UC-NRLF ■ill $C 3D 521 ilB MANUAL OF ACCOUNTING, REPORTING AND BUSINESS PROCEDURE 11 CITY AND COUNTY OF PHILADELPHIA JOHN M. WALTON CITY CONTROLLER EFFECTIVE JANUARY 1 1914 Gi)u;juasa^u)K^ . 4)^- <^ ^^^ c-^liu^. MANUAL OF ACCOUNTING, REPORTING AND BUSINESS PROCEDURE OF THE CITY AND COUNTY OF PHILADELPHIA EFFECTIVE JANUARY 1, 1914 ISSUED BY THE CITY CONTROLLER IN CONFORMITY WITH EXISTING LAWS AND ORDINANCES JOHN M. WALTON CITY CONTROLLER PHILADELPHIA DECEMBER 29, 1913 t A DuNLAP Printing Company PRINTERS AND BINDERS 1316-1829 CHERRY STREET PHILADELPIHA, PA. < if~-^LL ft . 7 L^- FORENVORD The purpose of this manual is to prescribe a comprehensive and orderly method of accounting and reporting for the city and county of Philadelphia. It is designed to furnish, with respect to municipal business, the information regarded by bankers and business men as absolutely essential in the administration of private business. It is assumed that the inter- ests of citizens are analogous to those of stockholders of private corporations; that public oflScials are trustees; and that the common interests of trustees and stockholders will best be promoted by a system of accounts and reports which reflects accurately all the important financial relations which affect those interests. There is nothing novel in the accounting system here prescribed. Its terms are in com- mon use in the financial statements of private enterprises. Nor is it revolutionary in its attitude toward older systems of governmental and municipal accounting. Its function is rather to round out and complete the older systems, which confined themselves almost exclu- sively to appropriation, expenditure, cash and debt statements. In prescribing for the city and county of Philadelphia an accounting system showing assets and liabilities, revenues accrued and expenses incurred, appropriations and funds, my guiding purpose is to make availalble to Councils, the Mayor, the Controller, and to other administrative and executive officers, current reports showing financial condition, operative results and condition of funds similar to those which are commonly available to the administrative heads of well managed private enterprises. The activities of the city and county are diverse, including among its numerous func- tions farming, manufacturing, public service enterprises and the operation of hospitals and other institutions. I have had these conditions constantly in mind in preparing a system of accounting that would be practical in every way and that at the same time would be sufficiently comprehensive to tell currently a complete story of the financial transactions, work done, and results accomplished in every activity of the city and county government. JOHN M. WALTON, City Controller. Ill 281983 Excerpt from Letter of Bankers relative to the beneficial effect upon the City's finances and credit of the asset and liability, revenue accrued and expense incurred and fund system of accounting and reporting: "Philadelphia, January 27, 1912. "HON. JOHN M. WALTON, "City Controller, Philadelphia. "Dear Sir:— . , "In the interest of efficient management of the business of the City, we desire to express our approval of the plan of accounting and reporting which is being installed by yon as shown in your annual report and your August statement of estimates • • *. "Intelligent direction of public as well as of private business requires that all pertinent facts be accurately, systematically, and promptly placed before the responsible officers, and before the public, whose support is essential to the success of a progressive administration. The new forms of statements • • • provide admirably for the proper description, classifica- tion, and reporting of the financial and operative facts pertaining to the City government. These furnish wliat in private business would be regarded as the first essential of economical and eiTRcient management. "Carried into a uniform budget for all City Departments, an expense classification such as that presented in the revised estimates would enable citizens and taxpayers, as well as public officials, to comprehend readily the purpose of each appropriation item, and to deter- mine the relative public importance of the several activities of the City. It would make possible, furthermore, the exercise of greater discretion on the part of Councils in defining and limit- ing the amounts which the various Departments may spend; on the part of the Mayor in approving or disapproving items in the budget; and on the part of the Controller in approv- ing or disapproving bills that come before him for audit. "Very respectfully, (Signed) "E. W. CLARK, E. W. Clark & Co., "W. W. FRAZIRR, Philadelphia Trust Co., "RICHARD M. HARTLEY, Land Title Co., "ARTHUR E. NEWBOLD, Drexel & Co., "C. S. W. PACKARD, The Pennsylvania Co., "G. C. PURVES, Philadelphia Savings Fund, "CHAS. J. RHOADS, Girard Trust Co." IV '• . I -.■."... .. . -f — i^ k^ a: o a. K) UJ 111 tc -1 a < -J >■ < T. V M h n < CE ili CO 4- 1- O a. a: 1 i a k \ \ \ 1 \ 1 UJ Q P^ PJ t> 02 iz; Pu !^ pq Q !zi ' H 5ZJ&. ;^« < ;z; C5 o K oa P4 VII ±IJ^L- of o ^2 lii y a a -' / a: O to < u - o o / of o < u s Z uJ O J o o o : 1 I (T i ; s O n- 1 S ° o n uJ z tr i ' (J ° 5 o — — ! ' 1- n 1 1 < tr 0. O o_ 1 ^ < Q QC Uj O ul cr lij O o UJ u CO z £r O Q. X UJ a UJ Q UJ -J tfi rr cc O O 1- V) CO 1- oc z Hi UJ ^n S 3 o 111 CO O § _J CC < Hi 1- o UJ Q Q UJ iz; Eh < fit p o ;z: »-i EH -a! fii o < O P^ CO l-H P? EH Hi ^ » O Q < ^ §ffi EH o 0. o ^ CO CQ o O tu ?5 H iz; o u o << p^ o C5 < TABLrE OF COINTEINTS PAGE Foreword — — — ~ - "^ Excerpt from letter of bankers _ - — iv Diagram showing general plan of the asset and liability, revenue accrued and expense incurred and fund system of accounting and reporting „ v Diagram of accounting system and monthly general journal entries for an operating de- partment or bureau _ vii Table of forms - _ _ _ x Chapter I. General description of asset and liability, revenue accrued and expense in- curred and fund system of accounting and reporting 1 Chapter II. Description and use of documents 3 Chapter III. Description and use of registers and schedules of documents 9 Chapter IV. Description and use of detail ledgers _ 20 Chapter V. Description and use of general ledger, general journal and general journal entries - 30 Chapter VI. Description and use of monthly reports (schedules of balances and totals) from detail ledgers to be transmitted to department of city controller 40 Chapter VII. Description and use of summary reports from general ledger 45 Chapter VIII. Organization units and functions or activities of tlie city and county 56 Index - - — - — - - — 63 IX TABLE OF FORMS The forms in this table were published in the blue book of forms entitled "Advance Sheets of Standard Departmental Forms for the Asset and Liability, Revenue, Expense and Fund System of Accounting and Reporting" December 16, 1912, and distributed to the several de- partments and bureaus, becoming effective January 1, 1913. T, -KT mm Paob nf Blob FOEM No. 1 ITLE OF FOEM g^^ ^^ p^^^^ DO0DMKNT8 2. Requisition on don- sibility for each step in the transaction from its beginning to its consummation. Each file of original documents will constitute a complete record of all transactions of the class. 2. Two Entries Made from Each Document. As a means of protecting the city against loss of original evidence, and for the pur- pose of fulfilling all accounting requirements, not less than two entries are to be made in the books of record from each document. The first entry is to be made from the original document in a register or registered schedule of documents which serves as a numerical index to the original files, as well as a secondary record of all the essential facts con- tained on the original dosument. Being classified according to classes of documents, each register will also serve the same accounting purpose as a journal or other book of orig- inal entry by means of which detail ledger postings may be proved. The second entry will be made from the original document which has been registered, or from a copy or schedule thereof, in a detail or subsidiary ledger account. Both the registration and the detail ledger entry thereby become original entries of the information contained in a document, and as these entries are made independently, there is no chance for copying an error in registration or posting from one book to an- other. In case there may be more than one detail ledger affected by the transaction, as many entries will be made as there are different detail or subsidiary ledger accounts affected. For example, an open market order is entered as an encumbrance against a specified account in the appropriation ledger and in a specified account under the name of the vendor in the claimant's ledger; a contract order is entered against a specified account under the name of the contractor in the contract ledger but not in the appropriation ledger for the reason that the encumbrance is set up from the original contrect at the time of its execution and not from the order, as is the case with open market orders. 3. Control Over the Accuracy of Accounts and Reports. The totaling of the registers and the posting of the totals to a general ledger through the medium of a general journal, are to be done at the end of each month, or as often as may be found desirable to prove the accuracy of postings to the detail or subsidiary ledgers. The general ledgers accounts, therefore, serve a double purpose: a. They will furnish a complete summary of all transactions for the period; b. The trial balance of the general ledger will give to administrative and controlling officers balances or totals to which the accuracy of all the schedules of balances and totals of the subsidiary ledgers may be proved. Control over the accuracy of the books should therefore be complete with respect to every detail of the accounts, as well as the mathematical accuracy of every item contained in both the summary and detailed accounts. 4. Uniformity of Treatment to Similar Accounts. The required forms of records give uniformity of treatment to similar accounts in each of the departments, bureaus and offices of the city. The documents and books so far aa l)ossible are made self-explanatory, the forms and columns all bearing captions and in- structions the purpose of which is to identify tlie forms and to give certainty to the pro- cedure of those whose duty it is to keep them. The only part of this system which requires considerable knowledge of accounting is the general journal and the general ledger — the instruments by means of which control over the accuracy and completeness of detail accounts and reports is secured. While of necessity the theory of these summary accounts must be technical and exacting in order to serve as an instrument of precision in the hands of the central controlling officer of the city, no doubt or question is left for the bookkeeper, as the whole practice is charted and each action to be taken is jirescribed. The classification established for the general ledger accounts has been defined after careful consideration of the question: What is the most summary statement of facts needed by oflTicers in the administration of the city's businessf In establishing the classi- fication of detail accounts, the aim has been to furnish information in any detail wliioh may be desired about any item in the summary statements of account CHAPTER II DESCRIPTION AND USE OF DOCUMENTS. By general classes, the documents used will be as follows : 1. Requisitions. (a) Requisitions on storekeeper. (b) Requisitions on central office of department or bureau, ie) Requisitions on department of supplies. (d) Requisitions on another department or bureau. 2. Orders. (a) Contract orders. (b) Open market orders. 3. Invoices. (a) Regularly rendered invoices. (b) Memorandum invoices. (c) Inter-departmentar invoices. (d) Credit invoices or credit memoranda. 4. Expenditure vouchers. (a) Contract vouchers. (b) Open market order vouchers. (c) Payroll and miscellaneous vouchers. 5. Advices of voucher adjustment. 1. Requisitions. A requisition is a request made by an officer or employee of the city for services, supplies and materials, such instrument becoming an official document when duly approved by an au- thorized official. Requisitions will be of four classes, as follows: (a) Requisitions on storekeeper. (b) Requisitions on central office of department or bureau. (c) Requisitions on department of supplies. (d) Requisitions on another department or bureau. (a) Requisitions on Storekeeper. The form used for "requisitions on storekeeper" is left to the discretion of the particular department. Tt must, however, contain sufficient information to enable the accounting division to properly classify the materials issued, and will be of a distinctive form and color. Requi- sitions on storekeeper being prepared in triplicate, the original and duplicate are forwarded to the storekeeper through the proper channels, and the triplicate remains as a permanent record in the issuing office. When properly approved, the original and duplicate requisitions are sent to the store- keeper and are his authority to make deliveries requested thereon. Deliveries from the store- house should always be accompanied by the duplicate requisition, which serves the purpose of a "delivery" or "shipping" ticket and bears the receipt of the person to whom the materials are issued. At the time of delivery of the goods, the storekeeper notes the fact upon the original requisition and forwards it to the central accounting office of the department or bureau. The duplicate requisition he retains on file as a storehouse record. No particular method of numbering the requisitions on storekeeper is prescribed, this be- ing left to the discretion of the departments. (b) Requisitions on Central Office of Department or Bureau. "When there is need for articles not kept by the storekeeper, or when the storekeeper re- quires articles at the storehouse or when services are required, a requisition on the central office of the department or bureau should be prepared in duplicate ; the original requisition being forwarded to the central office of the department or bureau; the duplicate being re- tained by the requisitioner. Upon the receipt of the original requisition in the central office of the department or bureau, and as soon as the necessity for the requisition has been determined, either (1) a 3 4 UKSCBIFTIOir AND USE OF DOCUMENTS. requisition will be made upon the department of supplies (c, described below) or (2) an order will be sent to a vendor by the central ofiSce of the department or bureau, or (3) a requisition on another department or bureau (d, described below) will be made, according to the manner in which the articles or services are to be obtained. A departmental order for the purpose of filling a requisition on central office should only be issued in special cases where its issue will not be in conflict with the Act of Assembly of April 4, 1903, P. L. 154, and where there is an unencumbered balance of an appropriation available in the department or bureau issuing it. The forms used for the requisition on the central office should be of a distinctive form and color, but should follow the same general lines as those issued upon the department of supplies (form No. 2). Minor changes in the wording and which do not change the essential character of the requisitions may be made to suit the requirements of the particular depart- ment. The items enumerated must be intelligible so as to admit of their proper classification by character of expenditure and by function or activity. (c) Hequisitions on Department of Supplies. Act of Assembly of April 4, 1903, P. L. 154, provides that the department of supplies shall have the direction, control and administration of the purchase and supply of all articles of personal property required in the conduct of the business of the city and that all departments of the city shall obtain such articles by requisition upon the department of supplies. By vir- tue of this act the department of supplies is designated the purchasing agency for the city of Philadelphia. The requisition on the department of supplies should be prepared in duplicate by means of carbon paper. The original, when properly approved, serves as a request made upon the department of supplies for the purchase of material or other things requisitioned for, and the duplicate as a file copy for the department or bureau issuing the requisition. No partic- ular method of numbering the requisitions is prescribed, this being left to the discretion of the department. It is suggested, however, that each department or bureau issuing requisitions on the department of supplies discontinue the present practice as soon as the new forms are avail- able, and number the first requisition No. 1 and continue consecutively. The letter "S" immediately preceding the number will signify that the requisition is on the department of supplies. (d) Requisitions on Another Department or Bureau. "When the occasion arises for a department or bureau to ask that work be done for it, or that supplies and materials be furnished by another department or bureau a requisition on central office should be made out in the regular form by the person requiring the services or the material and sent to the central office of the bureau, which will issue on the other depart- ment or bureau, from this requisition an inter-departmental or inter-bureau requisition upon a form similar to that used for the requisition on the department of supplies. 2. Orders. As herein used orders are of two kinds, namely, contract orders and open market orders, (a) Contract orders will be understood to mean the requests made by a purchasing agent or other person authorized to request the delivery of supplies and materials under for- mally executed contracts, the quality, quantity, and price of the supplies or material being governed by the terms of the contract under which the order is issued, (b) Open market orders, as used in this relation, will be understood to mean all requests for the delivery of supplies, materials, or the rendering of service not formally contracted for by the city, and which, upon acceptance and delivery by the person receiving the same, constitute informal contracts, the quantity, quality and price being determined by correspondence and other in- fonnal agreements between the agents of the city and the vendor prior to delivery, or by the settlement of aecounts statoOCUMENT«. (8) Inspector's office copy (Form 4F). This copy is sent to the inspector's office, department of supplies. By thia copy the in- spectors are informed as to the quality and quantity of the goods ordered, tlie point of de- livery and the date upon which the delivery is to be made. When the goods have been found to meet the requirements of the orders, the consignee or receiver of goods is notified^ the copy then becomes the permanent record of the inspector's office. This copy is required only when order is issued by department of supplies. The forms used and the method and procedure employed in issuing orders direct to the contractor or vendor by the several departments or bureaus should be substantially the same as described above. 