Bud ..Lit.. [REVISED] [UNIFORM CLASSIFICATION OF ACCOUNTS Bus. Admin. Lib. FOR WATER CORPORATIONS PRESCRIBED BY THE OF THE STATE OF CALIFORNIA EFFECTIVE JANUARY 1, 1920 SAN FRANCISCO, CALIFORNIA STATK PKINTINi; OKFKT SACRAMENTO 1919 THE LIBRARY THE UNIVERSITY OF CAL [FORNIA LOS ANGELES UNlVEPSItg < LIBRA UOS ANGELES Graduate Se*-ol of University of California Los Angeles 24, California RAILROAD COMMISSION OF CALIFORNIA. EDWIN O. EDGEBTON, President Commissioner H. D. LOVELAND Commissioner FRANK R. DEVLIN Commissioner HARLEY W. BBUNDIGE Commissioner IBVING MABTIN Commissioner W. R. WILLIAMS, Secretary. , ' / [REVIS>,_. UNIFORM CLASSIFICATION OF ACCOUNTS FOR WATER CORPORATIONS PRESCRIBED BY THE RAILROAD COMMISSION OF THE STATE OF CALIFORNIA EFFECTIVE JANUARY 1, 1920 bAN FRANCISCO, CALIFORNIA CALIFORNIA STATE PRINTING OFFICE SACRAMENTO 1810 48*5 Bus. Admin. Library 5686 W3CI UNIfORM CLASSIflCATION OF ACCOUNTS fOR WATER CORPORATIONS. Approved October 25, 1912. To All Water Corporations: This uniform system of accounts for water corporations is established c iju and issued by the Railroad Commission of the State of California in accordance with provisions of section 48 of law of 1911, known as the "Public Utilities Act," in effect March 23, 1912. Section 48. ' ' The Commission shall have power to establish a system of accounts to be kept by the public utilities subject to its jurisdiction, or to classify said public utilities and establish a system of accounts for each class, and to prescribe the manner in which such accounts shall be kept. It may also in its discretion prescribe the forms of accounts, * \^") records and memoranda to be kept by such public utilities, including the accounts, records and memoranda of the movement of traffic as well as the receipts and expenditures of moneys, and any other forms, records and memoranda which in the judgment of the Commission may be necessary to carry out any of the provisions of this act. The system *< of accounts established by the Commission and the forms of accounts, records and memoranda prescribed by it shall not be inconsistent, in the case of corporations subject to the provisions of the act of congress entitled 'An act to regulate commerce,' approved February fourth, eighteen hundred and eighty-seven, and the acts amendatory thereof and supplementary thereto, with the systems and forms from time to time established for such corporations by the Interstate Commerce -_; Commission, but nothing herein contained shall affect the power of the Commission to prescribe forms of accounts, records and memoranda covering information in addition to that required by the Interstate Commerce Commission. The Commission may, after hearing had upon its o\vn motion or upon complaint, prescribe by order the accounts in which particular outlays and receipts shall be entered, charged or credited. Where the Commission has prescribed the forms of accounts, records or memoranda to be kept by any public utility for any of its business, it shall thereafter be unlawful for such public utility to keep any accounts, records or memoranda for such business other than those so prescribed, or those prescribed by or under the authority of any other state or of the United States, excepting such accounts, records or memo- randa as shall be explanatory of and supplemental to the accounts, records or memoranda prescribed by the Commission." 2-48885 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. Section 1. (x) "The term 'Water Corporation' when iised in this act, includes every corporation or person, their lessees, trustees, receivers or trustees appointed by any court whatsoever, owning, controlling, operating or managing any water system for compensation within this State." For the purpose of this system of accounts, water corporations are divided into three classes as follows : Class A Corporations having average annual operating reve- nues exceeding $100,000.00. Class B Corporations having average annual operating reve- nues less than $100,000.00, and more than $25,000.00. Class C Corporations having average annual operating reve- nues less than $25,000.00. Any corporation in Classes B and C may keep the more extended division or subdivision of any or all the accounts shown herein; if desired, further refinements or extensions of the scheme of accounts to meet the needs of individual corporations may be made by subdividing the accounts herein established, provided that the integrity of the accounts is not impaired and that the titles and purposes of any accounts so raised shall first" be filed with the Railroad Commission. All accounts shall be kept by the double-entry method by all corpora- tions or persons within the scope of this order. This requirement, however, is not intended to apply to purely statistical accounts. The first entry relating to anything for which a charge or a credit is made to any fixed capital or investment account shall describe the property in respect of which the entry is made with such fullness and particularity as to enable its identification. All charges made to fixed capital or other property account with respect to any property acquired on or after January 1, 1913, shall be the actual money costs of the property. When the consideration given and for which a charge is made to any fixed capital or other property account is anything other than money, the actual consideration shall be fully described in the entry, to enable identification, and the amount charged shall be the actual money value of the consideration at the time of the transaction. Discounts upon securities and other commercial papers issued are to be provided for in other accounts and must in no case be included as part of the cost of any property acquired. The figures and letters prefixed to the titles of accounts in the follow- ing definitions and instructions are solely for convenience of reference, and are not to be considered as part of the title or definition. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 5 All corporations are hereby required on and after January 1, 1913,, to keep their accounts in accordance with instructions herein provided. All corporations operating in more than one incorporated city or partly within and partly without an incorporated city, shall show separate profit and loss accounts for each incorporated_city ; and a single profit and loss account for all territory not within an incorporated city. All general expense common to the entire system, together with the expenses and repairs of the pumping, distributing and transmission systems, shall be treated as common to the entire system and prorated to the several incorporated cities or other territory on some equitable basis in accordance with the benefits derived. NOTE. Corporations will file with the Commission a statement in complete detail and full explanation supporting the basis on which a prorate of expenses is made. In prescribing this system of accounts, the Commission does not bind itself to approve any item set out in any account, either as to amount or character, for rate-fixing purposes or when authorizing the issuance of securities. The prescribed system of accounts is designed to set out the facts in connection with the income, expenditures, etc., and there- from the Commission will determine, when engaged in fixing rates or approving issues of securities, just what consideration shall be given to the various items in the several accounts. RAILROAD COMMISSION OF THE STATE OF CALIFORNIA. By CHARLES R. DETRICK, Secretary. Date : October 25, 1912. Commercial Building. San Francisco, California. 6 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. BALANCE SHEET ACCOUNTS. Definitions and Instructions. Balance 8ltl Accounts d< fined. 1>\ Balmier Sheet Accounts are meant those titles under \\liich the ledger accoiinls are combined and summarized to show the assets, liabilities, and profit or loss of the business at a given lime. Where the title and definition of a Balance Sheet Account clearly indicate that it is a summary of other accounts, it is not required that a special ledger account shall be raised under such a title to include the balance, from the accounts usually carried on the ledger. Assets. The term Assets is an accepted designation of the wealth -or money's worth, either actual or nominal, in the possession or control, or at the disposal of the individuals, firms, corporations, or govern- ments, when that wealth or money's worth is considered as resources for satisfying the obligation of debtors to creditors, and those of trustees to their principals; and as a basis of the property rights of owners or stockholders, or as resources classified according to their character, their relation to the principal purpose of the business or enterprise in which they are utilized, their form, or the time when and conditions under which they become owned or controlled by or at the disposal of the individual, firm, corporation or government utilizing or disposing of them. Corporate deficit is the excess of the expense and deductions over revenue or income, and represents the amount due to the corporation by its proprietors, or proprietary interests, for the replacement of lost invested capital. Liabilities. In accounting, Liabilities are primarily amounts of money or quantities of other specified forms of wealth which persons, firms, corporations, or governments are under obligation to pay or deliver, or for whose custody, use, payment, or expenditure they are responsible, or amounts representing losses or depreciation of assets incurred but not realized. Corporate surplus is the excess of revenue or income over expenses and deductions, or portions of the property rights or equity of the proprietors. ASSET ACCOUNTS. 1. FIXED CAPITAL INSTALLED PRIOR TO JANUARY 1, 1913. In this account (on the balance sheet statement) shall be shown the total of the balance in the ledger accounts representing the corpora- tion's fixed capital which was installed prior to January 1, 1913, and which is still in service at date of the balance sheet. (See text of this account under Account No. C-29, "Fixed Capital Accounts.") CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 7 2. FIXED CAPITAL INSTALLED SINCE DECEMBER 31, 1912 . This account is a summary of the accounts representing the corpora- tion's fixed capital installed since December 31, 1912, and should show the cost of the fixed capital which has been installed since that date and is still in service at the date of the balance sheet. (For primary fixed capital accounts see Accounts C-l to C-4, " Intangible Capital," and Accounts C-5 to C-28, "Tangible Capital Accounts.") 3. CASH AND DEPOSITS. A. Cash. Charge to this account the amount of current funds avail- able for use on demand in the hands of financial officers and agents, or deposited in banks or with trust companies, and cash in transit for which agents receive current credit. B. Special Deposits. Charge to this account special deposits to pay declared dividends or matured interest, cash realized from the sale of securities held for disbursement when the purposes for which the securities are sold are accomplished; special deposits other than in sinking funds for the payment of debts and interest, not matured; also money and securities deposited to secure the performance of contracts, and other deposits of a special nature not provided for elsewhere. 4. NOTES RECEIVABLE. Charge to this account the cost of all collectible obligations in the form of Notes Receivable or other similar evidences of money receivable on demand or within a time not exceeding one year. This does not include interest coupons. Time loans that mature more than one year after date of issue shall be considered as investments and shall not be included in this account. 5. ACCOUNTS RECEIVABLE. Charge to this account all amounts owing to the corporation upon accounts with solvent concerns other than banks, also the cost of all accounts and claims (except notes or negotiable bills) upon which responsibility is acknowledged by solvent concerns or which are suffi- ciently secured to be considered good, and of all judgments against solvent concerns where the judgment is not appealable or suspended through appeal. The following sub-accounts are provided : A. Accounts with System Corporations. Include in this account amounts due from proprietary, affiliated, controlled, and controlling corporations on open accounts other than those provided for in Account No. 8-B, "Advances to System Corporations for Construction, Equip- ment and Betterments." 348885 8 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. B. Due from Consumers and Agents. Include in this account amounts due from consumers and agents for services rendered or billed. NOTE. Accounts with consumers and agents shall be kept in such manner as will enable corporations to show amounts due from consumers and agents for current accounts, for delinquent accounts, and amounts due from consumers whose service has been suspended. C. Miscellaneous Accounts Receivable. Include in this account amounts due from employees for working funds advanced, and amounts due from miscellaneous debtors upon open accounts considered collectible. 6. INTEREST AND DIVIDENDS RECEIVABLE . Charge to this account all interest considered collectible accrued but not yet collected upon bonds, notes or other commercial paper, held by or for the benefit of the corporation ; all dividends declared or guar- anteed by solvent concerns but not yet collected, the right to which is in the corporation. 7. OTHER CURRENT ASSETS. Charge to this account the cost of all current assets which are not includible under any of the foregoing accounts. By Current Assets are meant only those things that are readily convertible into money and which are held not as investments, but with the intent of being presently converted into money. 8. INVESTMENTS. This account includes the cost of all properties acquired or held not for use in present operations, but as a means of obtaining and exer- cising control over other corporations, or for income to be derived from them, or for a rise in value, or for devotion to future operations, and for securing other business advantages that may seem possible through their acquisition and possession. It is subdivided as follows: A. Securities of Other Corporations. Include in this account the cost of stocks and bonds and other evidences of indebtedness issued by other companies. This account does not include any stocks, bonds, or other evidences of indebtedness issued or assumed by the accounting corpora- tion. Class A corporations will subdivide this account so as to show separately the cost of a. Stocks of System Corporations. &. Funded Debt of System Corporations. c. Miscellaneous Stocks. d. Miscellaneous Bonds. NOTE. In the annual reports to the Railroad Commission, investments will be required to be classified so as to show those held subject to a lien of some character and those held free of all lien or pledge. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 9 B. Advances to System Corporations for Construction, Equipment and Betterments. Include in this account advances to proprietary, affiliated, controlled and controlling corporations to enable such corpo- rations to pay for construction, equipment, additions, and betterments, when such advances are of a permanent nature (i. e., where there is not an understanding that the advances are to be repaid within one year) or when it is understood and intended that reimbursement shall be made by the issue of the securities of the debtor corporation. NOTE. Temporary advances on open accounts to system corporations and such advances for purposes other than construction, equipment, additions and betterments shall be included in accounts receivable. C. Miscellaneous Investments. Include in this account all other investments of a permanent nature in intangibles and in physical property not held for the operation of the company's plant as a water system. NOTE. In the annual reports to the Railroad Commission, investments will be required to be classified so as to show those held subject to a lien of some character and those held free of all lien or pledge. 