} HF m CM o • mm ii' Til' "^"^^^ J NATIONAL ASSOCIATION OF RAILWAY AND UTILITIES COMMISSIONERS Uniform Classification of Accounts for Water Utilities THE STATE LAW REPORTINO COMPANY Prepared by Gominittee on Statistics and Accounts of Public Utilities and Recommended for Adoption by State Commissions at the Annual Meeting of the National Association of Railway and Utilities Commissioners in Atlanta, October, 1921. Revised at Con- vention, Detroit, Mich., November, 1922. • • • • • • ♦ > > > * 5 » 1 NATIONAL ASSOCIATION OF RAILWAY AND UTIUTIES COMMISSIONERS Uniform Classification of Accounts for Water Utilities REPORTINO COMPANY Prepared by Committee on Statistics and Accounts of Public Utilities and Recommended for Adoption by State Commissions at the Annual Meeting of the National Association of Railway and Utilities Commissioners in Atlanta, October, 1921 • • • Published by THE STATE LAW REPORTING COMPANY New York Revision of 1922 Second Edition COPYRIGHT, 1922 BT TKB NATIONAL ASSOCIATION OP RAILWAY AND UTIUTIES COMMISSIONERS All Rights Reserved CONTENTS General Instructions 1 Balance Sheet Accounts 2 General Instructions and Definitions 4 Text Pertaining to Balance Sheet Accounts 9 Fixed Capital Accounts (List) 27 General Instructions and Definitions 28 Text Pertaining to Fixed Capital Accounts 34 Income Accounts (List) 47 General Instructions and Definitions 49 Text Pertaining to Income Accounts 52 Profit and Loss Accounts (List) 59 General Instructions and Definitions 59 Text Pertaining to Profit and Loss Accounts 60 Operating Revenue Accounts (List) \ 62 General Instructions and Definitions 62 Text Pertaining to Operating Revenue Accounts 64 Operating Expense Accounts (List) 67 General Instructions and Definitions 70 Text Pertaining to Operating Expense Accounts 74 555 1 J) 7 X » » I • t » > J ^ a UNIFORM CLASSIFICATION OF ACCOUNTS FOR WATER UTILITIES GENERAL INSTRUCTIONS 1. Accounts to be Kept by Double Entry Method. All the accounts (other than purely statistical accounts) defined in this classification must be kept by the double entry method. 2. Account Numbers Not a Part of Title. The numbers prefixed to account titles in this classification are. solely for convenience of reference and are not part of the titles or definitions. n 3. Accounting Period. It is recommended that 'each water corporation select the month as its accounting period and that it make its bookkeeping entries on a monthly basis. It may, however, select a quarterly or other basis if that will better meet the conditions under which it conducts its business. Each corporation will be required to close its books at the end of the fiscal year for which it makes its annual report. 4. Records. Each water corporation shall so keep its general accounting books and all other books and records which support in any way the entries to such accounting books that it can furnish at any time full informa- tion as to any account kept by it. Moreover, it shall support each entry to each account with such detailed information as will enable a ready identification and verification of the facts recorded therein. The books referred to herein include not only books of account m a hm.ited technical sense but all other records such as minute books, stock books, etc., which will be useful in developing the history of any of the accounting companv's transactions. I BALANCE SHEET ACCOUNTS STANDARD FORM OF BALANCE SHEET ASSET SIDE 101. Fixed capital Current Assets: 111. Cash 112. Notes receivable 113. Accounts receivable 114. Interest and dividends receivable 115. Materials and supplies 116. Prepayments 117. Miscellaneous current assets Miscellaneous Assets: 121. Investments in affiliated companies 122. Miscellaneous investments 123. Sinking funds 124. Replacement fund 125. Miscellaneous special funds 126. Special deposits Suspense: 131. Unamortized debt discount and expense 132. Property abandoned 133. Jobbing accounts 134. Clearing or apportionment accounts 135. Work in progress 136. Miscellaneous suspense Adjustment Accounts: 141. Discount on capital stock 142. Reacquired securities 143. Treasury securities 150. Profit and loss — deficit BALANCE SHEET ACCOUNTS STANDARD FORM OF BALANCE SHEET LIABILITY SIDE 201. Capital stock 202. Premium on capital stock 211. Long term debt 212. Receiver's certificates Current Liabilities: 221. Notes payable 222. Accounts payable 223. Consimiers' deposits 224. Matured interest unpaid 225. Dividends declared 226. Matiu-ed long term debt unpaid 227. Miscellaneous current liabilities Accrued Liabilities: 231. Taxes accrued 232. Interest accrued 233. Miscellaneous accrued liabilities 241. Advances from affiliated companies Reserves: 251. Retirement reserve (depreciation) 252. Casualty and insurance reserve 253. Unamortized premium on debt 254. Sinking fund reserves 255. Contributions for extensions 256. Contingency reserve 257. Miscellaneous reserves 261. Miscellaneous unadjusted credits 270. Profit and loss — surplus BALANCE SHEET ACCOUNTS BALANCE SHEET ACCOUNTS General Instructions and Definitions 1. Balance Sheet Accounts Defined. By balance sheet accounts are meant those titles under which the ledger accounts are combined and summarized to show the assets, liabilities and surplus or deficit of an enterprise at a given time. Where the title and definition of a balance sheet account clearly indicate that it is a summary of other accounts, it is not required that a special ledger account shall be raised under such title to include the balances from the accounts usually carried on the ledger. 2. Form of Balance Sheet. The standard form of balance sheet is shown on pages 2 and 3. Certain of the terms there used are defined, for the sake of greater clearness, in the following paragraphs: 3. Current Assets. Current assets are those assets that are readily converted into money or capable (in the case of materials and supplies) of being used in operation or construction. 4. Investments. _ Investment represents the relatively permanent employment of property for the purpose of directly or indirectly producing revenue. Investment in permanent assets devoted to the undertakings for which the accounting company is primarily organized is called fixed capital investment or simply fixed capital. Property in the form of assets necessary to the conduct of the accounting company's operations of which the individual items are subject to frequent change is sometimes said to represent an investment in working capital. Investments may also be of property segregated in special funds; of property devoted to the use of affiliated corporations; or of property not devoted to the undertakings for which the accounting company is primarily organized, as more specifically defined in account No. 122, ** Miscellaneous In- vestments," which see. Encumbered investments are those held subject to a lien or other encumbrance of some character. Unencumbered investments are those held free of all encumbrances. BALANCE SHEET ACCOUNTS 5 5. Funds. Funds are assets, usually those capable of ready conversion into cash, set aside in the hands of trustees or otherwise restricted to specific uses. 6. Suspense Accounts. Suspense accounts are accounts in which may be carried any ex- penditure the appropriate disposition of v.hich is not yet determined, or any loss which may properly be spread over a period of time, or any other debit which may be amortized through charges made to expense or other income accounts at intervals over a period of time; credit items, the final disposition of which is not yet determined, may also be carried in suspense under account No. 261, "Miscellaneous Unadjusted Credits." 7. Adjustment Accounts. Adjustment accounts are accounts in which may be carried debits that offset certain liabilities but which it is not desirable, as a matter of bookkeeping convenience, to charge against the liability accounts concerned. 8. Current Liabilities. Current liabilities are those which are definitely determined in amount and are either matured at the date of the balance sheet or become due within a year from date or upon demand of the creditor. 9. Accrued Liabilities. Accrued liabilities are those nuu yet due, but which are to become due in the near future and which accrue or grow from day to day, such as unmatured interest, rents, taxes, etc. Credits to accounts representing accrued liabilities whose amounts are not definitely known, as in the case of many taxes, are made on the basis of esti- mates which are adjusted when the proper amounts become known. 10. Reserves. Reserves are credit accounts created through arbitrary or esti- mated charges made to provide wholly or in part for matters to be later determined. 11. Discount and Premium on Capital Stock. Ledger accounts shall be provided to cover the discounts and premiums on each class of capital stock issued or assumed by the accounting company. The total of the net debit balances remaning 6 BALANCE SHEET ACCOUNTS in these several accounts shall be included in account No. 141, "Dis- count on Capital Stock," and the total of the net credit balances in account No. 202, "Premium on Capital Stock." By the term discount is meant the excess of the par value of stocks actually issued or assumed (and accrued dividends, if any, expressed in the contract of sale) over the actual cash value of the consideration received for such stocks. By the term premium is meant the excess of the actual cash value of the consideration received for stock issued or assumed over the par value of such stock (and accrued dividends, if any.) Entries in these accounts representing discounts shall be carried therein until offset (1) by premiums realized on subsequent sales of the same class of stock, (2) by assessments levied on the stockholders, (3) by appropriations from surplus for that piupose, or (4) by charges to Profit and Loss upon reacquirement of the stock. Entries in these accounts representing premiums realized shall be carried therein until offset (1) by discount suffered on sales of the same class of stock, or (2) by credits to Profit and Loss upon reacquirement of the stock. In case the accounting company is permitted and elects to distribute all or any part of the net premium on its capital stock to its stockholders, the amount thus distributed shall be charged to the premium account. For the purpose of this classification the premiimi realized at the sale of, capital stock shall not be considered a profit and loss item ex- cept upon reacquirement of the stock sold. In no case shall discount on capital stock be charged to or included in any account as a part of the cost of acquiring any property, tangible or intangible, or as a part of the cost of operation. When stock which has been issued or assumed by the accounting company is reacquired, the difference between the price paid and the par value of the stock shall be charged or credited to Profit and Loss as may be appropriate. Concurrently the premium or discount ac- count for the particular issue of stock reacquired shall be adjusted through Profit and Loss to the extent of the premium or discount applicable to the shares reacquired. This does not apply to the pur- chase of securities solely for special funds in which the accounting company carries at cost instead of par value securities issued or as- sumed by itself. In case the premium or discount realized at the prior sale of the stock reacquired has been included in an asset account other than the premium and discount account, such asset account shall be concur* BALANCE SHEET ACCOUNTS 7 rently adjusted through Profit and Loss to the extent of the premium or discount previously included therein with respect to the shares reacquired. 12. Discount, Expense and Premium on Long Term Debt. Ledger accounts shall be provided to cover discounts, expense and premiums at the sale of each class of long term debt (including re- ceiver's certificates) issued or assumed by the accounting company. The total of the net debit balances remaining in these several accounts shall be included in account No. 131, "Unamortized Debt Discount and Expense" and the total of the net credit balances in account No. 253, "Unamortized Premium on Debt." By the term discount is meant the excess of the par value of the securities issued or assumed and the accrued interest thereon, over the actual cash value of the consideration received for such securities. By the term premium is meant the excess of the actual cash value of the consideration received for securities issued or assumed over the par value of such securities and the accrued interest thereon. By the term expense are meant all expenses in connection with the issue and initial sale of evidences of debt, such as fees for drafting mortgages and trust deeds; fees and taxes for issuing or recording mortgages and trust deeds; cost of printing bonds, certificates of in- debtedness, and other commercial paper having life of more than one year; fees paid trustees acting under mortgages and trust deeds; fees paid for legal services to trustees relative to mortgage securities; fees and commissions paid underwriters and brokers for marketing such evidences of debt; and other like expense. Each month (or other accounting period) there shall be charged to income account "Amortization of Debt Discount and Expense" a proportion (based upon the ratio of such fiscal period to the remaining life of the respective securities) of each of the debit balances in these accounts, and correspondingly there shall be credited to income ac- count "Amortization of Premium on Debt" a similar proportion of each of the credit balances in these accounts. When any long term debt which has been actually issued to bona fide holders for value is reacquired by the accounting company, a pro- portion of the balance remaining in the accounts covering discount, expense, and premium on long term debt of the class of security re- acquired shall be credited or charged, as may be appropriate, to Profit and Loss. Such proportion shall be based upon the ratio of the 8 BALANCE SHEET ACCOUNTS par value of the security reacquired to the par value of all the securi- ties of the same class actually outstanding immediately before such reacquirement. This does not apply to the purchase of securities solely for special funds in which the accounting company carries at cost instead of par value securities issued or assumed by itself. In case, however, the premium or discount realized at the prior sale of the securities reacquired has been included (in excess of the propor- tion authorized in the text of fixed capital account No. 355, "Interest during Construction") in an asset account other than the premium account, such asset account shall be concurrently adjusted through Profit and Loss to the extent of such excess of the premium or discount previously included therein with respect to the securities reacquired. Except as provided in account No. 355, "Interest during Construc- tion," no discount on long term debt shall be charged to or included in any account as a part of the cost of acquiring any property, tangible or intangible, or as a part of the cost of operation. 13. Contingent Assets and Liabilities. Contingent assets and liabilities shall not be included in the body of the balance sheet statement. Whenever the balance sheet is stated, however, contingent assets and liabilities, if any, should be shown in detail in a supplementary statement. Contingent assets represent possible sources of value contingent upon the fulfilment of conditions regarded as uncertain. Contingent liabilities include items which may, under certain conditions, become obligations of the company, but are neither direct nor assumed, obligations at the date of the balance sheet. BALANCE SHEET ACCOUNTS TEXT PERTAINING TO BALANCE SHEET ACCOUNTS 101. Fixed Capital. This account shall include the cost of property having an expecta- tion of life in service of more than one year which is devoted to the operations conducted by the accounting company, less deductions for property abandoned, sold, or otherwise retired. Separate subdivisions shall be used for each distinct class of opera- tions conducted by the accounting company, as, for example, "Fixed Capital — water, ' ' "Fixed Capital^electric. ' ' If, however, the account- ing company conducts two or more separate and distinct classes of operations, as in the case of a company having both a water and an electric departrpent, expenditures chargeable to such fixed capital ac- counts as "Land," "Organization," "General Structures," "Engineering and Superintendence," etc., which are not assignable to a particular depart ment or kind of operations, may be shown in a subdmsion having the title "Fixed Capital — general," The foregoing shall not be construed to prohibit the apportionment of such expenditures between depart- ments on a more or less arbitrary basis provided this basis is clearly stated in the accounting company's public reports. 111. Cash. This account shall include all money coming into the possession of the accounting company in which it has a beneficial interest. This covers coin of the United States, United States treastu-y notes, gold and silver certificates and greenbacks, and bank bills payable to bearer on demand; also all banks credits, checks and drafts receivable sub- ject to satisfaction or transfer upon demand (whether payable to bearer or to order.) 