, drainage taxes, and the 
 like should not be charged to this account, but should be included 
 in operating expense, additions and betterments, or road and equip- 
 ment accounts, as may be appropriate. 
 
 Note C. — Taxes on new lines under construction or on property 
 acquired for the extension of existing lines should be charged to 
 road and equipment account No. 46, "Taxes," until the lines are 
 opened for commercial operation. 
 
 Note D. — Taxes assessed separately on real estate acquired for 
 Additions and Betterments should be charged to the appropriate 
 additions and betterments accounts until the completion or coming 
 into service of the property . 
 
 Note E.— Amounts received in reimbursement of taxes on prop- 
 erty jointly used should be credited to account I 8, "Joint Facility 
 Rent Income. ' ' Amounts paid in reimbursement of such taxes should 
 be charged to account 1 21, "Joint Facility Rent Deductions." 
 
 II. OTHER INCOME: 
 
 I 6. Income from Lease of Road. 
 
 This account should include the amount accrued as rent for 
 road (including the equipment and other railway property 
 covered by the contract) owned or controlled by the account- 
 ing company and held by another company under lease or 
 other agreement granting exclusive use and control for 
 operating purposes. 
 
1^ 
 
 This account should include the entire amount of rent 
 (except taxes) receivable by the lessor according to the terms 
 of lease or other agreement, whether it is paid to the lessor in 
 cash or is disbursed by the lessee for the account of the lessor 
 as interest on funded debt, guaranteed dividends on stock, or 
 otherwise. 
 
 Note A.— If equipment is included in the lease of road, the rent of 
 such equipment should be credited to this account and not to Hire 
 of Equipment account. 
 
 Note B.— If property, the rent of which is charged to account 
 I 19, "Deductions for Lease of Other Roads," is sublet by the ac- 
 counting company, the rent receivable therefor should be credited 
 to this account. 
 
 Note C— If, under the terms of a lease, the deficit (or any portion 
 of it) resulting from the lessee company's operations of the property 
 leased is payable by the lessor company, the amount should be 
 charged to this account by the lessor. 
 
 Note D. — A company owning or controlling steam roads and 
 lea,sfng the entire railway property to others and performing no 
 railway operations should charge to this account the cost of main- 
 taining its organization, such as the salaries of officers, clerks, and 
 attendants; ofl&ce expenses; law expenses; cost of stationery, print- 
 ing, and supplies; and like expenses. 
 
 I 7. Hire of Equipment — Credit Balance. 
 
 This account should include the net credit balance of 
 
 (1) amounts accrued as owed by others for the use of the ac- 
 counting company's equipment leased or interchanged, and 
 
 (2) amounts accrued as owed to other carriers for the use of 
 their equipment leased or interchanged and amounts ac- 
 crued as owed to individuals and companies for the use of 
 private cars. 
 
 Note A.— If the net balance is a debit, it should be included in 
 account I 20, "Hire of Equipment — Debit Balance." 
 
 Note B.— Rent for equipment included in the lease of road to 
 another company should not be included in this account, but should 
 be credited to account I 6, " Income from Lease of Road." 
 
 Note C. — This account does not apply to equipment assigned to 
 Auxiliary (or Outside) Operations, the rent of which is provided 
 for in the Classification of Revenues and Expenses for Outside Opera- 
 tions. 
 
 I 8. Joint Facility Rent Income. 
 
 This account should include amounts accrued as rent of 
 tracks, yards, terminals, and other facilities owned or con- 
 trolled by the accounting company and used jointly with 
 other carriers, companies, and individuals. 
 
 Note A.— Amounts redeived from other companies in reimburse- 
 ment for taxes on property jointly used should be credited to this 
 account. 
 
13 
 
 Note B. — The cost of maintenance, operation, or administration 
 of joint facilities recoverable from others should not be included in 
 this account, but should be credited to the various joint facility ac- 
 counts provided in the Classification of Operating Expenses. When 
 the compensation for the use of joint facilities is a fixed amount or 
 is based upon a charge per passenger, per ton, per car, or other unit, 
 it should be fairly apportioned by the operating company between 
 this account and the appropriate joint facility operating expense 
 accounts. 
 
 Note C. — If the facilities are used jointly with others than common 
 carriers and the amounts involved are relatively small, they need not 
 be apportioned between this account and the joint facility operating 
 expense accounts, but may be credited to revenue account No. 18, 
 "Rents of Buildings and Other Property." 
 
 I 9. Miscellaneous Rent Income. 
 
 This account should include rents of property carried in the 
 road and equipment accounts, the rents of which are not pro- 
 vided for in the three foregoing accounts. To this account 
 should be charged the cost of maintenance of the property- 
 rented, also incidental expenses in connection with such prop- 
 erty, such as the cost of negotiating contracts, advertising for 
 tenants, fees paid conveyancers, collectors' commissions, and 
 analogous items. 
 
 Note A. — If the expenses of the property leased can not be separated 
 from the expenses of property used in the company's operations, the 
 rents should be credited to revenue account No. 18, '' Rents of Build- 
 ings and Other Property. " 
 
 Note B . — If a service (other than maintenance) is performed by 
 the accounting company in connection with such property, the in- 
 come should not be included in this account, but the service should 
 be treated as an auxiliary (or outside) operation in accordance with 
 the Introductory Letter in the Classification of Revenues and Ex- 
 penses for Outside Operations. 
 
 Note C. — If property, the rent of which is charged to account I 22, 
 "Miscellaneous Rent Deductions," is sublet by the accounting com- 
 pany, the rent receivable therefor should be credited to this account. 
 