9. MATERIALS AND SUPPLIES . Charge to this account the cost (including transportation) of all materials and supplies acquired, and the value of discarded equipment and of equipment, materials, and supplies returned to store, regardless of whether the same are intended to be consumed in construction or in operation, or later to be sold. Where discounts recovered through prompt payment are not credited to the particular bills, the cost at which such materials and supplies shall be charged shall be the invoice cost, and any discounts recovered through prompt payment of bills for such materials and supplies shall be credited to Account No. C 20, "Interest During Construction," or to Account No. E-45, "Undis- tributed Adjustments-Balance," according as such materials and sup- plies are intended for construction or for operation. When the use of any tangible fixed capital is discontinued it shall be treated as retired; the original cost of such capital shall be credited to the fixed capital account in which carried, and its value, if any, as second-hand material or junk shall be charged to this account, or an appropriate sub-account. If such value is not known and can not readily be determined, it. shall be estimated, and errors in such estimates, when determined, shall be adjusted through the accounts involved during the year in which the estimates were made; if later, then through the "Corporate Surplus or Deficit" account. Inventories of materials and supplies shall be taken at least annually, and any shortages or overages disclosed by such inventories shall be credited or debited to this account and debited or credited to Account No. E-48, "Undistributed Adjustments-Balance," or to Clearing 10 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. Account No. 4, "Supply Expense" (if that account is used), in case such shortages or overages can not be assigned to specific accounts. Shortages may, however, be charged directly to ' ' Corporate Surplus or Deficit." Where materials and supplies from stores have been used in construction, and it is estimated that part of the shortage or overage is due to such materials and supplies having been actually applied to construction, a proper proportion of the inventory shortage or overage should be charged or credited to Account No. C 25E, "Miscellaneous Construction Expenditures," directly or through Clearing Account No. 4, "Supply Expense." 10. SINKING FUNDS . Charge to this account the amount of cash and the cost of live securi- ties in the hands of trustees of sinking and other funds for the purpose of redeeming outstanding obligations. A separate account shall be raised for each sinking fund. 11. OTHER SPECIAL FUNDS. Charge to this account the amount of cash and the cost of securities held in trust by or for the corporation in insurance funds, pension funds, hospital funds, and other similar special funds not provided for in the preceding accounts. A separate account shall be raised for each fund. NOTE. Securities issued or assumed by the corporation may be included among the assets of special funds only when they represent the actual investment of funds held in trust and when the fund so held would share in the distribution of assets covered by the securities in case of foreclosure or dissolution. 12. TREASURY SECURITIES. Charge to this account the par value of all stocks and bonds which have been authorized and issued by the corporation or assumed by it and held by the Treasurer or other fiscal agent of the corporation for its benefit. When such securities are sold their par value shall be credited to this acount. 13. PREPAID EXPENSES. A. Prepaid Rents. Charge to this account the amount of rents paid in advance of the enjoyment of the term. As the term is consumed, credit this account at monthly intervals and debit the appropriate rent account with the amount applicable to the month. B. Prepaid Taxes. Charge to this account the excess of taxes paid over the amount properly chargeable to Income or other accounts as shown by the debit balance in the Tax Liability account. (See Account No. 26, "Taxes Accrued.") CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 11 C. Prepaid Insurance. When premiums on insurance policies are paid in advance of their accrual, the amount prepaid shall be charged to this account. As such premiums accrue, they shall be credited at monthly intervals to this account and charged to the appropriate expense account. D. Other Prepayments. When prepayments are made for anything other than as provided for in the three preceding accounts, the amount of such prepayments shall be included in this account. 14. UNAMORTIZED DISCOUNT ON SECURITIES AND EXPENSE. When capital stock, funded debt securities and other evidences of indebtedness are disposed of for a consideration whose cash value is less than the sum of the par value of the securities or other evidences of indebtedness and the interest thereon accrued at the time the transfer takes place, the excess of such sum of the par value and accrued interest over the cash value of the consideration received shall be charged to this account. To this account shall also be charged all expense connected with the issue and sale of evidences of debt, such as fees for drafting mortgages and trust deeds, fees and taxes for recording mortgages and trust deeds; cost of engraving and printing bonds, certificates of indebtedness, and other commercial paper having a life of more than one year; fees and commissions paid underwriters and brokers for marketing such evidences of debt, and other like expense. At or before the close of each fiscal period thereafter, a proportion of such discount and expense on securities representing indebtedness based upon the life of the security to maturity shall be credited to this account and charged to Account No. 109, "Amortiza- tion of Debt Discount and Expense." Such discount and expense may, if desired, be amortized more rapidly through charges of all or any part of it, either at the time of issue or later, to Account No. 114-fr, "Other Deductions from Surplus." 15. OTHER SUSPENSE. This account includes all debits not elsewhere provided for and the proper final disposition of which is uncertain. It will include all such matters as expense of preliminary surveys, plans, investigations, etc., made for determining the feasibility of projects under 'contemplation. Should any such project later be carried to completion, such amounts shall be credited to this account and charged to the proper capital account or accounts; should it be abandoned, such amounts shall be charged to "Corporate Surplus or Deficit." When the proper disposition of any matter charged to this account is determined, it shall be credited to this account and charged to the appropriate account or accounts. 12 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 16. CONSTRUCTION WORK IN PROGRESS: In this account may be included amounts expended upon plant that is in process of construction under estimates or work orders but is not ready for service at. the date of the balance sheet. It includes, also, such proportion of plant supervision expenses, engineering expenses. tool expenses, supply expenses, and general expenses as may be properly chargeable to the construction work included under this account. When the work is completed on any job, the cost of which has been included in this account, the sub-account covering that job shall be credited with the amount at which it stands charged, and the appro- priate fixed capital or other accounts shall be concurrently charged; but in no case shall any expenditure be carried in this account after the work is completed. 17. CORPORATE DEFICIT . Under this head should be shown the debit balance, if any, in the "Corporate Surplus or Deficit Account." LIABILITY ACCOUNTS. 18. CAPITAL STOCK. To this account should be credited the par value of the capital stock issued and outstanding, including any that may be in the corporation 's treasury, or held in trust for it, or in sinking or other funds. 19. INSTALLMENTS ON STOCK SUBSCRIPTION. To this account should be credited the amounts received for capital stock to be .paid for in installments, until such stock is issued. 20. FUNDED DEBT . A separate account shall be opened for each mortgage, note, or other lien or security. The entry in any account shall show the' purpose for which funded debt is issued and shall make intelligible reference to the book, page, and account wherein are shown any discount or premium- realized on the amount issued or assumed. If the consideration received for the indebtedness is other than money the entry shall show to whom issued and shall describe with sufficient particularity to identify the actual consideration received. If the issue in any case is to an agent of an undisclosed principal, the name and address of agent and the fact of his agency must be shown in the entry; also short time securities or notes and mortgages payable which are due at a date over one year in the future. 21. RECEIVER'S CERTIFICATES. When any receiver acting under the orders of a court of competent jurisdiction is in possession of the property of the corporation and CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 13 under the orders of such court issues certificates of indebtedness charge- able upon such property, the par value of such certificates shall be credited to this account. Interest accruing upon such certificates shall also be credited monthly to this account. 22. ADVANCES FROM SYSTEM CORPORATIONS FOR CONSTRUCTION, EQUIP- MENT AND BETTERMENTS. Credit this account with advances from proprietary, affiliated, controlled and controlling corporations to enable the accounting corpo- ration to pay for construction, equipment, additions and betterments when such advances are of a permanent nature (i. e., where there is not an understanding that the advances are to be repaid within one year) or when it is understood and intended that a reimbursement shall be made by the issue of the securities of the debtor corporation. NOTE. Temporary advances on open accounts for system corporations and such advances for purposes other than construction, equipment, additions and betterments shall be included in accounts payable. 23. NOTES PAYABLE. When any note or draft which matures not later than one year after date' of issue or of demand is issued or the primary liability thereon assumed by the corporation, the par value thereof shall be credited to this account and when it is paid it shall be charged to this account and credited to "Cash" or other suitable account except secured notes proper to be included in Account No. 20, "Funded Debt." 24. ACCOUNTS PAYABLE. A. Accounts with System Corporations. Credit to this account the amounts owing to proprietary, affiliated, and controlled or controlling corporations on open accounts other than those provided for in Account No. 22, "Advances from System Corporations for Construction, Equip- ment and Betterments." B. Audited Vouchers and Wages Unpaid. Credit to this account the amount of audited vouchers or accounts, and audited pay rolls unpaid on the date of the balance sheet. Include also the amount of unclaimed wages and outstanding pay and time checks issued in payment of wages. C. Consumer's Deposits. Credit to this account as such deposits are made all cash deposited with the corporation by consumers for water service as security for the payment of bills. Deposits refunded should be charged to this account and credited to cash. Deposits applicable to uncollectible water bills should be credited to the account of the consumer and debited to this account. 14 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. D. Miscellaneous Accounts Payable. Credit to this account all amounts owing to miscellaneous creditors on open accounts and not provided for elsewhere. 25. INTEREST ACCRUED. Credit to this account at the close of each month the interest accrued during the month upon the interest-bearing indebtedness, issued or assumed by the corporation, except interest on judgments and receivers' certificates. When such interest is paid it should be charged to this account and credited to "Cash" or other suitable account. The interest accruing on any judgment against the corporation or upon any receivers' certificates shall be credited to the account to which such judgment or receivers' certificates stand credited. 26. TAXES ACCRUED . To this account should be credited taxes that have accrued but are not yet due. The full amount of taxes for the year should be estimated and charged equally (one twelfth) to the expenses (Account No. E-50) of each month, with corresponding credit to this account; as soon as the amount of the taxes for the period is known, the accounts should be adjusted to conform. When taxes become due and are vouchered, they should be charged to this account. 27. DIVIDENDS DECLARED. When any dividend is declared, the amount of the dividend shall be credited to this account and here remain until it is paid, when the amount of the payment shall be charged to this account and credited to "Cash" or other suitable account. 28. SERVICE BILLED IN ADVANCE . When bills are made for water to be furnished in future months, and the amount of the bills is included in "Accounts Receivable," but not in the revenue accounts, the proportion of the bills applicable to future months shall be credited to this account. As the term for which the bills are made expires, the appropriate revenue account should be credited and this account debited with the amount applicable to the current month. i 29. RESERVE FOR ACCRUED DEPRECIATION. Credit to this account or to appropriate sub-accounts such amounts as are concurrently charged to Account No. E 52, "Depreciation of Plant and Equipment." Charge to this account or to appropriate sub- accounts (except as prescribed in the notes hereunder) the reali/ed depreciation in the several classes of tangible fixed capital; that is, the CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 15 difference between the original cost (estimated if not known) of prop- erty relinquished, retired, or destroyed, and the value of any salvage recovered. NOTH A. When any property is retired which was installed prior to the raising of the "Reserve for Accrued Depreciation," only such portion of the realized deprecia- tion shall be charged to the reserve as is due to life in service after the establish- ~*ent of the reserve ; this portion may be estimated on the basis of the proportion -nich the life in service of the property in question after the establishment of the eservo bears to its entire life in service. The remainder of the realized depreciation snail be charged to Account No. 114-B, "Realized Depreciation Not Covered by Reserves," unless the corporation has on its books a depreciation reserve accumulated prior to the establishment of the prescribed depreciation rules, in which case such other remainder, or so much of it as may be provided for, shall be charged to such other reserve account. NOTE B. When any property is retired whose book value has been reduced by writing off estimated depreciation, only that part of the realized depreciation which has not already been written off shall be charged as above to the "Reserve for Accrued Depreciation," or Account No. 114-B, "Realized Depreciation Not Covered by Reserves." NOTE] C. When any property is retired whose book value is greater than the known or estimated cost, such excess shall be charged to "Corporate Surplus or Deficit" and the realized depreciation shall be charged as elsewhere directed. NOTE D. If any property is sold for more than its original cost, the amount of depreciation, if any, accrued and credited to a reserve in respect thereof, shall be determined as accurately as possible and charged to such reserve. The sum of the amount so charged and the excess of the selling price over the cost of the property shall be credited to Account No. 115, "Miscellaneous Additions to Surplus." 30. RESERVE FOR AMORTIZATION OF INTANGIBLE CAPITAL. Credit to this account such amounts as are concurrently charged to Account No. 111-B, "Amortization of Landed Capital," and to Account No. E-51, "Amortization of Franchises and Patents." Charge to this account when any franchise, patent, or landed capital expires or is relinquished, the amount at which it stood charged in the corporation's fixed capital accounts, or such amount as has been previously credited to this reserve in respect of such capital if the amortization has not been fully accomplished. That portion of its cost which has not been covered by credits to the reserve or previously written off shall be charged to "Corporate Surplus or Deficit" account as "Amortization Unprovided for Elsewhere." 31. UNAMORTIZED PREMIUM ON DEBT. When funded debt securities or other evidences of indebtedness issued or assumed by the corporation are disposed of for a considera- tion whose cash value is greater than the sum of the par value of such securities or other evidences of indebtedness and the interest thereon accrued at the time the transfer takes place, the excess of the cash value of such consideration received over the sum of the par value of the securities or other evidence of indebtedness and the accrued interest shall be credited to this account. At monthly intervals thereafter a proportion of such premium based upon the life to maturity of the security or other evidence or maeDteaness snail be charged to this account and credited to Account No. 1.10, "Amortization of Premium on Debt Cr." in the Income account. 448885 16 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. 32. CASUALTY AND INSURANCE RESERVES. When any admitted liability arises because of loss or damage to the property of others, or of injuries to employees or other persons, the amount of the liability may (if not previously provided for by insurance or self -insurance) be charged to the appropriate operating expense or other accounts and credited to this account, against which (in such case) the actual cost of satisfaction of the liability shall be charged when the matter is determined. If the extent of the liability can not be ascertained promptly after the liability arises, it may be estimated as accurately as practicable for the purpose of determining the immediate charge to the expense or other appropriate account, in which case the matter shall be adjusted when the extent of the liability is definitely ascertained. If the lo s is of such character that it is in whole or in part indemnifiable under any contract of insurance carried by the corporation, the indemnifiable portion of the loss shall be charged to the insurer and credited to "Casualty and Insurance Reserves." Also credit to this account the amounts charged to operating expense Account No. E 45, "Insurance," to cover self-carried risks. 