112. Notes Receivable. , This account shall include the ledger value of all notes and bills receivable which are the property of the accounting company and upon which solvent concerns or individuals are liable. This covers demand notes, drafts, etc., issued by others than banks, and time notes, drafts, etc., by whomever issued. This account does not in- clude notes coming within the definition of "Investments in Affiliated Companies" or "Miscellaneous Investments" (for which see page 12). 10 BALANCE SHEET ACCOUNTS 113. Accounts Receivable. This account shall include all amounts (other than deposits in banks) owing to the accounting company upon open book accounts with sol- vent concerns and individuals ; also the ledger value of all accounts and claims upon which responsibility is acknowledged by solvent concerns and individuals or which are sufficiently secured to be considered good and of all judgments against such concerns where the judgment is not appealable or suspended through appeal. This account does not in- clude negotiables. Note A. — The record of accoxints receivable shall be kept in such manner as to permit the ready segregation of the three groups, consumers' accoimts, accounts with affiliated companies, and miscellaneous accounts receivable. Note B. — It is suggested that when practicable consumers' accounts be further classified into current month accoimts, accounts more than one month but less than one year old, and accounts over one year old. 114. Interest and Dividends Receivable. This account shall include the amount of interest accrued to the date of the balance sheet on funded and unfunded Securities, loans, open accounts, mortgages and deposits held by or for the accounting company; dividends declared on stocks similarly held, and dividends accrued on stocks when contracts require that the dividend be paid at stated times. Note. — No amount representing interest or dividends receivable shall be included in this account imless its payment is reasonably assured by past experience and anticipated provision, or otherwise. But the definition of this accoimt should not be construed to prevent the carrying of interest and dividends receivable in a sus- pense account until collection has actually been made, even though the debtor be considered to be solvent. 115. Materials and Supplies. This account shall include the balances representing the cost (in- cluding transportation, insurance, and inspection charges, customs duties, etc., of all material and supplies not charged out of the account- ing company's accounts, regardless of whether the same are intended to be consumed in construction or in operation, or later to be sold. Trade or cash discounts allowed in connection with the purchase of or payments for materials and supplies shall be credited to the particular bills on which such discounts are allowed, or to clearing account "Stores Expense" when not practicable to credit the particular bills. The cost of materials and supplies includes all specifically assign- able transportation charges incurred in obtaining the delivery of such materials and supplies upon the premises of the purchaser, and the cost of any special tests made thereon prior to their acceptance. BALANCE SHEET ACCOUNTS 11 When any materials and supplies the cost of which has been charged to this account are issued for use, the amount at which they stand charged herein should be credited to this account and charged to the proper construction, operating expense, or other account. The scrap or salvage value of things retired from the service shall be charged to an appropriate sub-account in this account while vsuch things remain the property of the accounting company. If such sal- vage value is not known, it shall be estimated and the estimated amount adjusted to conform to the fact when it is determined. Inventories of materials and supplies shall be taken at least annually and any shortages or overage disclosed by such inventories shall be credited or debited to this account and concurrently debited or credited to operating expenses, fixed capital or other appropriate accounts. Note A. — It is not required that the transportation and other elements of cost shall be assigned with a greater degree of accuracy than to the nearest cent per unit of material or supply. Where a single transportation item covers a multi- tude of things, the portion of the expense not assigned to specific things should be charged to the same account to which store expenses are charged. Note B. — If an appliance sold is for any reason returned to the accounting com- pany, it should be charged to the appropriate sub-account at its appraised value. Cost of repairing or renovating it should be charged to the same sub-account. Appro- priate adjustments should be made in accoimts credited with the original sale. 116. Prepayments. This account shall include the debit balances described under the following sub-heads: a. Prepaid Taxes. The excess of taxes paid over the amount properly chargeable to current income or other similar account, as shown by a debit balance in the liability account (See account No. 231, "Taxes Accrued," page 22). b. Prepaid Rents. The amount of rents paid in advance of the enjoyment of the term. As the term is consumed, this account shall be credited at regular accounting intervals and the appropriate rent account debited with the amount applicable to the period. c. Prepaid Insurance. The amount of premium on insurance policies paid in advance of their accrual. As such premiums accrue they should be credited at regular accounting intervals to this account and charged to the appropriate operating expense or other account. d. Miscellaneous Prepayments. Prepayments made for any purpose other than as provided for in the three preceding heads. 12 BALANCE SHEET ACCOUNTS Note — By the accrual of insurance, rents, etc., is meant their accumulation when considered as spread uniformly over the period to which they apply. Thus, if the rent fixed by contract of lease for a certain property is $600 for a calendar year, this accrued at the rate of $50 each month (unless it is desired to base the accruals on days, when the varying lengths of the months would require to be con- sidered), regardless of the actual times when the rent matures; $50 should thus (if the rent has been prepaid) be credited each month to the sub-accotmt "Prepaid Rents" and concurrently charged to the appropriate account in the "Income" ac- count. Similarly in the case of other prepayments. 117. Miscellaneous Current Assets. This account shall include the cost of all current assets which are not includible under any of the foregoing accounts. (See "Balance Sheet Accounts — General Instructions and Definitions," Section 3, page 4). 121. Investments in Affiliated Companies. This account shall include the ledger value of the accounting com- pany's investment in securities or non-negotiable notes issued or as- sumed by affiliated companies ; also of its investment advances to such companies. Two companies are affiliated if either one controls the policy of the other or if both are subject to the same control. By "Investment advances" are meant debit balances in open accounts with affiliated companies not subject to current settlement and interest accrued on such open accounts when such interest is not subject to current settlement. This account shall be sub-divided as follows: a. Stocks. b. Bonds. c. Notes. d. Advances. Note A. — ^Accoimts with affiliated companies which are subject to current settle- ment such as charges for materials and supplies currently furnished, charges for repairs to equipment, etc., shall be classed as current assets or current liabilities as may be appropriate. Note B. — Securities borrowed by the accounting company and pledged should not be included in this account. Note C. — Securities pledged for purposes other than that of security for long or short term debt of the accoimtin? company should be included in account No. 123, "Sinking Funds;" account No. 124, "Replacement Fund;" accoimt No. 125, "Miscellaneous Special Ftmds;" or accoiont No. 126, "Special Deposits" as may be appropriate. 122. Miscellaneous Investments. This account shall include the balances in accounts representing mis- cellaneous investments such as those in securities of other non-affiliated corporations, in tangible property of a permanent nature not coming within the definition of fixed capital, as, for example, real estate leased BALANCE SHEET ACCOUNTS 13 to others or held for a rise in value, etc., provided such investments are not included in any special fund account. The accounting company's records shall be kept in such manner as to permit the ready analysis of this account to show separately in the company's annual reports full particulars concerning its investments of any given class, including the ledger value of those which are held subject to a mortgage, pledge, or other lien. 123. Sinking Funds. This account shall include the amount of cash, the ledger value of securities of other companies, and other assets which are held by trus- tees of sinking funds for the purpose of redeeming outstanding obliga- tions, including such assets so held by the accounting company when they are segregated in a distinct fund; also amounts deposited with such trustees on account of mortgaged property sold, when the pro- ceeds of such sale are to be held for the redeeming of securities; and the cost of live securities issued or assumed by the accounting com- pany and held in such funds. A separate account shall be kept for each fund and the title of each fund should designate the obligation in support of which the fund is created. • Note. — Should the constituents of a sinking fund change substantially in value, and such change seem likely to be permanent, it may be reflected by vsuitable entries in this accoimt and in the corresponding reserve account or in "Profit and Loss" as may be appropriate. 124. Replacement Fund. If the accounting company desires, or is required, to segregate in a special fund the assets or any part of the assets represented by the retirement reserve, the ledger value of such assets shall be included on the balance sheet in this account. 125. Miscellaneous Special Funds. This account shall include the amount of cash and the ledger value of securities of other companies and other assets in insurance, em- ployees' pension, savings, relief, hospital, and other funds which have been raised and specifically set aside or invested for purposes not pro- vided for elsewhere; also thQ cost of securities issued or assumed by the accounting company and held in such funds. A separate account shail be provided for each fund. • 126. Special Deposits. This account shall include the debit balances described under the following sub-heads: 14 BALANCE SHEET ACCOUNTS a. Coupon Special Deposits. All moneys and bank credits spe- cially deposited in the hands of fiscal or other agents of th^s accounting company for the payment of interest covipons when presented. Such coupons when paid from such deposits shall be credited to this account and charged to the appropriate matured interest account. Payments to trustees (or other agents of the holders of bonds or other securities) of the interest accrued thereon which operate under the terms of the securities (or of mortgages supporting such securities) as a release of the paying corporation from further liability from such interest shall not be charged to this account but to the appropriate "Interest Ac- crued" account. b. Dividend Special Deposits. All moneys and bank credits specially deposited in the hands of fiscal or other agents of the accounting company for the payment of dividends upon its stocks. Such dividends when paid from such deposit shall be credited to this account and charged to the appropriate dividend account. c. Miscellaneous Special Deposits. All moneys and bank credits deposited in the hands of fiscal or other agents of the account- ing company for other special purposes than the payment of interest coupons and dividends. Charges to this account shall specify the purpose for which deposit is made. When such purposes are satisfied, this account shall be credited with the amount specially deposited to provide such satisfaction. Note. — This account shall not include any assets available for general corporate purposes. 131. Unamortized Debt Discount and Expense. This account shall include the total of the net debit balances repre- senting the discount and expense in connection with the issuance of each class of the accounting company's long term debt (See "Balance Sheet Accounts — General Instructions and Definitions," Section 12, Page 7). 132. Property Abandoned. This account is intended as a suspense. account which shall include the retirement loss (i. e., the original cost, estimated if not known, plus cost of dismantling, less salvage) on property destroyed or abandoned because of replacement, of obsolescence, of an extraordinary casualty, or for any other reason, when such loss has not been provided for in advance through a reserve. Charges to this account shall be made only with the permission of the regulatory commission, and the amount BALANCE SHEET ACCOUNTS 15 SO charged shall be amortized through annual or more frequent charges over a definitely determined period to. such accounts as shall be proper. Application to the commission for permission to use this account shall give full particulars concerning the property abandoned or retired, the reasons for its retirement, the accounts through which it is proposed to amortize the retirement loss, and the future period over which, in the judgment of the company making the application, the amount of such charge should be distributed. 133. Jobbing Accounts. This account shall include the balances in accounts with customers or others for jobbing work not completed at the date as of which the balance sheet is stated. Such accounts, when work is completed and charges made, shall be cleared by charges to accounts receivable. 134. Clearing or Apportionment Accounts. This account shall include the balances in accounts maintained to carry temporarily the cost of operating such ' facilities as garages, stables, storehouses, etc., and also overhead or burden costs such as it is desirable shall be apportioned over the construction and operating accounts involved. The charges to operating accounts and the credits to these accounts should, unless there is some good reason to the contrary, be so dis- tributed that the costs for any one year will be absorbed by the trans- actions occurring during that year. 135. Work in Progress. This account shall include the total of the balances in open "work order" or "job order" accounts for work in progress, or in suspense accounts to which the cost of construction or maintenance work is temporarily charged pending its final distribution to the appropriate fixed capital or operating expense accounts. Note. — Charges for additions to fixed capital not involving replacements, or for improvements which necessitate retirements or reconstruction of existing prop- erty when full credits have been made in advance to fixed capital accoimts to cover the ledger cost of property retired, may be carried in fix»i capital account No. 359, "Unfinished Construction," which see. 136. Miscellaneous Suspense. This account shall include all debits not elsewhere provided for, the proper final disposition of which is uncertain. This will include the cost of tentative or preliminary surveys, designs, and investigations made for determining the feasibility of projects under contemplation. If the project is thereafter definitely undertaken, such amount shall 16 BALANCE SHEET ACCOUNTS be credited to this account and charged to the proper work order, fixed capital, or other account. If the project is abandoned, the cost of the preliminary investigation shall be charged to the appropriate operating expense or other account. Whenever the proper disposition of any matter charged to this account is determined, it shall be cred- ited to this account and charged to the appropriate account. 141. Discount on Capital Stock. This account shall include the total of the net debit balances repre- senting the discount on capital stock issued or assumed by the account- ing company (see "Balance Sheet Accounts — General Instructions and Definitions," Section 11,. Page 5). 142. Reacquired Securities. When securities, whether debt or stocks, have been actually issued by the accounting company to bona fide holders for value (or after such issue by another corporation have been assumed by the account- ing company) and after such issue (or assumption) have been acquired by the accounting company under circumstances which require that they shall not be treated as paid or retired, they shall be charged at face value to this account. If the price at which such securities have been reacquired is greater or less than the par or face value, the dif- ference shall be adjusted through Profit and Loss or through the ap- propriate discount or premium account. Note A. — ^This account shall not include securities that are merely guaranteed. Note B. — This account shall not include any securities held in sinking and other reserve funds. 