 Note D. — Taxes on property, the rent of which is credited to this 
 account, should becharged to account 1 5, " Railway Tax Accruals. " 
 
 Note E.— The rent of property carried in balance-sheet account B 6 
 (o), "Miscellaneous Investments — Physical Property," should not 
 be included in this account, but in account 1 10, "Net Profit from Mis- 
 cellaneous Physical Property," or I 24, "Net Loss on Miscellaneous 
 Physical Property. " 
 
 Note F.— If the amounts received as rent for the exclusive use of 
 tracks and other railway facilities maintained by the accounting 
 company (the expenses in connection therewith being included in its 
 operating expenses) are considerable, they should be divided into two 
 portions, one representing the cost of maintenance, which should be 
 credited to the appropriate operating expense accounts (not joint 
 facility accounts), and the other representing the rent (amount appli- 
 cable to the investment in the property), which should be credited 
 to this account. If relatively small, the amounts need not be divided, 
 but may be credited to revenue account No. 18, " Rents of Buildings 
 and Other Property." 
 
14 
 
 Note G. — Rent and other income on real estate acquired for Addi- 
 tions and Betterments should be credited to the appropriate additions 
 and betterments accounts until the completion or coming into service 
 of the property. 
 
 1 10. Net Profit from Miscellaneous Physical Property. 
 
 This account should include the net credit balance of the 
 revenues or income from, and the expenses (excluding taxes) of, 
 physical property carried in balance sheet account B 6 (a), 
 ''Miscellaneous Investments — Physical Property. " 
 
 Note.— If the net balance is a debit, it should be shown under 
 account I 24, "Net Loss on Miscellaneous Physical Property." 
 
 I 11. Separately Operated Properties — Profit. 
 
 This account should include amounts receivable under the 
 terms of agreements or contracts whereby the surplus resulting 
 from the operation of properties of other companies having a 
 separate corporate existence and operated separately, is to be 
 paid, in whole or in part, to the accounting company. 
 
 Note A. — The amount payable by the operating company should 
 be charged by it to account I 29, " Transfer of Income to Other Com- 
 panies." 
 
 Note B.— In determining the amount receivable by the accounting 
 company, consideration should be given not only to the operating 
 revenues and operating expenses but also to other items of income or 
 deduction which affect that amount. 
 
 Note C— This account should not include the results from opera- 
 tions of property and facilities owned by the accounting company, the 
 revenues and expenses of which are provided for in the Classification of 
 Revenues and Expenses for Outside Operations, or in accounts I 10, 
 "Net Profit from Miscellaneous Physical Property," and 124, "Net 
 Loss on Miscellaneous Physical Property." 
 
 Note D. — Dividends or other returns upon securities issued by separ 
 lately operated companies and held or controlled by the accounting 
 company should not be included in this account, but in account 1 12, 
 "Dividend Income,"I13, "Incomefrom Funded Securities," or I 14, 
 "Income from Unfunded Securities and Accounts," as may be ap- 
 propriate. 
 
 I 12. Dividend Income. 
 
 This account should include dividends declared on railway 
 and other stocks owned by the accounting company ( and held 
 in its treasury or deposited in trust), or controlled through 
 leaso or otherwise, the income from which is the property of 
 the accounting company. Accruals of guaranteed dividends 
 may be included in this account if their payment is reasonably 
 assured. 
 
 Note A. — This account should not include credits for dividends on 
 stocks issued or assumed by the accounting company and owned by it, 
 whether held in its treasury, in si)ecial dei)osits, or in sinking or other 
 reserve funds, or pledged as collateral. 
 
15 
 
 Note B.— Dividends on stocks of other companies held in sinking 
 or other reserve funds should not be included in this account, but 
 should be credited to account 1 15, "Income from Sinking and Other 
 Reserve Funds." 
 
 1 13. Income from Funded Securities. 
 
 This account should include interest on funded securities 
 and debenture stock of railway and other companies owned 
 by the accounting company (and held in its treasury or 
 deposited in trust) or controlled through lease or otherwise, 
 the income from which is the property of the accounting 
 company. Interest accrued should not be credited unless its 
 payment is reasonably assured by past experience, guaranty, 
 anticipated provision, or otherwise. In other cases the credit 
 to this account should be based upon the interest actually 
 collected. 
 
 Note A. — The term funded securities, ashere used, means all bonds, 
 notes, and other evidences of indebtedness (except open accounts 
 for advances) which, by the terms of the creation of the debt, do not 
 mature until more than one year after the date of such creation. 
 
 Note B. — This account should not include interest on funded se- 
 curities issued or assumed by the accounting company and owned 
 by it, whether held in its treasury, in special deposits, or in sinking 
 or other reserve funds, or pledged as collateral. 
 
 Note C— Interest on funded securities of other companies held in 
 sinking or other reserve funds should not be included in this account, 
 but in account I 15, "Income from Sinking and Other Reserve 
 Funds." 
 
 Note D.— At the option of the company there may be included in 
 this account the portion applicable to the fiscal period of the amount 
 requisite to extinguish (during the interval between the date of 
 acquisition and the date of maturity) the discount or premium on 
 funded securities of other companies owned. 
 
 Note E.— Interest accruing on funded securities after maturity 
 should not be included in this account, but in account 1 14, "Income 
 from Unfunded Securities and Accounts." 
 
 I 14. Income from Unfunded Securities and Accounts. 
 
 This account should include interest income on unfunded 
 securities and matured funded securities of other companies, 
 interest on bank balances and open accounts, and other 
 analogous items, including discount on short-term notes. 
 