33. INCOME INVESTED SINCE DECEMBER 31, 1912, IN FIXED CAPITAL. Credit to this account such amounts from income or surplus as are definitely set aside to cover expenditures for extensions or improve- ments of the fixed capital cf the accounting corporation ; such appro- priations include those made discharging the principal (less the dis- count, if any, suffered at the time of sale) of any obligation incurred in the acquisition of any property whose cost is carried in the fixed capital accounts. The amounts credited to this account shall be con- currently charged to "Corporate Surplus or Deficit" account as "Appropriations to Reserves." This account should not include temporary appropriations for the acquisition of property the cost of which is intended later to be met by an issue of securities, nor appropriations for the payment of obligations which are intended to be replaced by new issues. 34. RESERVES INVESTED IN SINKING FUNDS . Credit to this account appropriations from surplus specifically invested or set aside in the hands of trustees for sinking and redemption funds, including accretions to such funds. (See explanation Account 104-C.) 35. OTHER RESERVES PROM INCOME OR SURPLUS. Credit to this' account all appropriations of income or surplus held in reserve, other than appropriations invested in fixed capital since CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 17 December 31, 1912, and appropriations invested in sinking or redemp- tion funds. A separate sub-account shall be raised for each reserve, and the entries in such sub-accounts will be required to be shown separately in the annual report to the Railroad Commission. 36. CORPORATE SURPLUS UNAPPROPRIATED . Under this head should be shown the credit balance, if any, in the ''Corporate Surplus or Deficit" account. FIXED CAPITAL ACCOUNTS. FIXED CAPITAL DEFINED. By the fixed capital of a corporation is meant the property, both tangible and intangible, which is devoted to the accomplishments of the principal purposes of its business and which has an expectation of life in service of more than one year from date of installation in service (exception being made in the case of hand tools and other small port- able tools that may be lost or stolen). COST OF FIXED CAPITAL. The term "Cost" as used in the texts for fixed capital accounts means the original cost to the corporation. It includes not only the costs of labor, materials and supplies directly employed or consumed in the construction and installation of property classed as fixed capital, but also the cost of preliminary plans and surveys and such portion of the expenses for engineering and plant supervision and general expenses as may be chargeable to the fixed capital accounts under an equitable plan for the apportionment of such expenses. Intangible Capital. C-l. ORGANIZATION. Charge to this account all fees paid to governments for the privilege of incorporation, and all office and other expenditures incident to organ- izing the corporation or other enterprise and putting it in readiness to do business. This includes the co.st of preparing and distributing prospectuses, the cost of soliciting subscriptions for stock (but not for loans nor for the issue of bonds or other evidences of indebtedness), cash fees paid to promoters, and the actual cash value at the time of organization of securities paid to promoters for their services in organ- izing the enterprise ; counsel fees ; cost of preparing and issuing cer- tificates of stock, and cost of procuring certificates of necessity from state authorities, and other like costs. This account shall not include any discounts upon stocks or other securities issued, nor shall it include 18 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. any costs incident to negotiating loans or selling bonds or other evidence of indebtedness. NOTE. Costs incident to preparing and filing certificates of authorization of incTi-ase of capital stock, and to the negotiation and issue of stock thereunder, are classed as additions. The cost of preparing and filing certificates of amendment of articles of incorporation is classed as a betterment. The cost of preparing and filing papers in connection with the extension of the term of incorporation or with reincorpo- ration consequent upon reorganization shall be classed as a renewal. C-2. FRANCHISES AND WATER RIGHTS. Charge to this account the amount (exclusive of any tax or annual charge) actually paid to the state, or to a political subdivision thereof, as the consideration for the grant of such franchise or water right as is necessary to the conduct of the corporation's water operations. If any such franchise is acquired by assignment, the charge to this account in respect thereof must ntft exceed the amount actually paid therefor by the corporation to its assignor. Any excess of the amount actually paid by the corporation over the amount paid by the original grantee to the grantor of the franchise shall be charged to Account No. 4-, ' ' Other Intangible Capital. ' ' If any such franchise has a life of not more than one year after the date when it is first exercised by the corporation, it shall not be charged to this account but to the appropriate accounts in operating expenses (or in Account No. 13-D, "Other Prepayments," if extending beyond the fiscal year). NOTE. Payments made to the state or to some subdivision thereof as a considera- tion for granting an extension for more than one year of the life period of a franchise are classed as renewals. Those made as a consideration for franchises or extensions thereof covering additional territory to be operated as part of an existing system are classed as additions. If the franchises cover separate and distinct new plants the payments therefor are classed as original capital. Annual or more frequent payments in respect of franchises must not be charged to this account but to the appropriate tax or operating expense account. C-3. PATENT RIGHTS. Charge to this account the cost of all rights (having a life of more than one year from the date when placed in service) acquired by the corporation in or under valid patents granted by the United States to inventors for inventions and discoveries which are necessary to the economical conduct of the corporation's water operations. NOTE. If a patent right is extended to cover a further period of time than that covered by the original grant, the cost of such extension is classed as a renewal. A patent right acquired for use in an existing system and necessary to the economical operation thereof is classed as an addition. C-4. OTHER INTANGIBLE CAPITAL. Charge to this account the cost of all other intangible capital devoted to water operations. Entries of charges to this account shall describe the acquired property with sufficient particularity clearly to identify it, and shall also show specifically the principal from whom acquired and CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 19 all agents representing such principal in the transaction ; also the term of life of such property, estimated if not known, and if estimated, the facts upon which the estimate is based. Class B and C corporations may consolidate these four accounts, carrying one account, "Intangible Capital." TANGIBLE CAPITAL. C-5. LANDED CAPITAL. Charge to this account the cost to the utility of all lands used and useful in its water operation, embracing source of water supply lands, pumping station land, purification land, rights of way for transmission and distribution facilities, pipe lines, and ditches, where such rights have lives in excess of one year from the date when such land is placed in service. Such cost includes, when assumed or paid by the purchaser in its own behalf, cost of registration of title, cost of examination of title, conveyancer's and notary's fees, purchasing agent's fee or, commission, or proportion of purchasing agent's salary, taxes accrued to date of transfer of title, liens upon the title acquired, cost of obtaining consents and payments for abutting damages; also assessments for betterment to real estate. NOTE A. Cost of buildings and other improvements must not be included in this account. NOTE B. If at the time of acquisition of an interest in lands it extends to building? or other improvements thereon, which improvements are devoted by the corporation to its water operations, and the contract of acquisition does not determine the price of such improvements, they shall be appraised at their fair cash value for use in such operations, and such appraised value shall be charged to the appropriate structures account, and excluded from the account "Land Devoted to Water Operations." If sucl: improvements are not devoted to water operations but are devoted to other operations or held as investments, the cost (or appraised value if the cost is not determined In the contract of acquisition) shall be charged to the appropriate investment account or capital account for other operations. If the improvements are removed or wrecked, the salvage (less the cost of removal or wreckage) shall be excluded from the account "Land Devoted to Water Operations." The entries in this account must be made in such wise as to enable the corporation to show in its annual report to the Railroad Commission the subdivision of the cost of its land devoted to water operations into the following: A. SOURCE OF WATER SUPPLY LAND. B. PUMPING STATION LAND. C. PURIFICATION LAND. D. RIGHT OF WAT. E. GENERAL OFFICE AND OTHER LANDS. C-6. BUILDINGS, STRUCTURES AND GROUNDS. Charge to this account the cost of all buildings, structures and permanent improvement of grounds used in the production operation of the water utility, embracing source of water supply buildings, pumping station buildings, purification buildings, and general office and other buildings and fixtures. 20 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. The following subaccounts should be raised : A. Source of Water Supply Buildings and Fixtures. Includes dwell- ings occupied by patrolmen, inspectors, caretakers or other employees engaged in the operation of the source of water supply facilities, well houses, pump houses and other buildings appurtenant thereto. B. Pumping Station Buildings and Fixtures. Includes all buildings and fixtures devoted to the pumping of water. C. Purification Buildings and Fixtures. Includes buildings, fixtures and permanent improvement of grounds devoted to water purification ; roofs over reservoirs, basins, etc. should be included in the appropriate capital account as part of cost of reservoirs, basins, etc. D. General Office and Other Buildings and Fixtures. Includes all buildings, fixtures and permanent improvement of grounds devoted to general offices, shops, storehouses, stables, garage and other miscel- laneous buildings and structures devoted to water utility operations, not included in the foregoing accounts. NOTE 1. Where general offices, shops, storehouses, stables, garages, etc., are located in one of the buildings under subaccounts A, B and C, no part of the cost of such buildings should be charged to this account (subaccount D). NOTE 2. The term "buildings, fixtures and grounds" includes : Structures of a permanent character and all fixtures permanently attached thereto, such as water pipes and fixtures, pipes and fixtures for warming and ventilating, gas pipes and fixtures for lighting purposes, electric wiring and fixtures for lighting, signalling and elevator purposes, and the engines and motors especially provided for operating them ; furnaces, boilers, etc., especially provided for producing steam for such engines and for heating ; electric generators especially provided for producing current for lighting such buildings ; all brick, concrete, iron or steel smokestacks used for heating or power plant purposes ; architect fees, excavations, grading, walks, drives, fences, walls, pavements and other improvements adjacent to such buildings. The cost of founda- tions and settings prepared especially for certain units of equipment and designed to last no longer than such units shall not be charged to this account, but to the account to which is charged the cost of the equipment for which installed. SOURCE OF WATER SUPPLY. C-7. IMPOUNDING DAMS AND RESERVOIRS. Charge to this account the cost of constructing dams and embank- ments across streams or canyons for impounding water; excavated reservoirs used in connection therewith, together with waste weirs, gates, culverts, tunnels, outlet wash and drain pipes, valves, screens and all equipment for operating valves, gates, screens, etc. C-8. LAKE AND RIVER CRIBS. Charge to this account the cost of constructing cribs in lakes or rivers, diversion dams and headgates for the purpose of collecting or diverting water therefrom, together with appurtenant valves, screens, gates, grating and the equipment to operate them. C-9. INTAKE AND SUCTION MAINS. Charge to this account the cost of constructing conduits, either pipe or tunnel, for conveying water by gravity or suction, from intake cribs, CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 21 springs and wells, or some other form of reservoir where the water is temporarily stored to await purification or pumping, together with appurtenant equipment, such as gates, valves, and other apparatus. C-10. WELLS. Charge to this account the cost of sinking shallow wells, open wells, deep wells, including casing walls, pits, together with all waste and over- flow pipes and other appurtenant equipment. C-ll. SPRINGS AND INFILTRATION GALLERIES. Charge to this account the cost of constructing basins, collecting chambers, etc., to utilize the flow o-f water from springs, the cost of constructing galleries for collecting water by infiltration; and the cost of all equipment such as gates, valves, or other apparatus necessary to the operation of such facilities. C-12. COLLECTING RESERVOIRS AND INTAKE WELLS. Charge to this account the cost of constructing reservoirs or intake wells for the purpose of holding a supply of water in readiness for purification or pumping, including gates, valves, inlet, outlet, drain and flush pipes and other appurtenant equipment. C-13. CANALS AND CONDUITS. Charge to this account the cost of constructing canals, conduits, and aqueducts for conveying water from the source of supply to the purifi- cation or pumping plant, including trestles, bridges, culverts, tunnels, main weirs, gates, valves, screens and other apparatus necessary to the operation of such facilities. PUMPING STATION EQUIPMENT. C-14. PUMPING EQUIPMENT. Charge to this account the cost of all equipment and apparatus used in the pumping of water and all processes performed upon it at the station up to its delivery to the transmission or distribution mains. This includes the cost of steam engines and turbines, hydraulic power equipment, electric prime movers, gas engines and turbines, pumps and pump equipment, furnaces, boilers, their foundations and settings, condensers, vacuum pumps and oiling systems, power transmission equipment, such as shafting, belting, rope and cable drives, gearing, pulleys, etc., flues to the smokestack entrance, feed pumps, piping, valves and all steam, hydraulic, electric and gas power pumping equip- ment, together with necessary tools and appliances. NOTE 1. The accounting corporation may, if it so desires, subdivide this account, under subaccounts A, B, C, etc., in order to show the details of cost of various classes of equipment. NOTE 2. The cost of smokestacks should not be charged to this account, but to Account No. C-6, B, "Pumping Station Buildings and Fixtures." 