143. Treasury Securities. This account shall include the par value of securities which have been nominally but not actually issued by the accounting company. For definition of the term "Nominal issue" see note under account No. 201, "Capital Stock" and Note B under account No. 211, "Long Term Debt." 150. Pr<^t and Loss.— Deficit. Under this head shall be shown the debit balance, if any, in the Profit and Loss account. (See "Profit and Loss Account — General Instructions and Definitions." Section 1, Page 59). 201. Capital Stock. This account shall include the items described under the following sub-heads : BALANCE SHEET ACCOUNTS 17 a. Full Paid Stock. This dco vers the total par value of stocks or receipts issued to represent permanent full-paid interests in the ac- counting company, or interests which, if terminable, are so only at the option of the company. By **Full paid interest" is meant an interest in which the full amount of the subscription has been paid in. b. Instalments Paid on Stock Subscriptions. This covers the amount of instalments paid on subscriptions for capital stocks. When the full amount of the subscription has been paid and certificates of stock are issued therefor this account shall be cleared and the par value of the stock so issued shall be credited to the account appro- priate for such stock. c. Stock Liability for Conversion. This covers the accounting company's liability under agreements to exchange its capital stock for the outstanding securities of companies whose physical property has been acquired under such agreements, but whose securities have not yet been surrendered for exchange. The records shall be so kept that stocks of different classes may be separately shown. The following is the most important classification of stock : (a) Common stock: Stock which has no preference in the distri- bution of dividends. (b) Preferred Stock: bLucK having preference in the distribution of dividends. (c) Debenture Stock: Stock issued under a contract to pay a specified rettirn at specified intervals. Preferred stock may be further classified as first preferred, second preferred, etc.; or as cumulative or non-cumulative \ or as participating or non-participating. First preferred stocks are those which have the first claim upon such dividends as may be distributed; a claim upon dividends taking precedence over the claim of common stock but in- ferior to the first preferred stock may be represented by second pre- ferred stock, and so on. Stock is cumulative if the amount by which the dividend at any dividend period fails to reach a stipulated divi- dend rate is carried forward to continue as a claim upon the dividend fund until satisfied. Stock is non-cumulative if such amount lapses. Stock is participating if it is not limited to a stipulated rate in the amount of dividends which it may receive but is entitled to partici- pate, in accordance with the terms of the contract under which it is issued, in further dividends. It is non-participating if it is limited to a stipulated rate. 18 BALANCE SHEET ACCOUNTS Stocks may differ also with respect, to voting provisions and con- ditions under which they may be retired. A separate ledger account should be maintained for each class of stock issued, and no two stocks shall be considered of the same class unless they are equal in their interest or dividend rights, their voting rights, and the conditions under which they may be retired. The characteristics of any class of stocks in these three regards shall be designated in the title of the account raised to cover such stocks and shall be clearly expressed in the first entry of such account. To the account for any class of stock shall be credited, when issued, the par value of the amount of stock of that class issued. If such issue is for money, that fact shall be stated; and if for any other consideration than money, the person to whom issued shall be designated and the consideration for which issued shall be de- scribed with sufficient particularity to identify it; if such issue is to the treasurer or other agent of the corporation to be by him disposed of for the benefit of the corporation, that fact, and the name of such agent, shall be shown; and such agent shall, in his account of the disposition thereof, show the like details concerning the consideration realized thereon, which account, when accepted by the corporation, shall be preserved as a corporate record. If the fair cash value of the consideration realized upon the issue of any amount of stock is greater than the par value of such stock and accrued dividends, if any, ex- pressed in the contract of issue, the excess shall be credited to account No. 202, "Premium on Capital Stock," and corresponding reference thereto shall be contained in the entry relating to such stock in the stock account. For each class of stock the records shall also show plainly the par value of (1) certificates issued and actually outstanding, being those not held by the company, its agents or trustees, or subject to its con- trol; and (2) certificates pledged and unpledged held in the company's treasury, by its agents or trustees, or otherwise subject to its control, including both those acquired after actual issue and those nominally but never actually issued. Note A.— Capital stock is considered nominally issued when certificates are signed and sealed and placed with the proper officer for sale and delivery, ot pledged, or otherwise placed in some special fund of the accounting company. It is consid- ered to be actually issued when it has been sold to a bona fide purchaser for a valu- able consideration, and such purchaser holds it free from all control by the account- ing company. All capital stock actually issued and not reacquired by or for the accounting company is considered to be actually outstanding. If reacquired by or for the accoimting company, under such circumstances as require it to be held alive and not canceled or retired, it is considered to be nominally outstanding. Note B. — ^When stock without p>ar value is issued the actual money value of the consideration realized from the issue should be credited to the account repre- senting that particular class of stock. BALANCE SHEET ACCOUNTS 19 202. Premium on Capital Stock. This account shall include the excess of the actual money value (at the time of issue of the stock) of the consideration received for such issue over the par value of the amount of stock issued and accrued dividends, if any, expressed in the contract of issue. If the stock is issued by the corporation to its treasurer or other agent, the excess of the actual money value of the consideration obtained by such agent in exchange for such stock over the par value and accrued dividends thereof shall be considered the premium realized. A separate ledger account shall be maintained for each class of stock as distinguished according to the text of account No. 201 preceding. Entries in these accounts shall be carried therein until offset by credits to Profit and Loss upon reacquisition of the stock or by credits t;p ''Cash" or similar account in case the corporation is permitted and elects to distribute to its stockholders all or any part of the premium realized on its stock. 211. Long Term Debt. This account shall include the total par value of all debt except receiver's certificates and advances from affiliated companies (for which see below) which by the terms of its creation does not mature until more than one year after date of creation. This covers bonds, notes, mortgage certificates, and all other forms of acknowledging in- debtedness. The records shall be so kept that long term debt of different classes may be separately shown. The most important classification is that based upon the nature of the lien or security as follows : (a) Mortgage Bonds : Bonds secured by a lien on physical property and not includible in the other subdivisions of this account. (b) Collateral Trust Bonds: Bonds and notes having a date of maturity of more than one year after date of issue secured by a lien on securities or other commercial paper; also stock trust certificates that are similar in character to collateral trust bonds. (c) Income Bonds: Bonds which ^re a lien on the accounting company's revenue alone, or bonds which, while being a lien on its property and franchises, can claim payment of interest only in case, interest is earned. (d) Equipment Obligations: Equipment bonds, equipment notes, or other obligations secured by lien on specific equipment. (e) Miscellaneous Obligations: All long term obligations not pro- vided for in the four preceding classes, including notes, unsecured certificates of indebtedness, debenture bonds, plain bonds, real estate 20 BALANCE SHEET ACCOUNTS mortgages executed or assumed, and other similar obligations maturing more than one year after date of issue. (f ) Receipts Outstanding for Long Term Debt : Receipts for pay- ment on account of long term debt securities. When the securities are issued for amounts so paid, the face value shall be included in the account covering the class of funded debt for which the securities are issued. Long term debt may differ also with respect to rates of interest, interest dates, and date of maturity. Separate ledger accounts shall be maintained for each class of long term debt, and no two amounts of debt not agreeing in respect of all four of the characteristics above named shall be included in the same ledger account, except that part of any long term debt issue agreeing in other characteristics but ma- turing serially may be treated as of the same class. The title of each ledger account for long term debt shall express the four characteristics above stated, that is to say, mortgage or other lien or security, rate of interest, dates of maturity of interest, and date of maturity of principal: as, e. g., "First Mortgage 5 per cent. Q. F. 10, August 10, 1928," which means a debt secured by the company's first mortgage, bearing interest at the rate of 5 per cent, per annum, interest matur- ing quarterly on February 10, May 10, August 10, and November 10 of each year, principal maturing August 10, 1928. For each class of long term debt the records shall also show plainly (1) the par value of certificates or other evidences of debt issued and actually outstanding, being those not held by the company, its agents or trustees, or subject to its control; and (2) the par value of certifi- cates or other evidences of debt pledged or unpledged held in the company's treasury, held by its agents or trustees, or otherwise sub- ject to its control; including both those reacquired after actual issue and those nominally but neyer actually issued. Note A. — Securities maturing one year or less from date of issue shall be in- cluded in account No. 221, "Notes* Payable." Matured long term debt shall be included in account No. 226, "Matured Long Term Debt Unpaid." Note B. — Long term debt securities are considered to be nominally issued when Certified by trustees and placed with the proper officer for sale and delivery, or pledged or otherwise placed in some special fund of the accounting company. They are considered to be actually issued when they have been sold to a bona fide pur- chaser for a valuable consideration and such purchaser holds them free from all control by the accounting company. All securities actually issued and not re- acquired and held by or for the accounting company under such circumstances as require them to be considered as held alive and not cancelled or retired are con- sidered to be actually outstanding. If reacquired by or for the accoimting com- pany, under such circumstances as require them to be considered as held ahve and not cancelled or retired, they are considered to be nominally outstanding. BALANCE SHEET ACCOUNTS 21 212. Receiver's Certificates. When any receiver, acting under the orders of a competent court, is in possession of the property of a corporation, and under the orders of such court issues certificates of indebtedness chargeable upon such property, the par value of such certificates shall be included in this account. Note. — Separate sub-accounts shall be maintained for receiver's certificates which mature in more than one year and those which mature in one year or less from date of issue. 221. Notes Payable. This account shall include the balances representing outstanding obligations in the form of notes, drafts, acceptances, or other similar evidences of indebtedness payable on demand or within a time not exceeding one year from date of issue. Note. — Secured notes and time loans payable more than one year from date of issue shall be included in account No. 211, "Long Term Debt." 222. Accounts Payable. This account shall include the amount of audited vouchers or ac- counts and audited pay rolls unpaid on the date of the balance sheet ; also balances representing unclaimed wages and outstanding pay and time or discharge checks issued in payment of wages, open accounts with other companies, except such as are includible under account No. 241, * 'Advances From Affiliated Companies," and similar items. 223. Consumers' Deposits. This account shall include the amounts deposited with the account- ing company by consumers as security for the payment of bills. De- posits refunded shall be charged to this account and credited to "Cash" or to account No. 125, "Miscellaneous Special Funds," if a special fund for such deposits is maintained. Deposits applicable to uncol- lectible or worthless bills shall, at the close of the fiscal year (or earlier at the option of the accounting company) be credited to the account of the consumer involved and debited to this account. 224. Matured Interest Unpaid. This account s:hall include the amount of matured and unpaid inter- est on debt of the accounting company except where such interest is added to the face of the principal as is the usual case with judgments and sometimes with advances from affiliated companies. 225. Dividends Declared. This account shall include the amount of any dividends which have 22 BALANCE SHEET ACCOUNTS been declared, but not paid. Dividends •shall be credited to this ac- count as of the day upon which they become a liability of the account- ing company (which is generally the date upon which they are de- clared) and when paid shall be charged to this account and credited to "Cash" or other suitable account. 226. Matured LongTTerm Debt Unpaid. This account shall include the amount of long term debt matured and unpaid without specific agreement for extension as to time of pay- ment, including unpresented bonds drawn for redemption through the operation of sinldng and redemption fund agreements. Note. — Real estate mortgages whose nominal maturity has been reached but which, by mutual agreement between mortgagee and mortgagor, are continued indefinitely as obligations of the accoimting company need not be transferred to this account, but may continue to be carried in account No. 211, "Long Term Debt." 227. Miscellaneous Current Liabilities. This account shall include the balances in all open accounts repre- senting current liabilities not specifically provided for in the foregoing accounts. 231. Taxes Accrued. This account shall include the amount of taxes accrued and properly charged against income or other accounts in excess of the amoimt of taxes paid as shown by the credit balance in the tax liability account. An open account entitled "Tax Liability Accotmt" shall be raised, and to it shall be credited at the close of each accotmting period taxes accrued during the period, corresponding debits being made to the appropriate accounts for tax charges. Such credits will necessarily be based upon estimate, but from time to time during the year as the actual tax levies become known, the amount of the periodic credits shall be adjusted so as to include as nearly as may be possible in each year the taxes applicable thereto. When any tax is paid, it shall be charged to the "Tax Liability Account" and credited to "Cash" or other suitable account. A debit balance in the "Tax Liability Ac- count" due to the prepayment of taxes applicable to the period sub- sequent to the date of the balance sheet shall be shown imder account No. 116, "Prepayments," while a credit balance shall be shown tmder account No. 231, "Taxes Accrued." Note. — In its annual reports the accoimting company may be required to state separately its liability for taxes over-due and tmpaid, i. e., such taxes as have not been paid at the date specified for such payment or after the expiration of such additional period as may be allowed by the tax-levying authority before penalty for non-payment or delayed payment becomes effective. Overdue taxes include those unpaid because of Htigation or dispute. BALANCE SHEET ACCOUNTS 23 232. Interest Accrued. This account shall include the amount of interest on all indebted- ness of the accounting company except where such interest is added to the face of the principal as in the usual case with judgments and sometimes with advances from affiliated companies, accrued to the date of the balance sheet but not payable until after that date. When such interest is paid, it shall be charged to this account and credited to "Cash" or other suitable account. Separate sub-accounts shall be maintained for each item of indebtedness. When interest matures without being paid, it shall be charged to this account and credited to account No. 224, "Matured Interest Un- paid." Payments to trustees (or other agents) of the holders of bonds or other securities of the interest accrued thereon which operate under the terms of the securities (or of mortgages supporting such securities) as a release of the paying company from fuither liability for such interest shall be considered equivalent to payments of interest made direct to bondholders and such interest shall not be credited to "Ma- tured Interest Unpaid." The interest accrued upon any judgment against the accounting company shall not be credited to this account, but to the account to which such judgment stands credited. 