 Note A.— The term unfunded securities, as here used, means notes 
 and other evidences of indebtedness payable on demand or having 
 dates of maturity one year or less from the dates of issue. 
 
 Note B.— Interest on assets held in sinking and other reserve funds 
 should not be included in this account, but in account 1 15, "Income 
 from Sinking and Other Reserve Funds." 
 
 Note C— Discounts on bills for material purchased should not be 
 credited to this account, but should be credited to the accounts which 
 were charged by the original invoices. 
 
16 
 
 I 15. Income from Sinking and Other Reserve Funds. 
 
 This account should include the income accrued on cash, 
 securities, and other assets (not including securities issued or 
 assumed by the accounting company) held in sinking and 
 other reserve funds. 
 
 Note A, — At the option of the company there may be included in 
 this account the portion applicable to the fiscal period of the amount 
 requisite to extinguish (during the interval between the date of 
 acquisition and the date of maturity) the discount or premium on 
 funded securities of other companies held in sinking or other reserve 
 funds. 
 
 Note B. — If the income to a sinking fund is allowed to be retained 
 in the fund and if the sinking ftmd is required to be represented by 
 a reserve, the amounts credited to this account in respect to such 
 income should be concurrently charged to account I 31, "Appropri- 
 tions of Income to Sinking and Other Reserve Fvmds" and credited 
 ' to balance-sheet accoxmt B 49, "Reserves from Income or Surplus." 
 
 I 16. Release of Premiums on Funded Debt. 
 
 This account should be credited during each fiscal period 
 with such proportion of the premiums on outstanding funded 
 debt obligations as may be applicable to that period. This 
 proportion should be determined according to the rule pro- 
 vided in balance-sheet account B 44, "Unextinguished 
 Premiums on Outstanding Funded Debt." 
 
 Note. — The amoimts credited to this account should be concur- 
 rently charged to the Discounts and Premiums accounts in which the 
 respective premiums are carried. 
 
 I 17. Contributions from Other Companies. 
 
 If, under the terms of agreements or contracts, the deficit of 
 the accounting company is payable (in whole or in part) by 
 another company without provision for subsequent reimburse- 
 ment, the amount so receivable should be credited to this 
 account. 
 
 Note A.— The amount payable should be charged by the con- 
 tributing comi)any to account I 25, "Separately Operated Prop- 
 erty—Loss." 
 
 Note B. — In determining the amoimt receivable by the accounting 
 company, consideration should be given not only to the operating 
 revenues and operating expenses but also to other items of income or 
 deduction which affect that amount. 
 
 Note C— This account should not include advances. (See balance- 
 sheet accounts B 33, "Obligations for Advances Received for Con- 
 struction, Equipment, and Betterments," and B 40, "Working 
 Advances Due to Other Companies.") 
 
17 
 
 I 18. Miscellaneous Income. 
 
 This account should include all items, not provided for else- 
 where, properly creditable to Income for the fiscal period for 
 which the Income Account is stated. 
 
 III. DEDUCTIONS FROM GROSS INCOME: 
 I 19. Deductions for Lease of Other Roads. 
 
 This account should include amounts accrued as rent for 
 roads (including the equipment and other railway property 
 covered by the contracts) of other companies held under 
 lease or other agreement by the terms of which exclusive use 
 and control for operating purposes are secured. 
 
 This account should include the entire amount of rent (ex- 
 cept taxes) payable by the lessee according to the terms of 
 lease or other agreement, whether it is paid to the lessor in cash 
 or is disbursed by the lessee for the account of the lessor as 
 interest on funded debt, guaranteed dividends on stock, or 
 otherwise. 
 
 Note A.— The rent of equipment included in the lease of road 
 should be charged to this account and not to Hire of Equipment 
 account. 
 
 Note B.— If property, the rent of which is charged to this ac- 
 count, is sublet by the accounting company to others, the rent 
 from the sublease should be credited to accoimt I 6, "Income from 
 Lease of Road." 
 
 Note C— If, under the terms of a lease, the deficit (or any portion 
 of it) resulting from the lessee company's operations of the property 
 leased is chargeable to the lessor company, the amount should be 
 credited to this account by the lessee. 
 
 I 20. Hire of Equipment — Debit Balance. 
 
 This account should include the net debit balance of (1) 
 amounts accrued as owed by others for the use of the account- 
 ing company's equipment leased or interchanged, and (2) 
 amounts accrued as owed to other carriers for the use of their 
 equipment leased or interchanged and amounts accrued as 
 owed to individuals and companies for the use of private cars. 
 Note A.— If the net balance is a credit, it should be included in 
 account I 7, "Hire of Equipment — Credit Balance." 
 
 Note B. — Rent for equipment included in the lease of road to the 
 accomiting company should not be included in this account, but in 
 account 1 19, "Deductions for Lease of Other Roads." 
 
 Note C— Interest accrued on any form of equipment trust obliga- 
 tions should not be included in this accotint, but should be charged 
 to account I 26, "Interest Deductions for Funded Debt." 
 
 Note D. — This account does not apply to equipment assigned to 
 Auxiliary (or Outside) Operations, the rent of which is provided for 
 in the Classification of Revenues and Expenses for Outside Operations. 
 
18 
 
 I 21. Joint Facility Rent Deductions. 
 
 This account should include amounts accrued as rent for 
 tracks, yards, terminals, and other facilities owned or con- 
 trolled by other carriers, companies, or individuals, in the 
 joint use of which the accounting company participates. 
 
 Note A. — Amounts paid by the accounting company in reim- 
 bursement for taxes on property jointly used should be charged to 
 this account. 
 