3. Invoices. In addition to the classification of invoices which follows, it should be noted that invoices in the city departments and bureaus are of either of two general classes; namely, (1) depart- mental invoices for goods tr services purchased by a department or bureau upon its own order, and (2) "supplies" invoices for goods purchased upon order of the department of supplies as the purchasinfj apont of tho. city. (a) Regularly rendered invoices. — An invoice will be considered as a statement of account rendered by a person who has furnished supplies or material, or who has performed service for the city not as a regular employee, such statement of account being used as a basis for the settlement of claims for goods so furnished or services so performed. Except under con- ditions described below under the heading "memorandum invoices," it is necessary that in- voices shall be rendered to the city at the time supplies and materials are delivered, or when services have been performed. Invoices for goods ordered by the department of supplies for the other departments and bureaus shall be delivered with the goods to the department or bureau for which the goods were purchased. Invoices in triplicate are to be required for all purchases by the department of supplies for other departments and bureaus; and invoices in duplicate for all purchases by depart- ments direct. If an extra copy of an invoice ie needed by any department or bureau, there is no objection to its being required by the department ordering the goods. Any goods de- livered under the circumj^canees above described, without triplicate or duplicate invoices, as case may be, will be held (if at all) at the vendor's risk; they will not be used or received into stock until invoices in triplicate are furnished. (b) Memorandum invoices are to be used under the following conditions: If at any time it may be necessary to use goods which have been delivered witliout invoices in tripli- cate, the person receiving the goods must make out memorandum invoices and state thereon the emergency which caused such action to be taken. Memorandum invoices will be treated in the same manner as vendor's invoices until the vendor's invoices shall have been received, when the copies of the vendor's invoices will be checked to the corresponding copies of the memorandum invoices and filed therewith u a part of the record. Deliverif slips in lieu of triplicate invoices are to be delivered with the goods when mer- chandise is delivered under the following conditions: (1) When it is contemplated that more than one delivery is to be made on account of a formal or an informal contract which does not require that orders be issued against it ; (2) When it is contemnlated that more than one delivery is to be made on a single order is.sued against a formal contract; (3) When it is eontemplntod that more than one delivery is to be made on a single open market order. The receiver of the goods will note the particulars of each delivery on the back of the "copy of advice to consignee" (Form 4Ti). and when the final delivery is made with the copies of invoice and original order accompanving it, he will copy on the back of the original order the particulars of each delivery which hr has previously noted on the "copy of advice to consignee." Whenever goods are delivered under the circumstances above described it is contemplated that the vendor shall leave with the receiver a delivery slip. In case the vendor does not leave a delivery slip with the goods the receiver will provide a memorandum for the deliverymnn to siprn as evidence of the quantity of each article delivered. These delivery slips, whether on the vendor's or receiver's forms, will be kept on file by the receiver of goods until the final deliverv upon an order is received, when they will be attached to the original copy of the order (Form 4) and forwarded, together with the "copy of advice to consitrnee" and the copies of the invoices (approved as to quantity and quality), to the central office of the receiver of the goods. In case of orders not completed at the end of the month, the re- DESCEIPTION AND USE OF DOCUMENTS. ' ceiving clerk will list the i eceipted delivery slips on a separate memorandum for each uncom- pleted order and send them to the central office of the department or bureau for entry in the register and schedule of invoices in the month in which the goods were received. They will be given an invoice number, which number will also be placed on the invoice when it comes through with the final delivery of the goods. This is done that the delivery slips may be identified on the register and schedule of invoices with the remainder of the invoice that is registered in a subsequent month. To the end that the contractor or vendor may clearly understand how he shall render invoices in the cases described above, the department of supplies (or other office issuing orders) will stamp the following notation on the contractor's or vendor's copy of the order: "Delivery slip must accompany each delivery of goods, and with the final delivery, in- voices in triplicate covering all deliveries upon the order must be sent to the department or bureau receiving the goods." The same procedure must be followed in rendering invoices cov- ering partial deliveries as has been outlined above under the heading "Regularly rendered invoices." That is, they must in all cases accompany the final delivery of goods to the con- signee, and upon approval of the goods as to quantity and quality by the proper person, be forwarded to the central office of the department or bureau for entry upon the register and schedule of invoices (see page 11). If the goods have been ordered by the department of supplies, however, the "Supplies invoices" are later entered upon the register and schedule of invoices sent to the department of supplies, preparatory to being forwarded to that de- partment (see page 14). It should be borne in mind, however, that this procedure for invoices is confined solely to those exceptional cases where it may be necessary to deliver goods ordered without invoices in triplicate accompanying the delivery. If it is found that there are any conditions in connection with the delivery of goods and the rendering of invoices that are not provided for by the foregoing procedure, rules cover- ing the same, in conformity with the general method of operation herein described, may be formulated as they arise. Wherever in the procedure outlined above the department of supplies is named, the same procedure with slight modifications to suit local conditions will be followed by all other de- partments and offices. The department of supplies is named specifically because that depart- ment is the purchasing department or agent for all city departments, bureaus and offices. (c) Inter-departmental invoices. — An inter-departmental invoice is an invoice rendered by one department or bureau to another for services rendered or materials, supplies or equip- ment delivered, or for the transfer of custodianship of land, structures and non-structural improvements. In the case of inter-departmental transfer all services, materials or property are to be billed at cost (or book) value. In the case of services the journal entry representing the cost value of services fur- nished another department or bureau will be charged to inter-departmental services, etc., through the medium of the register of invoices and payrolls. Materials, supplies and equip- ment purchased for another department or bureau where such fact is known at time of purchase will similarly be charged to inter-departmental services, etc., through the medium of the register of invoices and payrolls. Materials, supplies and equipment issued from the storehouse of a department or bureau for the benefit of another department or bureau will be charged to inter-departmental ser- vices, etc., through the medium of the monthly report of stores issued. Equipment that is in use by a department or bureau and not in stores at the time of its transfer to another department or bureau, and land, structures, non-structural improvements, accounts receivable, choses in action, or any other asset whatsoever not mentioned above, the custodianship of which is transferred to other departments or bureaus, must be registered in the register of property and equipment, etc., transferred ; the description of which appears later. Through the medium of this register monthly totals of the cost (or book) value of property that has been in the custody of a department, and which is transferred, are secured, and inter-departmental services, etc., is charged, and land, structures, non-structural improve- ments and equipment or other asset accounts — as the case may be — is relieved or credited therewith. The inter-departmental invoices should describe and give the cost (or book) value of the property transferred, and should bo prepared in triplicate. The original and first copy (du- plicate) should be sent to the receiving departments, and with the goods if possible. The second copy (triplicate) should be retained by the department furnishing the goods. The first copy should be receipted by the department receiving the goods and returned by it to the department furnishing the good? ft? evidence that the goods as issued have been received. 8 DESORIPTIOW AWI) L'SE OF DOOtTUSKTS. (d) Credit invoices or credit memoranda are issued where there are allowances or reductions made on an invoice in favor of the city, usually on account of goods return ;d to the vendor. When such invoices are received, they will be entered in the registry of invoices in red ink as a credit. If an invoice has been vouchered prior to the goods being returned to the vendor, the adjustment would be made in the voacher register instead of in the invoice register. Whenever it is not practicable to issue orders covering petty expenditures the invoices cot- ering such expenditures should have noted on them the words ' ' No order. ' ' 4. Expenditure voucher as liprcin used is a document prepared by a department or bureau, containing a statement of an amount due by the city, approved by the proper head of the department or bureau, such statement being accompanied by the evidence of the pro- priety and justice of the claim certified to by persons having direct knowledge thereof. There are three classes of expenditure vouchers, namely those chargeable to (1) general fund appropriations; those chargeable to (2) loan fund appropriations, and those chargeable to (3) special and trust fund appropriations. Each of these three main classes of expendi- ture vouchers is sub-divided as follows : (a) Contract vouchers (Form 5) printed on blue paper. (b) Open market vouchers (Form 5 A) printed on yellow paper. (c) Payroll and miscellaneous vouchers (Form 5 B) printed on white paper. The first named, (a) contract voucher, is used to cover payments applying to duly exe- cuted contracts; (b) open market vouchers cover open market orders, and (c) payroll and miscellaneous vouchers cover all payrolls and incidental expenses for which no contract has been executed or open market order issued. The several classes of vouchers are of the same size and form, and furnish the same gen- eral information to the city controller. If possible, no voucher should be drawn for an amount less than one dollar. Approval of all claims against the city for audit and payment shall be on expenditure vouchers, certified by the head of the department in which the claims originate. Particulars of the claim will be entered on the inside of the voucher, giving the item, date, recapitula- tion by object of expenditure, and, if there are several items chargeable to one account, they will be entered in the column headed "amount." The total of the items will be extended in the last column, and if more than one account Is covered by the voucher, the last column will be totaled and this total will be the amount of the voucher. On the reverse side of the voucher (Forms 5, 5 A and 5B), the departments will enter the number of voucher and warrant, estimate number if a contract voucher, and open market order number if an open market voucher, and the general or loan ftmd appropriation item numbers and amounts. The name of the payee, the nature of the voucher and the total amount thereof will also be shown in the spaces provided therefor. Under the heading "Charac- ter of expenditure" and "Amount" will be entered the distribution of the voucher amount in accordance with the classification of expenditure detailed thereunder. The total of the amount column will be the total amount of the voucher as distributed. Space is provided likewise for the approval of the voucher by the bureau chief and the director of the de- partment in which the voucher emanated, and for the acknowledgment of the receipt of the warrant by the payee. 5. Advices of Voucher Adjustment. . . When an adjustment between the amount of a warrant and the amount of a voucher, or any adjustment in the amount of a voucher, is necessary in the division of audit of expen- ditures in the department of city controller, there will be prepared and forwarded to the department or bureau in which the voucher originated an ad^ice showing the dat« and num- ber of the warrant and voucher, number of the contract (if on a contract voucher), name of the claimant, original amount of the claim, amount of adjustment, and nature of ad; This advice will serve as a basis for adjustment entries in the proper departmental <>• > records, for the adjustment of the voucher and the drawing of a new warrant, and as a per- manent record in the files of the department or bureau concerned. Duplicate copies of the advice of voucher adjustment are to be sent to the department of supplies for changos in the amount of a warrant and voucher prepared by that department The duplicate copy will, upon approval, be sent by the department of supplies to the particu- lar department or bureau, whose accounts are affected by the adjustment. In this way the city controller's accounts will be kept in constant adjustment with the accounts of the oper- ating departments and bureaus and the department of supplies. CHAPTBR III DESCRIPTION AND USE OF REGISTERS AND SCHEDULES OP DOCUMENTS. By general classes, the registers and schedules of documents used will be as follows : 1. Register and Schedule of Contracts. 2. Register and Schedule of Orders — Contract and Open Market. 3. Register and Schedule of Invoices and Payrolls. 4. Register and Schedule of Invoices sent to Department of Supplies. 5. Register and Schedule of Vouchers sent to City Controller. 6. Register and Schedule of Reductions in Contract Reserves. 7. Register and Schedule of Properties, etc., transferred or otherwise disposed of. 8. Register and Schedule of Inter-Departmental Services, etc., received. 9. Monthly Report of Stores Issued from Storehouse. 10. Monthly Report of Stores Returned to Storehouse. 11. Register and Schedule of Reserves for Repairs and Capital Depreciation. 12. Register and Schedule of Revenue Accrual. Where it is not specifically stated in connection with the description of each register and schedule, it is understood that a schedule is prepared hy means of carbon paper at the time each register sheet is written. The schedules in all cases must be promptly transmitted to the city controller. By reason of the infrequeney of special and trust transactions, separate columns have not been provided in the several registers for entries of this character. When transactions of this kind occur, entry thereof should be made in the "general account" or "general fund" column and the amount designated by a symbol in order that separate totals for ' ' general ac- count" or "general fund" and "special and trust accounts" or "special and trust funds" may be secured for journal entry purposes. The special and trust transactions have been omitted from the journal entries of this chap- ter and of chapter V, as they will not occur in a number of the departments or bureaus. Where they do occur, the journal entries here given may be readily expanded to include special and trust transactions owing to the journal entries therefor being similar to those of the general account and capital account and those of the general fund and loan funds. In this chapter and chapter V the words "safety" and "supplies" have been used in journal entries to distinguish between appropriations, and transactions incident thereto, made to an operating department or bureau direct and those made to the department of supplies for the use of an operating department or bureau. The word "safety" as the short de- partmental title of the department of public safety is used for illustrative purposes. In practice, the short title of the particular department or bureau for which the general jour- nal entries are formulated would be substituted, 1. Register and Schedule of Contracts. The purpose of a register of contracts is to provide a chronological record of this class of documents, as well as monthly totals for the general journal. No regular form of register and schedule of contracts is provided in the book of forms and in a number of departments and bureaus where the contracts entered into are few in number, they can be readily summarized and totals for the month secured without the use of any special record. Even in the departments and bureaus where few contracts are entered into, however, a register will be found of value which shows the date of execution of the contract, name of the contractor, the purpose of the contract and the amount of the contract, divided as to general fund, loan funds or special and trust funds. The register and schedule should be totaled at the end of each month, a separate total being made for general fund, for loan funds and for special and trust funds. If a loose leaf register is used, the schedule for transmission to the city controller may be made by carbon process. In the department of supplies, two copies of the schedule of contracts in addition to the register of contracts will be required, the second copy being sent to the department or bureau for whose benefit goods or services are being contracted. The purpose of thus noti- fying the operating department is to enable it to encumber the memorandum appropriation accounts that it keeps with the appropriations made to the department of supplies for its use. 9 10 DX80BIPTIOI7 AND U8K OF BEOISTKiUI AND 8CHRDULE8 OF DOOUMEHTB. The totaJs by funds of contracts entered into form the bans of a general journal entry, as follows : Unencumbered Balance of Appropriations — Safety — General Fund. Unencumbered Balance of Appropriatbns — Supplies — General Fund. Unencumbered Balance of Appropriations — Safety — Loan Funds. Unencumbered Balance of Appropriations — Supplies — Loan Funds. To Reserve for Contracts — Safety — General Fund. Reserve for Contracts — Supplies — General Fund. Reserve for Contracts — Safety — Loan Funds. Reserve for Contracts — Supplies^ — Loan Funds, 2. Begister and Schedule of Orders — Contract and Open Market. The purpose of the register of orders (Form 10) is twofold: (1) to provide a complete record and numerical index to files of orders issued ; (2) to establish totals of estimateid or actual amounts by means of which the accuracy of postings to reserves set up against appro- priation accounts, as well as the postings of orders to the contract ledger and the claimant's