233. Miscellaneous Accrued Liabilities. This account shall include the balances in all accounts representing accrued liabilities other than interest or taxes. 241. Advances from Affiliated Companies. This account shall include the par value of non-negotiable notes due to affiliated companies, credit balances in open accounts with such companies other than credit balances in credit accounts classable as current liabilities, and interest accrued on notes and open accounts included in this account when such interest is not subject to current settlement. Two companies are affiliated if either one controls the policy of the other, or if both are subject to the same control. This account shall be sub-divided as follows : a. Notes, including both time and demand notes ; b. Open accounts not subject to current settlement ; c. Interest accrued on amounts included in this account when not subject to current settlement. Accounts with affiliated companies which are subject to current settlement, such as charges for materials and supplies currently fur- 24 BALANCE SHEET ACCOUNTS nished, charges for repairs to equipment, etc., shall be classed as current assets or current liabilities as may be appropriate. Negotiable notes due to affiliated companies shall not be included in this account but in account No. 221, "Notes Payable." 251. Retirement Reserve. To this account shall be credited such amounts as are charged to the operating expense account "Retirement Expense" to cover the retire- ment loss represented by the excess of the original cost, plus cost of dismantling, over the salvage value of fixed capital retired from service; to this account shall also be credited such amounts as may be appropriated from surplus for a similar purpose. When any fixed capital is retired from service, the original cost thereof (estimated if not known, and where estimated, the facts on which the estimate is based should be stated in the entry) should be credited to the proper fixed capital account and charged, plus the cost of retirement, less salvage, to this account. If the credit balance in this account is in- sufficient to cover the retirement loss, the excess over the balance contained in the reserve shall (with the consent of the regulatory commission) be charged to account No. 132, "Property Abandoned," which see, or other appropriate account. The losses which this account is intended to cover are those incident to important retirements of buildings, of large sections of continuous structures like water mains, or of definitely identifiable units of plant or equipment, and the object of the account is that the burden of such losses may be as nearly as is practicable equalized from year to year. Note A. — When property is retired whose ledger value has been reduced below original cost, only the remaining ledger value shall be wntten ofif as retirement loss. Note B. — When any property is retired whose ledger value is greater than the known or estimated cost, such excess shall be charged to Pn^fit and Loss. Note C. — If any property is sold for more than its original cost, the excess of its selling price over the cost of the property plus the cost of dismantling and sell- ing, shall be credited to this account. Note D. — If the accounting Company has, previous to the effective date of this uniform classification of accounts, maintained a reserve under some other title such as "Depreciation Reserve" for the purpose of equalizing retirement losses, the balance in such reserve, as at the effective date of this classification, shall be transferred to this account. V 252. Casualty and Insurance Reserve. When any admitted liability arises because of loss or damage to the property of others, or of injuries to employees or other persons, the amount of liability may (if not previously provided for by insur- ance or self -insurance), be charged to the appropriate operating ex- pense or other accounts and credited to this account against which BALANCE SHEET ACCOUNTS 25 (in such case) the actual cost of satisfaction of the liability shall be charged when the matter is determined. If the extent of the liability can not be ascertained promptly after the liability arises, it may be estimated as accurately as practicable for the purpose of determining the immediate charge to the expense or other appropriate account, in which case the matter shall be adjusted when the extent of the lia- bility is definitely ascertained. If the loss is of such character that it is in whole or in part indemnifiable under any contract of insurance carried by the accounting company, the indemnifiable portion of the loss shall be charged to the insurer and credited to "Casualties and Insurance Reserve." This account shall also include the amounts charged to the operating expense account "Insurance" to cover self- carried risks. 253. Unamortized Premium on Debt. When long term debt securities or other evidences of indebtedness are disposed of for a consideration whose cash value (exclusive of accrued interest) is greater than the par value of such securities or other evidences of indebtedness, the excess of such cash value of the consideration received over the par value of the securities or other evidences pf indebtedness shall be credited to this account. At regular accounting intervals thereafter a proper portion of such premium, based upon the life of the security or other evidence of indebtedness to maturity, shall be charged to this account and credited to account No. 434, "Amortization of Premium on Debt," in the income account. 254. Sinking Fund Reserves. This account shall include the net balances in accounts to which are credited, in accordance with the requirement of mortgages and other contracts, or by action of the company's directors, definite appropria- tions of income and surplus whether held in general funds or specifi- cally set aside in the hands of trustees, for the purpose of retiring or redeeming bonds or other obligations of the accounting company. It shall also include such accretions from the investment of funds specifi- cally set aside for the above described purpose as are required to be added to the reserve. When the debt which the sinking fund is created to redeem matures and the fund has accomplished its purpose, the balance in the reserve shall be charged to this account and credited to Profit and Loss. If the mortgage or other obligation permits, the par value of bonds or other evidences of indebtedness issued or assumed by the accounting company which are reacquired through the operations of a sinking 26 BALANCE SHEET ACCOUNTS fund may be charged to this account and credited to Profit and Loss when and as such bonds or other evidences of indebtedness are acquired. 255. Contributions for Extensions. To this account shall be credited contributions in money or property made to the accounting company for the purpose of assuming the burden or any part of the burden represented by the investment neces- sary for the establishment or extension of services rendered by the company. This covers such items as contributions toward the cost of line extensions in sparsely settled territory made by consumers, either voluntarily or when reasonably required by the company as a condi- tion of giving the desired service, and the cost of services to which the company has title, in so far as such cost is borne by the consumer; it also covers grants from municipal or other governmental bodies or contributions from chambers of commerce and similar organizations made with the object of establishing a new service in the community by assuming part of the investment cost of the enterprise. Note. — This does not include advances for the construction ot extensions which are ultimately to be repaid wholly or in part, to the consumer. Such advances should be credited, to Account No. 261, "Miscellaneous Unadjusted Credits^" When final determination has been made as to the amount of the advance to be returned to the consumer, the balance, if any, shall be credited to this account. 256. Contingency Reserve. This account shall include such amounts as the accounting com- pany may set aside to provide against unforeseen contingencies. 257. Miscellaneous Reserves. This account shall include the balances in all reserves other than those provided for in the six preceding accounts. (A description of each such reserve giving the purpose for which it is created and a summary of debits and credits thereto during the year may be re- quired in annual reports to the regulatory commission) . Note. — If the accotmting company maintains operating reserves for the pur- pose of equalizing expenses from month "to month, such reserves shall be cleared annually imless there remains a credit balance due to the non-completion of main- tenance work because of adverse labor conditions, non-receipt of material, or other similar reasons, in which case such part of the balance as is applicable to unfinished work may be carried over to the following year. Under no circumstances shall a debit balance be carried over the year. 261. Miscellaneous Unadjusted Credits. This account shall include the amount of credit balances in suspense accounts that can not be entirely cleared and disposed of until addi- tional information is received. 270. Profit and Loss— Surplus. Under this head shall be shown the credit balance, if any, in the Profit and Loss account. (See "Profit and Loss Account — General Instructions and Definitions," Section 1, Page 59). FIXED CAPITAL ACCOUNTS 27 FIXED CAPITAL ACCOUNTS 301. Organization 302. Franchises 303. Miscellaneous intangible capital 311. Land (a) Source of supply land and water rights (b) Pumping station land (c) Purification land (d) Storage land (e) Transmission and distribution land and rights of way (e-1) Transmission land and rights of way (e-2) Distribution land and rights of way (f) General office land (g) Miscellaneous land devoted to water operation (g-1) Stores department land (g-2) General shops land (g-3) Garage land 312. Structures (a) Source of water supply structures (b) Pumping station buildings and fixtures (c) Purification buildings and fixtures (d) Reservoirs and stand pipes (e) Distribution structures (f ) General office buildings and fixtures (g) Miscellaneous structures devoted to water operations (g-1) Store department structures (g-2) General shop structures (g-3) Garage structures, etc. 313. Boiler plant equipment 314. Steam power pumping equipment 315. Electric power pumping equipment 316. Gas or oil power pumping equipment 317. Hydraulic power pumping equipment 318. Miscellaneous pumping equipment 319. Purification system 320. Transmission mains or canals 321. Distribution mains or canals 322. Services 323. Consumers' meters and measuring devices 324. Consumers' meters and measuring device installation 325. Hydrants 326. Fire cisterns, basins, fountains and troughs 327. General equipment (a) Office equipment (b) Shop equipment (c) Store equipment (d) Transportation equipment 28 FIXED CAPITAL ACCOUNTS (e) Telephone, telegraph and wireless system (f ) General laboratory equipment (g) Miscellaneous equipment 328. Miscellaneous tangible capital Overhead Cost and Other Undistributed Items: 351. Engineering and superintendence 352. Law expendittu'es during construction 353. Injuries and damages during construction 354. Taxes during construction 355. Interest during construction 356. Miscellaneous construction expenditures 357. . Fixed capital not classified by prescribed accounts 358. Cost of plant and equipment purchased 359. CTnfinished construction General Instructions and Definitions 1. Fixed Capital Defined. By the fixed capital of a corporation is meant the property, both tangible and intangible, which is devoted to the accomplishment of the principal purposes of its business and which has an expectation of life in service of more than one year from date of installation in service. 2. Tangible and Intangible Capital and Overhead Costs. Tangible capital covers all physical property classed as fixed capital. Charges to specific accounts for tangible property cover direct labor and material costs up to and including the time of the foreman super- vising the job; also such overhead expenditures for engineering, taxes during construction, etc., as can be allocated to definite items of prop- erty. Charges to overhead cost accounts should cover only expendi- tures of this nature which pertain to the enterprise as a whole and cannot be allocated to definite items of property. Intangible capital covers organization expenditures, and rights, privileges, and other property not physical, such as franchises or patent rights. Sp far as possible overhead costs should be assigned or apportioned to particular jobs or items to the end that each item shall bear its proper share of such cost, and that the entire cost of the item, both direct and overhead, shall be deducted from the fixed capital accounts at the time of its retirement. Certain overhead costs, however, which clearly pertain to the entire enterprise, such as in some cases engineer- ing, interest, etc., should not be apportioned, but retained in the appropriate fixed capital accounts as part of the investment cost so long as the enterprise continues under the form in which it started. FIXED CAPITAL ACCOUNTS 29 These instructions should not be interpreted as permitting the addi- tion to fixed capital accounts of arbitrary percentages to cover as- sumed overhead costs, but only as requiring the assignment or appor- tionment to particular accounts for tangible property of actual and necessary overhead expenditures. 3. Fixed Capital to be Entered and Retained on Books at Cost. All charges to fixed capital accounts shall be at the actual cost of the property acquired, at the time of its acquisition. A bona fide contract or agreement of purchase and sale between entirely separate parties shall be prima facie evidence of actual cost. Each item of property shall be carried in the fixed capital accounts at no more, and no less, than its actual cost unless, or until, such property is abandoned, replaced, reconstructed, or converted, when the account- ing shall be as hereinafter set forth. The foregoing shall not, how- ever, be interpreted to forbid the inclusion in account No. 357 "Fixed Capital Not Classified by Prescribed Accounts" of undisturbed book values which have been carried prior to the effective date of a pre- scribed uniform system of accounts, and which may or may not repre- sent the actual cost of property in service; but the inclusion of such undisturbed book values in fixed capital accounts shall be without prejudice to any future determination of the actual cost of the prop- erty. The term "cost" includes not only the cost of labor, material, and suppHes directly employed or consumed in the construction and installation of fixed capital, but also the cost of preliminary plans and surveys and such portion of the expenses for engineering and plant supervision and of general expenses as may be chargeable to the fixed capital accounts under an equitable plan for apportionment of such expenses. 