 Note B.— The cost of maintenance, operation, or administration 
 of joint facilities, chargeable to the accounting company, should not 
 be included in this account, but should be charged to the various joint 
 facihty accounts provided in the Classification of Operating Expenses. 
 When the compensation for the use of joint faciUties is a fixed amount 
 or is based upon a charge per passenger, per ton, per car, or other unit, 
 it should be fairly apportioned between this account and the appro- 
 priate joint facihty operating expense accounts. This apportionment 
 should be made by the operating company, if it is a steam road, and 
 should be followed by the accounting comi)any. 
 
 Note C. — If the facilities are used jointly with others than common 
 carriers and the amounts involved are relatively small, they need not . 
 be apportioned between this account and the joint facihty operating 
 expense accounts, but may be charged to the appropriate operating 
 expense accounts (not joint facility accounts). 
 
 I 22. Miscellaneous Rent Deductions. 
 
 This account should include rents accrued on property 
 leased to the accounting company and not properly charge- 
 able to any of the three foregoing accounts. 
 
 Note A. — This account should not include such rents as are pn> 
 vided for in the Classification of Operating Expenses for Steam Roads or 
 in the Classification of Revenues and Expenses for Outside Operations. 
 
 Note B.— If property, the rent of which is chargeable to this ac- 
 count, is sublet by the accounting company to others, the rent from 
 the sublease should be credited to accoimt 19," Miscellaneous Rent 
 Income." 
 
 Note C. — Payments for the exclusive use of property maintained 
 by the lessor and used in the accounting company's operations (when 
 considerable in amount and when not provided for in the Classifica- 
 tion of Operating Expenses for Steam Roads or in the Classification 
 of Revenues and Expenses for Outside Operations) should be divided 
 into two portions: one representing the cost of maintenance, 
 which should be charged to the appropriate operating expense 
 accounts (not joint facility accounts), and the other representing the 
 rent (amount appUcable to the investment in the property), which 
 should be charged to this account. If relatively small, the amounts 
 need not be divided, but may be charged to the appropriate operating 
 expense accounts (not joint facility accounts). 
 
 I 23. Miscellaneous Tax Accruals. 
 
 This account should include all taxes accrued other than 
 those provided for in account I 5, "Railway Tax Accruals," 
 such as taxes on securities owned, taxes on income from 
 securities owned, taxes on physical property other than that 
 
19 
 
 carried in the road and equipment accounts, Federal excise 
 taxes or such portion of them as is not assigned to railway 
 operations, and analogous items. 
 
 Note.— If property other than railway property is so inti- 
 mately connected with railway property that the taxes thereon can 
 not be separately ascertained, such taxes may be included in account 
 I 5, " Railway Tax Accruals"; also, when it is impossible to ascertain 
 from the taxing authorities the distribution of taxes between (1) rail- 
 way property, operations, and privileges, and (2) other property, 
 operations, and privileges, the taxes on the latter may be included in 
 account I 5, "Railway Tax Accruals." 
 
 I 24. Net Loss on Miscellaneous Physical Property. 
 
 This account should include the net debit balance of the 
 revenues or income from, and the expenses (excluding taxes) 
 of, physical property carried in balance-sheet account B 6 (a), 
 ''Miscellaneous Investments — Physical Property." 
 
 Note.— If the net balance is a credit, it should be shown imder 
 account I 10, "Net Profit from Miscellaneous Thysical Troperty." 
 
 I 25. Separately Operated Properties — Loss. 
 
 This account should include amounts payable under the 
 terms of agreements or contracts whereby the deficit resulting 
 from the operation of properties of other companies having a 
 separate corporate existence and operated separately is to be 
 paid, in whole or in part, by the accounting company. 
 
 Note A .—The amoiant receivable by the operating company should 
 be credited by it to account I 17, " Contributions from Other 
 Companies.' ' 
 
 Note B. — In determining the amount payable by the accounting 
 company, consideration should be given not only to the operating 
 revenues and operating expenses, but also to other items of Income 
 or deduction which affect that amount. 
 
 Note C. — This account should not include the results from opera- 
 tions of property and facilities owned by the accounting company, the 
 revenues and expenses of which are provided for in the Classification 
 of Revenues and Expenses for Outside Operations, or in accounts 
 I 10, "Net Profit from Miscellaneous Physical Property," and I 24, 
 "Net Loss on Miscellaneous Physical Property." 
 
 Note D.— Dividends or other returns upon securities issued by 
 separately operated companies and held or controlled by the account- 
 ing company should not be included in this account to offset a 
 deficit payable, but in account I 12, "Dividend Income"; I 13, 
 "Income from Funded Securities"; or I 14, "Income from Un- 
 funded Securities and Accounts," as may be appropriate. 
 
 I 26. Interest Deductions for Funded Debt. 
 
 This account should include interest on funded debt issued 
 or assumed by the accounting company which has accrued 
 during the period for which the Income Account is stated. 
 
 Note A.— This account should include the interest accrued on aU 
 classes of funded debt as defined in balance-sheet account B 31, 
 
20 
 
 "FuBded Debt," end also the interest on receivers' certificates issued 
 for a term of more than one year, the interest accrued on long-term 
 advances, and the interest accrued on debenture stock. 
 Note B. — This account should not include charges for interest on 
 funded debt obligations issued or assimied by the accounting com- 
 pany and owned by it, whether held in its treasury, in sjjecial deposits, 
 or in sinking or other reserve funds, or pledged as collateral. (See 
 account I 31, "Appropriations of Income to Sinking and Other Re- 
 serve Fimds.") 
 