ledger, may be proved. Orders should be entered chronologically, one line for each order, un- der one series of order numbers, beginning with number 1 at the first of the year or with any other number if it is desired to continue a series already begun. It is recommended that a loose leaf form of register be used so that the register and a schedule may be made at one writing by means of a carbon sheet. A schedule of orders must be transmitted to the department of city controller as soon as enough orders have been issued to fill or nearly fill a schedule, but not less often than twice a month. Departments which purchase their supplies through the department of supplies will not use this register of orders (Form 10) to register the copies of orders issued by the latter de- partment. The department of supplies will register and schedule to the controller all orders issued for supplies whether for its own use or for the use of other departments. The copy of order sent to departments as an advice of the issue of an order by the department of sup- plies will be registered by each department in a separate register kept for that class of orders. The use of this register will be exactly similar to that of the register of orders (Form 10) de- scribed above with the exception that no schedule of the entries therein will be transmitted to the city controller, and the postings made therefrom will be only to memorandum appropria- tions accounts (department of supplies appropriations). As the columnar arrangement of tlie register of an operating department or bureau for departjnont of supplies orders will be the same as the register (Form 10) designed for orders issued direct by departments, the loose sheets of the latter may be used for both purposes and kept in separate binders or in one binder separated with a tab or guide sheet. If a department feels that the time elapsing between the issue of a requisition on the de- partment of supplies and the receipt of the copy of order therefrom is too long to delay en- cumbering the memorandum appropriation accounts the requisition rather than the order may be used for this purpose. It must be pointed out, however, that if requisitions instead of orders are used to encumber department of supplies appropriations the result.s in many cases will not be ns satisfactory aa if orders were used. For example, requisitions for supplies not on contract at the time of issuing the requisition will have to be held open or posted to some suspense account, because the department issuing the requisition will not know at the time whether the supplies req\iesteriation ledger as a contract or as an open market order encumbrance, and also whether the charge should be made to a new account in the contract ledger or to some account in the claimant's ledger as an open market order. The price at which to estimate the amount of the order will, likewise, be unknown at the time the requisition is issued. But an estimate must be made of the amount of each requisition if it is to be set np at onee as an encumbrance against some appropriation, and this estimated amount may be subject to great fluctuations from the amount of the order as issued by the department of siipplies. Considering these difficulties it would seem more satisfactory to a department tense only the copy of order from the department of supplies when setting iip the encumbrance for orders issued. As requisitions are issued on the department of supplies a copy thereof conld be plaeenth, year and year. Every effort should be made to have all invoices for goods delivered in December, for instance, reg- istered on the December register. For such large charges as the monthly lighting bills, etc., it is essential that the register for a given month be kept open until the bills for that month can be entered. The bookkeeper will have to exercise some judgment, however, as to how long he can afford to keep registers open, in order to get in delinquent invoices, before he closes his register of invoices for the month ; but in doing so he shoiild bear constantly in mind the comparisons which are to be made of monthly expenses and monthly acquisitions of property as will be shown by the reports drawn from his detail ledgers. The procedure to follow in registering invoices is first, to post in the column No. 1 the number given by the bookkeeper to the invoice, then in column No. 4 headed "Registra- tion," the date upon which the invoice was actually entered in the register, in column No. 5 the date of the invoice itself, and in column No. 6 the date of the delivery of the goods if such date differs from that of the invoice. Column No. 7 is for the number of the order which the invoice covers (either partly or completely). Under "Claimant" will be entered the name of the claimant from whom the purchase is made. At the right-hand end of the line note the number of the appropriation item to which the invoice is to be charged when it is vouchered. If the invoice is charge- able to a general fund appropriation the amount will be entered in the column headed "Gen- eral Account;" if chargeable to a loan fund appropriation it will be entered in the column headed "Capital Account;" if chargeable to a special and trust fund appropriation it will be entered in the column headed "General Account" and indicated with the Special and Trust Account symbol in order that separate totals for the General Account and Special and Trust Accounts may be secured. This information is derived from the appropriation item number which the invoice bears. The five columns under "Distribution" are provided to indicate the nature of the expen- diture accounts to which the invoices and payrolls are chargeable. All invoices chargeable strictly to "Expense" and bearing an expense symbol or name should be entered in the col- umn headed "Expense." The four blank columns following that headed "Expense" are for such invoices as are properly distributable to "Work in Progress" (jobs), and "Stores" ac- counts, "Property" (capital outlay), for which there are respective ledgers and for which headings to the columns should be written on each sheet of the register, care being taken to DESCBIPTION AND USE OF EEGISTEES AND SOHEDUT.ES OK DOCUMENTS. 13 keep the pasition ol the coluuiu so headed relatively the same sheet by sheet._ The invoice bears a symbol or a job name that will determine the column and ledger in which the charge is to be distributed. Occasionally the charges on an invoice are distributed to two or more kinds of accounts and will therefore be distributed on the register and schedule in two or more of the distribution columns. The second and third columns under the heading "Voucher" are for reference only, and will not be filled in until after the voucher covering the invoices has been prepared and reg- istered. These two columns are primarily for the use of the city controller's office, but may be used to advantage by the bureau to indicate, by entering the number of the voucher when drawn, the invoices that have gone to payment. The date of delivery of goods in the sixth column is to indicate whether the rule, requiring deliveries to be accompanied by in- voices, is being complied with. ', The labor and salary rolls are entered on the register and schedule of invoices and pay- rolls as if they were invoices, except that there is to he posted no invoice nor order number, no date of registration nor claimant. Note whether the roll is for labor or for salary and the dates of the period which the roll covers. The distribution of the rolls to the columns for the different controlling accounts and detail ledgers is obtained in totals for each roll, from the time sheet or other document in which the charges on the roll to each symbol or name of account are summarized by accounts. The entry of the payrolls upon the register is made preferably at the end of the month after all the invoices to be taken into account for that month have been registered. The payrolls are entered only on the departmental register and schedule, as there are no purchases of personal services by the department of supplies for other departments and bureaus. If the amount of an invoice entered on a register and schedule previous to that of the current month has to be changed by reason of an error in price or calculation, or for any other reason, the increase or decrease will be noted against the original entry in red ink as a memorandum only, giving amount and date of change. An entry covering the adjustment will be made in the adjustment of invoice columns of the voucher register. If the invoice is cancelled the word "Cancelled" and the date of cancellation should be noted against the en- try. If an invoice ali-oady entered on a current register and schedule, however, has to be changed in amount the register should be changed to agree with the invoice as corrected, and a note made of the original amount of the invoice in the "Memo" column; if cancelled leave the number of the invoice as originally entered and draw a line in red ink through the remainder of the entry and write "cancelled" in the "Memo" column, giving the date of cancellation. When there is such a number of invoices for a montli that they cannot be listed on one sheet of the register, take second or third sheets, giving them in the upper left-hand corner the same number and date as that borne by the first. If there is more than one sheet it is well to give the first sheet and each succeeding one consecutive sheet numbei-s at the upper right- hand corner. When a register and schedule is to consist of more than one sheet leave two lines blank at the bottom of each sheet, and one line at the top of each after the first, for bringing forward totals. At the end of the month total all the columns, bringing forward the footings from sheet to sheet. The combined totals of all the columns to the right of those headed general account, capital account and special and trust account should agree with the combined totals of these three columns. When this agreement is arrived at the register itself is in balance. There is no way of checking from totals the accuracy of the distribution of amounts posted in the columns headed general account, capital account and special and trust account. Consequently special care should be taken in making these entries. It should be seen at the end of the month that the postings are in the proper account columns as called for by the ap- propriation item numbers noted in the claimants' column. From the register of invoices and payrolls, the following general journal entries are made: Expenses — General Account. Stores — General Account. AVork in Progress — General Account. Reserve for Repairs — General Account. Land, Structures, other Improvements and Equipment — Capital Account. Reserve for Capital Depreciation — Capital Account. To Invoices and Payrolls Payable — Safety — General Account. Invoices Payable— Supplies — General Account. Invoices and Payrolls Payable — Safety — Capital Account. Invoices Payable — Supplies — Capital Account. In connection with the above entry it will be necjssary in most cases to make another journal 14 DESCBIPTION ATTD VBB OF BEOISTEBS AKD 80HBDTn:.E8 OF DOOTTlCnm. entry in order to keep the debits and credits of the general account and of the capital account in balance, and to show the net amount of inter-account transactions. If there are no apecial and trust account transactions entering into the above, the amount of the journal entry for the advances is secured by taking the diflferenoe between the sum of the general account debits and the sum of the general account credits of the preceding journal entry. If the gen- eral account credits exceed the general account debits there has been a net use of general account funds for capital account (permanent improvements) and the amount thereof should be entered in the former of the following alternate journal entries. If the general account debits exceed the general account credits there has been a net use of capital account funds for current purposes, and the amount thereof should be entered in the latter of the following alternate journal entries. In any mixed journal entry, such as the one above where the debits and credits of the general account or of the capital account do not balance (though, of course, the total debits and credits of the whole journal entry must always balance) a col- lateral entry for advances to and from must be used. Advances to Capital Account — General Account, To Advances from General Account — Capital Account. For general account moneys used for permanent improvements. or Advances to General Account — Capital Account, To Advances from Capital Account — General Account. For capital account moneys ascd for current expenses. The same instructions are applicable to special and trust accounts as are given above for the general account. 4. Register and Schedule of Invoices sent to Department of Supplies. Invoices for goods or services ordered by the department of supplies for other depart- ments or bureaus in its capacity as purchasing agent are received by the operating depart- ment with the goods and, after approval as to quantity and quality, are registered by the operating department as "supplies" invoices in the register of invoices — supplies (see de- scription of register and schedule of invoices and payrolls, page 12). When these "supplies" invoices are ready for transmittal to the department of supplies, they are to be registered and scheduled in the register and schedule of invoices sent to department of supplies, the form of which is similar to the register and schedule of vouchers (Forms 12 and 12A). These forms can be used simply by striking out the word "vouchers" in the title and inserting the words "invoices to department of supplies." The monthly journal entries from this register are as follows : Invoices payable — Supplies — General Account. Invoices payable — Supplies — Capital Account. To Invoices sent to Department of Supplies — General Account. Invoices sent to Department ol Supplies — Capital Account and Unencumbered Balance of Appropriations — Supplies — General Fund (column 7). Unencumbered Balance of Appropriations — Supplies — Loan Funds (column 10). Reserve for Contracts — Supplies — General Fund (column 5). Reserve for Contracts — Supplies — Loan Funds (Column 8). Reserve for Open Market Orders — Supplies — General Fund (column 16). Reserve for Open Market Orders — Supplies — Loan Funds (column 17). To Budget Allowance — Supplies---General Fund (total of columns 5, 6 and 7). Budget Allowance — Supplies — Loan Funds (total of columns 8, 9 and 10). •Unencumbered Balance of Appropriations — Supplies — General Fund (column 16 minus column 6). •Unencumbered Balance of Appropriations — Supplies — Loan Funds (column 17 minus column 9). Any adjustments in invoices that are made after they have been received by the depart- ment of supplies may be obtained by the operating department or bureau from the adjustment *Accotint!i marked thus * indicate that the estimatpd or actual amount of the o|i«>n market order* liquidated was greater tlian the actual amount of tlw* invoiccH sent to department of snppliex. Tbeae accounts may be reversed, that is, become debit entries if the invoices exceed the amount of the order* on which they are based, in which latter case the amount of these adjustments should l>c combined with the first and second debits of the entry outlined above. DESCRIPTION AND USE OF EEGISTBBS AND SCHEDULES OF DOCUMENTS. 15 in invoice columns of the schedule copies that it receives from the department of supplies' reg- ister of vouchers sent to city controller. A recapitulation of these adjustments must be made monthly, and a general journal entry prepared thereof similar to that for the same columns of the departmental register of vouchers sent to city controller (see below). 5. Register and Schedule of Vouchers Sent to City Controller. The forms of register and schedule of vouchers (Forms 12 and 12 A) are so designed that the register and the schedule may be made at one writing by means of a carbon sheet. Vouchers should be transmitted with the schedule to the department of city controller. A schedule miist accompany each consignment of vouchers to the city controller, even if only one voucher be transmitted at a time. At the end of each month, without fail, all vouchers registered under date of the month closed must have been scheduled to the department of city controller. The controller will thus have the same monthly totals of vouchers drawn as the department drawing them, and the books of both will be kept in constant agreement. Tie department of supplies will register in its register of vouchers all vouchers for sup- plies, etc., which it sends to the city controller, whether purchased for its own use or for other departments. Departments which purchase their supplies through the department of supplies will enter in their register of vouchers only those vouchers which are prepared in their own departments for expenditures incurred by them direct and not through the department of sup- plies. In order that there may be constant agreement between the books of the department of supplies and the books of tlie several departments for which the former department acts as the purchasing agent it will be necessary for the department of supplies to currently inform the other departments of the vouchers passed and transmitted to the city controller for set- tlement for each department respectively. This will be accomplished by the department of supplies making two schedule copies of each register of vouchers, the first copy for transmis- sion to the city controller with the vouchers and the second for transmission to the department or bureau for which the goods or services represented by the vouchers were purchased, and which has approved the invoices included thereon. A series of schedule numbers should be established by each department, and these num- bers should be inserted at the head of the register and schedule in the space provided there- for. The date of transmittal, which on the schedule is called the "Date of schedule," is also to be noted by the department transmitting the schedule. The number of the voucher registered will be entered in the column headed "Voucher No." and in the second column will be noted the date of registration, which is the date under which the voucher is charged against the general fund or loan fund appropriation account. The third column will show the name of the claimant. In the fourth column under "General, Loan or Special and Trust Item No." will be noted the number of the general fund, loan fund or special and trust fund appropriation ac- count chargeable, or if there is no number, the title of the account may be abbreviated there- under. In the six columns under the main heading "amount of voucher," which is divided into "General Fund," "Loan Funds" and "Special Trust Funds," and again sub-divided under each fund into "contract," "o. m. order," and "payroll and miscellaneous," will be en- tered the audited amount of all vouchers transmitted to the controller for payment. Vouchers issued on contract or open market order will be entered in the respective columns designated under the particular fund from which the vouchers are payable. Vouchers for payroll and miscellaneous purchases or services not received on contract or open market order will be entered in the "Payroll and Miscellaneous" column under "general fund," "loan fund," or "special and trust fund," as the case may be. The purpose of the columns headed "Invoices or claims" is to take care of adjustments, if any, between the invoices as scheduled to the department of city controller and the in- voices as vouchered. It is for adjusting purposes only and in scheduling the voucher, if it has been found necessary in auditing within the department to make any changes either in the amount of the invoice or in the title of the general ledger account (i. e., expense, stores, work in progress, etc.) to which it has been charged, such change should be noted in these columns. Not only should the difference between the amount previously reported on the schedule of invoices and the amount found to be correct after audit, be entered in the "added to invoice" column, but the title of the general ledger account affected should also be noted. 