4. First Entries Must Enable Identification. Every debit or credit to a fixed capital or other investment account must be made in such wise as to be readily identified with the par- ticular item of property to which it relates. For each item (or project) of fixed capital or other investment the records shall show the date of the entry, the date of acquisition or installation, the date when placed in service, the actual money cost, and the description thereof with such particularity as to make possible the location and identification thereof (including in case the item is movable, the name of the manu- facturer and the identifying mark or number, if any, imprinted there- on, and such other particulars as may be necessary for identificatior) Where two or more items are acquired under a single undivided cou- 30 FIXED CAPITAL ACCOUNTS tract, the entry in respect of each shall refer to the others and shall state the entire consideration, and shall also state the portion thereof fairly applicable to the particular item covered by the entry. When any item of capital is withdrawn from service, the date of withdrawal shall be included in the withdrawal entry relating to such item. Note A. — In the case of continuous structures like water, mains, etc., the record shall be itemizecf to the extent that no item shall contain more than one operating division or section or more than one type of construction. The entry for any item shall so specify the location and the principal physical characteristics (such as size, weight, type, etc.) of the chief constituent parts of the item that iden- tification may be assured. Note B. — The date when an item c-f fixed capital is placed in service may, if preferred, be kept in the engineering records. 5. Application of Classification. The accounts in this classification shall include all expenditures for fixed capital regardless of the way in" which the funds for the con- struction or acquisition have been provided. Such expenditures shall not be charged to Operating Expense, Income, Surplus, or to special funds in such manner as to exclude from the property accounts any expenditure for fixed capital. These accounts shall also include the necessary credits to represent the cost originally charged to them of property or equipment aban- doned, destroyed, sold, or otherwise retired from service. Wherever the term original cost is referred to in this classification, and such cost can not be ascertained, an estimate of the original cost shall be used. 6. Salvage and Insurance. Salvage, as the term is employed in this classification, means the value to the accounting company, based upon a fair market price, of equipment or other material recovered in the process of repairing, re- placing, or abandoning plant and equipment; or the net amount re- ceived from its sale if the material is not retained by the accounting company. Salvage recovered in connection with a replacement or abandonment involving a deduction from fixed capital accounts shall be credited against the account to which the retirement loss is charge- able. Salvage recovered in connection with maintenance expenses not involving deductions from fixed capital accounts shall, so far as practi- cable, be credited to the appropriate maintenance accounts. Insur- ance recovered on property damaged or destroyed shall be treated in the same manner as salvage. 7. Withdrawals or Retirements. To the end that the capital accounts shall at all times disclose the FIXED CAPITAL ACCOUNTS 31 cost of all property in service, the cost of retired capital, whether re- placed or not, must be deducted from (i. e., credited to) the account, or accounts, in this classification to which such cost is chargeable. Every water corporation is therefore required to take suchme asures and establish such procedure as will insure strict compliance with these requirements. When anything is worn out, lost, sold, destroyed, abandoned, surrendered upon lapse of title, becomes permanently un- serviceable or is withdrawn or retired from service for any other reason, the amount at which such thing stood charged in the capital account shall be credited to the appropriate capital account, and the entry of such credit shall cite by name and page of book or other record the original entry of cost of the thing retired. If there is no such original entry, that fact shall be stated in connection with the credit entry- If the amount originally charged (i. e., the ledger value) is not sepa- rately recorded, it shall be taken to be the proportionate share of said property in the value of the entire group in which the property is in- cluded. The entry shall state the fact of such estimation. Credits for original cost of property retired should include such part of the overhead cost as is equitably assignable to the item retired. When the cost of retired property is credited to the appropriate fixed capital accounts, it shall be concurrently charged (less any sal- vage or insurance that there may be on the retired property) to account No. 251 "Retirement Reserve" to the extent that the total balance in the reserv^e is sufficient to cover such loss; the remainder, if any, representing such part of the loss due to the retirement as has not been provided for in advance by the accumulation of a retirement re- serve, shall, with the consent of the regulatory commission, be charged to suspense account No. 132 "Property Abandoned" to be amortized in such manner as may be determined. The cost of dismantling, tearing down, or removing any discarded plant or equipment shall be considered a part of the retirement loss ^nd charged to the "Retirement Reserve" or to "Property Aban- doned" in accordance with the provisions of the foregoing paragraph. When any replacement takes the form of reconstructing or converting existing property in such a way that the cost of the entire project can- not be accurately assigned as between the cost of putting in the new property, and the cost of taking out the old, no greater proportion of the cost of the project shall be charged to fixed capital accounts than would equal the cost of new plant or equipment having equivalent capacity and expectation of ser\dceable life. Such part of the cost of a reconstruction project as is not chargeable to fixed capital shall be 32 FIXED CAPITAL ACCOUNTS considered a retirement loss and charged to the "Retirement Reserve" or to "Property Abandoned" as already provided. The foregoing instructions do not apply to the retirement of those minor parts, the charges for replacing which are made directly to maintenance expense accounts. Note A. — The foregoing rule shall not be applied to capital temporarily out of service. In their annual reports to the regulatory commission, corporations may- be required to give particulars concerning all capital temporarily disused and not credited to the proper capital account in accordance with the foregoing rule. Note B. — No receiver or other person temporarily in charge of a water corporation shall be relieved of the foregoing requirement through failure to obtain the records of the corporation. If, by reason of the absence oi the corporate records, he is unable to make the proper credits to the capital accounts of the corporation for retirements, he shall open on his books the two historical accounts "Cost of Property Retired during the Receivership" and "Loss on Property Retired during the Receivership" and credit to the former accotmt the original cost in accordance with the foregoing requirement, concurrently charging the same amount (less sal- vage, if any) to the latter accovmt. 8. Improvements on Leased Property. The cost of additions to and betterments of leased property should be charged to a sub-account under the appropriate fixed capital ac- count, and retirement losses in connection therewith treated in the same manner as on company-owned property. In case the full benefit of improvements will not be obtained by the lessee because of rever- sion to the lessor at the expiration of the lease, the cost of improve- ments may be charged to suspense and cleared by uniform charges to rent deductions within the period of the lease. Ordinary current re- pairs, including minor rearrangements and changes in connection with leased buildings, should be charged to the appropriate maintenance account. Expenditures charged to lessors or for which lessors are re- quired under the lease-hold agreement to reimburse the lessee prior to the tennination of the lease should not be charged to the fixed capital accounts of the lessee. 9. Salvage from Equipment, Tools, etc. When the cost of any work equipment, machinery, tools, or ma- terials and suppHes obtained for use in construction work has been charged to accounts in this classification and the entire value thereof has not been consumed in the work, the residual value of such work equipment, machinery, tools, or materials and supplies shall be credited upon the completion of the work to the accounts to which originally charged, and concurrently charged to the material and supply account or other appropriate accounts. FIXED CAPITAL ACCOUNTS 33 10. Sub-accounts for Departmental Capital. The fixed capital accounts should be so subdivided as to distinguish clearly between general capital and departmental capital. Sub- accounts for departmental capital should be so entitled and con- structed as to enable the corporation to report in the detail indicated in the following classification. the fixed capital devoted to each par- ticular department or jointly to any specific group of departments. v34 FIXED CAPITAL ACCOUNTS TEXT PERTAINING TO FIXED CAPITAL ACCOUNTS 301. Organization. This account shall include all fees paid to governments for the privilege of incorporatipn and all office and other expenditures inci- dent to organizing the corporation or other enterprise and putting it into readiness to do business. This covers cost of preparing and dis- tributing prospectuses, cost of soliciting subscriptions for stock (but not for loans or for the purchase of bonds or other evidences of in- debtedness), cash fees paid to promoters and the actual cash value at the time of organization of securities paid to promoters for their services in organizing the enterprise, counsel fees, cost of preparing and issuing certificates of stock and cost of procuring certificates of necessity from state authorities and other like costs; also costs inci- dent to preparing and filing certificates of authorization of increase of capital stock and to the negotiation and issue of stock thereunder, and of preparing and filing certificates of amendment of articles of incorporation. This account should not include any discount on stocks or other securities issued, nor should it include any costs in- cident to negotiating loans or selling bonds or other evidences of in- debtedness. Note. — Cost of preparing and filing papers in connection with the extension of the term of incorporation or with reincorporation consequent upon reorganization should be charged to account No. 781.24, "Law Expenses," or, by companies in- "Class C" or "Class D," to the account of which "Law Expenses" is a subdivision. 302. Franchises. This account shall include amounts actually paid to a state or to a political subdivision thereof in consideration of franchises running in perpetuity or for a specified term of more than one year and neces- sary to the conduct of the accounting company's operations. If any such franchise is acquired by a mesne assignment, the charge to this account in respect thereof should not exceed the amount actually paid therefor by the corporation to its assignor, nor should it exceed the amount specified above. Any excess of the amount actually paid by the corporation over the amount above specified should be charged to account No. 303, "Miscellaneous Intangible Capital." 303. Miscellaneous Intangible Capital. This account shall include the cost of patent rights, licenses, privi- leges, and other intangible property not elsewhere provided for; and all other fixed capital charges which are not specifically assignable to some other account in this classification. FIXED CAPITAL ACCOUNTS 35 NoTE.--When any corporation desires to reclassify, according to the Uniform Classification of Accounts, the book accounts representing its investment in plant and equipment prior to the effective date of this classification, any remainder of the original total book value over the amount determined as properly chargeable to other prescribed accounts (including profit and loss or reserve accounts in cases where it is found that part of the original total book value is properly chargeable to such accounts) may be charged to "Miscellaneous Intangible Capital." When such a reclassification is undertaken by the accounting company, and has not been passed upon by the regulatory commission, acceptance by the commission of re- ports showing the revised balances shall not commit it to the approval of the amounts thus set up. 311. Land. This account shall include the cost to the utility of all lands used and useful in its water operation, embracing source of water supply lands, pumping station land, purification land, rights of way for transmission and distribution facilities, pipe lines, and ditches, where such rights have lives in excess of one year from the date when such land is placed in service. Such cost includes, when assumed or paid by the purchaser in its own behalf, cost of registration of title, cost of examination of title, conveyancer's and notary's fees, purchasing agent's commission or fees, or proportion of purchasing agent's salary, taxes accrued to date of transfer of title, and all liens upon the title acquired; cost of obtaining consents and payments for abutting damages ; also the first cost of acquiring leaseholds of land for rights of way with a life of more than one year, but not including the rents paid periodically in consideration of rights obtained under such leases. This account also includes special assessments levied by public authorities on the basis of benefits for streets and other public im- provements, such as nej^ roads, new bridges, new sewers, new pave- ments, new curbing, etc., but not any taxes levied to provide for maintenance of such improvements. The cost of buildings and other improvements should not be in- cluded in this account. If at the time of acquisition of an interest in lands it extends to buildings or other improvements thereon, which improvements are devoted by the accounting company to its water operations, and the contract of acquisition does not determine the price of such improvements, they should be appraised at their fair cash value for use in such operations, and such appraised value should be charged to the appropriate structures account, and excluded from this account . If such improvements are not devoted to water operations but are devoted to other operations or held as investments, the cost (or appraised value if Lhe cost is not determined in the contract of acquisition) should be charged to the appropriate investment account or capital account for other operation. If the improvements are re- 36 FIXED CAPITAL ACCOUNTS moved or wrecked, the cost of removing or wrecking them should be charged and the salvage credited to the land account. Net proceeds from the sale of timber, cordwood, or other property- purchased with rights of way or other lands should be credited to this account. ^ This account may be sub-divided as follows, and so far as prac- ticable, records of the cost of land devoted to water operations should be kept in the detail indicated. Land used both for general office and departmental purposes may be classed as "Miscellaneous." a. Source of supply land and water rights. h. Pumping station land. c. Purification land. d. Storage land. e. Transmission and distribution lands and rights of way. e-\. Transmission land and rights of way. e-2. Distribution land and rights of way. /. General office lands. g. Miscellaneous land devoted to water operations. g-1. Stores department land. g-2. General shops land. g-3. Garage land, etc. 312. Structures. This account shall include all permanent buildings and structures to house, support, or safeguard persons or property with all appur- tenant fixtures, improvements to land and other constructions. Buildings shall include all fixtures attached • to and forming a permanent part thereof, such as water pipes and fixtures, steam pipes and fixtures for heating and ventilating, gas pipes and fixtures for lighting, etc., electric wiring and fixtures for lighting, signaling, etc., elevators, cranes and hoists and the motive power for operating them, building refrigerating systems and furnaces, boilers, etc., specially provided for such systems, storage batteries and electric generators with their prime movers specially provided for building service, conduits, including cable conduits which form a part of the building, but not including conduits which would be removed with their contents, and subways or areaways directly connected to and forming a part of the building. This account also includes cost of excavations, brick or concrete chimneys and such piers and founda- tions for machinery and apparatus as are designed to be as permanent FIXED CAPITAL ACCOUNTS 37 as the buildings and independent of their use in connection with any particular units of equipment. Charge also the cost of architect's plans and of superintendence of construction. Improvements to land include roadways, fences, sidewalks, sewer systems, water systems, yard lighting systems, grading and land- scape gardening, docks and water front improvements, railroad tracks, tramways and trestles, canals, bench marks, monuments, and any other permanent structures which are an improvement to the property This account may be subdivided as follows, and so far as prac- ticable, records of the cost of the structure devoted to water opera- tions should be kept in the detail indicated. Structures used both for general offices and departmental purposes may be classed as "Miscellaneous." Note. — Where general offices, shops, storehouses, stables, garages, etc., are located in one of the buildings under sub-accounts A, B, and C, no part of the cost of such buildings should be charged to this account (sub-account D.) a. Source of water supply structures. b. Pumping station building and fixtures. c. Purification buildings and fixtures. d. Reservoirs and standpipes. e. Distribution structures. /. General office buildings and fixtures. g. Miscellaneous structures devoted to water operations. g-1. Store department structures. g-2. General shop structures. g-3. Garage structures, etc. 313. Boiler Plant Equipment. This account shall include the cost installed of all furnaces, boilers, and boiler apparatus and accessories devoted to the production of steam for use in pumping water. This covers boilers and valves thereto attached, appurtenant furnaces and grates, and flues leading to smokestacks and chimneys, and the specially provided foundations and settings of such boilers and appurtenances; also metal smoke- stacks. It also covers mechanical stokers and other like apparatus for regulating the supply of fuel, etc., feed and hot water heaters and economizers, injectors, filters, feed pumps, blower engines, coal conveyors, ash conveyors, reservoirs for boiler or condenser water and intake and discharge water ])ipes and pipe lines and tunnels, air pi]3es and general service pij^es, steam traps, drains and separators, and pipes for conducting steam from the boiler to the engine or to the gas producers, exhaust pipes, etc. This account shall not include sU.'am pipes whose primary purpose is the heating of buildings. 