22 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. C-15. MISCELLANEOUS PUMPING STATION EQUIPMENT. Charge to this account the cost of all miscellaneous equipment ; this includes horses, wagons, harness, automobiles, motorcycles, bicycles, furniture and fixtures (when not a permanent part of buildings, etc.), roads, trestles, bridges, etc. PURIFICATION CAPITAL. C-16. PURIFICATION SYSTEM. Charge to this account the cest of all apparatus and equipment used for purification of water. This includes settling basins, filter beds, mechanical filters, and all auxiliary apparatus for purifying water, together with protecting structures erected in connection therewith. NOTE. Regarding structure. See text of Account No. C-6, C, Purification Buildings and Fixtures. TRANSMISSION AND DISTRIBUTION CAPITAL. O-17. TRANSMISSION MAINS OR CANALS. Charge to this account the cost of all transmission mains either pipes or canals, used for delivering water from the pumping station impound- ing reservoir or other source of supply to the distribution reservoirs or mains; this includes the cost of all trenching for pipes or canals, placing transmission main pipe, special castings, lead packing, shut-offs, man- holes, valves and the cost of filling trenches, and restoring the surface of the street to its former condition as required by the municipal authorities, canal excavation, checks, drops, bridges, spillways, and miscellaneous canal structures. NOTE. Transmission main, as distinguished from distribution main, is used for conveying water to the distribution storage reservoirs, tanks, or standpipe, and has no direct service connection with consumers ; mains having 1 such connections will be classed as distribution mains, or if the distance between the source of supply and the first direct service connection with consumers is considerable, the portion between the source of supply and the first direct service connection with consumers will be classed as transmission main. The cost of replacing paving disturbed in laying transmission mains shall be included in a subaccount. NOTE. On an irrigation system, the transmission is the main canal from which the laterals are supplied. C-18. DISTRIBUTION MAINS OR CANALS. Charge to this account the cost of all distribution mains either pipes or canals in place. This includes all mains or canals used in the distribution of water to the beginning of the service connections, includ- ing the cost of all trenching, placing distribution main pipe, special work and castings, lead packing, shut-offs, manholes, valves and t In- filling of trenches and restoring the surface of the street to its former condition as required by the municipal authorities; also excavations. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 23 checks, spillways, bridges, waterways, main lateral headgates, and all structures in lateral canals. NOTE. A distribution main begins at the outlet valve of the pump, when such main has direct service connections witli consumers at a relatively short distance from the pumping station. If water is pumped into a storage reservoir, tank or stand- pipe through a main having no direct service connections with consumers, such main will be classed as transmission, and the distribution main will begin at the outlet valve of such storage reservoir, tank or standpipe. The cost of replacing paving disturbed in laying distribution mains shall be included in a subaccount. C-19. DISTRIBUTION RESERVOIRS, TANKS AND STANDPIPES. Charge to this account the cost of constructing distribution storage reservoirs, tanks and standpipes, including appurtenant equipment, such as inlet, outlet, flush drains and overflow pipes, gates, check and control valves, floats, gauges, high water alarms, and all other equip- ment necessary to the operation of such reservoirs, tanks and stand- pipes. C-20. HYDRANTS, FIRE CISTERNS, FOUNTAINS, ETC. Charge to this account the corporation's property in all hydrants, fire cisterns, basins, fountains and troughs; this includes all material in place, the cost of trenching for placing hydrants, hydrant connections, masonry and concrete in connection with construction of basins and cisterns, and all foundations and settings for fountains and troughs and restoring the pavement to its original condition. NOTE. This account should be segregated on the utilities' books under subaccounts A, B, etc., in order to show the cost of installing hydrants, as distinguished from cisterns, troughs, etc. C-21. SERVICES. Charge to this account the cost of corporation's property in services in or leading to the consumers' premises. This includes the cost of material in place, the cost of trenching for placing services, service pipe, service boxes, stopcocks, etc., and the cost of filling the trenches and restoring the surface to its proper condition. C-22. METERS AND MEASURING DEVICES. Charge to this account the cost, including labor, of setting meters used in measuring water sold to consumers, the property of the utility. This includes the first cost of setting meters, measuring devices, weirs, etc., the first set of meter fittings, and the connection in the premises of the consumer, or such portion of the cost as is borne by the utility. Also the cost of all measuring devices, weirs, etc., including labor of installation, used in the delivery of water from the canals of the utility, to the consumer. The cost of changing the position of a meter or device, or its removal must not be charged to this account. 5-48885 24 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. C-23. MISCELLANEOUS DISTRIBUTION EQUIPMENT. Charge to this account the cost of all miscellaneous equipment used in the distribution of water and which is not includable in the foregoing accounts. This includes tools and appliances (working stock only), horses, wagons, harness, automobiles, motorcycles, bicycles, furniture and fixtures (when not a permanent part of buildings, etc.), roads, trestles and bridges, etc., where a part of the distribution system. GENERAL CAPITAL. C-24. GENERAL EQUIPMENT. Charge to this account the cost of all equipment of general structures, as provided under the following heads : A. General Office Equipment. This includes the cost of all equip- ment of general offices, such as desks, chairs, tables, movable safes, filing cases, drafting-room equipment, and other like office appliances and equipment ; also engineering instruments. B. General Shop Equipment. This includes the cost of all equip- ment specially provided for general shops, such as furnaces, boilers, gas producers, engines, electric generators, and other power apparatus used in operating machinery in such shops; machine tools, cranes, hoists, shafting, belts and the like shop equipment ; also such smithing equip- ment in general shops as is used principally for other general purposes than shoeing horses and repairing vehicles. NOTE. Hand and other small portable tools liable to be lost or stolen shall not be included herein, but portable tools and apparatus of special value may be charged to this account and remain herein so long as record is kept of the persons to whom such tools and apparatus are issued and such persons are made responsible therefor. C. General Store Equipment. This includes the cost of all equipment of general store structures, such as movable counters, movable shelving, and other movable equipment of like nature, carts, barrows, trucks, etc., and other apparatus and appliances used in handling materials and supplies. NOTE. Counters, shelving and the like, which are permanently attached to the structure shall be charged to Account No. C-6, and not to this account. D. General Stable and Garage Equipment. This includes the cost of all equipment of general stables and garages including horses, harness, drays, wagons, automobiles and other vehicles, equipment of shoeing shops, harness repair shops, vehicle repair shops, etc. C-25. UNDISTRIBUTED CONSTRUCTION EXPENDITURES. This account includes the expenditures provided for in the following sub-accounts, when such expenditures can not be satisfactorily allocated to the fixed capital accounts to which they relate. Upon the retirement or withdrawal of any property with respect to which any charge is CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 25 included in this account or any sub-account hcreunder, there shall be credited to this account or the appropriate sub-account such part of the undistributed expenditures during construction (estimated if not known) as may be applicable to the property withdrawn or retired. A. Engineering and Superintendence. Charge to this account all expenditures for services of engineers, draftsmen and superintendents employed on preliminary and construction work, and expenses incident to the work of such employees when the expenditures can not be assigned to specific construction accounts. B. Law Expenditures During Construction. Charge to this account general law expenditures incurred in the construction of the water plant, such as the pay and expenses of counsel, solicitors and attorneys, their clerks and attendants, and expenses of their offices; the cost of printing briefs, legal forms, testimony, reports, etc. ; payments to arbi- trators for the settlement of disputed questions ; cost of suits and pay- ments of special fees, notarial fees and witnesses fees, and court expenses. When any of the expenditures enumerated herein can be charged directly to the account for which incurred, they shall be so charged, and not to this account. Law expenditures in connection with the organization of the corporation shall be charged to Account No. 1, ''Organization." C. Injuries and Damages During Construction. Charge to this account all damage to or destruction of property other than that owned by the corporation, caused directly in connection with the construction of the works, all expenses incident to injuries or death of employees and other persons for which the corporation is held liable. This includes such expenses as judgments, court costs, salaries and expenses, or fees of physicians, surgeons, expenses of undertakers, nursas, and hospital expenses, medical and surgical supplies, contribution to hospitals during the period of construction of the plant, transportation of injured per- sons, salaries paid to employees while disabled, the salaries and expenses of claim agents, adjusters and their assistants. The compensation of the general solicitors or counsel of the corporation while engaged in the defense and settlement of damage or injury sustained will also be charged to this account. D. Taxes During Construction. Charge to this account all taxes and assessments levied and paid on property belonging to the corporation while under construction and before the plant is opened for operation, except special taxes assessed for street and other improvements, such as grading, sewering, curbing, guttering, paving, sidewalks, etc., which shall be charged to the account to which the property benefited is charged. E. Miscellaneous Construction Expenditures. Charge to this account salaries and expenses of executive and general officers of the corporation 26 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. before it is ready to begin operations ; clerks in general offices engaged on construction accounts or work; rent and repair of general offices when rented, with the office expenses ; insurance during construction ; also construction and equipment items of a special and incidental nature which can not properly be charged to any other fixed capital account. NOTE A. This account may include a suitable proportion of store expenses when such expenses are not assignable to specific materials. NOTE B. This account shall not include any costs of organization, or any costs or discounts connected with the issue and disposal of stocks, bonds, or other securities, or commercial paper. C-26. INTEREST DURING CONSTRUCTION. Charge to this account the interest accrued upon all moneys (and credits available upon demand) expended in connection with the con- struction and equipment of the property from the time of such acquisi- tion until the construction is ready for use. Interest receivable accrued upon such moneys and credits shall be credited to this account. Credit to this account also discount realized through prompt payment of bills for materials and supplies used in construction, unless such discounts are credited to the bills ta which they apply. If any property with respect to which an interest is included in this account is withdrawn or retired from service, the amount of such interest (estimated if not known) shall be credited to this account and charged off as part of the original cost of the property so retired. No interest upon expenditures for replacements, renewals or reconstruction shall be included in this or any other fixed capital account unless proper credits are made to the appropriate fixed capital accounts for any interest included in such accounts in respect of property retired or withdrawn. C-27. COST OF PLANT PURCHASED IN LIEU OF PLANT CONSTRUCTED. Charge to this account the purchase price of a plant acquired. In the entry reference shall be made to decision number under which the Railroad Commission authorized the purchase. This account shall be used only as a clearing account and will be closed by a transfer to the appropriate primary accounts. C-28. FIXED CAPITAL INSTALLED PRIOR TO JANUARY 1, 1913 . In this account (on the balance sheet statement) shall be shown the total of the balances in the ledger accounts representing the corpora- tion's fixed capital which was installed prior to January 1, 1913, and which is still in service at the date of the balance sheet. The accounts representing the fixed capital of the corporation as carried on its books at the close of December 31, 1912, shall be so designated upon the books of the corporation as to show clearly that they relate only to fixed capital installed prior to the close of that CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. 27 date. No debits shall be made to such accounts with respect to any property subsequently acquired, but the cost of such property shall be charged to the accounts hereinbefore provided. When any property acquired prior to January 1, 1913, is withdrawn or retired from service, the amount at which it stands charged shall be credited to the account in which it is charged and concurrent debits shall be made (1) to "Cash," "Materials and Supplies," or other account, as may be appro- priate, for the value of any salvage; (2) to Account No. 29, "Reserve for Accrued Depreciation," or to Account No. 30, "Reserve for Amortization of Intangible Capital," for the amount of depreciation or other amortization applicable to the period subsequent to December 31, 1912; and (3) to "Corporate Surplus or Deficit Account" for the' remainder of the amount at which the property is carried in the accounts for fixed capital; unless the corporation had on that date a reserve for retirements, in which case the latter amount, or so much of it as may be applicable, shall be charged to such reserve account. NOTE. In the reports to the Railroad Commission, a statement will be required showing the names of the accounts for fixed capital actually carried by the corpo- ration on December 31, 1912, and the balances therein at the date of the report. C-29. FIXED CAPITAL INSTALLED SINCE DECEMBER 31, 1912. This account is a summary of the accounts representing the corpora- tion's fixed capital since December 31, 1912, and should show the cost of the fixed capital which has been installed since that date and is still in service at the date of the balance sheet. (For the primary Fixed Capital accounts, see Account C-l to C-4, "Intangible Capital," and Accounts C-5 to C-27, "Tangible Capital.") INCOME ACCOUNT. INCOME ACCOUNT DEFINED . The income account brings together those accounts that show the total amount of money that the corporation has received or becomes entitled to receive for services rendered during a given period, the return accruing during the period upon investments, and the disbursements and obligations incurred that affect the disposition of the amounts so received or accrued. The following accounts make up the income account .statement and should be closed into the Income Account at the close of the year or other fiscal period. 101. OPERATING REVENUES. Include in this account the total operating revenues of the corpora- tion for the period covered by the income statement. See Accounts R-l to R-9, inclusive, under "Operating Revenue." 28 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 102. OPERATING EXPENSES. Include in this account the total operating expenses of the corpora- tion for the period covered by the income statement. (See Accounts E-l to E-51, inclusive, under "Operating Expenses.") 103. UNCOLLECTIBLE WATER BILLS. Charge to this account (and credit the account receivable in which theretofore carried) the amount of any account for water services vhich, after a reasonably diligent effort to collect, has proved imprac- ticable of collection. This account includes only uncollectible bills for amounts which have been treated as operating revenues; other uncol- lectible bills should be charged to Account No. 105-G, "Uncollectible Non-operating Revenues," or to Corporate Surplus or Deficit Account, as may be appropriate. Debts written off as bad but subsequently collected, shall be credited to this account. 104. NON-OPERATING REVENUES . A. Rents from Buildings, Land and Apparatus. Credit to this account as it accrues rent from the rental of buildings, land and water apparatus and appliances. Where the contract of rental includes the setting and connection of such apparatus and also its maintenance by the corporation, the total earnings from such rental shall be credited to thifi account. B. Interest and Dividend Revenues. Credit to this account monthly Jill revenues accruing to the corporation, not retained in specific sinking or other reserve funds, from interest upon all its bank balances, special deposits, and other assets, when such interest is a liability of solvent concerns or individuals, and from dividends declared or guaranteed by solvent concerns upon stocks held by the corporation. No interest or dividends upon securities issued or assumed by the accounting corpora- tion shall be credited to this account nor to any other revenue account. Class A corporations will subdivide the revenue included herein and keep separate accounts for a. Interest Revenues on Funded Debt owned. b. Miscellaneous Interest Revenues. c. Dividend Revenues. C. Sinking and Other Reserve Fund Accretions. Credit to this account and charge the appropriate fund or its trustee, the revenues from securities and other assets in the hands of trustees or specifically set aside for sinking and other special funds, when the revenues are retained as a part of the funds. NOTE. Concurrent entries should be made charging Account No. 113, "Sinking Fund Appropriations," or Account No. 114-E, "Appropriation to Reserves," crediting Account No. 34, "Reserves Invested in Sinking Funds," or No. 35, "Other Reserves from Income or Surplus," as may be appropriate. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 29 D. Miscellaneous Non-operating Revenues. Credit to this account all non-operating revenues not provided for in the foregoing accounts. 105. NON-OPERATING REVENUE DEDUCTIONS . A. Kent Expenses. Charge to this account all expenses arising in (,'onnection with the procuring of revenues from rented property, such as the cost of negotiating contracts, advertising for tenants, fees paid conveyancers, collector's commissions, cost of enforcing payment of rent, cost of ousting tenants, etc. This includes the expenses accruing while the property is idle and awaiting an occupant: also the cost of maintenance of the property when such cost is borne by the corporation. Such maintenance includes depreciation as well as reparable wear and tear. It doas not include taxes. B. Interest Expenses. Charge to this account all expense arising in connection with procuring interest upon investments, such as expense of collection, expense of investigating delay in payment, expense of enforcing payment, and the like. It does not include taxes on such investments. C. Dividend Expenses. Charge to this account all expense arising in connection with the collection of dividends on stocks of other corpo- rations, including expenses incurred in the investigation of the affairs of the corporations whose stocks are held, whether for the purpose of detecting mismanagement or for the purpose of inducing the declara- tion of dividends, and all expense connected with enforcing payment of dividends when declared. It does not include taxes on such in vest- ments. D. Others' Operations Expenses. Charge to this account the cost of negotiating contracts whereunder the corporation is to participate in the profits resulting from the operations of others ; also all expense of collecting the corporation's proportion of such profits, and all expense connected with procuring the modification or the dissolution of any such contract. E. Miscellaneous Non-operating Expenses. Charge to this account all non-operating expense not provided for in the foregoing sub-accounts. F. Non-operating Taxes. Charge to this account all taxes payable by the corporation accrued upon non-operating property, and all taxes assignable to non-operating revenues. G. Uncollectible Non-operating Revenues. When any non-operating revenues are judged by the corporation to be uncollectible, the amount thereof shall be credited to the account in which theretofore charged nnd charged to this account. 30 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 106. INTEREST ACCRUED ON FUNDED DEBT . Charge to this account monthly all interest accrued on outstanding funded debt issued or assumed by the corporation. This account does not include interest on securities held by the corporation in its treasury, or pledged as collateral. NOTE A. The amount charged to this account shall be concurrently credited to Account No. 25, "Interest Accrued," to which account shall be debited payments made on account of interest, 107. OTHER INTEREST DEDUCTIONS. Charge to this account monthly all interest accrued on receivers' certificates and on interest bearing unfunded obligations of the corpo- ration. NOTH A. The amount charged to this account shall be concurrently credited to Account No. 25, "Interest Accrued," or to No. 21, "Receivers' Certificates," to which accounts shall be debited payments made on account of such interest. 108. RENT DEDUCTIONS. Charge to the appropriate account as under, rents paid or accrued on property of all kinds used in the operation of the water system. A. Rent for Lease of Other Water Plant. Charge to this account monthly all amounts accrued against the corporation for rent of water plant and equipment which it holds under some form of lease from another, and of which it has the exclusive possession. This account is intended to cover only rents payable for the use of water plant or operating units held as a whole under some form of lease. B. Miscellaneous Rent Deductions. Charge to this account all other rents paid or accrued on property used in the operation of the water system. 109. AMORTIZATION OF DEBT DISCOUNT AND EXPENSE . Charge to this account at or before the close of any fiscal period that proportion of the unamortized discount and expense on outstanding debt which is applicable to the period. This proportion shall be deter- mined according to a rule, the uniform application of which during the interval between the issue and the maturity of any debt will completely amortize or wipe out the discount at which such debt was issued and the debt expense connected therewith. Such amortization may at the option of the corporation be earlier affected by charging all or any portion of such discount and debt expense to Account No. 114^G, "Other Deductions from Surplus," immediately upon issue of the debt or thereafter. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 31 UO. AMORTIZATION OF PREMIUM ON DEBT CR. Credit this account at or after the close of any fiscal period the proportion of the premium at which outstanding debt was issued which is applicable to the period. This proportion shall be determined according to a rule, the uniform application of which during the interval between the issue and the maturity of any debt will completely amortize or wipe out the premium at which such debt was issued. 111. MISCELLANEOUS DEDUCTIONS FROM INCOME . Charge to this account the matters provided for in the following sub-accounts : A. Loss on Operations of Others. Whenever, in accordance with the terms of any contract, the corporation is bound to contribute toward reimbursement of the losses resulting from the operations of others, all liabilities accruing to the corporation from such source shall be charged to this account. B. Amortization of Landed Capital. Charge to this account at the close of any fiscal period such portion of the original money cost (estimated if not known) of landed capital as is necessary to cover the proportion of the life thereof expired during such period. NOTH A. The amounts charged to this account shall be concurrently credited to Account No. 30, "Reserve for Amortization of Intangible Capital." NOTII B. When any landed capital expires or is otherwise retired from service (as, e. ff., through sale) the capital account or investment account (if any) originally charged therewith shall be credited with the amount originally charged ; Account No. 30, "Reserve for Amortization of Intangible Capital," shall be debited with all amounts theretofore credited to such account in respect of such landed capital so going out of service, the appropriate account shall be debited with the proceeds of sale (if any), and any necessary adjustment shall be made through the "Corporate Surplus or Deficit" account. C. Other Contractual Deductions from Income. Charge to this account all deductions from gross income which are in the nature of fixed charges and not provided for otherwise, such as those required by the terms of some contract, agreement, charter provision, law, or ordi- nance. Such deductions should not include any appropriations or dis- positions of income that rest solely in the discretion of the accounting corporation. NOTE. Payments to sinking funds shall not be charged to this account but shall bo included In Account No. 113, "Sinking Fund Appropriations." CORPORATE SURPLUS OR DEFICIT ACCOUNT. CORPORATE SURPLUS OR DEFICIT ACCOUNT DEFINED. This account or summary is the connecting link between the income account and the balance sheet. It summarizes the changes in the corpo- rate surplus or deficit during a given fiscal period resulting from the business transactions during that period as well as those affected by 32 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. any disposition of net profits made solely at the option of the corpora- tion, by accounting adjustments not properly attributable to the period, or by miscellaneous losses or gains not provided for elsewhere. To this account should be carried the net balance of the accounts forming the Income account, and in it should be summarized all optional appropriations (including dividends) ; miscellaneous adjust- ments due to errors in accounting in prior fiscal periods; profits from the sale of securities or other property; losses upon property sold or otherwise retired and not covered by reserves, and unusual losses and gains of like nature. For these matters the following accounts are provided ; their net balance added to the net balance from the Income account should show the net surplus or deficit on the date of the balance sheet. 112. DIVIDENDS ON OUTSTANDING STOCK. When any dividend is declared upon any outstanding stocks of the corporation, the amount of such dividend shall thereupon be charged to this account. All entries to this account shall show the amount of stock upon w y hich the dividend is declared as well as the amount thereof. If the dividend is payable in anything other than money, such thing shall be described in the entry with sufficient particularity to identify it, and the actual money value thereof shall be stated as the amount of the dividend. When any dividend is declared upon the stocks of the corporation owned by or held in behalf of the corporation, the amount of such dividend thereon shall be credited to this account. Entries of credits to this account shall be made with the same degree of particularity as is prescribed in the preceding paragraph. 113. SINKING FUND APPROPRIATIONS. Charge to this account all appropriations to sinking funds and accre- tions to such funds on account of income from previous investments. Such appropriations should include: (1) direct payments; (2) income from investments of sinking funds; (3) income from cash or special deposits held by trustees of sinking funds. All earnings of sinking funds and contributions to such funds shall be included in this account whether such contributions are made at the option of the corporation or are required by the provisions of mortgages, deeds of trust, or other contracts. 114. MISCELLANEOUS DEDUCTIONS FROM SURPLUS. A. Expenses Unprovided for Elsewhere. Charge to this account all expenses not chargeable as a part of operating expenses or of non- operating expenses, such as fines levied on the corporation for violation CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 33 of law, for misfeasance, etc., fines levied on directors, officers, and other employees of the corporation and assumed by it, donations to funds, to churches and other associations, and other like expenses and outgoes. B. Realized Depreciation Not Covered by Reserves. Charge to this account the realized depreciation (that is, the difference between the original cost and the salvage, if any) on tangible capital retired, when such depreciation has not been provided for through a depreciation reserve. This includes such portion of the realized depreciation on any physical property which was installed prior to the creation of the reserve for accrued depreciation as is due to life in service before that date; this portion may be estimated on the basis of the proportion which the life in service of the property in question prior to the establishment of the reserve bears to its entire life in service. C. Amortization Unprovided for Elsewhere. Charge to this account when any intangible property expires or is relinquished, such portion of its cost as has not been previously written off or is not covered by Account No. 30, "Reserve for Amortization of Intangible Capital." Charge also to this account all optional amortization, such as that of 'organization expenses, and assets, carried in Account No. C 4, "Other Intangible Capital." D. Gifts to Controlled Corporations. Charge to this account all gifts made by the corporation to its controlled corporations, also such portions of all advances thereto as are not carried as assets. E. Appropriations to Reserves. Charge to this account all optional appropriations to reserves. F. Other Appropriations from Surplus. Charge to this account all optional appropriations made by the corporation and not provided for elsewhere. NOTE. A complete analysis of this account will be required in annual reports of corporations to the Railroad Commission. G. Otlicr Deductions from Surplus. Charge to this account all deductions from surplus made to extinguish discount on stocks out- standing, optional amortization of debt discount and expense, deduc- tions because of erroneous accounting in prior fiscal periods, and all other deductions from surplus not provided for elsewhere. NOTE. A complete analysis of this account will he required in annual reports of corporations to tho Railroad Commission. 115. MISCELLANEOUS ADDITIONS TO SURPLUS. Credit to this account all additions to surplus due to erroneous accounting in previous fiscal periods, profits arising from the sale of securities or other property, etc. 34 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. OPERATING REVENUES WATER. EXPLANATION. Revenues Defined. By revenues, as the word is used herein, are meant all amounts of money which the corporation receives or becomes law- fully entitled to recover for services rendered, for products sold, as gro-:s profits on merchandise sold, or as a return upon its property (or interest in property). Revenues are classified as OPERATING REVENUES and NON-OPERATING REVENUES. Operating Revenues Defined. Operating revenues are those derived from the sale of products and merchandise, from services rendered, and from return on property used by the person or corporation in its own operations. Non-operating Revenues Defined. Non-operating revenues are those derived as a return upon the property of the corporation not used in the operation of its water system, or in the'hands of others or from its interests in property in the hands of others. They may be sub- classified as RENTS, INTEREST, DIVIDENDS, and MISCELLANEOUS. R-l. EARNINGS FROM COMMERCIAL SALES. Credit this account with all revenue from water sales to commercial consumers, both where the revenue is dependent upon the quantity of water taken as received by meter or at a flat rate. Commercial con- sumers embrace residences, offices, apartment houses, retail commercial establishments, etc., where water is not used primarily for power or industrial purposes. Water sold to the municipality for use in public buildings and not included in the contract for hydrant rentals, and other municipal uses, will be credited to this account. Where a dis- count is allowed for prompt payment of bills, or penalty is added for non-payment on a fixed date, such discount or penalty shall be charged or credited to this account. The earnings shall be subdivided and reported separately to the Railroad Commission as follows: A. Commercial earnings flat rate. B. Commercial earnings metered. R-2. EARNINGS FROM INDUSTRIAL SALES. Credit this account with all earnings from the sale of water for power and industrial purposes to manufacturers and industrial estab- lishments. Discounts allowed for prompt payment of bills or penalties added for non-payment on a fixed date (such as discounts or penalties) shall be CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. 