16 DESORIPTIOir AND USE OF BKOISTKB8 AND B0HEDUI.E8 OF DOODUBHTB. in the columu Jioudcd "Order No." there will be uutured the uumber of the order cov- ered by the voucher, and iu one of tiie next two columns there will be entered the amount of the order a» originally cHtiiualed. if the order in chargeable to a general fund appropria- tion account the amount thereof will be noted iu the column "General Fund;" if chargeable to a loan fund item the amount of the order will be entered in the column "Ijoan Funds." The amount settled by voucher may be more or less than the estimated amount of the open market order liquidated on which the voucher is based. This difference between the amount of the settlement voucher and the amount of the order must be adjusted by journal entry at the close of each month, as found from totals of the register of vouchers. The totals of the register of vouchers for the month will be entered in ink. These totals will form the basis for the following entries in tlie general journal to be posted to their re- spective controlling accounts in the general ledger: Invoices and Payrolls Payable — Safety — General Account. Invoices and Payrolls Payable — Safety — Capital Account. To Vouchers sent to City Controller — General Account. Vouchers sent to City Controller — Capital Account, and Unencumbered Balance of Appropriations — Safety — General Fund (column 7). Unencumbered Balance of Appropriations — Safety — Loan Funds (column 10). Reserve for Contracts — Safety — General Fund (column 5). Reserve for Contracts — Safety — Loan Funds (column 8j. Reserve for Open Market Ordeis — Safety — General Fund (column 16). Reserve for Open Market Orders — Safety — Loan Funds (column 17). To Budget Allowance — Safety — General Fund (total of columns 5, 6 and 7). Budget Allowance — Safety — Loan Funds (total of columns 8, 9 and 10). •Unencumbered Balance of Appropriations — Safety — General Fund (column 16 minus 6). •Unencumbered Balance of Appropriations — Safety — Loan Funds (column 17 minus 9). 6. Register and Schedule of Reductions in Contract Reserves. The purpose of this register is to provide a complete record of all reductions In contract reserves and to establish totals by means of which the accuracy of the postings to the general fund, loan funds and special and trust funds appropriation ledgers, and the contract ledger may be proved. A loose leaf form of register is recommended (Form 13) so that the register and a sched- ule (Form 13 A) may be made at one writing by means of a carbon sheet. As soon as enough entries have accumulated to till or nearly fill a sheet, the schedule should be transmitted to the department of city controller. The number of contract reductions in a month may be so small in some departments as to make the use of a register for this purpose appear unnecessary. The form of register rec- ommended, however, is designed to be prepared with the schedule at one writing by means of a carbon sheet. The schedule, therefore, will take the place of the various forms of advice of contract reductions now sent to the controller. The register with the schedule will es- tablish a standard method in all departments of registering and reporting reductions in con- tract reserves. In some cases, however, it may be necessary for the city controller to require that the schedule be supplemented with a further statement. In the first column, "Date of Registration," will be noted the date on which the reduction in the contract is registered. The second columu, headed "Department, Bureau, etc.," is designed principally for aae in the department of supplies to indicate the departments, bureaus, or offices whose supply items of appropriations, controlled by the department of supplies, are affected by reductions in contracts made by the latter department. It will be necessary for the department of supplies in writing its register and schedule of reductions in contract reserves to make an extra copy of the schedule for transmittal to the department or bureau whose appropriation accounts are affected thereby. The latter department will use its copy of the schedule to reduce its mem- *Accounta marked thus • indii-nte that the estlmnted or actual amount of the open market ordera liquidated was greater than the amount of the vouchers sent to city controller. These accounts may be reversed, that is, become debit entries if the vouchers sent to city controller exceed the amount of the ordeo's on whleh Hhey are hnsed, la which latter case the amount of the.«ie ndJiiRtmenta should be combined with the first and second debits of the entry outlined above. DESCEIPTION AND USE OF EEGISTEES AND SCHEDULES OF DOCUMENTS. 17 oranda contract accounts and increase its memoranda appropriation accounts. It will also be necessary for it to make a general journal entry for its memoranda "supplies" appropria- tion accounts similar to that given below for "Safety" appropriation accounts. In the third column will be noted the item number of the appropriation affected by the reduction in the contract reserves. In the column under "Contractor" will be entered the name of the individual, firm or corporation whose contract has been reduced, and in the next column will be entered the num- ber of the contract. Under the main heading "Amount of Reduction" and in the column "General Fund" or "Loan Funds" as the case may be, the amount of the reduction is noted. If the contract re- duced is chargeable to a general fund appropriation account, the amount of the re- duction will be entered in the "General Fund" column; if the contract reduced is chargeable to a loan fund account, the amount of the reduction will be entered in the "Loan Funds" column. The nature of the contract, i. e., whether it is for supplies, equipment, construction, etc., will be noted in the last column under this heading. Before transmitting schedules of reductions in contract reserves they must be certified to and approved by the proper certifying and approving officers in the departments in which the schedules originate. Space for certification and approval is provided at the bottom of the register and the schedule. The totals of the register of reductions in. contract reserves will be entered in ink and will form the basis for the following journal entry: Reserve for Contracts — Safety — General Fund. Reserve for Contracts — Safety — Loan Funds. To Unencumbered Balance of Appropriations— Safety — General Fund. Unencumbered Balance of Appropriations — Safety — Loan Funds. 7. Register and Schedule of Properties, etc.. Transferred or Otherwise Disposed of. The inter-department invoices for land, structures, non-structural improvements and equipment, as well as any other assets the custodianship of which is transferred from one de- partment or bureau to another (other than services, materials, supplies and equipment which have been charged to inter-departmental services in the distribution upon the register of invoices and payrolls; and materials, supplies and equipment issued from storehouse which have been charged to inter-departmental services through the medium of the monthly report of stores issued) will be registered at cost (book) value in a register of properties, etc., trans- ferred, a carbon copy of which must be transmitted to the department of city controller. The monthly totals from the register should be journalized as follows : Inter-departmental Services Rendered — General Account. To Land, Structures, other Improvements and Equipment — Capital Account. Stores — General Account. "Work in Progress — General Acccount. Expense — General Account, and Advances to General Account — Capital Account. To Advances from Capital Account— General Account. 8. Register and Schedule of Inter-Departmental Services, etc., Received. This register provides for a current record of all inter-departmental invoices for ser- vices, materials, supplies and equipment received from other departments and bureaus, and for such transfers of the custodianship of land, structures, non-structural improvements and other immovable properties belonging to the city as may be made to it. The monthly totals drawn from this register produce the following journal entry : Expenses — General Account. Stores — General Accoimt. "Work in Progress — General Account. Land, Structures, other Improvements and Equipment — Capital Account. Accounts Receivable — General Account. To Inter-Departmental Services Received — General Account, and Advances to Capital Account — General Account. To Advances from General Account — Capital Account. 18 DKSCRIPTION AND USE OF SE0I8TEB8 AND B0HEDUI.E8 OF DOOrMSKTS. 1). Monthly Report of Stores Issued from Storehouses. A form of monthly report of stores issued (Form 2i) has been prepared on which the vari- ous classes of articles or stores ledger accounts may be printed, thereby avoiding the necessity of rewriting the names of the articles in each monthly report. The report will show the amount of stores distributed under each expense classification. The report of stores issued must be made up monthly from the signed requisitions of sup- plies issued during a month. In the columns provided on the report form the total quantity and amount of each article issued for the month will be noted under the particular ex- pense classification of each department, the titles of which classification will be entered in the blank space at the head of each column. The charges to the respective expense accounts affected in the expense ledger for stores issued will be made from this monthly report. In the general ledger the controlling accounts, "Expenses" and "Stores," will be debited and cred- ited respectively with the total amount of stores issued for the month. Stores issued to con- struction work will of course be a charge to a construction rather than an expense account. The assembling sheets (Form 24 A) will be used in connection with the montlily report of stores issued for assembling by divisions or organization units the stores issued daily dur- ing the month to which the report relates. The monthly report of stores issued from storehouses is journalized as follows: Expense — General Account. Reserve for Repairs — General Account. Accounts Receivable — General Account. Work in Progress — General Account. Inter-departmental Services — General Account. Land, Structures, other Improvements and Equipment — Capital Account. To Stores — General Account. and Advances to Capital Account — General Account. To Advances from General Account — Capital Account. 10. Monthly Report of Stores Returned to Storehouses. The monthly report of stores returned to storehouses will be prepared by the store- keeper each month, and will show in summary all stores returned to storehouses by depart- ments or bureaus to which they have been issued on requisition. A form similar to that used for the monthly report of stores will be utilized. The storekeeper will check the goods received and issue a receipt in duplicate, and file the duplicate. The latter is used at the close of month in classifying and preparing the monthly report of stores returned to storehouses. Postings to the stores (debits), expense (credits) and property (credits) detail ledgers should be made from these monthly reports of stores returned to storehouses, for each kind of stores received back. The general journal entries are as follows : Stores — General Account. To Expense — General Account. Reserve for Repairs — General Account. "Work in Progress — General Account. Land, Structures, other Improvements and Equipment — Capital Account and Advances to General Account — Capital Account. To Advances from Capital Account — General Account. 11. Register and Schedule of Reserves for Repairs and Capital Depreciation. This register provides a means for obtaining currently each month the amounts to be set aside in reserve for repairs and capital depreciation and the amount of the charges to expeoM for the former and to investment of the city — capital account for the latter. The reserve for capital depreciation will be charged to investment of the city (surplus) — capital account — instead of to expense in view of the provision of the state constitution tiiat requires the pay- ment of all debt from current revenues within thirty years after it is created. The conse- quent heavy contribution from general account income for the reduction of capital account indebtedness that must be made each year much more than offsets the capital depreciation in the city's property and equipment. DESCEIPTION AND USE OF BEGISTERS AND SCHEDULES OF DOCUMENTS. 19 Separate portions of the register will be set aside for the reserve for repairs and the re- serve for capital depreciation. The same ruling will do for both portions of the register. In the first column is entered the estimated percentage of the annual reserve for repairs or for capital depreciation, as the ease may be. In the second column is entered the monthly pro- portion of the annual percentage. In the third column is entered the title of the general prop- erty and equipment class. The following columns are in twelve groups of two each, there being one group for each month. The first of the two columns in each group is for book valu- ation (at cost) of the property in each class, as indicated by the class title. The second column is for the amount of the monthly reserve. The amounts of reserves for repairs should be posted monthly to the credit of the detail reserve for repairs accounts in the reserves for repairs and capital depreciation ledger (for further details, see page 29) and should be debited monthly to the proper detail accounts in the expense ledger. By this method provision is currently made for the repair of properties and equipment, actual expenditures for which are very heavy in some months and very light in others. The general journal entry for the monthly total of this register for the reserve for repairs is as follows: Expense — General Account. To Reserve for Repairs — General Account. The amount of capital depreciation is similarly extended upon a monthly basis. As capi- tal depreciation is chargeable to investment of the city (surplus) — capital account, no detail debit will be necessary, but detail credit postings will be required to the detail capital de- preciation accounts of the resei've for repairs and capital depreciation ledger. The general journal entry for the monthly total of the reserve for capital depreciation of this register is as follows : Investment of the City — Capital Account. To Reserve for Capital Depreciation — Capital Account. 12. Register and Schedule of Revenue Accrual. The register of revenue accrued is a columnar book in which is recorded all the various revenues accruing to the department or bureau. The form for the register of revenue ac- crual is similar to that used for the register of depreciation, having wide space for listing the sources of revenue at the left, and a column for total yearly revenue accrued. To the right will be columns for each month to which can be extended for journal entry purposes the monthly proportions of revenue accrued. The monthly journal entry for revenue accruals is: Receiver of Taxes — General Account. Revenues Accrued, not due — General Account. Accounts Receivable — General Account. To Revenue, 191 — General Account. CHAPTER IV DESCRIPTION AND USE OP DETAIL LEDGERS. The purpose of the detail ledgers Is to state in detail the transactions pertaining to every subject concerning which information is needed. The number and classifica- tion of the accounts in the detail ledgers depends on the number and classification of the subjects, concerning which administrative judgment is required. The accuracy of the postings to the several detail ledgers should be proven monthly by checking the monthly schedules of balances and totals thereof (Chapter VI) to the respective con- trolling accounts in the general ledger. By general classes, the detail ledgers used will be as follows : 1. Appropriation ledgers. a. General fund. b. Loan funds. c. Special and trust funds. 2. Contract ledger. 3. Claimant's ledger. 4. Expense ledger. 5. Stores ledger. 6. Work in progress ledger. 7. Property ledger. 8. Reserve for repairs and capital depreciation lodger. 9. Revenue ledger. 1. Appropriation Ledgers. a. General Fund. The general fund ledger of each department will contain an account with each appropriation, other than those provided from loan funds or special and trust funds, in which the department has an interest. Each account will show every transaction aflfecting it ; each account will show not only the amount appropriated, but the con- tracts awarded, tlie open market orders issued, and the vouchers drawn against the authorization to spend indicated in the title. Each account will show the balance un- expended and the balance unencumbered. The general fund ledger (Form 20) may be provided either in a loose leaf or a bound book. The amounts of the budget allowance will be the first entries made in the ledger, space at the top of the ledger sheet being provided for this purpose, the amount of the appropriation being entered in the first "amount" column to the left Additional appropriations and transfers will be entered in the "Amount" column as they are subsequently authorized, the date of each authorization being noted in the date column, and the character of the appropriation in the "Memo" column. In opening a new appropriation ledger at the beginning of a year, the non-merging bal- ance of each appropriation of the previous year should be carried forward marking in the "Memo" column "Books of 191—." By columnar arrangement the front of the ledger page is divided into contract en- cumbrances and open market order encumbrances ; the reverse side of the page is pro- vided for expenditures. For those departments which may have a large number of expenditure items chargeable against a particular item of appropriation in excess of the available space provided on the reverse of the encumbrance ledger slieet. extra sheets (Form 20 A) are designed with the expenditure ruling on both sides for inser- tion after the encumbrance sheet. As each contract against a general fund appropriation is awarded and entered in the register of contracts, the amount of the award will be posted in the "Amount" col- umn of the page carrying the account of the appropriation item affected under the general caption "Contract Encumbrances," the date of the award and the number of the contract being also noted in the respective columns thereunder. Reductions and cancellations made subsequently in contracts will first be entered in the register of re- ductions in contract reserves and the amounts thereof entered in the column "Deduct 20 DESCEIPTION AND USE OF DETAIL LEDGEES. 