38 FIXED CAPITAL ACCOUNTS Note. — When the system for supplying boiler or condenser water is elaborate, as when it includes a dam, reservoir, canal, and pipe line, the cost should not be charged to this account but to a special sub-account under account No. 312, "Struc- tures," entitled "Water Supply Structures — Steam." 314. Steam Power dumping Equipment. This account shall include the cost of all pumping equipment driven by steam power. Thi§ includes engines, turbines, pumps, condensers, vacuum pumps, and lubricating systems. 315. Electric Power Pumping Equipment. This account shall include the cost of all pumping equipment driven by electric power, including electric prime movers, pumps, lubricating systems, s^wdtch boards and other electric apparatus. 316. Gas or Oil Power Pumping Equipment. This account shall include the cost of all pumping equipment driven by gas or oil power, including gas and gasoline or oil prime movers, igniting and starting apparatus, pumps, lubricating systems, etc. It also shall include the cost of gas producers and accessories devoted to the production of gas for purposes of operating gas engines. This includes producers, economizers, regenerators, vaporizers, steam in- jectors, scrubbers, exhausters, seals, especially provided boilers and pumps, flues, blower engines and accessory apparatus. 317. Hydraulic Power Pumping Equipment. This account shall include the cost of the hydraulic power works and all equipment of the hydraulic power pumping station. This includes the cost of all dams, canals and flumes devoted to the pro- duction of hydraulic power and the delivery of water to the head gates of the water wheels and turbines. Also charge with the cost of wasteways from the outlet of the draft tube to the point of the final discharge, including the cost of all gates, valves and other acces- sories, sluices, forebays, etc., used in the development of the hydraulic power and all accessory canals and aqueducts. Charge also with the cost of all water wheels and turbines used in the pumping of water by hydraulic power including their foundations and settings, governors, and all apparatus appurtenant thereto from the head gates and governors to the wasteways. Charge this account also with the cost of all pumps at the station operated by hydraulic power. Note. — Utilities desiring to do so may subdivide this account as follows: a. Hydraulic power works. b. Water wheels and turbines. c. Pumps and pump equipment. d. Hydraulic power pumping station auxiliary equipment. FIXED CAPITAL ACCOUNTS 39 318. Miscellaneous Pumping Equipment. This account shall include the cost of all miscellaneous equipment; this includes horses, wagons, harness, automobiles, motorcycles, bi- cycles, furniture and fixtures (when not a permanent part of build- ings, etc.) 319. Purification System. This account shall include the cost of all apparatus and equipment used for purification of water. This includes settling basins, filter beds, mechanical filters, and all auxiliary apparatus for purifying water, together with protecting structures erected in connection therewith. 320. Transmission Mains or Canals. This account shall include the cost of all transmission mains either pipes or canals used for delivering water 'from the pumping station impounding reservoir or other source of supply to the distribution reservoirs or mains; this includes the cost of all trenching for pipes or canals, placing transmission main pipes, special castings, lead pack- ing, shut-offs, manholes, valves and the cost of filling trenches, and restoring the surface of the street to its former condition as required by the municipal authorities, canal excavation checks, drops, bridges, spillways, and miscellaneous canal structures. Note. — Transmission main, as distinguished from distribution main, is used for conveying water to the distribution storage reservoirs, tanks, or standpipe, and has no direct service connection with consumers; mains having such connections will be classed as distribution mains, or if the distance between the source of supply and the first direct service connection with consumers is considerable, the portion between the source of supply and the first direct service connection with consumers will be classed as transmission main. The cost of replacing paving disturbed in laying transmission mains shall be included in a sub-account. Note. — On an irrigation system, the transmission is the main canal from which the laterals are supplied. 321. Distribution Mains or Canals. This account shall include the cost of all distribution mains either pipes or canals in place. This includes all mains or canals used in the distribution of water to the beginning of the service connections, including the cost of trenching, placing distribution main pipe, special work and castings, lead packing, shut-offs, manholes, valves, and the filling of trenches and restoring the surface of the street to its former condition as required by the municipal authorities; also excavations, checks, spillways, bridges, waterways, main lateral hcadgates, and all structures in lateral canals. 40 FIXED CAPITAL ACCOUNTS Note. — A distribution main begins at the outlet valve of the pump, when such main has direct service connections with consumers at a relative short distance from the pumping station. If water is pumped into a storage reservoir, tank or standpipe through a main having no direct service connections with consumers, such main wiU be classed as transmission, and the distribution main will begin at the outlet valve of such storage reservoir, tank or standpipe. The cost of replacing paving disturbed in laying distribution mains shall be in- cluded in a sub-accoimt. ^ 322. Services. This account shall include the cost of corporation's property in services in or leading to the consumer's premises. This includes the cost of material in place, the cost of trenching for placing services, service pipes, service boxes, stop cocks, etc., and the cost of filHng the trenches and restoring the surface to its proper conditioni. 323. Consumers' Meters and Measuring Devices. This account shall include the cost of all meters, measuring devices, weirs, etc., used or to be used in measuring or determining water de- livered to consumers. This covers in addition to cost of meters to point of delivery on the accounting company's premises such inci- dentals as the cost of meter badges and their attachment to the meters, testing and storing new meters and the first set of meter fittings, con- nections, and shelves. Note A. — ^This account does not include the cost of the utility's meters which record the output of the station. Such cost shaU be charged to the appropriate power plant equipment accoimt. Note B. — ^The cost of setting, removing, or resetting consumer's meters shall not be dasLTged to this account. 324. Consumers' Meter and Measuring Device Installation. This account shall include the cost of the first setting of meters for determining the amount of water delivered upon the premises of con- sumers. When any meter service is. permanently discontinued this account shall be credited with an amount representing the average installation cost of a consumer's meter. Note. — Cost of removing consumers' meters and of setting other meters sub- stituted for them, shall not be charged to this account, but to account No. 751 — 5» "Removing and resetting meters and devices." 325. Hydrants. This account shall include the cost of water utility's property in all hydrants placed in the distribution system. This includes the cost of all materials in place, the cost of trenching for placing hydrants, hydrant connections, etc., and the cost of filling trenches and restor- ing the surface to its proper condition. FIXED CAPITAL ACCOUNTS 41 326. Fire Cisterns, Basins, Fountains and Troughs. This account shall include the cost of the utility's property in all fire cisterns, basins, fountains and troughs; digging and trenching in connection therewith, and restoring the pavement to its original con- dition or that required by municipal ordinances. 327. General Equipment. This account shall include the cost installed of all equipment coming under the following heads : a. Office Equipment. This account includes the cost of all office and service equipment not permanently attached to buildings, such as chairs, desks, tables, movable safes, filing cabinets, drafting room equipment, typewriters, adding machines, addressographs, portable lamps, lockers, clocks, and fans, chronograph systems, pneumatic tube systems, lunch room equipment, doctors' equipment, pulmotors, mechanical office appliances, floor covering and other like office appliances and equipment. Small articles of slight value or of short life should not be charged to this account but to the appropriate operating account. b. Shop Equipment. This includes the cost of all equipment specially provided for shops but not so permanently attached as to be chargeable to account 312, "Structures," such as furnaces, boilers, gas producers, engines, electric generators, and other power apparatus operating machinery in such shops; machine tools, hoists, shafting, belts, and all like shop equipment, also such smithing equipment in shops as is used principally for other general purposes than shoeing horses and repairing vehicles; and all specially provided foundations not expected to outlast the machinery or apparatus mounted thereon. c. Store Equipment. This includes the cost of all equipment for the receiving, shipping, handling and storage of materials and sup- plies. This covers loading and. unloading equipment (except cranes when they are of such a nature as to be charged to buildings) ; der- ricks, portable cranes, hoists, chain falls, scales, trucks, counters, shelving, wheel-barrows, and the like. d. Transportation Equipment. This includes the cost of equip- ment for general transportation purposes such as automobiles, motor trucks, trailers, tractors,- motorcycles and other vehicles, battery charging outfits, gasoline and oil storage tanks and pumps and other eqviipment; horses, harness, drays and wagons; equipment for shoeing 42 * FIXED CAPITAL ACCOUNTS horses, and equipment for harness repair shop, vehicle repair shop, and automobile repair shop, if this equipment is devoted exclusively to these purposes. e. Telephone, Telegraph and Wireless System. This includes the cost of all telephone, telegraph and wireless lines and equipment for general use in connection with water operations, including poles and fixtures used exclusively for telephone and telegraph wires ; wires, cables, telephone booths, instruments, switchboards, gongs, dynam- eters, towers, antennae, etc. f. General Laboratory Equipment. This includes the cost of all meter and other testing apparatus and laboratory equipment not elsewhere provided for. g. Miscellaneous Equipment. This includes any other miscel- laneous equipment not elsewhere provided for, such as construction equipment, including boilers, engines, motors, hoists, concrete mixers and distributing apparatus, pumps, air compressors, riveters, lathes, power saws, pipe machines, forges, steam hammers, pile-drivers, steam shovels, lighters, industrial track and cars, etc.; and any equipment of a permanent nature which can not be properly charged to any of the foregoing accounts. Note A. — ^The cost of small portable tools and implements, such as hammers, saws, wrenches, files, jacks, wire cutters, climbing irons, etc., shall not be charged to this account. Such items shall be carried in account No. 115, "Materials and Supplies," until issued for use when "Materials and Supplies" shall be credited and the appropriate work order or other account charged with the cost of tools or imple- ments so issued. The cost of maintaining tools and implements shall be charged to the expense of the department to which they are assigned. Note B. — So far as practicable separate sub-accounts sliall be maintained for the equipment of each individual water plant, office building, shop, garage, etc. 328. Miscellaneous Tangible Capital. This account shall include the cost of all tangible water capital not elsewhere provided for. 351. Engineering and Superintendence. This account shall include all expenditures for services of engineers, draftsmen, and superintendents employed on preliminary and con« stfuction work, and all expenses incident to the work when such dis- bursements can not be assigned to a particular tangible capital accounf. Note A. — When, any of the expenses designated can be charged direct to the primary account for which incurred, they shall be so charged. But no charges shall be made to permanent investment accounts for incidental services or engineering performed by the regular employees and officers of the accounting company unless they have been specially a&iignedto such work. FIXED CAPITAL ACCOUNTS 43 Note B. — Expenditures for tentative or preliminary designs or experiiiiehts shall be carried in a suspense account until it is determined whether or not tq under- take the construction. If the project is continued, such expenditures shall then be transferred to the appropriate fixed capital account; and if it is abandoned, they shall be charged to operating expense, income, or profit and loss accounts as may be appropriate. 352. Law Expenditures During Construction. This account shall include general expenditures of the following nature incurred in connection with the construction of a water plant, namely, the pay and expenses of all counsel, solicitors, and attorneys, their clerks and attendants, and expenses of their offices; printing briefs, legal forms, testimony, reports, etc.; payments to arbitrators for the settlement of disputed questions; costs of suit and payments of special fees, notarial fees, and witness fees and expenses connected with taking depositions; also all legal and court expenses. When any of the expenditures above enumerated can be charged directly to the account for which incurred, they should be so charged and not to this account. Expenditures in connection with the acquisi- tion of right of way or other land should be charged to account No. 311, "Land." Law expenditures in connection with the organization of the corporation should be charged to account No. 301, "Organiza- tions." (See "Fixed Capital Accounts — General Instructions and Definitions," Section 2, page 28). 353. Injuries and Damages During Construction. This account shall include all expenditures incident to injuries to persons or damages to property of others when caused directly in con- nection with construction of water plant and equipment. This covers fees and proportion of salaries and expenses of physicians and sur- geons; compensation insurance; nursing and hospital attendance; medical and surgical supplies, artificial limbs, railroad and carriage fares for conveying injured persons and attendants; funeral expenses (including payment to undertakers) proportion of pay and expenses of claim adjusters and their clerks, and pay and expenses of em- ployees and others called in consultation in relation to the adjustment of claims coming under this head; also witness fees, court costs and amount of final judgments. When any of the expenditures above enumerated can be charged directly to the account for which incurred, they should be so charged, and not in this account. (See "Fixed Capital Accounts — General In- structions and Definitions," Section 2, page 28). 