 Note C. — When funded debt is incurred for new lines or extensions, 
 the interest that accrues on the funded debt after the lines are open 
 for operation should be included in this accotmt, and should not be 
 charged to road and equipment account No. 47, "Interest and 
 Commissions." 
 
 Note D. — When funded debt is incurred for additions and better- 
 ments purposes, the interest that accrues on the funded debt after 
 the receipt or the completion or coming into service of the property 
 so acquired should be included in this account, and should not be 
 charged to additions and betterments account A 34, "Interest and 
 Commissions." 
 
 Note E.— Interest accruing on funded debt securities after matu- 
 rity should not be included in this account, but in account I 27, 
 "Interest Deductions for Unfunded Debt." 
 
 I 27. Interest Deductions for Unfunded Debt. 
 
 This account should include interest accrued on unfunded 
 debt, such as short-term notes (payable on demand or having 
 dates of maturity one year or less from dates of issue), interest 
 on matured funded securities and open accounts, and other 
 analogous items, including discount on short-term notes. 
 
 Note A. — When short-term notes or other evidences of unfimded 
 indebtedness are issued for new lines or extensions, the interest 
 that accrues after such lines or extensions are open for operation should 
 be included in this accoimt, and should not be charged to road and 
 equipment account No. 47, "Interest and Commissions." 
 
 Note B. — When short-term notes or other evidences of unfunded 
 indebtedness are issued for additions and betterments purposes the 
 interest that accrues after the receipt or the completion or coming 
 into service of the property should be included in this account and 
 should not be charged to additions and betterments accoimt A 34, 
 "Interest and Commissions." 
 
 I 28. Amortization of Discount on Funded Debt. 
 
 This account should be charged during each fiscal period 
 with such proportion of the unextinguished discount and ex- 
 pense on funded debt obligations as may be applicable to that 
 period. This proportion should be determined according to 
 a rule, the uniform application of which throughout the in- 
 terval between the date of sale and the date of maturity will 
 extinguish the discount and expense on funded debt. 
 
 In order that the discount and expense on funded debt 
 may be extinguished sooner, the company may, at its option, 
 
21 
 
 charge to account PL 11, ''Debt Discount Extinguished 
 through Surplus, ' ' all or any portion of the discount and ex- 
 pense on funded debt remaining at any time unextinguished, 
 but the charge to account I 28 for any period must not exceed 
 the proportion applicable to that period, and a charge should 
 be made for each period so long as any portion of the discount 
 and expense remains ud extinguished. 
 
 Note. — The amounts charged to this account should be concur- 
 rently credited to the Discounts and Premiums accounts in which the 
 respective discounts are carried. (See balance-sheet accounts B 20, 
 "Unextinguished Discount on Securities" and B 44, "Unextinguished 
 Premiiuns on Outstanding Funded Debt.") 
 
 I 29. Transfer of Income to Other Companies. 
 
 If, under the terms of agreements or contracts, the surplus 
 of the accounting company is payable (in whole or in part) 
 to another company, without provision for reimbursement, 
 the amount so payable should be charged to this account. 
 
 Note A.— The amount receivable by the other company should 
 be credited by it to account 1 11, " Separately Oi)erated Properties- 
 Profit." 
 
 Note B.— Dividends or other payments upon securities issued or 
 assumed by the accounting company should not be included in this 
 account. 
 
 Note C— In determining the amount payable by the accounting 
 company, consideration should be given not only to operating revenues 
 and operating expenses, but also to other items of income or deduc- 
 tion which affect that amount. 
 
 I 30. Miscellaneous Deductions. 
 
 This account should include all items, not provided for else- 
 where, properly chargeable to Income for the fiscal period for 
 which the Income Account is stated. 
 
 Note.— This account should include fines imposed by government 
 authorities, not specifically chargeable to Operating Revenues or 
 Operating Expenses. 
 
 IV. DISPOSITION OF NET INCOME: 
 
 I 31. Appropriations of Income to Sinking and Other Re- 
 serve Funds. 
 
 This account should include amounts of appropriations of 
 income for siukiug and other reserve funds. The terms of 
 mortgages, deeds of trust, or other contracts providing for the 
 allocation of income or for the payment of definite sums into 
 sinking and other reserve funds, and for accretions to such 
 funds on account of income from previous investments, may 
 be made the basis of such appropriations. 
 
 The appropriations for payments or accretions to the funds 
 may include amounts equal to (1) direct payments; (2) the 
 
22 
 
 interest or dividends on securities issued or assumed by the 
 accounting company and held in such funds; (3) the income 
 from investments in securities (other than those issued or as- 
 sumed by the accounting company) held in such funds; and 
 (4) the income from cash and other property held in such funds. 
 Note A.— The amounts charged to this account should be concur- 
 rently credited to balance-sheet account B 49, "Reserves from Income 
 or Surplus." 
 
 Note B. —If appropriations for direct payments are made from sur- 
 plus, they should be charged to account PL 6, "Appropriations ol 
 Surplus to Sinking and Other Reserve Funds." 
 
 I 32. Dividend Appropriation's of Income. 
 
 This account should include dividends on outstanding capi- 
 tal stock issued or assumed by the accounting company (other 
 than that held by it), if declared from income. 
 
 This accoimt should be subdivided so as to show separately 
 the dividends on the various classes of capital stock. 
 
 If a dividend is payable in any thing other than money, 
 such thing should be described in the entry with sufficient 
 particularity to identify it. 
 