21 Reductions in Contracts" under the caption "Contract Encumbrances" of the appro- priation item account affected. Open market orders issued chargeable to general fund appropriation accounts will first be registered in the register of orders, and the amount thereof will be posted in detail in the column "Estimated Amount" of the general fund appropriation ledger under the general caption of "Open Market Order Encumbrances," the dates and order numbers being entered in the respective columns thereunder. Differences, if any, be- tween the amount of an open market order as issued and the amount of a voucher liqui- dating the order will be entered in chronological order in the columns "Add" and "Deduct" under the sub-title "Adjustments" of the general caption "Open Market Order Encumbrances." The latter caption has been subdivided into two sections of duplicate columns for open market order amounts and adjustments. Postings under this caption will be entered in the first section to the left, and when the section is filled, continued therefrom to the second section on the right. It has been estimated that on an average the number of open market order encum- brances posted in a year to an appropriation account will be almost twice the number of contract award items posted during the same period. Departments using the bound book form of ledgers will have to exercise some judgment in this matter at the time of opening their books for a new fiscal year. If sufficient space is not available on a led- ger page for all the entries posted in a year to a particular appropriation item thereon, extra pages immediately following the first page of the appropriation item should be allowed for that purpose. All the ledger pages relating to one appropriation account would thus be kept together rather than scattered through the ledger. Departments using the loose leaf form of ledger may insert additional ledger sheets as required. After expenditure vouchers have been registered in the register of vouchers they will be entered in the appropriation ledgers in the particular account affected under the general caption of "Expenditures." In the first column will be noted the date of registration or the date the voucher becomes a charge against the appropriation, the warrant number and the order num- ber on which the expenditure is based, being entered on the same line with the date in the next two columns, in their order. The name of the payee or claimant will be entered in the column headed "In Whose Favor." In the column headed "For "What" will be noted short particulars as to the nature of the articles or services covered by the voucher. In the three columns under the sub-caption of "Audited Vouchers, Adjustments and Cancellations" will be entered the amounts of expenditure vouchers drawn in pay- ment of contracts or contract orders, opm market orders, payroll and miscellaneous. Voixchers drawn in payment of contracts or contract orders will be entered in the "Contract" column, vouchers drawn in payment of open market orders will be entered in the column of that heading, and vou<5hers drawn in payment of payrolls and mis- cellaneous claims will be entered in the column "Payroll and Miscellaneous." In the last column with the heading "Amount" under the sub-title "Unencum- bered Balance of Appropriations" will be noted the balance unencumbered, i. e., the balance remaining in an appropriation over and above the total amount of contracts awarded, open market orders issued, and payroll and miscellaneous expenditures made. The date for which this balance is determined will be indicated in the date column alongside of the amount. The sum of the totals for the month of all amounts entered in the "Amount" col- umn under "Contract Encumbrances" for all the general fund appropriation accounts will agree with the total amount of general fund contracts registered, as per monthly summary of the register of contracts, and this agreement should be effected at the end of each month before the monthly total is journalized for entry in the general ledger. The sum of the totals drawn from the column "estimated amount" under the cap- tion "Open Market Order Encumbrances" for all the general fund appropriation accounts will agree with the total of the column entitled "Open Market" under "Gen- eral Fund" in the register of orders, and this agreement shoiild be effected at the end of each month as a proof of the accuracy of the bookkeeping work before the monthly total of the register of general fund open market orders issued is journalized for entry in the general ledger. It will be seen that the difference at any time between the total of the amount 22 DXflOBIPTIOir AND USE OF DETAII, I,EDOEBS. column under "Contract Encumbrances" and the total payments on account of con- tracts as indicated in the column entitled "Contracts" under "Expenditures," minus the reductions in contracts, will be the amount of the contingent liability on contracts unvouchered ; and similarly the difference at any time between the total of the column entitled "Estimated Amount," under the caption "Open Market Order Encumbrance," and the total of vouchers drawn in payment thereof ("Open Market Order" column under "Expenditures"), plus or minus the adjustments, will be the amount of outstand- ing open market orders unvouchered. The total of the columns entitled "Contract," "Open Market Order," and "Payroll and Miscellaneous" under the caption "Expenditures" deducted from the total appro- priations (as adjusted by transfers to and from) will show at all times the unexpended amount of each general fund appropriation account; and to ascertain the balance avail- ble in each appropriation, for further contracts, open market orders and payroll and miscellaneous payments, it is only necessary to deduct from this unexperCied balance the balance of contracts and open market orders unvouchered. This same result may be secured, however, in another way by deducting from the total appropriations (as adjusted by transfers to and from) the sum of the totals of the "Contract Encumbrance," and "Open Market Order Encumbrance" and "Payroll and Miscellaneous" exi>enditure columns of the ledger. The balance thus obtained is known as the "unencumbered bal- ance of the appropriation." The sum of the total expenditures posted each month in detail in the columns en- titled "Contract," "Open Market Order," "Payroll and Miscellaneous" in all general fund appropriation accounts must agree with the monthly totals of the several sec- tions of the register of vouchers, and this agreement should be effected at the end of every month. As explained previously herein, no postings of contract orders issued will be made from the register of orders to the appropriation ledgers. Therefore there will be no adjusting entries in these ledgers for differences between the amount of a voucher and the amount of a contract order as issued. The ultimate purpose in the columnar ar- rangement of the appropriation ledger is to show the balance unexpended and the bal- ance unencumhered. In the case of contracts this purpose is attained by posting to the respective appropriation accounts the amount awarded for each contract. These en- tries serve to establish the contract encumbrance against appropriations regardless of subsequent orders issued against those contracts. Only contract reductions, cancella- tions or voucher payments on aecotmt of contracts will affect the amount of contract encumbrances. The procedure for such entries is treated in the foregoing. In the case of open market orders, liowever, the only encumbrance against appro- priations is the estimated or actual amount of the order as issued. If, therefore, subse- quent adjustment is necessary between the estimated amount of an order and the voucher payment the amount of adjustment must be shown in the appropriation account affected, in one of the columns "Add" or "Deduct" under the general caption of "Open Market Order Encumbrances," in order that each account may show the cor- rect amount of open market order encumbrances. These adjustment amounts will be found by taking the difference between each voucher amount and the amount of the order liquidated by the voucher and posting the difference as directed. The proof of the accuracy of the individual adjustments in a month may be determined at the end of the month by comparing the net additions or deductions, as shown in all the appro- priation accounts with the net additions or deductions, as shown by the register of vouchers. The general ledger controlling accounts affected by such adjustments in open market orders are adjusted at the close of a month by journal entry from the regis- ter of vouchers, ns explained in the foregoing remarks on the register of vouchers. If a voucher has been decreased in amount or cancelled after it has been trans- mitted to the city controller, the department in which the voucher originated should be notified by the city controller (a new warrant drawn if necessary) and tlie amount of the decrease or cancellation should be noted in either the "Contract," "Open Mar- ket Order" or "Payroll and Miscellaneous" column under "Expenditures" of the ap- propriation account affected (in red ink) ; imd if an open market order voucher the amount of reduction must be indicated in the "Deduct" column under "Open Market Order Encumbrances." This entry will decrease the total amount of vouchers charged against the appropriation account. At the end of each month the advices from the city controller's office of voucher adjustments shotild be summarizt^d nnd an entry of the BESCEIPTION AND USE OF DETAIL LEDGERS. 23 totals thus secured prepared for the general journal, debiting vouchers sent to city controller (general account, capital account or special and trust account) and crediting expenses or other proprietary controlling accounts affected, at the same time one of the following collateral fund entries will be made for the same amount according to the class to which the voucher decreased or cancelled belongs : 1. If a Payroll and Miscellaneous Voucher or Open Market Order Voucher : Budget Allowance (General, Loan or Special and Trust Fund). To Unencumbered Balance of Appropriations (General, Loan or Spe- cial and Trust Funds). 2. If a Contract Voucher : Budget Allowance (General, Loan or Special and Trust Funds). To Reserve for Contracts (General, Loan or Special and Trust Funds). In the case of advices from the city controller's office of voucher adjustments to the department of supplies, instead of crediting expense or other proprietary controlling accounts, as indicated above, the department of supplies will credit "Invoices Received from Departments and Bureaus." Its fund entries are similar to ihose above. The operating department or bureau whose accounts are thus affected, however, will journalize its copy of the advices of the city controller's voucher adjustments by crediting expense or other proprietary controlling accounts affected as noted above for advices of city controller's adjustments in its own departmental vouchers and will use the fund entries noted above. These adjustment journal entries are all based upon the assumption that the adjustments are reductions; if, however, the adjustments amount to a net increase, all of the above adjustment entries should be reversed as to debits and credits. Similarly the particular accounts affected in the contract ledger and the claimants' ledger respectively will have to be changed to correspond with any adjustments made in the appropriation accounts for contract voucher or open market order voucher re- ductions. Red ink entries of the reductions will be made in the "vouchers" column and black ink entries in the "adjustments" columns of the contract and the claimants' ledgers, and in the case of open market order vouchers a red ink entry would also be necessary in the "Amount" column under "Orders liquidated" in the claimants' ledger. If the month's record in the voucher register containing the original entry of the altered or cancelled voucher has not been closed, the proprietary or fund general jour- nal entries may be dispensed with by making a current entry for the amount of the ad- justment in red ink in the voucher register. The various adjustment entries in the detail ledgers as described above, would still have to be made, however, as the original amount of the voucher would have been previously posted thereto before it was sent to the city controller's office for audit and settlement. The following agreements should be effected at the end of each month between the general ledger controlling accounts and the schedules of balances of the several detail ledgers. The schedule of balances of "Open Market Order Encumbrances" of all ac- counts in the general fund appropriation ledger should agree with the credit balance of "Reserve for Open Market Orders — general fund" in the general ledger. Likewise the total of the unvouchered balances of "Contract Encumbrances" of all accounts in the general fund appropriation ledger should agree with the credit balance of "reserve for contracts — general fund" in the general ledger, and should be supported by a schedule of contract balances prepared from the contract ledger. The total of all unen- cumbered balances in the general fund appropriation ledger should agree with the credit balance of the general ledger account entitled "Unencumbered balance of ap- propriations — general fund." These agreements are proofs of the correctness of the several records mentioned, and should be effected not less frequently than once a month; schedules of balances of the general fund appropriation ledger and the other detail fund ledgers should be taken off at the end of each month for this purpose. Appropriation accounts for salaries and wages will be opened in the appropriation ledgers in the same manner that accounts for other than salaries and wages are opened. In such cases, there being no contract or open market order encumbrances, the columns provided for recording such details in the appropriation ledgers will remain blank, and only the appropriation and expenditure columns therein will be used to record vouchers passed for salaries and wages. "Where a loose leaf appropriation ledger is used, it may be found practical in large departments and bureaus to have some sheets ruled solely 3 24 DKBOBIPTION AND USE OV DKTAIL LEDOKBS. for expendituren for use Avith salary and wage appropriation items, whereas others can be ruled for encumbrances as well as expenditures. h. Loan Funds. The loan fund apin-opriation ledger (Form 20) should contain an account with each ap- propriation made from loans showing the amount made available through appropriation or transfer, the contracts awarded, the open market orders issued, the vouchers drawn against the same, and the unexpended and the unencumbered balance. The form and method of using the loan fund ledger is the same as that described in the foregoing for the general fund ledger. The sheets for the general fund and loan fund ledgers respectively may be kept in two separate ledger binders, or they may be kept in one binder with two separate sections indi- cated by a dividing sheet with a tab. Appropriations from temporary loans will be consid- ered as general fund appropriations and entered in the general fund appropriation ledger rather than in the loan fund appropriation ledger, for the reason that temporary loans are of very short duration — not over four months ; are used generally to meet current expenses of the city, and are usually repaid out of general fund appropriations of the sncceedini; year, c. Special and Trust Funds. The special and trust funds appropriation ledger should be kept in the same manner as the general fund and loan fund ledgers, upon sheets of the same ruling, and in most cases it will be best practice to keep it in the binder with the general fund and loan fund appropria- tions, using a tab to separate the sheets from those of the two other ledgers. 2. Contract Ledger. The contract ledger will contain an account with each contract awarded, the quantity, price and amount of each line of goods or services included within the contract, the quantity and amount ordered, the quantity and amount delivered, the invoices vouchered for payment, the balance not ordered, and the balance of the contract which has not been vouchered. The left-hand page of the contract ledger (Form 21) provides for a complete record of the contract, the printed form at the head indicating the particulars that are to be recorded. Under the head of "Accounts chargeable" will be noted the several general fund, loan fund or special and trust fund accounts affected, and in the "Total" column the amount of the contract, chargeable to each. The four blank columns immediately following the word "total" may be used for making an analysis of the contract amount by organization units or other classifications. Reduction or cancellation of the amount of a contract will be noted in red ink in the "Total" column. As orders are issued against a contract they will be entered under the head of "Orders issued," with the date, number and estimated amount. Two blank columns are provided in the block headed "Orders issued" which may be used to analyze the orders according to or- ganization units or other classification. Under the head of "Vouchers" will be entered the date, number and amount of voucher, and on the same line imder the head of "Adjustments" will be noted the difference between the original order and the amount of the voucher. On the same line, under "Orders liqui- dated," will be noted the original amount of the order covered by the voucher. It is not con- templated that the voucher will be entered on the same line as the original entry of the order in the column to the left. The "Per cent Retained" column is provided for noting therein the amount of any contract payment retained in accordance with the terms of the contract. When a retained payment is vouchered, the voucher will be entered in the register of vouchers in the same manner as other vouchers. The difference between the total of "Orders issued" and the total of "Orders liquidated" will show at all times the amount of orders unvouchered. The right-hand page of the contract ledger (Form 21 A) provides for the details of the articles or services contracted for. Following the caption "Articles or services" will be en- tered the name of each article included in the contract. Tn the columns opposite the words "Unit of measure" will be indicated the unit of measure of each article mentioned in the con- tract; for instance, if the article is "eggs" the unit will probably be "dozen," and opposite "Unit price" will be shown the price per dozen. Opposite the "Line number" will be shown the number of the line in the contract, and opposite "Quantity" will be shown the quantity specified in the contract DESCRIPTION AND USE OF DETAIL LEDGEES. 