44 FIXED CAPITAL ACCOUNTS 354. Taxes During Construction. This account shall include all taxes and assessments levied and paid or chargeable on property belonging to the accounting company while such property is under construction, and before the plant is opened for commercial operation, except special taxes assessed for street and other improvements, svich as grading, sewering, curbing, guttering, paving sidewalks, etc., which should be charged to the account to which the property benefited is charged. Whenever any of the expenditures above enumerated can be charged directly to the account for which incurred, they should be so charged and not to this account. (See "Fixed Capital Accounts — General Instructions and Definitions," Section 2, page 28). 355. Interest During Construction. When any bonds, notes, or other evidences of indebtedness are sold, or any interest bearim^ debt is incurred, for acquisition or construction of plant and equipment, the interest accruing on the part of the debt representing cost of property chargeable to fixed capital accounts (less interest, if any, allowed on unexpended balances) after such fund becomes available for use and before the receipt or the completion or coming into service of the property so acquired shall be included in this account. When such securities are sold at a premium, the proportion of such premium assignable to the time between date of the actual issuance of the securities and the time when the property acquired or the improve- ment made becomes available for service shall be credited to this account. This account shall indude also such proportion of the discount and expense on long term debt issued for construction purposes as is equit- ably assigned to the period between the date of the actual issuance of the securities and the time when the property acquired or the improve- ment made becomes available for the service for which it is intended. The proportion of discount and expense thus chargeable shall be de- termined by the ratio between the period prior to the completion or coming into service of the facilities or improvements acquired or con- structed and the period of the entire life of the securities issued. This account shall also include reasonable charges for interest dur- ing the construction period on the accounting company's own funds used tcmiporarily during such ])eriod f(jr construction purposes. When any of the exj^enditures above enumerated can be charged directly to the account for which incurred, they should be so charged, FIXED CAPITAL ACCOUNTS 45 and not to this account. (See "Fixed Capital Accounts — General Instructions and Definitions," Section 2, page 28). Note A. — If any securities issued or assumed by the accounting company are sold or exchanged by or for that company for a consideration the actual money value of which at the time of such sale or exchange is less than the value of the securities at par and the accrued interest thereon, if any, the difference between the money value of the consideration received and the par value of the securities, plus the accrued interest, shall be deemed discount, and in no case (except as pro- vided in the third paragraph of this account) shall discount be included as part of the cost of anything charged in any fixed capital or investment account pre- scribed in this classification. 356. Miscellaneous Construction Expenditures. This account shall include the salaries and expenses of the general officers of a water plant under construction, clerks in general offices engaged on construction accounts or work; rent and repair of general offices when rented, with the office expenses; insurance during con- struction (except workmen's compensation, the cost of which is charge- able to account No. 353, "Injuries and Damages during Construc- tion"); also all construction and equipment items of a s'pecial and incidental nature which can not properly be charged to any other account in this classification. To this account shall be credited discounts realized through prompt payment of bills for materials and supplies used in construction unless such discounts are credited to the particular bills. When any of the expenditures above enumerated can be charged directly to the account for which incurred, they shall be so charged, and not to this account. (See ''Fixed Capital Accounts — General In- structions and Definitions," Section 2, page 28). Note A. — This account may include a suitable proportion of store expenses when such expenses are not assignable to specific materials. Note B. — This account should not include any cost of organization or any costs or discounts connected with the issue and disposal of stocks, long term debt, or other securities and commercial paper. 357. Fixed Capital not Classified by Prescribed Accounts. Under this head shall be grouped the balances in accounts repre- senting the accounting company's investment in fixed capital prior to the time when it began to follow the classification of fixed capital accounts herein prescribed. 358. Cost of Plant and Equipment Purchased. This account shall include the cost to the accounting company of any plant purchased as a whole when such cost is not immediately assignable to primary fixed capital accounts. Where the contract of 46 FIXED CAPITAL ACCOUNTS purchase includes not only plant and equipment, but also securities and other assets, the appraised value of such securities and other assets shall be deducted from the total cash cost and the remainder of the cash cost shall be charged to this account. Where the considera- tion given for the property purchased is other than cash, such consid- eration shall be valued on a current cash basis. If the consideration includes the assumption of liabilities, such liabilities shall be included in the determination of the cost at their cash value at the time the contract is made. _ This account shall be used only as a clearing account in which ten^orarily to carry the cost of plant and equipment purchased for a lump sum until such time as a plan for distributing such cost to the primary accounts appropriate to the property is approved by the regu- latory commission. Note A. — The value at the time of purchase of any securities or other assets acquired shall be included in the accounts appropriate for such assets. The par value of any liability assumed shall be included in the appropriate Hability accounts and any necessary adjustment between the cash charjged to the property accounts and par value shall be made in the appropriate premium or discount account. Note B. — The accounting company shall be prepared to furnish the regulatory commission upon demand a full report of the contract of acquisition of each plant or portion thereof purchased and a statement showing in detail the consideration given therefor. It shall procure in connection with the acquisition of any such plant and equipment all existing records, memoranda, and accoimts in possession or control of the grantor relating to the construction and improvements of such plant and equipment, and shall preserve such records, memoranda, and accounts until authorized by the regulatory commission to destroy or otherwise dispose of them. Where the records, memoranda, and accounts are so intimately involved with other records, memoranda, and accoimts of the grantor as to make their trans- fer impracticable or inadvisable, certified copies of them shall be proctu*ed and obtained by the grantee. The verity of the copy shall be certified by the custodian of the originals. 359. Unfinished Construction. This account shall include the balances in open work orders rep- resenting additions to plant and equipment when the charges to such work orders have not been distributed to the foregoing fixed capital accounts. Note. — This account is intended to include only charges for new construction not involving any replacement. If, however, at the beginning of a job involving the replacement or retirement of any fixed capital the accoimting company shall make full credits therefor to the appropriate fixed capital accounts, the cost of in- stalling new property in substitution or replacement may be carried in the fixed capital account "Unfinished Construction." INCOME ACCOUNTS 47 STANDARD FORM OF INCOME ACCOUNT Item Account Income from Operating Properties: 1 401 Operating revenues *** $ 2 402 Operating expenses $ *** 3 403 Uncollectible bills ♦** 4 404 Taxes *** 5 Total revenue deductions *** 6 Operating income applicable to corporate and leased prop- erties *♦* $ 7 411 Rent for lease of other water plant $ *** 8 412 Joint facility rents **♦ 9 Total (items 7 and 8) $ *** 10 415 Rent accrued from lease of water plant — Cr *♦* 11 Net rent deduction (credit balance in red) *** 12 Balance of income applicable to corporate property *** $ Income from Non-operating Properties: 13 421 Miscellaneous rent revenues $ *♦* 14 422 Interest on long term debt owned *♦* 15 423 Miscellaneous interest revenues **♦ 16 424 Dividend revenues *♦* 17 425 Income from special funds **♦ 18 426 Miscellaneous non-operating revenues *** 19 Total (items 13 to 18 inclusive) $ *** 20 427 Non-operating revenue deductions *** 21 Total miscellaneous income ; . . . . *** 22 Gross corporate income (items 12 and 21). *** $ Deductions from Gross Corporate Income: 23 431 Interest on long term debt • $ ♦♦* 24 432 Miscellaneous interest deductions *** 25 433 Amortization of debt discount and expense *** 26 434 Amortization of premium on debt — Cr *** 27 435 Miscellaneous amortization chargeable to income *** 28 436 Miscellaneous deductions from gross corporate income *** 29 Total deductions from gross corporate income *** 30 Net income (loss in red) *** $ 48 INCOME ACCOUNTS Disposition of Net Income: 31 441 Sinking fund appropriations $ •** 32 442 Dividend appropriations of income • •** 33 443 Miscellaneous appropriations of net income. •*♦ 34 Total appropriations of net income •** 35 Balance transferred to surplus •** % ■ i INCOME ACCOUNTS 49 INCOME ACCOUNTS General Instructions and Definitions 1. Income Accounts Defined. The income accounts are those that show the sources and disposi- tion of income during a given period. Any change in the items shown on a balance sheet at the end of such a period as compared with a balance sheet at the beginning of the period, which is not merely a transfer from one balance sheet account to another, that is to say, any transaction which affects the profit and loss balance, must be explained by the income accounts or by the profit and loss accounts. A summary statement of income accounts arranged in convenient form to show the accounting history of a given period is usually called collectively the ** Income Account." Income accounts whose title and definition plainly indicate that they are summaries of other accounts are not required to be set up as special ledger accounts, though it may often be a matter of bookkeeping convenience to do so. 2. Form of Income Account. The form in which the income account is stated is generally of great ■ importance as affecting the conclusions that may be drawn there- from concerning the results of the enterprise. The standard form adopted for the purpose of this classification is shown on pages 47 and 48. In this form of statement there are certain terms used to indicate divisions of the income account which require special defini- tion, given in the following paragraphs. 3. Revenues. The word revenues as used herein means all amounts of money which the accounting company receives or becomes lawfully entitled to recover for services rendered, for products sold, as profits on mer- chandise sold, or as a return upon its property (or interests in prop- erty). Revenues are classified as operating revenues and non-operating revenues. 4. Operating Revenues. Operating revenues are those derived from the sale of products and merchandise, from services rendered, from return on property used by the person or corporation in its own operations, and from interest on current funds. 50 INCOME ACCOUNTS 5. Non-operating Revenues. Non-operating revenues are those derived as a return upon the property of the accounting company in the hands of others or from its interest in property in the hands of others. They may be sub- classified as rents, interest dividends, and miscellaneous. 6. Revenue Deductions. Revenue deductions include expenses, taxes, and uncollectible bills. 7. Expenses. Expenses are those outgoes (including losses due to the retirement of capital) necessary to the production and distribution of the com- modities sold, and the services rendered, and to the collection of the revenues. They are divided into operating expenses, and non-operat- ing expenses. 8. Taxes. Taxes are those annual or other payments exacted by governments for the purpose of raising funds for public uses. 9. Uncollectible Bills. When a corporation is engaged regularly in rendering to general consumers a service, or in supplying to such consumers a commodity, current accounts or claims against such consumers tor such services rendered or commodity supplied which are incapable of collection by the exercise of reasonable diligence are included under the name Uncollectible Bills. 10. Income. Income is what is left after subtracting revenue deductions from revenue. Income from operating properties is income derived from the operation, or as a compensation for the use, of properties devoted to the undertakings for which the accounting company is organized. Income from non-operating properties is income derived from properties not devoted to the undertakings for which the accounting company is organized; also trom properties not belonging to the accounting company, but in which it has an interest through ownership of stocks, bonds, or otherwise. Operating income applicable to corporate and leased properties is that income arising from any class of operations which is available to pay a return in one form or another upon capital employed in that class of operations. Income applicable to corporate INCOME ACCOUNTS 51 property is that income which is available to pay a return in one form or another on capital owned by the accounting company. It is the operating income applicable to corporate and leased properties less rentals for the use of capital not owned. Gross income is income from all sources whatsoever. It might also be called total net revenue. Gross corporate income is that income applicable to corporate prop- erties, that is, gross income less rentals for capital not owned. Net income is that amount left after all contractual or compulsory deduc- tions have been made from gross income except such sinking fund accruals as are required to be temporarily reserved. 11. Delayed Income Items. Delayed items are those representing transactions which occurred prior to the period covered by the income account, but which were not recorded currently. Such items may be charged or credited to the appropriate income account for the fiscal period in which the transactions are actually recorded. If, however, the amount of such items is relatively so large that its inclusion in the income account for a single year would result in a seriously abnormal income state- ment, and no provision has been made through accruals to reserves or suspense accounts for anticipating such transactions, the account- ing company may distribute the amount, or any part thereof, to Profit and Loss. 52 INCOME ACCOUNTS TEXT PERTAINING TO INCOME ACCOUNTS 401. Operating Revenues. Under this head shall be shown the total revenues of the accounting company from water €perations during the period covered by the in- come account. (For the primary operating revenue accounts see pages 64 to 66). 402. Operating Expenses. Under this head shall be shown the total expenses of the accounting company for water operations during the period covered by the in- come account. (For the primary operating expense accounts see pages 70 to 100). 403. Uncollectible Bills. This account shall include charges for accounts due from 'consumers or customers which, after a reasonably diligent effort to collect, have proved impracticable of collection. If accounts which have been so written off are afterwards collected, the amount received should be credited to this account. Note A. — Charges to this account may be made on the basis of the estimated average loss due to uncollectible accounts in which case the concurrent credit shall be to a special account under balance sheet account No. 257, "Miscellaneous Re- serves." To the reserve thus estabHshed shall be charged such accounts as are determined to be uncollectible. When charges for uncollectible accounts are thus made by estimate, the estimate shall be adjusted at the end of each fiscal year to conform to the experience of the accounting company as determined by analysis of its accounts receivable. Note B. — In its annual report to the regulatory commission the accounting company may be required to state the rule by which is determined what accounts are to be charged off as uncollectible. 