35 charged or credited to this account. The earnings shall be subdivided and reported separately to the Railroad Commission as follows: A. Earnings from Industrial Sales flat rate. B. Earnings from Industrial Sales metered. R-3. EARNINGS FROM MUNICIPAL HYDRANT RENTALS : Credit to this account all revenue from the municipality for hydrant rental. Where the hydrant rental paid by the municipality includes the use of water for street sprinkling and flushing purposes, and such water is not being separately metered, the total revenue collected under the contract for hydrant rental will be credited to this account. R-4. EARNINGS FROM SALE FOR STREET SPRINKLING . Credit to this account all earnings from sale of water for street sprinkling, both to individuals and contractors engaged in sprinkling streets, parks, and thoroughfares, and also with sales to the municipality where such sprinkling is performed by the city. R-5. EARNINGS FROM SALES TO MUNICIPAL DEPARTMENTS . Credit to this account all earnings from the sale of water to municipal departments other than for street sprinkling if such is performed by the municipality. This includes earnings from the sale of water for sewer and street flushing, street constructions, filling fire cisterns and basins, etc. Where a separate contract is entered into for water services at public buildings, as schools, police and fire stations, city hall, etc., revenue collected under such contracts will be credited to this account, and a record kept of revenue received under each separate contract. R-6. EARNINGS FROM SALES FOR IRRIGATION . Credit to this account all earnings from the sale of water for irriga- tion purposes at rates specially made, in any manner applied to units of consumption. R-7. MISCELLANEOUS EARNINGS FROM OPERATIONS. Credit to this account all earnings from operating transactions not properly included in the preceding accounts. OTHER OPERATING REVENUES. R-8. PROFIT ON MERCHANDISE SALES . Credit to this account the receipts derived from the sale of water appliances and plumbing fixtures used in the consumption and utiliza- tion of water. Profit as used in the account, is defined as being the excess of the sales price over the casli cost ; including the invoice cost, cost of handling, storage, etc.; charge this account with all expense for 36 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. labor and material in connection with the sale of such appliance or merchandise. The net amount only, or the profit on sales, is to be carried to "Income Account." The credit and charges to this account shall be made in such a manner as to admit of a detailed analysis when called for by the Railroad Commission. R-9. PROFIT ON PIPING AND CONNECTIONS. Credit this account with all earnings derived from piping and connec- tion work performed by the corporation. This includes earnings from services performed on the consumer's premises, such as piping, con- necting and disconnecting house piping and water fixtures, the relocat- ing of piping or apparatus, and other plumbing and fixture work. If prospective consumers are charged for services performed by the corporation in connecting the house piping and plumbing with the service connection, or for laying such service piping, such earnings shall be credited to this account. Charge to this account all expenses for labor and material in connection with such operations. The net amount only, or the profit from piping and connection work being carried to the "Income Account." The credits and charges will be made in such manner as to admit of a detailed analysis when called for hv the Railroad Commission. Operating 1 Expenses. INSTRUCTIONS PERTAINING TO OPERATING EXPENSE ACCOUNTS. OPERATING EXPENSES DEFINED. By operating expenses is meant the expenses of conducting water utility operations and services incident thereto, including the expense of maintaining the property devoted to the water operations, the expense of collecting revenues, accounting and the general and super- vision expenses in connection with such operations. In order that the operating expenses shall clearly reflect only the cost of rendering such utility service, all expenses incident to any other than water utility service, shall be excluded from accounts thereunder and charged to accounts otherwise provided under non-operating expenses. DEFINITIONS OF CERTAIN TERMS USED IN CONNECTION WITH EXPENSE ACCOUNTS. Except where some other meaning is clearly specified in the definitions of the accounts, the following words, wherever used hereunder, have the meanings below stated : Cost means cash or money cost, and not price based on a term of credit. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 37 Labor means human services of whatever character. Cost of Labor includes wages, salaries and fees paid to persons for their services. Cost of materials and supplies includes all specifically assignable transportation charges incurred in obtaining the delivery of such materials and supplies upon the premises of the purchaser, and cost of any special tests made thereon prior to their acceptance; and in case the accounting person or corporation desires, it may include a suitable proportion of store expense (when the materials and supplies are passed through stores) and the cost of further transportation to the place of consumption, and a suitable proportion of the expense of the purchasing department, in which case a corresponding credit shall be made to the suitable expense account as hereinafter provided. Cost of repairs, when made by the accounting person or corporation, includes cost of labor expended and material consumed, less salvage, if any. NOTE. It is not required that the transportation element of cost shall be assigned with a greater degree of accuracy than to the nearest cent per unit of material or supply. Where a single transportation item covers a multitude of things the portion of the expense not assigned to specific things should be charged to the same account that store expenses are charged to. GENERAL ACCOUNTS. 1. SOURCE OF WATEB SUPPLY EXPENSES. 2. PUMPING EXPENSES. 3. PURIFICATION EXPENSES. 4. TRANSMISSION AND DISTRIBUTION EXPENSES. 5. COMMERCIAL EXPENSES. 6. GENERAL AND MISCELLANEOUS EXPENSES. 7. TAXES. 8. DEPRECIATION, ETC. Classification for Water Utilities. 1. SOURCE OF WATER SUPPLY. E-l. SUPERINTENDENCE. Charge to this account the salaries and expenses of the superintend- ent and assistants, chemists, draftsmen, foremen and all clerical help upon records and accounts pertaining to the source of water supply, whether such service is performed at the general office, or at the plants. E-2. OPERATING LABOR. Charge to this account the salary and wages of patrolmen, inspectors, caretakers and other employees engaged in operating equipment appur- tenant to such facilities. Do not include maintenance, labor or labor pumping water. 74021 9 CLASSIFICATION l5P . 38 CLASSIFICATION DP ACCOUNTS, WATER CORPORATIONS. E-3. OPERATING SUPPLIES AND EXPENSES. Charge to this account the cost of supplies consumed, and expenses incurred in the operation of the source of water supply. Do not include maintenance supplies or expenses. E-4. WATER PURCHASED FOR RESALE. Charge to this account the cost at the point of delivery to the utility of all water purchased for resale. NOTE. Details of this account shall be kept so as to show from whom purchased, quantity purchased, and the rate and amount paid therefor. E-5. REPAIRS TO WATER SUPPLY BUILDINGS AND FIXTURES. Charge to this account the cost of labor and material used in repairs to buildings, fixtures and grounds used in connection with the source of water supply, such as dwellings occupied by patrolmen, inspectors, care- takers, and other employees engaged in the operation of the source of water supply, pump houses, well houses, and other buildings. NOTE. If source of water supply pumping is done in the pumping station where water is pumped into the distribution system, this account may be charged with an equitable portion of the cost of maintaining such station buildings, fixtures and grounds. E-6. REPAIRS TO SURFACE SOURCE OF SUPPLY FACILITIES. Charge to this account the cost of labor and material used in repairs to impounding reservoirs, dams, artificial lakes and ponds, canals, con- duits, embankments, channels, waste weirs, gates, valves, gate struc- tures, pipe lines, flumes, acqueducts, supporting trestles, viaducts, anil appurtenant equipment when used for collection or diversion of water from a surface source of supply. E-7. REPAIRS TO GROUND SOURCE OF WATER SUPPLY. Charge to this account the cost of labor and material used in repairs to large open wells, shallow tubular wells, deep wells, artesian wells, springs, and repairs to infiltration galleries. Include also repairs to collecting reservoirs, intake wells, and conduits and appurtenant equip- ment when used for the collection of water from a ground source of water supply. 2. PUMPING. E-8. SUPERINTENDENCE. Charge to this account the salary and wages of superintendent of the pumping plant, the assistant superintendent, foremen, chemists, engi- neers, draftsmen, and all clerical help upon records and accounts per- taining to pumping (see capital accounts Nos. C-14 and 15), whether such services are performed at the general office or at the plant. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 39 E-9. PUMPING LABOR. Charge to this account the salary and wages of all employees engaged in operating equipment. This includes such labor as that of chief engineer, assistant engineers, firemen, helpers, oilers, wipers, motor attendants, shovelers, weighers, feed pump men, blowing flues, cleaning boilers, and other labor in engine and boiler and pump room directly in connection with power pumps. E-10. MISCELLANEOUS LABOR. Charge to this account the salary and wages of all employees in and about the pumping plant such as watchmen, janitors, messengers, labor cleaning buildings and yards, and other labor chargeable to pumping plant not included in the foregoing accounts. E-ll. FUEL FOR STEAM. Charge to this account all fuel used under boilers at the pumping plant, whether coal, oil, gas, or other fuel at cost plus freight and switching charges, demurrage and labor discharging or transferring fuel from point of delivery to place of storage. E-12. POWER PURCHASED. Charge to this account the cost of all steam, electricity, or gas pur- chased for the operation of prime movers at pumping plant. E-13. LUBRICANTS, ETC. Charge to this account the cost of all lubricants for power pumping equipment, such as cylinder oil, machine oil, graphite and other lubri- cants; also boiler compounds. E-14. MISCELLANEOUS PUMPING STATION SUPPLIES AND EXPENSES. Charge to this account all operating supplies and expenses of pump- ing plant, such as waste, packing, wipers, hose, gaskets, gauge glasses, hand tools, gas and electricity for lighting, laboratory apparatus and supplies, power plant records, boiler inspection, telephone service, sta- tionery, water for fire protection and general use, janitor's supplies, and items of similar nature. E-15. REPAIRS TO PRIMARY PUMPING EQUIPMENT. Charge to this account all labor and material used in repairs to all pumping equipment driven by steam, electricity, gas or oil. This includes prime movers, whether they are combined into one machine or are separate units of equipment. Include also repairs to appurtenant equipment, such as condensers, lubricating systems, belting, etc. 40 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. E-16. REPAIRS TO BOILERS AND BOILER PLANT EQUIPMENT. Charge to this account all labor and material used in repairs to fur- naces, boilers, feed pumps, economizers, feed water heaters, super- heaters, flues to smoke-stack entrance, boiler water purification equip- ment, stokers, boiler room cranes, oil tank equipment, including feed piping and auxiliary equipment. Also the specially provided founda- tion and settings for such equipment. NOTE. The cost of repairing smoke stacks, either iron, steel, or brick should be charged to Account No. E-18, "Repairs to Pumping Station Buildings, Fixtures and Grounds." E-17. REPAIRS OF MISCELLANEOUS PUMPING STATION EQUIPMENT. Charge to this account all labor and material used in repairs to pump- ing station equipment, such as cranes, hoists, machine tools, safety appliances, also the piping system in connection with making of steam and the delivery thereof to the prime movers such as valves, traps, injectors, expansion joints, pipe supports, gauges, gauge boards, and similar equipment. Also includes repairs to wagons, harness, auto- mobiles, motorcycles, bicycles, shoeing horses, furniture, etc. NOTE. Repairs to conduits for station wiring, pipes for heating buildings, and pipes supplying water for general station purposes should be charged to Account No. E-18, "Repairs to Power Pumping Buildings and Fixtures." E-18. REPAIRS TO PUMPING STATION BUILDINGS, FIXTURES AND GROUNDS. Charge to this account the cost of labor and material used in repairs to buildings, fixtures and grounds. This will include repairs to struc- tures and all fixtures permanently attached thereto, such as water pipes and fixtures, pipes and fixtures for heating and ventilating, gas pipes and fixtures, electric wiring and fixtures for lighting, signalling, and elevator purposes, motors, generators, all iron, steel, concrete, or brick smoke stacks, used for heating or power plant purposes, also fences, walls, sidewalks, and pavements adjacent to such buildings. 3. PURIFICATION. E-19. PURIFICATION LABOR, Charge to this account the salary and wages of employees engaged in the different processes of purification of water. This includes such labor as cleaning basins, removing ice and sediment, etc., operating filters, and water treatment equipment, purification by slow and rapid sand filtration and other means. Do not include labor on repairs. E-20. PURIFICATION SUPPLIES AND EXPENSES. Charge to this account the cost of all supplies consumed and expenses incurred in the purification of water, such as chemicals, coagulants, and CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 41 other supplies, such as soap, brooms, towels and similar items used in the process of water purification, softening, removal of iron, alge, etc. E-21. REPAIRS TO PURIFICATION PLANT AND STRUCTURES. Charge to this account the cost of all labor and material in making repairs to the purification plant. This includes repairs to chlorine apparatus, settling basins, renewing and washing sand and repairs to all other equipment used in the purification of water by plain sedimen- tation, sedimentation with coagulation, treatment for softening and removal of iron, alga?, etc., purification by slow and rapid sand filtra- tion, mechanical filters, also repairs of buildings, fixtures and grounds devoted to the purification of water. 4. TRANSMISSION AND DISTRIBUTION. E-22. SUPERINTENDENCE. Charge to this account salary an,d expenses of superintendents, assistants, general foremen, clerical help on records and accounts, and such portion of the engineering staff as is directly assignable to transmission and distribution, also salaries and expenses of engineers, draftsmen, cost of drawing material, stationery and other miscellaneous items. E-23. PATROLLING STORAGE FACILITIES. Charge to this account salary and wages of all employees engaged in patrolling, inspecting and operating the distribution storage facil- ities, also includes the wages of employees stationed at the distribution storage reservoirs, inspection of tanks and standpipes, etc., including minor repairs made by patrolmen. E-24. METER AND FITTINGS, DEPARTMENT EXPENSES AND SUPPLIES. Charge to this account all labor and material, removing and re-setting meters or other measuring devices on the premises of con- sumers, meter shop clerks, employees keeping shop records, readjusting, painting, replacing worn gears, wearing parts and dials, testing and repairing old meters, repairing and replacing connections, meter fittings, etc., meter unions and cocks, and expenses for routine tests, also such expenses as light, fuel, gas, electricity and water used for operating machinery and for testing in this department, also include inspection and testing on consumers' premises in connection with com- plaints and for which no charge is made by the utility. E-25. STREET DEPARTMENT EXPENSES AND SUPPLIES. Charge to this account the cost of labor and material, inspecting the distribution system, flushing mains and hydrants, pumping out 42 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. hydrants, taking street pressure, and clerical help in connection there- with. E-26. CUSTOMERS' PREMISES EXPENSES. Charge this account with all labor and material required for adjust- ing house piping, plumbing and water fixtures, investigating reports of poor service or large bills including inspection and testing of house plumbing, labor changing meters for request tests and inspecting new plumbing; also carfare, meals, etc., of employees engaged in such work. E-27. MISCELLANEOUS SUPPLIES AND EXPENSES , Charge to this account the cost of labor in transmission and distri- bution system not provided for in any of the preceding accounts all such tools as are not properly chargeable to plant and equipment used by the street department employees ; office supplies of such departments and other miscellaneous distribution, operating supplies and expenses r.ot elsewhere provided. E-28. REPAIRS TO TRANSMISSION MAINS AND CANALS. Charge to this account the cost of labor and material incurred in repairing, changing position of or replacing transmission mains, either pipes or canals, between the pumping station or other source of supply and the distribution reservoirs, tanks, etc. ; this account to include such expense as seeking and repairing leaks, repairing pipes or canals and removing and replacing worn sections and fittings, caulking, protecting exposed parts of undermined mains, digging and bracing in connection with such work, repaving and repairing manholes, etc., together with all material and supplies consumed in thawing pipes and scraping to remove incrustation. E-29. REPAIRS TO RESERVOIRS, TANKS AND STANDPIPES . Charge to this account the cost of labor and material used in repair- ing distribution reservoirs, tanks, and standpipes. This includes repair to masonry and linings due to settlement of underlying material, frost action or from other cause; caulking and repairing with cement grout- ing, asphalt or other waterproof material, painting and caulking stand- pipes and tanks, replacing small parts due to decay or excessive corrosion or electrolysis, and replacement of hoops, repairs to valves, etc. E-30. REPAIRS TO DISTRIBUTION MAINS AND CANALS . Charge to this account the cost of labor and material used in repair- ing, overhauling or changing position of or replacing distribution mains, either pipes or canals. This includes seeking and repairing CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. 