 Note A. — This account should include the dividends declared out 
 of income on all classes of capital stock defined in balance-sheet account 
 B 28, "Capital stock," except debenture stock. The payments on 
 debenture stock should be charged to account I 26, "Int-erest Deduc- 
 tions for Funded Debt." 
 
 Note B. — This account should not include charges for dividends 
 on capital stock issued or assumed by the accounting company and 
 owned by it, whether held in its treasury, in special deposits, or in 
 sinking or other reserve funds, or pledged as collateral. (See account 
 I 31, "Appropriations of Income to Sinking and Other Reserve 
 Funds.") 
 
 Note C— This account should be used if the appropriations are 
 definitely made as chargeable to income. If similar appropriations 
 are made from surplus, they should be charged to account PL 7, 
 "Dividend Appropriations of Surplus." 
 
 I 33. Appropriations op Income for Additions and Better- 
 ments. 
 
 This account should include amounts appropriated from 
 income for additions to and betterments of property carried in 
 the road and equipment accounts. 
 
 These amounts should be subdivided so as to show (a) 
 amounts expended during preceding fiscal periods, (6) amounts 
 expended during the current fiscal period, and (c) amounts 
 held in reserve. Entries should be made concurrently credit- 
 ing the amounts to balance-sheet account B 48 ^ "Additions to 
 Property since June 30, 1907, through Income, " or to account 
 B 49, "Reserves from Income or Surplus." 
 
23 
 
 Note. — This account should be used if the appropriations are 
 definitely made as chargeable to income. If similar appropriations 
 are made from surplus, they should be charged to account I'L 8, 
 "Appropriations of Surplus for Additions and Betterments." 
 
 I 34. Appropriations of Income for New Lines and Exten- 
 sions. 
 
 This account should include amounts appropriated from 
 income for the construction of new lines or the extension of 
 existing lines. 
 
 These amounts should be subdivided so as to show (a) 
 amounts expended during preceding fiscal periods, (6) amounts 
 expended during the current fiscal period, and (c) amounts 
 held in reserve. Entries should be made concurrently credit- 
 ing the amounts to balance-sheet account B 48, "Additions to 
 Property since June 30, 1907, through Income" or to account 
 B 49, "Reserves from Income or Surplus. " 
 
 Note.— This account should be used if the appropriations are defi- 
 nitely m.ade as chargeable to income. If similar appropriations are 
 made from surplus, they should be charged to account PL 9, "Ap- 
 propriations of Surplus tor New Lines and Extensions." 
 
 I 35. Stock Discount Extinguished through Income. 
 
 This account should include such appropriations from 
 income as are made to reduce or extinguish the discount on 
 capital stock included in the Discounts and Premiums 
 accounts. (See balance-sheet account B 20, "Unextinguished 
 Discount on Securities.") 
 
 Note.— This account should be used If the appropriations are defi- 
 nitely made as chargeable to income. If similar appropriations are 
 made from surplus, they should be charged to account PL 10, 
 "Stock Discount Extinguished through Surplus." 
 
 I 36. Miscellaneous Appropriations of Income. 
 
 This account should include appropriations of income not 
 provided for elsewhere. 
 
 Note A.— This account should include any appropriations of 
 Income (except sinking fund appropriations) made for the discharge 
 of the principal (less the discount, if any, suffered at the time of sale) 
 of any indebtedness incurred in the acquisition or improvement of 
 property carried in the road and equipment accounts. The amounts 
 charged to this account for such purpose should be concurrently 
 credited to balance-sheet account B 48, "Additions to Property since 
 June 30, 1907, through Income." 
 
 Note B.— This account should be used if the appropriations are 
 definitely made as chargeable to income. If similar appropriations 
 are made from surplus, they should be charged to account PL 12, 
 "Miscellaneous Appropriations of Surplus." 
 
 Note C— This account should include such appropriations of 
 income as are made to provide a reserve for doubtful accounts. 
 
PROFIT AND LOSS STATEMENT. 
 
 List of Accounts. 
 
 I. CREDITS: 
 
 Balance (at beginning of fiscal period). page. 
 
 PL 1. Credit Balance Transferred from Income Account. 25 
 
 PL 2. Profit on Road and Equipment Sold 25 
 
 PL 3. Delayed Income Credits 25 
 
 PL 4. Miscellaneous Credits 25 
 
 Balance Debit (at end of fiscal period) carried 
 to General Balance Sheet. 
 II. DEBITS: 
 
 Balance (at beginning of fiscal period). 
 PL 5. Debit Balance Transferred from Income Account. 26 
 PL 6. Appropriations of Surplus to Sinking and Other 
 
 Reserve Funds 26 
 
 PL 7. Dividend Appropriations of Surplus 26 
 
 PL 8. Appropriations of Surplus for Additions and Bet- 
 terments 27 
 
 PL 9. Appropriations of Surplus for New Lines and Ex- 
 tensions 27 
 
 PL 10. Stock Discount Extinguished through Surplus ... 28 
 
 PL 11. Debt Discount Extinguished through Surplus 28 
 
 PL 12. Miscellaneous Appropriations of Surplus 28 
 
 PL 13. Loss on Retired Road and Equipment 28 
 
 PL 14. Delayed Income Debits 28 
 
 PL 15. Miscellaneous Debits 29 
 
 Balance Credit (at end of fiscal period) carried to 
 General Balance Sheet. 
 
 (24) 
 
TEXT EXPLANATORY OF ACCOUNTS APPEARING 
 IN THE PROFIT AND LOSS STATEMENT FOR 
 STEA^I ROADS. 
 
 I. CREDITS: 
 
 PL 1. Credit Balance Transferred from Income Account. 
 