25 As orders are issued and entered on the left-hand page of the contract ledger, a record of the quantity of same will also be made on the right-hand page according to the article in the colums headed "Ordered." When goods are received they will be noted against their proper order in the columns headed "Received." This record will thus show at all times the quantity ordered of a given article, the quantity received, and the balance that may yet be ordered of that article. The accounts in the contract ledger may be arranged alphabetically by names of contrac- tors or in any other manner adapted to the requirements of departments. 3. Claimant's Ledger The claimant's ledger for departments will contain an account with each vendor or tradesman who has received orders (not under contract) for the delivery of goods or the ren- dering of service, and will contain a detailed record of each order issued, each invoice vouch- ered and the balance not vouehered for payment. This book (Form 22) admits of entering the date, number, particulars and the estimated cost of each order. The column headed "Memo" may be used to note information as to the dates of invoices, etc. As vouchers are drawn they will be entered under the head of "Vouch- ers," but no attempt should be made to enter a voucher on the same line on which the order was originall}' entered. If the voucher amount differs from the estimated amount of the or- der, the difference, plus or minus, is noted under the head of "adjustments" on the same line as the voucher amount. Under the caption of "Orders liquidated," and on the same line as the voucher entry, will be shown the amount of the order as originally entered. The dif- ference then between the accumulated total of the orders originally entered and the accumu- lated total of the orders liquidated will be the amount of orders unvouchered, and the total of the schedule of balances for all claimants' accounts will agree with the credit balance of "Reserve for open market orders" in the general ledger. 4. Expense Ledger (Forms 25 and 25 A). Expenses are (1) the accrued costs, paid or i)ayable, of the services, rents, supplies and materials and parts obtained by or for the city for administration of its affairs or the main- tenance and operation of its business undertakings; and (2) the losses incurred by it in such maintenance and operation. Administration Expense is the cost of direction and control (including salaries and wages, services other than personal, materials, supplies, etc.), which is not directly allocable to operation, maintenance or capital outlays. These expenses only apply to departments or offices which are wholly executive or administrative in their functions. Such offices are those of the mayor, the directors of the executive departments of the city, and the county offices. Operation Expense is the ordinary running expenses of the city government (including salaries and Avages, services other than personal, materials, supplies, etc.) incident to the cost of conducting the current services performed by the city. Maintenance Expense is the cost incurred for repairs, and other current upkeep (in- cluding salaries and wages, services other than personal, material, supplies, etc.), for the preservation of municipal properties. The reserve for replacements is to be charged cur- rently to "investment of the city (surplus) — capital account" (see page 18, last paragraph). Fixed Charges are the costs incurred for purposes specifically provided by law or which are of a fixed nature, such as interest, sinking fund payments, rents, insurance and taxes paid to other civil divisions. Other Expenses are the costs incurred, if any, for expenses of a miscellaneous nature that are not chargeable to any of the specific expense headings named aibove. Among the expenses to be classified under other expenses are: (1) educational and general welfare grants and contributions; (2) subsidies and bounties; (3) burial expenses; (4) gratuities; (5) pensions and retirement salaries; (6) losses. For purposes of administration and budget making an expense ledger is one of the most important records of a department, since it enables officials to obtain an accurate and well classified statement of the monthly cost of operating each function or activity under- taken or performed. The elements of expense to be recorded in the expense ledger are: (1) invoices and payrolls directly chargeable to expense; (2) stores issued; (3) work in progress distributed; (4) inter-departmental services received; (5) reserve for repairs. Invoices and payrolls chargeable to expense should be posted to their respective ac- counts in the expense ledger JO accordance with the expense classification, such posting to 20 DaWBTPTION Aim TT8B OF DETAII, I.EnOEBS. be made immediately after entry of the invoice or payroll in the register of invoices and payrolls. Where stores are kept and issued on requisitions and the number of requisitions in each month is small, the amount of each requisition will be posted in detail in the expense ledger. If the stores requisitions are very numerous, the postings to the expense ledger should be made from the monthly report of stores issued, which statement should be made in accordance with the expense classification, so that there will be a sinjfle monthly entry in the expense ledger to eacTi expense sub-account for which stores have ' lod during the month. Stores returned to storphouse after having been issued on i ion should be credited to the respective expense accounts to which they have previously been charged. Completed work in progress of an expense nature should be taken into the various accounts affected in the expense ledger. These entries are made from the work in progress ledger. Services or materials received from another department should be posted from the inter- departmental invoices to the various accounts in the expense ledger chargeable therewith, providing such work or materials are of an expense nature. If they are of the nature of per- manent improvements and equipment, or for stores, they wotild be posted to the property or stores ledgers. The reserve for repairs to property and equipment in the custody of a department or bureau should be distributed to the various expense accounts from the register of reserves for repairs and capital depreciation. The form of the expense ledger provide;, an account for each sub-account of the expense classification, and thus furnishes the necessary analysis of ex- penses incurred. Few, if any, credits are posted to this ledger, as all of the accounts are normally debits, so that single columns are provided for each account. The few credits enter- ing into this ledger are entered in red ink in the debit columns. A schedule of balances and totals should be taken from the expense ledger monthly and should agree in total with the balance of the controlling account "expenses" in the general ledger, thereby proving the accuracy of the month's postings to the expense ledger. Below is presented an outline classification of expenses, together with symbol letters for the same for the bureau of correction of the department of public safety as an illustration of the classifications of expenses to be used by the various departments and bureaus in con- nection with the expense ledger : P— DEPARTMENT OP PUBLIC SAFETY (P— Protection). C— BUREAU OF CORRECTION (C— Correction). Functions or Activities. G General Services: GC Administration (C — Executive Control). GA Accounts and records. GB Care of buildings and grounds. GH Heat and power plant. GS Store department. GT General stables (T — Transportation). P Care and Support of Prisoners : PG Guarding and housing prisoners. PM ^Tedical care of prisoners. PF Feeding prisoners PK Clothing prisoners. PT Transportation of prisoners. PJ Janitorial service. M Manufacturing and other production. MW Manufacturing gas and by-products. MK Manufacturing clothing and shoes. MT Manufacturing tinware. MS Quarrying stone and gravel. ML Laundering. MB Blncksmithing. MF Farming. Characters of Expense. - - X Operation. --Y Maintenance. DESCRIPTION AND USE OF DETAIL LEDQEES. 27 Objects of Expense. A Personal service. B Services other than personal. C Materials. D Supplies. J Contributions, interest, etc. K Pensions, etc. L Losses and contingencies. DETAIL EXPLANATION OF FUNCTIONAL CLASSIFICATION (on previous page). Detention of Petty Offenders {General Function). Symbol. G ''^ General Service. GO Administration. Includes expenses of superintendent's and warden's offices and apart- ments. GA Accounts and Records. Includes expenses of bookkeeping and statistical work. GB Care of Buildings and Grounds. Includes expenses of carpenter, painter, stonemason, plumber and tin- smith. GH Heat and Power Plant. Includes expenses of engineer and fireman. GS Store Department. Includes expenses of storekeeper. GT General Stables. Includes expenses of house stables. P Care and Support of Prisoners. PG Guarding and Housing Prisoners. Includes expenses of captain, lieutenant, guards, matrons, moral instruc- tor, organist and bed and bedding. PM Medical Care of Prisoners. Includes expenses of physician, nurses and apothecary. PP Feeding Prisoners. Includes expenses of kitchen and bakery. PK Clothing Prisoners. Includes expenses of finished articles (clothing and shoes and repairs.) PT Transportation of Prisoners. Includes expenses of travel of officers and guards and moving prisoners. PJ Janitorial Service. ^^ Includes expenses of labor and supplies used in cleaning. M Manufacturing and Other Production. MW Manufacturing Gas and By-products. Includes cost and expenses of manufacturing of gas and by-products. MK Manufacturing Clothing and Shoes. Includes cost and expenses of manufacturing clothing and shoes. MT Manufacturing Tinware. Includes cost and expenses of labor and material in manufacturing tin- ware. MS Quarrying Stone and Gravel. ~ Includes cost and expenses of operating quarry and gravel pit. ML Laundering. Includes cost and expenses of operating laundry. MB Blacksmithing. Includes cost and expenses of blacksmithing. MP Farming. Includes cost and expenses of farming and gardening. 28 DESOKIPTION AND D8E OF DSTAIL LEDOl 5. Stores Ledger (Form 23). The introduction of stores ledgers in all departments will be required whenever supplies and materials are handled in such quantities as to render necessary the keeping of stores ac- counts. It is desired to have all accounting forms and reports uniform in all departments, but it will not be insisted upon to change at once existing forms of stores ledger which may be meeting the requirements of particular departments. Such changes may be made at a later date following the installation of the other departmental accounting forms. But all depart- ments that carry stores of materials and supplies must keep a stores ledger. With the introduction of stores ledgers, inventories should be taken at the beginning of each year, or more frequently if desired, and schedules of balances and totals of these ledgers prepared at the end of each month in order that the stores balances, as shown in the ledgers, may be proved to the controlling account "Stores" in the general ledger. The accuracy of the stores ledger will thereby be subject to the double check of trial balance and inventory con- trol. The total of charges to "Stores" account in the general ledger is to be established through the invoices; the total of credits to "Stores" is to be established through signed requisitions and storekeepers' reports; and the balance of "Stores" is to be checked both by inventory and schedule of balances and totals. 6. Work in Progress Ledger. The purpose of the work in progress, or job, ledger is to keep separate accounts for show- ing the cost of any work in the nature of maintenance or of extensions (improvements) for which it is thought useful to have available at any time the detailed cost to date. It provides a separate account for each job in progress. The accounts in the work in progress, or job, ledger are posted from the original documents, payrolls, invoices, requisitions on stores (or monthly reports of stores issued), etc., similar to the method of posting the expense and prop- erty ledgers. The ruling of the work in progress, or job ledger, is similar to that of the expense ledger. As practically all the entries are debits, a single column is sufficient for each account. About the only credits to the work in progress ledger are adjustments and en- tries transferring the balances of these accounts to the expense ledger or the property ledger. Distribution of work in progress is obtained by posting from the monthly report of work in progress completed. Accounts showing debit balances are those which have not yet been distributed. A schedule of balances should be taken from the work in progress ledger monthly and should agree with the controlling account " work in progress" in the general ledger, thereby proving the accuracy of the month's postings in the work in progress ledger. 7. Property Ledger. Outlays are the accrued costs, paid or payable, for lands, structures, non-structural im- provements and equipment, including all properties of a more or less permanent character, and thus available for continuing use, which are obtained or used by the city in the exercise of its governmental functions, or in connection with the business undertakings conducted by it. The property ledger provides for a detailed analysis of the land, structures, non-struc- tural improvements and equipment of the department or bureau in accordance with the uni- form property classification. It provides a sub-account for each heading of the property classification. To open the property ledger an inventory of all land, structures, non-struc- tural improvements and equipment should be taken at cost value and classified accord- ing to the property classification mentioned above. This grouping should be by: (1) de- partment or bureau charged with the property, by (2) functional use of the property, and by (3) kind of property. The sub-divisions or accounts of the last group, viz., kind of property, will be found in the city's property code established by the city controller's office. There should be posted to the respective accounts of the property ledger direct from the distribution of expenditures on the invoices and payrolls any expenditures for the ac- quisition of property or equipment other than replacements, which are chargeable to invest- ment of the city (surplus) — capital account. The form of the property ledger is similar to that of the expense ledger. The sub- accounts being all debits, single columns are provided, and if there are any credit entries they should be made in red ink in the debit columns. Property and equipment that might occa- sionally be disposed of would be about the only credits in the property ledger. DESCRIPTION AND USE OF DETAIL LEDGERS. 29 A sehedule of balances of the property ledger at the close of each month would show the amount of property and equipment on hand, and should prove to the controlling account "land, structures, other improvements and equipment" in the general ledger. The schedule of balances and totals of the property ledger should be verified from time to time by cheeking it with an actual inventory of property and equipment. 8. Beserves for Repairs and Capital Depreciation Ledger. This ledger provides for a detailed analysis by classes of property and equipment of the reserves set aside each month for repairs and for capital depreciation. These reserves should not be figured on each property account, but upon classes of property and equipment so grouped that all property similar in nature having the same estimated rate for cost of repairs or cost of replacement will be in the same class. The register of reserves for repairs and cap- ital depreciation furnishes the monthly amounts of the reserves to be set aside for each class of property and equipment. The debits, as well as the credits to the accounts in this ledger, being fairly numerous, the ordinary ledger ruling is probably best adapted to its requirements. Two accounts should be opened for each class of property, one being for reserve for repairs and the other for re- serve for capital depreciation. Each account heading should show (1) the title or other designation of the property class; (2) the total cost value of the property in that class; (3) the estimated required per- centages of reserve for repairs or for capital depreciation (in the one account, this percentage being for the reserve for repairs, and in the other for capital depreciation). Changes in the total cost value of the property in each class are to be noted in total each month by taking from the property ledger the total acquisitions and dispositions, together with any adjust- ments and by extending the resulting new balance. The accounts in this ledger should be credited respectively with the monthly reserves as determined by means of the register for repairs and capital depreciation. Expenditures for repairs are to be debited to the reserve accounts for repairs, and expenditures for replace- ments are to be debited to the reserve accounts for capital depreciation. Any credit balances in the reserves for repairs accounts represent the excess of the reserves set aside for repairs in accordance with the estimated rates thereof over and above the actual expenditures for re- pairs. Actual repairs are made more or less irregularly as needed. The reserves for repairs account makes possible the charging of an average amount to expense for repairs in each ac- counting period. It thereby makes a more even distribution of repairs to expense and guards against the necessity of charging extraordinarily heavy repairs to expense in any accounting period. Any credit balances in the capital depreciation accounts represent legerve for future replacements to offset capital depreciation that has taken place. In some of the smaller departments and bureaus, where the property classification is not an extensive one, it may be found practicable to keep the reserves for repairs and capital de- preciation ledger in the back of the property ledger, although the single column ruling of the property ledger would necessitate a considerable number of red ink entries, the debits as well as the credits being quite numerous in this ledger. Numerous changes in the balances of property in each class would also cause difficulty in using the property ledger ruling. A schedule of balances and totals should be taken from this ledger monthly, and should agree with the balances of the controlling accounts "reserve for repairs — general account" and "reserve for capital depreciation — capital account" in the general ledger, thereby prov- ing the accuracy of the postings to this ledger. 