43 , repairs to pipes, replacing and removing worn sections and fit- tings, caulking, protecting exposed parts of undermined mains, repay- ing and repairs to manholes, the cost of all supplies used, and expenses in connection with thawing such mains and removing incrustation. E-31. REPAIRS TO SERVICES . Charge to this account the cost of labor and material in repairing, overhauling and changing position of water service connections. This includes such repairs as seeking and repairing leaks, cleaning and scraping out service pipes, repairing service pipe connections to meters, including stop cocks, service boxes, changing and extending old service pipes to put meters in better location, thawing out service pipes, repairing turnout gates, consumers' laterals, etc. E-32. REPAIRS TO HYDRANTS. Charge to this account the cost of labor and material in repairing hydrants. This includes repairs of parts, including digging and filling in connection with such repairs, painting, protecting exposed parts of undermined hydrants and connections, and changing location of hydrants. E-33. REPAIRS TO FOUNTAINS AND TROUGHS . Charge to this account the cost of labor and material and other expense incurred in repairs to fountains and troughs. This includes renewal of worn-out pipes, valves, painting, digging and repaving in connection with such work. 5. COMMERCIAL EXPENSES. E-34. COLLECTIONS, READING METERS, ETC. Charge to this account all salaries and expenses of collection depart- ment employees, taking application for water service, reading meters, preparing, delivering and collecting bills and such expenses as sta- tionery, stamps, etc. ; the premium on surety bonds of employees of the collection department, and fees and commissions paid for collecting bills. E-35. PROMOTION OF BUSINESS, SALARIES AND EXPENSES. Charge to this account all salaries and expenses of all employees whose services are devoted to the promotion and extension of business, including canvassers, solicitors, demonstrators, distributors of circulars and advertising matter, al! v:c:*,.iisBnons P ala to canvassers, solicitors and dealers for the introduction and sale of water appliances, etc., and such expenses as stationery and supplies, advertising in newspapers and periodical posters, dodgers, handbills, circulars, etc. 44 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 6. GENERAL AND MISCELLANEOUS. K-'M. SALARIES OF GENERAL OFFICERS. Charge to this account all salaries of the chairman of the board, president, vice president, secretary, treasurer, comptroller, auditor, chief engineer, general manager, assistant general manager, general superintendent, purchasing agent, and all other officers whose jurisdic- tion extends over the entire water utility and whose services can not be satisfactorily distributed to specific accounts ; also fees of directors, fees of receivers and payments to engineering corporations for super- vising and managing operations of the utility. E-37. SALARIES OF GENERAL OFFICE CLERKS. Charge to this account all salaries of traveling auditors, bookkeepers, stenographers and other general office clerks whose salaries can not be satisfactorily distributed to specific accounts. Where general office clerks perform services, in the commercial, new business, or other departments within the utility, their salaries should be apportioned accordingly. E-38. MISCELLANEOUS GENERAL OFFICE SUPPLIES AND EXPENSES. Charge to this account the cost of all supplies and expenses such as messenger and janitor service, newspapers and periodicals, directories, telegrams, exchange on remittances, books, stationery and telephone, heating of general offices, etc. ; also traveling and incidental expenses of general officers and attendants. E-39. LAM' EXPENSES GENERAL . Charge to this account all law expenses except those incurred in connection with the defense and settlement of injury and damage claims ; the salaries and expenses of counsel-, solicitors and general attor- neys, their clerks and attendants, etc. All law books, printing briefs, legal forms, testimony, reports, fees and retainers of general counsel and attorneys, court costs and payment of specific notarial and witness fees, expenses of taking depositions, and other general law and court expenses. Expenses of arbitrators of disputed points should also be charged to this account. RAILROAD COMMISSION EXPENSES. Charge to this account all fees and expenses of counsel, solicitors, attorneys, clerks, attendants, expert witnesses, and others whose ser- vices are secured in the defense and prosecution of all petitions and other transactions before the Railroad Commission of California. Expenses which are made necessary by rules, regulations, and order of the Commission, as improvement of service, additional inspection, CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 45 etc., will not be charged to this account but direct to department expense account affected. E-41. INJURIES AND DAMAGES . Charge to this account all damages to or destruction of property other than that owned by the corporation, and all expenses incident to injury or death to employees, and other persons for whose injury or death the corporation is held liable, or in the settlement of which claim allowances are made. This includes judgment for damages, accident, or death, and plaintiff's court costs, proportion of salaries and expense of fees of physicians and surgeons, expense of undertakers, nurses and hospital attendants, medical and surgical appliances and salaries and expenses paid to disabled employees, salaries and expenses of claim agents, adjusters and their assistants; the compensation of general counsel and attorney of the corporation, and other attorneys while engaged in the defense and settlement of damage suits. NOTE A. Corporations arc at liberty to subdivide this account to show the following expenses : A. INJURIES TO PERSONS. B. DAMAGES TO PROPERTY. NOTE B. Where such subdivision is not made, the account should be so kept as to admit of the separation over two such subaccounts when called for by the Railroad Commission. E-42. RELIEF DEPARTMENT AND EXPENSES . Charge to this account pensions paid to retired employees or repre- sentatives of former employees and expenses in connection therewith, salaries and expenses incurred in conducting a relief department and contributions made to such department. E-43. WATER FRANCHISE REQUIREMENTS . Charge to this account the cost of all service and materials and sup- plies furnished to municipal corporations in compliance with franchise requirements and for which no payment is received by the corpora- tion; also of all direct expense, such as paving and other like matters incurred in compliance with such requirements and for which no reimbursement is received by the corporation. Amounts charged to this account for which there is no direct money outlay shall be credited to Account No. E-47, "Undistributed Adjustments-Balance." p]-44. OTHER GENERAL EXPENSES. Charge to this account such incidental general expenses as are not provided for in the foregoing accounts, such as cost of publishing notice of stockholders' meetings, election of directors, annual reports in news- papers, dividends declared, if any, and fees and expenses paid to trustees. 46 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. E-45. INSURANCE. Charge to this account premiums paid to insurance companies for fire, fidelity, boilers, casualty, burglary and all other insurance; also amounts set aside as an insurance reserve if it is decided to open such an account. NOTE. Premiums on surety bonds of commercial department employees should be charged \o Account No. E-33, "Collections, Reading Meters, Etc." E-46. REPAIRS TO GENERAL STRUCTURES . Charge to this account the cost of repairing all buildings and other structures of a permanent character devoted to general purposes, such as general office buildings, general shop buildings, general storehouse buildings, general stable. buildings, etc. This includes such repairs as all fixtures attached to and made a permanent part of the buildings, such as water pipes and fixtures, steam pipes, and fixtures for warming and ventilating, gas pipes, electric wiring, elevators, etc., and the engines and motors specially provided for operating them, foundation for machinery and apparatus as are designed to be as permanent as the buildings in (or in connection with) which they are constructed, and to outlast the first machinery installed and mounted thereon. NOTE. Where general offices, shops, stables, etc., are includible In buildings forming a part of the pumping or distribution system, no part of the cost of repairs should be charged to this account. E-47. REPAIRS OF GENERAL EQUIPMENT . Charge to this account the cost of repairing all equipment of general offices, general shops, general stores, and general stables, etc. This includes all repairs of desks, chairs, tables, filing cases, drafting room equipment, etc., and of shops such as furnaces, boilers, engines, machine tools, smithing equipment, shafting, belts, etc. ; and of store such as movable counters, shelving and other movable equipment of like nature, carts, barrow r s, trucks, etc., and other apparatus used in handling material, and of stables such as wagons, harness, automobiles, bicycles, etc., shoeing horses, and all equipment of shoeing shops. NOTE A. Counters, shelving and the like which are permanently attached to the structure shall be charged to Account No. E-45, "Repairs to General Structures." NOTE B. The accounting corporation may, if it so desires, subdivide the account under subaccounts, as under, in order to keep record of cost of repairs to various clife-sts of equipment : A. General Office Equipment. B. General Shop Equipment. O. General Store Equipment. D. General Stable and Garage Equipment. UNDISTRIBUTED ADJUSTMENTS BALANCE . At least once a year an inventory of materials and supplies and of tools shall be taken, and the difference between the inventories and the ledger balances shall be debited or credited to this account in case it can not be assigned to specific accounts as provided under Account No. 9, CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 47 "Materials and Supplies." Credit to this account all discounts recovered through the prompt payment of bills for material and sup- plies consumed in operation unless such discounts are applied to the particular bills; also amounts included in expenses, as provided in Account No. E-42, "Water Franchise Requirements." E-49. EXTRAORDINARY REPAIRS . When the property of the utility is damaged by floods, earthquakes, fire (if not recoverable under insurance) or other casualty of an extra- ordinary nature, the cost of repairing such damage must be charged to this account and not to ordinary repair accounts. The account will be credited with (1) The salvage or scrap value, if any, of the damaged property. (2) The amount of depreciation that had been accrued on such property prior to the damage, which amount will, of course, be debited to Account No. 29, "Reserve for Accrued Depreciation." If the amount of such damage or loss is considered too large to be charged off in one year, the utility should apply to the Commission by letter or otherwise for authority to set up an "Extraordinary Repair Suspense Account" to which account will be charged the cost of repair- ing the damage less salvage, etc., and the amount so charged will be amortized over a given period by crediting "Extraordinary Repairs Suspense Account" and concurrently debiting this account. E-50. TAXES. This account should be charged (account "Taxes Accrued" being credited) regular monthly installments sufficient to cover all taxes imposed by lawful authority. A. Upon property real, personal and mixed (except assessments for betterment to real estate, which should be charged to account benefited.) B. Upon earnings in addition to or in lieu of taxes upon property. C. All specific licenses or charges levied upon the corporation based upon or with respect to its capital stock, property or business. D. The value of all discounts allowed or services rendered in lieu of taxes. NOTE. The amount of taxes accrued during any month shall, when the levy is unVnowi'. te eslimated, and when tho levy is finally determined the estimate shall be corrected in the provision for taxes during the remainder of the year. For example, if at the beginning of the tax year the taxes against the corporation are estimated to be $600 for the year, the estimated monthly charge will be $50. If during the fifth month it is found that the levy is $640, adjustment should be made and a charge of $55 per month made to "Taxes" for the remaining eight months of the tax year. 48 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. GENERAL AMORTIZATION OF CAPITAL. E-51. AMORTIZATION OP FRANCHISES AND PATENTS . Charge to this account each month the amount necessary to cover such portion of the life of franchises and patents as has expired or been consumed during the month. The amount so charged shall be concurrently credited to an appropriate sub-account under Account No. 30, "Reserve for Amortization of Intangible Capital." NOTE. The amount so charged to this account shall be based upon a rule deter- mined by the accounting corporation and filed with the 'Railroad Commission. The purpose and effect of such rule should be to accumulate by charges equitably distributed throughout the life of any franchise or patent, a reserve that will, at the expiration of its life, equal the original cost. E-52. DEPRECIATION OF PLANT AND EQUIPMENT. Charge to this account the amount estimated to be necessary to cover the depreciation accruing in the corporation's tangible capital. The amount charged to this account shall be concurrently credited to account, "Reserve for Accrued Depreciation." NOTE. Charges to above depreciation account should be reported separately under the following subheads : A. Depreciation on Source of Water Supply. B. Depreciation on Pumping Equipment. C. Depreciation on Transmission and Distribution System. D. Depreciation on General Capital. CLEARING ACCOUNTS. (Not required of Class B and C corporations.) The following accounts are provided for certain expenses which usually affect several classes of operations but need to be brought together in one account in order that the total of the expenses may be known and properly distributed. An inventory of tools, harness, vehicles, and other materials and supplies in shops, stores, stables and garages shall be taken at least once a year, and any loss disclosed by such inventory in excess of the amount taken into account through the depreciation currently charged out should be apportioned to the appropriate expense accounts on the basis of charges made since last inventory. 1. Shop Expense. This account or appropriate sub-accounts should be arranged so as to record separately the expenses of the general shops as follows: (1) Salary and wages of shop employees; (2) personal and incidental expenses of such employees; (3) materials and supplies for general shop use; (4) repairs of tools, machinery and appliances; (5) rent of shop buildings; (6) depreciation of tools, machinery and appliances. The shop expense account should be cleared by apportioning the total amount of expenses to the various jobs on an equitable basis. CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 49 2. Stable and Garage Expense. This account or appropriate sub- accounts should be arranged so as to record separately the expenses of stables and garages as follows: (1) Salaries and wages of drivers, chauffeurs, stablemen, garagemen and other employees in stables and garages; (2) personal and incidental expenses of such employees; (3) materials and supplies, including fuel and gasoline, harness, tires, and other supplies for stables and garages ; (4) repairs of automobiles and other vehicles and harness; (5) rent of buildings or vehicles; (6) depreciation on vehicles, horses, harness, etc. Credit to this account any charges for service performed for others. A record should be kept of the use of teams and automobiles, and the total expense should be apportioned to the proper accounts accord- ing to use, or the debits to the expense accounts may be made at rates per hour of service which have been found to be fair and to distribute the total expense equitably. 3. Tool Expense. Charge to this account all expense for tools (except shop tools carried as supplies unissued). It includes the cost of small hand tools of which no account is kept after issue ; the cost of repairing tools ; the cost of tools lost or stolen, and depreciation on tools taken out of service because of breakage or other deterioration. This account should be cleared by charging repairs and cost of plant installed such amounts as will equitably distribute the total expense for tools. 