 Under this title should be shown the net credit balance 
 brought forward from the Income Account. 
 PL 2. Profit on Road and Equipment S'old. 
 
 This account should include credits to Profit and Loss on 
 account of the sale of property carried in the road and equip- 
 ment accounts if the proceeds of such sale are in excess of the 
 amount of the assets shown therefor. 
 PL 3. Delayed Income Credits. 
 
 This account should include credits relating to operating 
 revenues, operating expenses, and other income items of pre- 
 vious fiscal periods, when such items are greatly delayed and 
 relatively large. 
 
 Note A. — As a rule, items affecting Income should be included in 
 the appropriate accounts in the fiscal period in which they accnie. 
 Only those items which are greatly delayed and the amounts of which 
 are relatively so large as to impair the figures for the current fliscal 
 period should be credited to this account. Other lap-over items 
 should be credited to the appropriate operating revenue, operating 
 expense, or other accounts in the current fiiscal period. 
 
 Note B. — All entries in this account should be made in such detail 
 as will indicate the operating revenue, operating expense, or other 
 income accounts to which they relate. 
 
 PL 4. Miscellaneous Credits. 
 
 This account should include amounts (not provided for else- 
 where) transferred from other accounts to Profit and Loss and 
 amounts representing increases of resources not properly as- 
 signable to the income of the fiscal period for which the 
 accounts are stated. Among the items which should be in- 
 cluded in this account are: 
 
 Adjustments or cancellations of old balance-sheet accounts 
 (other than road and equipment accounts) . 
 
 (25) 
 
26 
 
 Profit derived from the sale of investment securities (such 
 as stocks or bonds owned). 
 
 Profit derived from the sale of property carried in balance- 
 sheet account B 6 (a), "Miscellaneous Investments — Physical 
 Property." 
 
 Credits resulting from adjustments required to bring to par 
 securities issued or assumed by the accounting company and 
 reacquired at a cost less than the par value. 
 
 Premiums on capital stock at the time of its retirement. 
 
 Unreleased premiums on funded debt retired before 
 maturity. 
 
 TT. DEBITS: 
 PL 5. Debit Balance Transferred from Income Account. 
 
 Under this title should be shown the net debit balance 
 brought forward- from the Income Account. 
 PL 6. Appropriations of Surplus to Sinking and Other Re- 
 serve Funds. 
 This account should include amounts of appropriations of 
 surplus for sinking and other reserve funds. The terms of 
 mortgages, deeds of trust, or other contracts providing for the 
 allocation of surplus or for the payment of definite amounts 
 into sinking and other reserve funds may be made the ba^isof 
 such appropriations. 
 
 Note A. — This account should be used if the appropriations are 
 definitely made as chargeable to surplus. If similar appropriations 
 are made from income, they should be charged to account I 31, 
 "Appropriations of Income to Sinking and Other Reserve Fimds." 
 
 Note B.— If appropriations are made to cover the income accruing 
 on sinking-fund assets and to cover amounts equivalent to interest on 
 securities issued or assumed by the accounting company and held in 
 such funds, the amounts of such appropriations should not be 
 included in this account, but should be included in account I 31, 
 "Appropriations of Income to Sinking and Other Reserve 
 Funds." If appropriations are made to cover sums equivalent to 
 dividends on stock issued or assumed by the accounting company 
 and held in such funds, the amounts of such appropriations may be 
 included in this account or in accotmt 1 31. 
 
 Note C. — The amoimts charged to this account should be concur- 
 rently credited to balance-sheet account B 49, "Reserves from Income 
 or Surplus." 
 
 PL 7. Dividend Appropriations of Surplus. 
 
 This account should include dividends on outstanding capi- 
 tal stock issued or assumed by the accounting company 
 (other than that held by it), if declared from surplus. 
 
 This account should be subdivided so as to show separately 
 the dividends on the various classes of capital stock. 
 
27 
 
 If a dividend is payable in any thing other than money, 
 euch thing should be described in the entry with sufficient 
 particularity to identify it. 
 
 Note A. — This account includes the dividends declared from sur- 
 plus on all classes of capital stock defined in balance-sheet account 
 B 28, "Capital stock," except debenture stock. The payments on 
 debenture stock should be charged to accoimt I 26, "Interest Deduc- 
 tions for Funded Debt." 
 
 Note B. — This account should not include charges for dividends on 
 capital stock issued or assumed by the accotmting company and 
 owned by it, whether held in its treasury, in special deposits, or sink- 
 ing or other reserve fimds, or pledged as collateral. (See accoun:j 
 PL 6, "Appropriations of Surplus to Sinking and Other Reserve 
 Funds.") 
 
 Note C— This account should be used if appropriations are defi- 
 nately made as chargeable to surplus. If similar appropriations are 
 made from income, they should be charged to account I 32, "Divi- 
 dend Appropriations of Income." 
 
 PL 8. Appropriations of Surplus for Additions and Better- 
 ments. 
 
 This account should include amounts appropriated from 
 surplus for additions to and betterments of property carried 
 in the road and equipment accounts. 
 
 These amounts should be subdivided so as to show (a) 
 
 amounts expended during preceding fiscal periods, (6) amounts 
 
 expended during the current fiscal period, and (c) amounts held 
 
 in reserve. Entries should be made concurrently crediting 
 
 the amounts to balance-sheet account B 48, ''Additions to 
 
 Property since June 30, 1907, through Income, " or to account 
 
 B 49, "Reserves from Income or Surplus." 
 
 Note. r— This account should be used if appropriations are defi- 
 nitely made as chargeable to surplus. If similar appropriations are 
 made from income, they should be charged to account I 33, "Appro- 
 priations of Income for Additions and Betterments." 
 