9. Revenue Ledger. The ruling of the revenue ledger is similar to that of the expense ledger, one important distinction being that all of the sub-accounts are credit accounts, whereas in the expense led- ger all of the sub-accounts are debit accounts. Debits to the revenue ledger are as rare as credits to the expense ledger, so that a single column for each sub-account is usually suffi- cient, the few debit entries arising being made in red ink in the credit columns. Sub-accounts are opened in the revenue ledger in accordance with the revenue classifica- tion, the purpose of this ledger being to provide the most useful and instructive classification of the revenues of a department or bureau. Postings to the revenue ledger are made from the bills rendered or other documentary evideuce of the accrual of revenue. A schedule of balances should be taken from the revenue ledger monthly, and should agree in total with the balance of the controlling account revenue in the general ledger, thereby proving the accuracy of the month's postings to the revenue ledger. CHAPTER V DESCRIPTION AND USE OF GENERAL LEDGER, GENERAL JOURNAL AND GENERAL JOURNAL ENTRIES. General Ledger. The general ledger is a record to be used for purposes of administrative and account- ing control. Its accounts enable the bookkeeper to prepare summary statements show- ing financial condition, operating results and condition of funds. Information in detail sup- porting many of the accounts of the general ledger is obtainable from the schedules of balances of the various detail ledgers. The accounts carried on the general ledger are mainly accounts controlling subsidiary ledgers. These accounts contain totals and balances to which the totals and balances of each subsidiary ledger must prove. The general ledger should be kept by the person who is responsible for the administration of the accounts of the depart- ment or bureau and for the accuracy of the postings, footings and balances in the subsidiary ledgers. The totals of the general ledger being independently arrived at, the book is a device for holding each clerk responsible for competent and faithful service. The method employed for obtaining these totals and balances independently is to take the postings from the totals of the registers in which the documents representing transactions are recorded, while the subsidiary ledgers are posted independently from the documents. Assuming that the entries and footings are correct, therefore, the totals and balances of a general ledger ac- count represent the totals of the schedule of balances and totals of a subsidiary ledger. Standard Accounts for the General Ledger of an Operating Department or Bureau (a Bureau in the Department of Public Safety Used as an Illustration). PROPRIETARY ACX^OUNTS. General Account. Deiit Accounts. (1) Cash and cash items. (2) Accounts receivable. (3) Stores. (4) Work in progress. (5) Crop of 191 (6) Manufactured goods. (7) Revenues accrued, not due. (8) Unaccrued expenses. (9) Advances to capital account. (10) City Treasurer. (11) Receiver of Taxes. (12) Expenses. (13) Operation account (closing). Credit Accounts. (14) Invoices and payrolls payable — Safety. (14A) Invoices payable — Supplies. (15) Invoices sent to department of supplies. (16) Vouchers sent to city controller. (17) Advances from capital account. (18) Reserve for repairs. (19) Expenses accrued, not due. (20) Unaccrued revenues. (21) Investment of the city. (22) Revenues. 30 general ledgek^ general journal and general journal entries. 31 Capital Account. Debit Accounts. (23) Cash and cash items. (24) Work in progress. (25) Land, structures, other improvements and equipment. (26) Advances to general account. Credit Accounts. (27) Invoices and payrolls payable — Safety. (27A) Invoices payable — Supplies. (28) Invoices sent to department of supplies. (29) Vouchers sent to city controller. (30) Advances from general account. (31) Eeserve for capital depreciation. (32) Investment of the city. Special and Trust Accounts. Deiit Accounts. (33; Cash and cash items. - ~ (34) Accounts receivable. (35) Securities and other personal properties in trust. (36) Land, structures, other improvements and equipment. Credit Accounts. (37) Deposits. (38) Invoices payable. (39) Vouchers sent to city controller. (40) Reserves for trust beneficiaries. FUND ACCOUNTS. General Fund. Deiit Accounts. (41) Budget allowance — Safety. (42) Budget allowance — Supplies. Credit Accounts. (43) Unencumbered balance of appropriations — Safety. (44) Unencumbered balance of appropriations — Supplies. (45) Eeserve for contracts — Safety. (46) Reserve for contracts — Supplies. (47) Reserve for open market orders — Safety. (48) Reserve for open market orders— Supplies. Loan Funds. Deiit Accounts. (49) Budget allowance — Safety. (50) Budget allowance — Supplies. Credit Accounts. (51) Unencumered balance of appropriations — Safety. (52) Unencumbered balance of appropriations — Supplies. (53) Reserve for contracts — Safety. (54) Reserve for contracts — Supplies. (55) Reserve for open market orders — Safety. (56) Reserve for open market orders — SuppMes. Spectal and Trust Funds. Debit Accounts. (57) Budget allowance — Safety. (58) Budget allowance — Supplies. 32 GENERAL LEDOEB, OKNERAI. JOUUNAI. AND QENEBAI. JOURNAL ENTRnH. Credit Accounts. (59) Unencumbered balance of appropriations — Safety. (60) Unencumbered balance of appropriations — Supplies. (61) Reserve for contracts — Safety. (62) Reserve for contracts — Supplies. (63) Reserve for open market orders — Safety. (64) Reserve for open market orders — Supplies. General Journal. The general journal is the medium through which the general ledger is posted. The amounts for the standard monthly entries in the general journal are obtained in practically every instance from monthly totals of the various registers. In cases where trans- actions affecting the general ledger do not belong to a class that is sufficiently numerous to require a register, the general journal entry is made direct from the document or other evi- dence showing the particulars of the transaction and the amount involved. Some of the standard journal entries will probably be found to be inactive during certain months by some departments and bureaus owing to no transactions of the class represented by a par- ticular journal entry occurring during the month. Also, certain portions of some of the jour- nal entries will be inactive in some months owing to there being no transactions affecting those portions although other portions of the journal entry are active. In cases of this kind, when working witli printed journal entries, the entire journal entry should be ruled out in any month that it is inactive, and any inactive accounts of an active journal entry should be similarly ruled out. .'- As soon as the monthly journal entries are dutermined these are to be entered in a bound book or on loose leaves kept in a loose leaf binder. It is believed that it will be found desirable for each department and bureau to have printed its standard monthly journal entries arranged for binding in a loose leaf binder. A certain number of blank journal entry sheets should also be provided for opening and closing journal entries and monthly entries of a special nature not included in standard entries. General Journal Entries. STANDARD OUTLINE MONTHLY GENERAL JOURNAL ENTRIBS FOR AN OPERATING DEP^iRTMBNT OR BUREAU. The following outline journal entries are for study and illustrative purposes only. The detail general journal entries (see page 36) are for actual use. 1 — Budget Allowance To Unencumbered Balance of Appropriations P^or appropriations of City Councils to this department or bureau (from Register of Ap- propriation Ordinances*). 2 — Unencumbered Balance of Appropriations To Reserve for Contracts For contracts entered into during the month (from Register of Contracts). 3 — Unencumbered BsJance of Appropriations To Reserve for Open Market Orders For open market orders issued during the month (from Register of Orders). 4 — Expenses Reserve for Repairs Work in Progress Land, Structures, other Improvements and Equipment To Stores For stores issued from storehouse during the month on stores requisitions (from Register of Stores Requisitions). •In most cMRs a total for the month, of nppropriatlons by City Connrllfi to any drpartmrnt or bureau, may be Beourod without the use of a register. GENERAL LEDGER^ GENERAL JOURNAL AND GENERAL JOURNAL ENTRIES. 33 5 — Expenses Reserve for Repairs Land, Structures, other Improvements and Equipment To Work in Progress For distribution of completed work in progress (from Register of Completed "Work in Progress). 6 — Expenses Reserve for Repairs Investment of the City Stores Work in Progress Land, Structures, other Improvements and Equipment Reserve for Capital Depreciation (Replacements) To Invoices and Payrolls payable For distribution by character of expenditure of invoices and payrolls for all personal ser- vice, services other than personal, materials, supplies, etc., purchased and received during the month (from Register of Invoices). 7 — Invoices and Payrolls Payable To Vouchers sent to City Controller For invoices and payrolls vouchered and sent to City Controller (from Register of Vouchers). 8 — Invoices and Payrolls Payable To Invoices sent to Department of Supplies For invoices — for materials and supplies ordered by the Department of Supplies and re- ceived by the operating department and bureau — sent to Department of Supplies to be vouch- ered, approved and certified to the City Controller (from Register of Invoices sent to Depart- ment of Supplies). 7a and 8a — Unencumbered balance of Appropriations Reserve for Contracts Reserve for Open Market Orders To Budget Allowance Collateral to journal entries Nos. 7 and 8 (from same source as those journal entries). 9 — Receiver of Taxes To Revenues For income accrued — ^bills having been rendered therefor by the operating department or bureau — the collections of cash thereon to be made by the Receiver of Taxes (from the Reg- ister of Revenue Accrual). 10 — Expenses To Reserve for Repairs For monthly proportion of reserve for repairs (from Register of Reserves for Repairs and Capital Depreciation). 11 — Investment of the City To Reserve for Capital Depreciatio-n For monthly proportion of capital depreciation (from the Register of Reserves for Re- pairs and Capital Depreciation). 12 — Reserve for Capital Depreciation Investment of the City To Land, Structures, other Improvements and Equipment For the cost value of property worn out and disposed of (in cases where no cash is real- ized) investment of the City being charged direct with that portion of the cost value for which a reserve has not been provided. Note. — If some cash is realized from the disposition of old property and equipment, the above journal entry would be used with an additional debit, namely, "Cash." 34 QENEKAL LEDOEB^ OBNEEAL JOUBNAL ANU OKNEEAL JOUU5AL ZHTSm. STANDARD OUTLINE MONTHLY GENERAL JOURNAL ENTRIES FOR THE DEPARTMENT OP SUPPLIES. Entries number 1, 2, 3, 6, 7, 7a, 9, 10, 11 and 12 of the standard outline monthly general journal entries for an operating department or bureau (see above) will be used by the de- partment of supplies. In addition this department will use the following: Invoices received from Departments and Bureaus To Invoices Payable. For invoices received from the several operating departments and bureaus, representing materials and supplies ordered by the department of supplies for other departments and bureaus (from Register of Schedules of Invoices sent to Department of Supplies). STANDARD OUTLINE GENERAL JOURNAL ENTRIES FOR OPENING NEW SET OF BOOKS. 1 — Stores (as per inventory) Work in Progress (as per inventory) Land, etc. (as per inventory) To Invoices and Payrolls Payable Reserve for Repairs Reserve for Capital Depreciation Investment of the City For taking upon the books all of the assets, liabilities and reserves of the City, and the excess of assets over liabilities and reserves, the excess being the investment of the City in the operating department, bureau or institution. 2 — Budget Allowance To Unencumbered Balance of Appropriations Reserve for Contracts Reserve for Open Market Orders For taking upon the books the unexpended portion of the budget allowance, together with its distribution between unencumbered balance of appropriations, unexpended portions of contracts, and unexpended portions of open market orders outstanding. The department of supplies will use as much of journal entry No. 1 for opening a new set of books as is necessary to take upon its general ledger the assets, liabilities, reserves and investment of the city, in its custody. It will also use journal entry No. 2 for its fund ac- counts the same as an operating department or bureau. STANDARD OUTLINE GENERAL JOURNAL ENTRIES FOR CLOSING AT END OF YEAR 1 — ^Revenues To Operation Account For closing revenue account at the end of the year. 2 — Operation Account To Expenses For closing expense account at the end of the year. 3 — Vouchers sent to City Controller Invoices sent to Department of Supplies To Operation Account Receiver of Taxes Investment of the City For closing the nominal accounts to "Investment of the City" at the end of the year. GENERAL LEDGER^ GENEEAL JOUENAL AND QENEEAL JOURNAL ENTRIES. 35 4 — Unencumbered Balance of Appropriations To Budget Allowance For merging balances of appropriations at close of year. The department of supplies will use journal entries No. 1, 2 and 4 (as above) for closing its books at the end of the year. It will use general journal entry No. 3 in the following modified form : Vouchers sent to City Controller To Invoices received from Departments and Bureaus Receiver of Taxes Operation Account Investment of the City 36 ORNKRAL LEDGKIt. OEMKBAT. JOURNAL AND OKNEBAI. JOUBHAL E: OPENING GENERAL JOURNAL ENTRIES-JANUARY 1, 191_ (WHIW OPENING NEW SET OF BOOKS.)* These detail general journal entries are for actual departmental use. The oatline journal •mtries (see page 32) are for study and illustrative purposes only. In this chapter and chapter III the words "safety" and "supplies" have been nsed in journal entries to distinguish ])etween appropriations and transactions incident thereto of an operating department or bureau and the department of supplies. The word "safety" as the short departmental title of the department of public safety is used for illustration purposes. In practice, the short title of the department or bureau for which the general journal entries are formulated would be substituted. 1 — Budget Allowance — Safety — General Fund Budget Allowance — Supplies — General Fund Budget Allowance — Safety — Loan Funds Budget Allowance — Supplies — Loan Funds To Unencumbered Balance of Appropriations — Safety — General Fund Unencumbered Balance of Appropriations — Supplies — General Fund Reserve for Contracts — Safety — General Fund Reserve for Contracts — Supplies — General Fund Reserve for Open Market Orders — Safety — General Fund Reserve for Open Market Orders — Supplies — General Fund Unencumbered Balance of Appropriations — Safety — Loan Funds Unencumbered Balance of Appropriations — Supplies — Loan Funds Reserve for Contracts — Safety — Loan Funds Reserve for Contracts — Supplies — Loan Funds Reserve for Open Market Orders — Safety — Loan Funds Reserve for Open Market Orders — Supplies — Loan Funds For taking upon the books all non-merging balances of appropriations brought forward from the previous year. 2 — Stores — General Account Work in Progress — General Account Land, Structures, other Improvements and Equipment — Capital Account To Invoices Payable — General Account Investment of City — General Account Invoices Payable — Capital Account Investment of City — Capital Account For taking up the inventories of the above debit accounts, the invoices payable at the opening of business, January 1, 191 — , and the investment of the city in the Hureau. 3 — Budget Allowance — Safety — General Fund Budget Allowance — Supplies — General Fund To Unencumbered Balance of Appropriations — Safety — General Fund Unencumbered Balance of Appropriations — Supplies — General Fund For taking upon the books the general appropriations to the ^Bureau for 191—. *In fonnulatinjif these journal entries, fund and proprietary journal entries for special and trust transactions have been omitted. Should a department's transactions include those of a special and trust nature, it should utilize titles similar to those here used for the other funds and accounts. GENERAL LEDGEK, GENERAL JOURNAL ANU GENERAL JOURNAL ENTRIES. 37 MONTHLY GENERAL JOURNAL ENTRIES. For the month of 191 1 — Budget Allowance — Safety — General Fund Budget Allowance — Supplies — General Fund Budget Allowance — Safety — Loan Funds Budget Allowance — Supplies — Loan Funds To Unencumbered Balance of Appropriations — Safety — General Fund Unencumbered Balance of Appropriations — Supplies^ — General Fund Unencumbered Balance of Appropriations — Safety — ^Loan Funds Unencumbered Balance of Appropriations — Supplies — Loan Funds For taking upon the books any appropriations, or allotments made to — Bureau during the month of. 191 — . 2 — Unencumbered Balance of Appropriations — Safety — General Fund Unencumbered Balance of Appropriations — Supplies — General Fund Unencumbered Balance of Appropriations — Safety — Loan Funds Unencumbered Balance of Appropriations — Supplies — Loan Funds To Reserve for Contracts — Ssrfety — General Fund Reserve for Contracts — Supplies — General Fund Reserve for Open Market Orders — Safety — General Fund Reserve for Open Market Orders — Supplies — General Fund Reserve for Contracts — Safety — Loan Funds Reserve for Contracts — Supplies — Loan Funds Reserve for Open Market Orders — Safety — Loan Funds Reserve for Open Market Orders — Supplies — Loan Funds For contracts (as per register of contracts) and open market orders (as per register of orders) registered and issued during month of 191 — . 3 — Reserve for Contracts — Safety — General Fund Reserve for Contracts — Supplies — General Fund Reserve for Contracts — Safety — ^Loan Funds _ Reserve for Contracts — Supplies — Loan Funds Reserve for Open Market Orders — Safety — General Fund Reserve for Open Market Orders — Supplies — General Fund Reserve for Open Market Orders — Safety — ^Loan Funds Reserve for Open Market Orders — Supplies — Loan Funds To Unencumbered Balance of Appropriations — Safety — General Fund Unencumbered Balance of Appropriations — Supplies — General Fund Unencumbered Balance of Appropriations — Safety — Loan Funds Unencumbered Balance of Appropriations — Supplies — Loan Funds For reductions, cancellations or annnllments in contracts and open market orders for the month of 191 — . 4 — Expenses — General Account Reserve for Repairs — General Account V-^ Accounts Receivable — General Account Work in Progress — General Account Inter-departmental Services — General Account Land, Structures, other Improvements and Equipment — Capital Account. To Stores — General Account For materials delivered from storehouses o storerooms during month of 191—. 5 — Stores — General Account To Expenses — General Account Reserve for Repairs — General Account Accounts Receivable — General Account Work in Progress — General Account Inter-departmental Services — General Account Land, Structures, other Improvements and Equipment — Capital Account For materials returned to storehouses or storerooms during month of. 191 — . 38 OKNKHAL LEDOKR, OKNEBAI. JOtTHNAI, AND OEWEBAI. JOUHJCAI. JTSTTRnak 6 — Expenses — General Account Eeserve for Repairs — General Account Stores — General Account Accounts Receivable — General Account Work in Progress — General Account Inter-departmental Services — General Account Land, Structures, other Improvements and Equipment— Capital Account Reserve for Capital Depreciation — Capital Account To Invoices and Payrolls Payable — Safety — General Account Invoices Payable — Supplies — General Account Invoices and Payrolls Payable — Safety— Capital Account Invoices Payable — Supplies — Capital Account For invoices and payrolls rf^gistered during month of. 191 — . 