4. Supply Expense. Charge to this account or to appropriate sub- accounts all expenses (except insurance and taxes) incurred directly in connection with the purchase, storage, handling and distribution of materials and supplies and stationery. It includes the pay and expenses of purchasing agents, managers of stores, clerks and laborers; rents of stores, cost of lighting, heating and undistributed freight and express charges, and the estimated depreciation on supplies due to breakage, leakage, shortage and wear and tear. This account should be cleared by adding to the cost of materials and supplies passing through stores a suitable loading charge which will equitably distribute the total cost of conducting the stores, and by adding to the cost of such supplies as are bought by the purchasing department pro rata share of the total expenses of the purchasing department. 5. Engineering Expense. Charge to this account or appropriate sub- accounts all expenses for engineering so as to show separately the follow- ing: (1) Salaries and wages; (2) personal and incidental expenses of engineering department employees ; (3) rent of office and office expenses. This account should be cleared by apportioning the total expenses to operating expense and fixed capital accounts on the basis of service 50 CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. rendered, as determined by the actual time devoted to particular jobs on an equitable basis fixed by the officers of the corporation. 6. Plant Supervision Expense. Charge to this account the cost of general supervision of the maintenance and construction of the plant where a separate department of the corporation's organization is charged with such supervision. It includes the pay and expenses of the plant supervising officers, sucli as the general plant superintendent, district plant superintendent, plant engineers and their office and field forces, charged with planning for and superintending the work of maintenance and plant construction. The account or appropriate sub-accounts should be so arranged as to show in detail the expenses of the plant supervision department as' follows: (1) Salaries and wages; (2) personal and incidental expenses of employees; (3) rent of offices and office expenses. This account should be cleared by charging directly to the appro- priate accounts such expenses as can be allocated to particular pieces of work and by charging out the balance on the basis of labor employed in all construction or maintenance work in progress. Charges to con- struction should be to Account C. 25 E Miscellaneous Construction Expenditures. NOTE. The pay of general foremen and foremen in direct charge of jobs should be included in the cost of the job and not charged to this account. s Every water corporation shall include in its expenses depreciation charges for the purpose of creating proper and adequate reserves to cover the expenses of depreciation currently accruing in its fixed capital, and for that purpose three accounts are provided for the expense of depreciation as above: Account No. E-52, "Depreciation of Plant and Equipment"; Account No. E 49, "Extraordinary Repairs"; Account No. E-51, Amortization of Franchises and Patents." By "Expense of Depreciation" is meant the loss suffered through the current lessening in value of tangible property from wear and tear, decay, obsolescence, or inadequacy resulting from use, age, physical change or supersession by reason of new inventions and discoveries, changes in popular demand, or public requirements ; also losses suffered through destruction of property by extraordinary casualties and decreases in the values of intangible property through lapse of time. The amount charged as expense of depreciation shall be based upon values determined by the accounting corporation. Such rules may be devised from a consideration of the corporation 's history and experience. Whatever may be the basis, the rules and a sworn statement of the facts CLASSIFICATION OF ACCOUNTS, WATER CORPORATIONS. 51 and expert opinions and estimates upon which they are based shall be filed with the Railroad Commission. Each amendment of any rule, together with statements and opinions, shall be also filed with the Rail- road Commission, before they are put into effect by the accounting corporation, and shall show the date when they are to become effective. WATER CORPORATIONS. List of Accounts. Balance Sheet Accounts. ASSET ACCOUNTS. PAGE. 1. Fixed capital installed prior to January 1, 1913 6 2. Fixed capital installed since December 31, 1912 7 3. Cash and deposits 7 A. Cash 7 B. Special deposits 7 4. Notes receivable 7 5. Accounts receivable 7 A. Accounts with .system corporations 7 B. Due from consumers and agents 8 C. Miscellaneous accounts receivable 8 6. Interest and dividends receivable 8 7. Other current assets 8 8. Investments 8 A. Securities of other corporations 8 B. Advances to system corporations for construction, equipment and betterments 9 C. Miscellaneous investments 9 9. Materials and supplies 9 10. Sinking funds 10 11. Other special funds 10 12. Treasury securities 10 13. Prepaid expenses ' 10 A. Prepaid rents 10 B. Prepaid taxes 10 C. Prepaid insurance 11 D. Other prepayments 11 14. Unamortized discount on securities and expenses 11 15. Other suspense 11 16. Construction work in progress 12 17. Corporate deficit 12 LIABILITY ACCOUNTS. IS. Capital stock 12 19. Installments on stock subscription 12 20. Funded debt 12 21. Receiver's certificates 12 22. Advances from system corporations for construction, equipment and better- ments 13 23. Notes payable 13 24. Accounts payable 13 A. Accounts with system corporations-- 13 B. Audited vouchers and wages unpaid 13 C. Consumer's deposits 13 D. Miscellaneous accounts payable 14 25. Interest accrued 14 20. Taxes accrued 14 27. Dividends declared 14 28. Service billed in advance 14 29. Reserve for accrued depreciation 14 54 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. PAGE 30. Reserve for amortization of intangible capital 1." 31. Unainortized premium oil debt 15 32. Casualty and insurance reserves 1C 33. Income invested since December .">!. I'.HJ, in fixed capital 1C 34. Reserves invested in sinking funds 1C 35. Other reserves from income or surplus 16 3G. Corporate surplus unappropriated , 17 CAPITAL EXPENDITURES. Intangible and Tangible Capital. FIXED CAPITAL ACCOUNTS. Intangible Capital. C 1. Organization 1_ 17 'C-2. Franchises and water rights 18 C-3. Patent rights 18 C-4. Other intangible capital 18 Tangible Capital. C 5. Landed capital 19 C-6. Buildings, structures and grounds 19 A. Source of water supply, buildings and fixtures 20 B. Pumping station buildings and fixtures 20 C. Purification buildings and fixtures 20 D. General office and other buildings and fixtures 20 SOURCE OF WATER SUPPLY. C - 7. Impounding dams and reservoirs 20 C- 8. Lake and river cribs 20 C-- 9. Intake and suction mains 20 C-10. Wells 21 C_ll. Springs and infiltration galleries 21 C-12. Collecting reservoirs and intake wells 21 C-13. Canals and conduits 21 PUMPING STATION EQUIPMENT. C-14. Pumping equipment 21 C 15. Miscellaneous pumping station equipment 22 PURIFICATION CAPITAL. C-16. Purification system 22 TRANSMISSION AND DISTRIBUTION CAPITAL. C-17. Transmission mains or canals 22 C 18. Distribution mains or canals 22 C 19. Distribution reservoirs, tanks and standpipes 23 C-20. Hydrants, fire cisterns, fountains, etc 23 C-21. Services 23 C-22. Meters and measuring devices 23 C_23. "Miscellaneous distribution equipment _ 24 GENERAL CAPITAL. C-24. General equipment A. General office equipment 24 B. General shop equipment 24 C. General store equipment 24 D. General stable and garage equipment 24 INDEX. 55 PAGE O- 25. Undistributed construction expenditures . 24 A. Engineering and superintendence 25 R. Law expenditures during construction 25 C. Injuries and damages during construction 25 D. Taxes during construction 25 E. Miscellaneous construction expenditures 25 C-245. Interest during Construction 20 G-27. Cost of plant purchased in lieu of plant constructed 26 C-28. Fixed capital installed prior to January 1, 191S 26 C-29. Fixed capital installed since December 31, 1912 27 INCOME ACCOUNT. 101. Operating revenues 27 102. Operating expenses : 28 103. Uncollectible water bills 28 104. Non-operating revenues 28 A. Rents from buildings, land and apparatus 28 B. Interest and dividend revenues 28 C. Sinking and other reserve fund accretions 1 28 D. Miscellaneous non-operating revenues 29 105. Non-operating revenues and deductions 29 A. Rent expenses ; 29 B. Interest expenses 29 O. Dividend expenses 29 D. Others' operations expenses ; 29 E. Miscellaneous non-operating expenses 29 F. Non-operating taxes 29 G. Uncollectible non-operating revenues 29 106. Interest accrued on funded debt 30 107. Other interest deductions 30 108. Rent deductions 30 A. Rent for lease of other water plant 30 B. Miscellaneous rent deductions 30 109. Amortization of debt discount and expense 30 110. Amortization of premium on debt-credit 31 111. Miscellaneous deductions from income 31 A. Loss' on operations of others 31 B. Amortization of landed capital 31 C. Other contractual deductions from income 31 CORPORATE SURPLUS OR DEFICIT ACCOUNT. 112. Dividends on outstanding stock 32 113. Sinking fund appropriations 32 114. Miscellaneous deductions from surplus 32 A. Expenses unprovided for elsewhere 32 B. Realized depreciation not covered by reserves 33 C. Amortization unprovided for elsewhere 33 D. Gifts to controlled corporations 33 E. Appropriations to reserves 33 F. Other appropriations from surplus 33 G. Other deductions from surplus 33 115. Miscellaneous additions to surplus 33 56 CLASSIFICATION OP ACCOUNTS, WATER CORPORATIONS. OPERATING REVENUES WATER. PAOB R-l. Earnings from commercial sales ' 34 A. Commercial earnings flat rate ^_ 34 B. Commercial earnings metered 34 R-2. Earnings from industrial sales 34 A. Earnings from industrial sales flat rate 35 B. Earnings from industrial sales metered 35 R-3. Earnings from municipal hydrant rentals '. 35 R-4. Earnings from sale for street sprinkling 35 R-S. Earnings from sales to municipal departments 35 R-6. Earnings from sales for irrigation 35 R-7. Miscellaneous earnings from operations 35 OTHER OPERATING REVENUES. R-8. Profit on merchandise sales 35 R-9. Profit on piping and connections , 36 OPERATING EXPENSES. 1. Source of Water Supply. E- 1. Superintendence 37 E- 2. Operating labor 37 E- 3. Operating supplies and expenses 38 E 4. Water purchased for re-sale 38 E 5. Repairs to water supply buildings and fixtures 38 E_ 6. Repairs to surface source of supply facilities 38 E- 7. Repairs to ground source of water supply 38 2. Pumping. E 8. Superintendence 38 E- 9. Pumping labor _i 39 E-10. Miscellaneous labor '. 39 E-ll. Fuel for steam 39 E-12, Power purchased 39 E-13 Lubricants, etc. 39 E-14. Miscellaneous pumping station supplies and expenses 39 E-15. Repairs to primary pumping equipment 39 E-16. Repairs to boilers and boiler plant equipment 40 E 17. Repairs to miscellaneous pumping station equipment 40 E-18. Repairs to pumping station buildings, fixtures and grounds 40 3. Purification. E-19. Purification labor 40 E-20. Purification supplies and expenses 40 E 21. Repairs to purification plant and structures 41 4. Transmission and Distribution. E-22. Superintendence 41 E-23. Patrolling storage facilities 41 E-24. Meter and fittings, department expenses and supplies 41 E-25. Street department expenses and supplies 41 E 26. Customers' premises expenses 42 E-27. Miscellaneous supplies and expenses 42 E-28. Repairs to transmission mains and canals 42 E 29. Repairs to reservoirs, tanks and standpipes 42 E-30. Repairs to distribution mains and canals 42 E-31. Repairs to services 43 E-32. Repairs to hydrants 43 E-33. Repairs to fountains and troughs 43 INDEX. 57 5. Commercial Expenses. PAGE E-34. Collections, reading meters, etc 43 E-35. Promotion of business, salaries and expenses 43 6. General and Miscellaneous. E-36. Salaries of general officers 44 K-37. Salaries of general office clerks 44 E-38. Miscellaneous general office supplies and expenses 44 E-39. Law expense general 44 E 40. Railroad Commission expenses 44 E 41. Injuries and damages 45 E-42. Relief department and expenses 45 E-43. Water franchise requirements 45 E-44. Other general expenses 45 E-45. Insurance 46 E^MJ. Repairs to general structures 46 E-47. Repairs to general equipment 46 E-^8. Undistributed adjustments Balance 46 E-49. Extraordinary repairs 47 E-50. Taxes 47 GENERAL AMORTIZATION OF CAPITAL. E-51. Amortization of franchises and patents 48 E-52. Depreciation of plant and equipment 48 CLEARING ACCOUNTS. 3. Shop expense 48 2. Stable and garage expense 49 3. Tool expense 49 4. Supply expense 49 5. Engineering expense 49 (5. Plant supervision expense 50 48885 10-19 3500 CLASS B WATER CORPORATIONS MAY CONSOLIDATE THEIR OPERATING EXPENSE ACCOUNTS AS FOLLOWS: ACCOUNT NAME E-l to E-3 E-4 E-5 E-6 to E-7 E-8 to E-10 E-ll to E-12 E-13 to E-14 E-15 to E-17 E-18 E-19 to TS-20 E-21 E-22 E-28 E-31 E-34 E-36 E-39 E-40 E-41 E-42 1-45 E-46 to E-27 to E-30 to E-33 to E-35 to E-38 to E-44 to E-47 to E-49 E-48 E-50 E-51 to E-52 SOURCE OF WATER SUPPLY Operating Labor and Expenses Water Purchased for Re-sale Repairs to Water Supply Buildings and Fixtures Repairs to Source of Supply PUMPING Pumping Labor Fuel and Power- Purchased Pumping Station Supplies and Expenses Repairs to Pumping Station Equipment Repairs to Pumping Station Buildings, Fixtures and Grounds PURIFICATION Purification Labor .Supplies and Expenses Repairs to Purification Plant and Structures TRANSMISSION AND DISTRIBUTION Operating Labor and Expenses Repairs to Transmission and Distribution System Repairs to Services COMMERCIAL Collection and Promotion of Business GENERAL AND MISCELLANEOUS General Officers' and Clerks' Salaries and Expenses Law Expenses-General Railroad Commission Expense Injuries and Damages Miscellaneous General Expenses Insurance Repairs of General Structures and Equip- ment Extraordinary Repairs, etc. TAXES Taxes GENERAL AMORTIZATION OF CAPITAL Depreciation, etc CLASS C WATER CORPORATIONS MAY CONSOLIDATE THEIR OPERATING EXPENSE ACCOUNTS AS FOLLOWS: ACCOUNT NAME E-l to E-7 Source of Water Supply E-8 to E-18 Pumping E-19 to E-21 Purification E-22 to E-27 Operating Transmission and Distribution System Repairs to Transmission and Distribution System E-34 to E-35 Commercial E-36 to E-49 General and Miscellaneous ifi-50 Taxes E-51 to E-52 ; Depreciation 27 E-28 to E-33 RAILROAD COMMISSION OF THE STATE OF CALIFORNIA CLASSIFICATION OF ACCOUNTS To ALL GAS, WATER AND ELECTRIC CORPORATIONS: The Railroad Commission at a meeting held on April 7, 1922, ordered that from and after July 1, 1922, the uniform classification of accounts for gas and electric corporations, effective January 1, 1913, and the uniform classification of accounts for water corporations effective January 1, 1920, be modified by adding thereto the following balance sheet accounts: 28a. Consumers' Advances for Construction. To this account should be credited cash advanced by consumers to cover the cost of extensions or for other specific purposes, in cases where such amounts are to be refunded in whole or in part. Separate sub-accounts should be maintained for each contribution. After the consumer has been refunded the entire amount to which he is entitled under the agreement or rule, the balance, if any, as shown by the sub-account, shall be transferred to account 28b "Donations in Aid of Construction." 28b. Donations in Aid of Construction. To this account shall be credited cash or other property donated by municipalities, individuals or others where there is no agree- ment for refund in whole or in part. If the donation is made in any form other than cash the amount to be credited to this account and concurrently debited to appro- priate fixed capital account, shall be its money value, estimated if not known, at date acquired. Separate sub-accounts shall be maintained for each donation which shall give particulars as follows : (a) Name of donor and amount received; (6) Purpose or purposes for which donations were made. NOTE. Property donated and the cost of extensions made with funds received as donations shall be charged to appropriate fixed capital accounts in the same manner as property acquired by purchase or extensions constructed with the utility's own funds. BY ORDER OF THE RAILROAD COMMISSION OF THE STATE OF CALIFORNIA, H. G. MATHEWSON, Secretary. 19396 6-22 2M RAILROAD COMMISSION OF THE STATE OF CALIFORNIA April 7, 1922. To ALL GAS, WATER AND ELECTRIC CORPORATIONS: From and after the date hereof, gas, water and electric corporations will not be required to keep separate income or profit and loss accounts, for each incorporated city in which they operate, nor a single income or profit and loss account for all territory not within an incorporated city, nor will they be required to pro rate their expenses to the several incorporated cities or other territory, all as directed by the Commis- sion's orders of October 24, 1912, and October 25, 1912. From and after the date hereof, all gas, water and electric corpora- tions must keep their records of operating revenues in such a manner as will enable them to report to the Commission their operating revenues from business done in each municipality and their operating revenues from business done in unincorporated territory. H. G. MATHEWSON, Secretary. IU397 6-22 2M Form L9-32m-8,'58(5876s4)444 University of California 4, CalifomU UCLA-GSM Library HF 5686 W3C1