 PL 9. Appropriations op Surplus for New Lines and Exten- 
 sions. 
 
 This account should include amounts appropriated from 
 surplus for the construction of new lines or the extension of 
 existing lines. 
 
 These amounts should be subdivided so as to show (a) 
 amounts expended during preceding fiscal periods, (6) amounts 
 expended during the current fiscal period, and (c) amounts held 
 in reserve. Entries should be made concurrently crediting 
 the amounts to balance-sheet account B 48, ''Additions to 
 Property since June 30, 1907, through Income," or to account 
 B 49, "Reserves from Income or Surplus." 
 
 Note. — This account should be used if appropriations are definitely 
 made as chargeable to surplus. If similar appropriations are made 
 from income, they should be charged to accoimt I 34, "Appropria- 
 tions of Income for New Lines and Extensions." 
 
28 
 
 PL 10. Stock Discount Extinguished through Surplus. 
 
 This account should include such appropriations of surphis 
 as are made to reduce or extinguish the discount on capital 
 stock included in the Discounts and Premiums accounts. 
 (See balance-sheet account B 20, "Unextinguished Discount 
 on Securities.") 
 
 Note.— This account should be used if appropriations are definitely 
 made as chargeable to surplus. If similar appropriations are made 
 from income, they should be charged to account I 35, "Stock Dis- 
 coimt Extinguished through Income." 
 
 PL 11. Debt Discount Extinguished through Surplus. 
 
 This account should include such appropriations of surplus 
 as are made at the option of the accounting company to reduce 
 or extinguish the discount and expense on funded debt. 
 
 (See account I 28, "Amortization of Discount on Funded 
 Debt," and balance-sheet account B 20, "Unextinguished 
 Discount on Securities.") 
 PL 12. Miscellaneous Appropriations of Surplus. 
 
 This account should include appropriations of surplus not 
 provided for elsewhere. 
 
 Note A. — This arcovmt should include any appropriations of sur- 
 plus (except sinking-fund appropriations) made for the discharge of the 
 principal (less the discoimt, if any, suffered at the time of sale) of any 
 indebtedness incurred in the acquisition or improvement of property 
 carried in the road and equipment accoxmts. The amounts charged 
 to this accoimt for such purpose should be concurrently credited to 
 balance-sheet account B 48, "Additions to Property since June 30, 
 1907, through Income." 
 
 Note B. — This account should be used when the appropriations 
 are definitely made as chargeable to surplus. If similar appropria- 
 tions are made from income, they should be charged to account I 36, 
 "Miscellaneous Appropriations of Income." 
 
 PL 13. Loss on Retired Road and Equipment. 
 
 This account should include charges to Profit and Loss (as 
 provided by the Classification of Expenditures for Additions 
 and Betterments), on account of (1) property (except equip- 
 ment) carried in the road and equipment accounts, which has 
 been abandoned, sold, or otherwise retired, and not replaced; 
 and (2) equipment which has been abandoned, sold, or other- 
 wise retired. 
 
 PL 14. Delayed Income Debits. 
 
 This account should include debits relating to operating 
 revenues, operating expenses, and other income items of pre- 
 vious fiscal periods when such items are greatly delayed and 
 relatively large. 
 
 Note A.— As a rule, items aflfecting Income should be included in 
 the appropriate accounts in the fiscal period in which they accrue. 
 Only those items which are greatly delayed and the amounts of which 
 
29 
 
 are relatively so large as to impair the figures for the current fiscal 
 period, should be debited to this account. Other lap-over items 
 should be debited to the appropriate operating revenue, operating 
 expense, or other accounts in the current fiscal period. 
 
 Note B.— All entries in this account should be made in such detail 
 as will indicate the operating revenue, operating expense, or other 
 income accounts to which they relate. 
 
 PL 15. Miscellaneous Debits. 
 
 This account should include amounts (not provided for else- 
 where) transferred from Profit and Loss to other accounts, 
 amounts written off in consequence of adjustments, and pay- 
 ments not properly chargeable to the income of the fiscal 
 period for which the accounts are stated. Among the items 
 which should be charged to this account are: 
 
 Adjustments or cancellations of old balance-sheet accounts 
 (other than road and equipment). 
 
 Losses or deficits not properly chargeable to income (such as 
 uncollectible bills for which no reserve has been provided). 
 
 Losses resulting from the sale of investment securities (such 
 as stocks or bonds owned). 
 
 Losses resulting from the sale, destruction, or abandonment 
 of property carried in balance-sheet account B 6 (a), "Miscel- 
 laneous Investments — Physical Property." 
 
 Losses resulting from adjustments required to bring to par 
 securities issued or assumed by the accounting company and 
 reacquired at a cost exceeding the par value. 
 
 Discounts on stock remaining unextinguished at the time of 
 its retirement. 
 
 Unextinguished discounts on funded debt retired before 
 maturity. 
 
THIS BOOK IS DUE ON THE LAST DATE 
 STAMPED BELOW 
 
 AN INITIAL FINE OF 25 CENTS 
 
 WILL BE ASSESSED FOR FAILURE TO RETURN 
 THIS BOOK ON THE DATE DUE. THE PENALTY 
 WILL INCREASE TO 50 CENTS ON THE FOURTH 
 DAY AND TO $1.00 ON THE SEVENTH DAY 
 OVERDUE. 
 
 JW IQ 1936 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 LD 21-100m-7,'33 
 
3lS-i- 
 
 A^- 
 
 UNIVERSITY OF CAIvlFORNIA UBRARY