7 — Expenses — General Account Reserve for Repairs — General Account Accounts Receivable — General Account Inter-departmental Services — General Account Land, Structures, other Improvements and Equipment — Capital Acconnt To Work in Progress — General Account For distribution of work in progress completed during month of 191 — . 8 — Expenses — General Account Reserve for Repairs — General Account Stores — General Account Work in Progress — General Account. Land, Structures, other Improvements and Equipment — Capital Account To Inter-departmental Services — General Account For services or materials received by a department from another department (for which reimbursement will not be made) during the month of 191 — . Note. — Expense is debited for services or materials used for running expenses; reserve for repairs, for services or materials used in maintaining (repairing) property; stores, for goods received and taken into stores ; work in progress, for work in progress transferred ; and land, structures, etc.. for property transferred. 9 — Advances to Capital Account — General Account To Advances from General Account — Capital Account For the net use of general account moneys for permanent improvements during the month of 191—. or 9a — Advances from General Account — Capital Account To Advances to Capital Account — General Account For the net use of loan funds moneys for current expense during the month of 191—. 10 — Invoices and Payrolls Payable — Safety — General Account Invoices Payable — Supplies — General Account Invoices and Payrolls Payable — Safety — Capital Account Invoices Payable — Supplies — Capital Account To Vouchers seht to City Controller — Safety— General Account Vouchers sent to City Controller— Safety — Capital Account Invoices sent to Department of Supplies — General Account Invoices sent to Department of Supplies — Capital Account For vouchers sent to City Controller and invoices sent to Depart ment of Supplies during m onth of 191—. 11 — Unencumbered Balance of Appropriations — Safety — General Fund Unencumbered Balance of Appropriations — Supplies — General Fund Unencumbered Balance of Appropriations — Safety — ^Loan Funds Unencumbered Balance of Appropriations — Supplies — Loan Funds Reserve for Contracts— Safety — General Fund GENEEAL LEDGER, GENEKAI. JOURNAL AND GENERAL JOURNAL ENTRIES. 39 Reserve for Contracts— Supplies — General Fund Reserve for Contracts — Safety — Loan Funds Reserve for Contracts — Supplies— Loan Funds ♦Reserve for Open Market Orders — Safety — General Fund ♦Reserve for Open Market Orders — Supplies — General Fund ♦Reserve for Open Market Orders — Safety— Loan Funds ♦Reserve for Open Market Orders — Supplies — Loan Funds To Budget Allowance — Safety — General Fund Budget Allowance — Supplies — General Fund Budget Allowance — Safety — LoanFunds Budget Allowance — Supplies — Loan Funds ♦Unencumbered Balance of Appropriations — Safety — General Fund ♦Unencumbered Balance of Appropriations — Supplies — General Fund ♦Unencumbered Balance of Appropriations — Safety — Loan Funds ♦Unencumbered Balance of Appropriations — Supplies — Loan Funds Collateral to foregoing proprietary entry. 12 — Receiver of Taxes — General Account Revenues Accrued, not due — General Account To Revenues — General Account For accrual of revenues, being aecoiints receivable sent to receiver of taxes for collection; and revenues accrued, not due, during the months of 19 — (from Register of Reve- niie Accrual). 13 — Receiver of Taxes — General Account To Revenues Accrued, not due — General Account For revenues accrued in a previous month that have fallen due during the month of 19 — (from Register of Revenue Accrual). 14 — Land, Structures, other Improvements and Equipment — Capital Account To Investment of the City — Capital Account For permanent properties and equipment acquired by gift during month of 191—. 15 — Expenses — General Account To Reserve for Repairs — General Account For proportion of maintenance depreciation for the month of 191 — . Where a department or bureau receives from another department or bureau services or materials for which it will draw a warrant, the transaction will be handled the same as a purchase from an outsider, that is, through the Register of Invoices, and will be included in the monthly journal entry of totals of that register. For use of Department of Supplies only : 16 — Invoices received from Departments and Bureaus — General Account Invoices received from Departments and Bureaus — Capital Account To Invoices Payable — General Account Invoices Payable — Capital Account For invoices received from various departments and bureaus during the montii of 191—. •Reserve for Open Market Orders is debitefl with the total of the open market orders liquidated column of the register of vouchers. Should the total of open market orders liquidated be in excess of the total of open market order vouchers the difference should be credited to "Unencumbered Balance of appropriations." If the amount of the open market order vouchers is in excess of the total open market orders liquidated the excess is debited to "Unencvmbered Balance of Appropriations." (See descrip- tion of reduction and cancellation of open market orders, pages 14 and 16). 4 CHAPTER VI DESOEIPTION AND USE OF MONTHLY REPORTS (SCHEDULES OP BALANCES AND TOTALS) FROM DETAIL LEDGERS TO BE TRANSMITTED TO THE DEPARTMENT OF CITY CONTROLLER. These schedules of balances and totals must ho, made in duplicate and one copy trans- mitted to the city controller. The schedule of balances and totals of a detail ledger (1) provides a means for proving the accuracy of the detail ledger to its controlling account in the general ledger, and (2) makes available in report form the information contained in the detail ledger. The special forms designed for this purpose are as follows: 1. Monthly Appropriation Statement. 2. Monthly Contract Statement. 3. Monthly Open Market Order Statement. 4. Monthly Stores Statement. 5. Monthly Statement of Expenses Incurred. 6. Monthly Work in Progress Statement. 7. Monthly Statement of Permanent Properties and Equipment. 8. Monthly Reserve for Repairs and Capital Depreciation Statement. 9. Monthly Revenue Statement. The purpose of transmitting monthly statements to the city controller of the Tarioos financial transactions that have taken place in departments during a month is primarily to effect a reconciliation between the records kept in departments and the controlling and other accounts with departments kept in the department of city controller. 1. Monthly Appropriation Statement. This schedule of balances and totals (Form 30) will be prepared from the appropria- tion ledger — general fund, loan funds and special and trust funds. As the appropriation ledger is divided into three fund divisions, the schedule of balances will naturally be divided into three parts, each of which is to be proven independently to the respective controlling accounts in the general ledger. The folio page of the appropriation ledger will be indicated in the "Folio" column, and on the same line will be noted in their order the appropriation item number, whether general, loan or special and trust funds, and the title of the appropriation account. Thereafter on the same line will be entered, in the first money column, the unencumbered balance of the ap- propriation at the beginning of the month for which the statement is prepared, and in the next column the total of additional appropriations, transfers to and any other credits to appropriations that may have been made during that month. In the columns under the general caption of "Debits" there will be entered respectively, the total of all the debit amounts for the month distributed in the four columns to the right, viz.: "Appropriation transfers from," "Contracts executed," "Open Market Orders Is- sued," "Payroll and Miscellaneous Vouchers Charged." The "Appropriation Transfers from" wUl be the total of red ink figures in an appropriation account representing transfers there- from to other appropriation accounts. The "Contracts Executed" will be the total contracts registered in a month less any deductions or cancellations of contracts during the same period. The "Open Market Orders Issued" will be the total open market orders issued for a month, as noted in the "Estimated Amount" column, plus or minus any adjustments effected daring the month, as noted in the "Add" or "Deduct" columns, under the general caption of "Open Market Order Encumbrances" of the appropriation ledger. The debits entered in the "Pay- roll and Miscellaneous Vouchers Charged" column will come from the "Payroll and Miscel- laneous" column in the appropriation ledger under the general caption of "Expenditures." In the last column of the schedule will be noted the unencumbered balance of each appro- priation at the close of the month covered by the schedule. This balance will be arrived at by subtracting the "Total Debits" column from the sum of the two credit columns to the left. The proof of the accuracy of the individual balances noted in the last column may be arrived at by adding whatever amount is in that column to the amount in the "Total Debits" column, the sum of which should equal the sum of the two credit columns. The 40 DESCBIPTION AND USE OF MONTHLY EEPOKTS. 41 total of the "Total Debits" column deducted from the sum of the totals of the two credit columns should be the grand total of unencumbered balances of appropriations of a depart- ment at the end of a month. The sum of the totals of the four debit columns should equal the total of "Total Debits" column. 2. Monthly Contract Statement. This schedule of balances and totals (Form 31) will be prepared from the contract ledger. The various details as to ledger folio, item number of appropriation charged, whether contract is a charge to a general fund, loan fund, or special and trust fund appro- priation, the contract number, date of contract and contractor's name, will be noted in the several columns provided for that purpose. As it will probably be found most desirable in the keeping of the contract ledger to divide it into the three fund divisions, the schedule of balances will naturally be divided similarly into three parts, each of which is to be proven independently to the respective controlling accounts in the general ledger. The unexpended balance of a contract at the beginning of the month for which the schedule is prepared will be indicated in the first money column. While these balances will be taken from the respective ledger accounts, each of them should be checked to the closing bal- ance of the same account on the schedule, of balances of the preceding month. The amount of contracts executed during the month will be entered in the column with that title. These credits will be obtained from the "Amount of Contract" column of the con- tract ledger. Contract vouchers charged during the month will be obtained from the "Amount" col- umn, under the heading "Vouchers" of the contract ledger. The "Unexpended Balance of Contract at End of Month" will be the balance obtained by subtracting the amount of the "Contract Vouchers Charged during the month and other debits" column from the sum of the two credit columns to the left, viz.: the unexpended bal- ance at the beginning of month and contracts executed, etc., during the month. By totaling all the columns of this schedule the grand total of unexpended balances of contract at the end of the month will be proved in the same way as explained above for the unexpended balances in individual contracts. 3. Monthly Open Market Order Statement. This schedule of balances and totals (Form 32) is prepared from the claimant's ledger. As it will probably be found most desirable in the keeping of the claimants' ledger to divide it into the three fund divisions, the schedule of balances will naturally be divided similarly into three parts, each i/f which is to be proven independently to the respective con- trolling accounts thereof in the general ledger. The folio page of the ledger, the appropriation item number charged, and the nature of the fund, i. e., whether general, loan, or special and trust, will be indicated in the respective columns to the left of the schedule. The next four columns, headed respectively "Order No.," "Date Order Issued," "Date Goods delivered," "Indicate Whether Partial (P) or Complete (C) Delivery," will be left blank for city controller's purposes, and no entries need be made therein by departments submitting this schedule to the city controller. The name of the claimant will be indicated in the column headed "Vendor." The balance of "unvouchered orders at beginning of (the) month" for which the schedule is prepared will be entered in the next column under that title. This balance will be the difference between the "Open Market Orders Issued" column and the total of the vouchers drawn on open mar- ket orders, as indicated in the column under "Vouchers," plus or minus any adjustments. The same balance may be obtained by deducting from the total of orders issued the total of orders liquidated. In the column headed "Open Market Orders Registered During Month and Other Credits" will be entered for each claimant's account the total amount of orders issued to him during the month under review, as indicated in the open market orders issued column and of any voucher adjustments noted for the month in the column "Add" under the caption "Adjustments" of the claimant's ledger. ,- In the column headed "Open Market Order Vouchers Charged During Month and Other Debits" will be noted the total amount for the month of the "Vouchers" column and of the "Deduct" column in each claimant's ledger account. The credit balance in each claimant's account of "Unvouchered Orders at End of Month," called for in the last column of the schedule, will be the difference between the sura of the first two credit columns of the schedule, 42 DE8CKIPTIOX AN!> ISK <)l MONTHLY RKPORTS. and the amount entered in the debit column for vouchers charf^ed durinf? the month. The grand total balance of unvouchered orders at tho end of the month of all claimants' accounts will be determined in the same way for individual balances after the schedule has been com- pleted and all its columns totaled. 4. Monthly Statement of Expenses Incurred. This schedule of balances and totals (Form 34) is prepared from the expense ledger, and it should be checked in total to the controlling account "expense" in the general ledger. In the column "Folio" will be noted the folio page of each account in the expense ledger. In the column "Code Letter or No." will be entered the code symbol of the expense ac- count in accordance with the classification of expenses established for a department or bureau. The title of each expense account will be indicated in the column provided for that purpose. In the column headed "Total Expenses for the Month" will be entered the total amount of expense items charged to each account in the expense ledger for the month for which the statement is prepared, less any abatements or adjustments (credits), and on the same line in the next column, under the title of "Total Expenses for the Same Month Last Year," will be noted similarly the total amount of expense items charged in the same expense account for the same period last year. If the expense classification this year is different from that of last year, or the information relating to la-st year's expense accounts cannot readily be compared with the expense classification of the current month and year, then the column "Total Expenses for the Same Month Last Year" will be left blank until an accurate comparison of expenses by months and years can be scheduled. The same is true of the last two columns on the schedule. A departmeut which can make a comparison of the current year's classification of expenses with that of last year will fill in the information called for in these two columns, other- wise the columns in question will remain blank for the current year. A department having its expense accounts in such .shape as to be able to complete this schedule will provide as follows : If the month for which the schedule is being prepared is, say, the month of June. 191 — , then "six" will be written in on the blank line of the title heading of the third column, mak- ing it read "Total Expenses for the Six Months Ending June 30. 191 — ," and below opposite each expense account will be entered the total amount of expense items charged therein, leas any abatements or adjustments (credits), during the six months ended with June 30, 191 — . In the last column on the schedule the total expense items charged to each expense ac- count for the six months ended June 30, 191 — , will be noted as a basis for a comparison of expense aeeounts covering the same period in the previous year. 5. Monthly Stores Statement. This is a schedule of balances and totals taken from the stores ledger (Form 33) by money values rather than quantities, and it should be checked in total to the controlling ac- count "stores" in the general ledger. The folio number of the stores ledger page of each article scheduled will be noted in the column "Folio." Under "Code Letter No.." will be entered the code symbol of each article of stores if such classification has been establisher T'orms for snunnary reports, 46 I'liiictionnl clas-ificalion. for Bureau of Correc- tion, 27 Functional use of pro]>erty, shown in property ledger. 28 I'lmctions or activities, dnsslfication of expenses by, 2fi of city and cnunly. 56 Tund balance sheets, 54 Fund ledgers, detail, for appropriations, 20 Funding relations as shown in fund accounts, 1 Funds, accounts in general ledger for, 31 in classlfloation nf fund accounts, 1 Oeneral account, accounts in general kdger for, SO balance sheet and operation accounts, 48 fieneral fund, accounts in general ledger for, 31 Tieneral journal, description and use of, 32 (K'neral ledger, contains summary accounts re- •piired in accounting system, 1 des<-ription and use of, 30 standard accounta for, 30 Inventory, of property, to open property ledger. tS of stores, when to take, 28 Investment of the city, analysis of, for general account, 48 shown in summary report*, 45 Inspector, office copy of order for, 6 Inter-departmental invoices, use of, 7 as elements of expense, 26 Inter-departmental sen-iies. register and schednle of, 17 Invoices, description and use of, 6 Invoices and payrolls, as elements of expense. S9 register and schedule of, 11 Invoices, credit, description and use of, 8 ilepartmental, description and use of, 8 inter-departmental, use of, 7 memorandum, description and use of, regularly rend<'red, description and use of, 6 sent to department of supplies, register and schedules of, 14 "supplies." u.se of, 6 Journal entries, detail monthly, 37 detail for o|)ening new set of books, 36 for vou<-her adjustments, 23 from register of contracts, 10 from rcL'i'it.T <.f int>-r.,|o|>nrtmental serrices, 17 from rejiister of invoices and payrolls. 13 from register of invoices sent to department of supplies, 14 from register of properties transferred. 17 from register of orders, 11 from register of re