404. Taxes. This account shall include the amount of taxes applicable to the water operations of the accounting company during the period for which the income account is stated. Separate account shall be kept of the taxes applicable to water operations and to operations other than water, as well as to non- operating revenues, if the accounting company has such other opera- tions or non-operating revenues. When taxes are levied on property used in two or more different classes of operations in such a way that the amount applicable to each class is not definitely stated, the total amount of the levy shall be apportioned by the accounting company INCOME ACCOUNTS 53 on some fair basis between the two or more classes of operations. In annual reports to the regulatory commission the basis of such appor- tionment shall be stated. The tax accounts shall be charged at regular accounting intervals and the "Tax Liability Account" (see note under account No. 231, "Taxes Accrued") concurrently credited with the period's proportion of taxes applicable to the operations covered by each account. If the exact amounts of the annual taxes are not known, they shall be esti- mated and a due share of the estimated amounts shall be charged for each accounting period. From time to time during the year as the actual tax levies become known the periodic charges shall be adjusted so as to include as nearly as possible the total amount of the taxes in the period to which they apply. Note A. — Taxes on property leased should be charged to the appropriate tax account by the party which under the terms of the lease contract actually pays such taxes. If by the provisions of the lease the party actually paying the taxes is reim- bursed by the other party to the lease, the amount of such reimbursement shall, when the taxes are paid in the first instance by the lessor, be credited to the appro- priate rent revenue account of the lessor and charged by the lessee to the appro- priate rent deduction account; when the taxes are paid in the first instance by the lessee, the amount of the reimbursement shall be credited to the appropriate rent deduction account of the lessee and charged by the lessor to the appropriate rent revenue account. Note B. — The tax accounts must not include any fees or charges sometimes called taxes, such as water taxes, drainage taxes, or fire taxes, which are payments for some specific service rendered by the government. 411. Rent for Lease of other Water Plant. This account shall include all amounts accrued against the account- ing company for rent of any water plant constituting a distinct operat- ing unit, such as a production plant or distribution system, under a lease giving exclusive possession to the lessee. 414. Amortization of Limited Term Land Rights. When the right to use land for a limited term has been acquired under a contract by which the consideration is a single immediate pay- ment instead of a series of periodic rentals during the term for which the land is transferred, this account shall include an amount sufficient to cover the portion of the life of such limited interest in land as has expired during the accounting period. The amount charged to this account shall be concurrently credited to the fixed capital account to which the cost of acquiring such an interest in land was originally charged. 54 INCOME ACCOUNTS 415. Rent Accrued from Lease of Water Plant — Cr. This account shall include all amounts accruing to the accounting company as rental for its water plant or any part thereof constituting a distinct operating unit, such as a production plant or distribution system, under a lease giving exclusive possession to the lessee. Note. — Rentals received for the use of comparatively small portions of plant or equipment, not constituting a distinct operating unit, the cost of whch is carried in v/ater fixed capital accounts, and the cost of maintaining which is ordinarily borne by the owner, shall not be credited to this account but to operating revenue accotmt No. 614, Miscellaneous Operating Revenues, even though the lessee has exclusive possession. 421. Miscellaneous Rent Revenues. This account shall include all rent revenues accruing to the account- ing company from properties not devoted to the undertakings for which it is organized. This covers such revenues as rentals from real estate not used in operations. 422. Interest on Long Term Debt Owned. This account shall include interest accruing to the accounting com- pany upon securities of other companies and national, state, or mu- nicipal governments. Interest accrued shall not be credited to this account unless its payment is reasonably assured ; in other cases credits to this account shall be based upon the interest actually collected. Note A. — No interest upon reacquired securities issued or assumed by the ac- counting company shall be credited to this account. Note B. — Interest accrued on securities of other companies held in sinking or other special funds shall not be credited to this account, but to account No. 425, "Income from Special Funds." 423. Miscellaneous Interest Revenues. This account shall include interest accrued to the accounting com- pany on loans, notes, and advances, special deposits, and all other interest bearing assets except funded securities and current funds employed primarily in the conduct of the business for which the ac- counting company is organized. Interest accrued shall not be credited to this account unless its payment is reasonably assured; in other cases credits to this account shall be based upon the interest actually collected. 424. Dividend Revenues. This account shall include revenues derived by the accounting com- pany from dividends on stocks of other companies held by it. Accruals of guaranteed dividends may be included in this account if their pay- ment is reasonably assvired. INCOME ACCOUNTS 55 Note A. — No dividends on reacquired securities issued or assumed by the ac- counting company shall be credited to this account. Note B. — Dividend revenues from securities of other companies held in sink- ing or other special funds shall not be credited to this account, but to account No. 425, "Income from Special Funds." 425. Income from Special Funds. This account shall include income (whether interest or dividends), accrued on cash, securities (not issued or assumed by the accounting company), and other assets held in sinking and other special funds. Note. — This account covers all income from investments of special funds, whether required to be retained in the fund or not. If such income is required to be retained in the fund and the fund required to be represented by a reser/e, the amount of such accretions to the fund shall be concurrently credited to the appropriate reserve accoimt and charged to account No. 441, "Sinking Fund Appropriations," or ac- count No. 443, "Miscellaneous Appropriations of Net Income," as may be appro- priate. 426. Miscellaneous Non-Operating Revenues. This account shall include all revenues accruing to the accounting company in accordance with the terms of any contract by which the company is entitled to participate in the profits resulting from the operations of others and all other non-operating revenues not provided for in any of the foregoing accounts. Note. — "Profits from the Operation of Others" does not include any dividends on stock. Revenues from dividends should be credited to account No. 424, "Divi- dend Revenues." 427. Non-Operating Revenue Deductions. This account shall include all expenditures necessary to receivmg or collecting non-operating revenues as listed under the following sub- heads. If desired, each sub-head may be made a separate ledger ac- count. The analysis of non-operating revenue deductions by such sub- heads may be required in annual reports to the regulatory commission. a. Rent Expense. This covers all expenses arising in connection with the procuring of revenues from rented properties which are prop- erly credited to account No. 421, "Miscellaneous Rent Revenues," such as the cost of negotiating contracts, advertising for tenants, fees paid conveyancers, collectors' commissions, cost of enforcing payment of rent, cost of ousting tenants, etc. This includes expense while the property is idle awaiting occupant; also cost of maintenance of prop- erty when such cost is borne by the owner. Such maintenance does not include taxes. b. Interest Expense. This covers all expenses in connection with the collection of interest upon investments. It does not include taxes on such investments. 56 INCOME ACCOUNTS c. Dividend Expense. This covers all expenses in connection with the collection of dividends on stocks of other corporations; also all expenses incurred, as in the investigation of the affairs of the corpora- tions whose stocks are held, whether for the purpose of detecting mis- management, or for the purpose of inducing the declaration of divi- dends; and all expenses connected with enforcing payments of divi- dents when declared. d. Miscellaneous Non-Operating Expense. This covers the cost of negotiating contracts by which the accounting company is entitled to share in profits from the operation of others, and all ex- penses of collecting the accounting company's proportion of such profits and all expenses of procuring the modification or dissolution of any such contract; also all other non-operating expenses (as expenses are defined under "Income Accounts — General Instructions and Defi- nitions," Section 7, Page 50) which are not provided for under the foregoing sub-heads. e. Non- Operating Taxes. This covers all taxes accruing upon non-operating property, revenue from which is .properly credited to accounts Nos. 421 to 426, inclusive, and all other taxes not upon property but assignable to non-operating revenues. f. Uncollectible Non-Operating Revenues. This covers any non-operating revenues judged by the accounting company to be un- collectible. 431. Interest on Long Term Debt. This account shall include all interest accrued on outstanding long term debt issued or assumed by the accounting company, the Hability for which is included under balance sheet account No. 211, "Long Term Debt;" also interest accrued on debenture stocks and on re- ceiver's certificates which mature more than one year after date of issue. This account does not include interest on securities held by the accounting company in its treasury, in sinking or other special funds, or pledged as collateral. Note A. — The amount charged to this account shall be concurrently credited to account No. 232, "Intecest Accrued" to which account shall be debited pay- ments made on account of interest. Note B. — If any securities issued or assumed by the accounting company are held in a sinking or other special fund, the interest on such securities shall not be charged to this account. 432. Miscellaneous Interest Deductions. This account shall include interest on all short-term obligations of INCOME ACCOUNTS 57 the accounting company such as notes or loans for terms of less than one year, unpaid taxes, consumers' deposits, or other accounts payable, etc. It shall also include interest on advances from affiliated com- panies (see balance sheet account No. 241, "Advances from Affiliated Companies"); and interest on receiver's certificates which mature in one year or less after date of issue. 433. Amortization of Debt Discount and Expense. This account shall include for any fiscal period that proportion of the unamortized discount and expense on outstanding debt which is applicable to the period. This proportion shall be determined accord- ing to a rule the uniform application of which during the interval between the issue and maturity of any debt, will completely amortize or wipe out the discount at which such debt was issued and the debt expense connected therewith. 434. Amortization of Premium on Debt — Cr. This account shall include for any fiscal period the proportion of the premium at which outstanding debt was issued which was applicable to the period. This proportion shall be determined according to a rule the uniform application of which during the interval between the issue and the maturity of any debt will completely amortize or wipe out the premium at which such debt was issued. 435. Miscellaneous Amortization Chargeable to Income. This account shall include such amounts as the accounting company may be required to charge to income in amortization of intangible book value or other items carried among its assets. 436. Miscellaneous Deductions from Gross Corporate Income. This account shall include all contractual deductions from gross cor- porate income not provided for in any of the foregoing accounts. This covers unsecured accruals of obligations arising under contracts whereby the accounting company has guaranteed the annual or more frequent periodic payment of money or performance of other obliga- tion on the part of another corporation or person and because of the default of such other corporation or person the liability of the account- ing company has become actual; losses resulting from the operations of others whenever in accordance with the terms of any contract the- accounting company is bound to contribute toward reimbursement of such losses; and income taxes levied upon bondholders and assumed by the accounting company. 58 INCOME ACCOUNTS 441. Sinking Fund Appropriations. This account shall include such amounts as are required by mort- gage provision or otherwise to be charged to income for the purpose of retiring or reducing the bonded or other obligations of the accounting company. It shall also include such accretions from the investments of funds specifically set aside for the above described purpose as are required to be added to a sinking fund reserv^e (see also account No. 425, "Income from Special Funds")- 442 Dividend Appropriations of Income. This account shall include amounts declared payable as dividends out of the income for the period for which the income account is stated on actually outstanding capital stock issued or assumed by the accounting company. This account shall be subdivided so as to show separately the divi- dends on the various classes of capital stock. If the dividend is not payable in cash, the consideration shall be described in the entry with sufficient particularity to identify it. Note. — This account shall not include charges for dividends on capital stock issued or assumed by the accounting company and owned by it whether held in the treasury, in special deposits, in sinking or other reserve funds, or pledged as collateral. 443. Miscellaneous Appropriations of Net Income. This account shall include all appropriations of net income not pro • vJded for in tlie three preceding accounts. This covers appropriations of income to special fund reserves (see account No. 425, "Income from Special Funds"). PROFIT AND LOSS ACCOUNTS 59 ♦ ♦♦ **♦ PROFIT AND LOSS ACCOUNTS Standard Form of Profit and Loss Account Dr. Or. Balance at beginning of the fiscal period Balance transferred from income account 501. Dividend appropriations of surplus 502. Appropriations to reserves 503. Miscellaneous credits to Profit and Loss 504. Miscellaneous debits to Profit and Loss *** Balance at the end of the fiscal period General Instructions and Definitions 1. Profit and Loss Account Defined. The Profit and Loss account is the collective title for a small group of accounts which form the connecting link between the income ac- count and the balance sheet. Its principal function is to explain changes in the corporate surplus or deficit during a given fiscal period as affected, first by the net result of all the transactions reported in the income account; second, by appropriations of surplus for specific purposes made at the option of the accounting company; and third, by special and unusual transactions or adjustments such as are not regularly recorded in the income account. 2. Delayed Income Items. Delayed items are those representing transactions which occurred prior to the period covered by the income account, but which were not recorded currently. Such items may be charged or credited to the appropriate income account for the fiscal period, in which the transactions are actually recorded. If, however, the amount of such items is relatively so large that its inclusion in the income account for a single year would result in a seriously abnormal income state- ment, and no provision has been made through accruals to reserves or suspense for anticipating such transactions, the accounting com- pany may distribute the amount, or any part thereof, to Profit and Loss. Note. — ^A complete anf.lysis of each of the Profit and Loss accounts hereunder may be required in annual reports to tlie regulatory commission. 60 ' PROFIT AND LOSS ACCOUNTS TEXT PERTAINING TO PROFIT AND LOSS ACCOUNTS 501. Dividend Appropriations of Surplus. This account shall include amounts declared payable as dividends out of accumulated surplus on actually outstanding capital stock issued or assumed by the accounting company. This account shall be divided so as to show separately the dividends on the various classes of capital stocks. If a dividend is not payable in cash, the consideration shall be de- scribed in the entry with sufficient particularity to identify it. Note. — ^This account shall not include charges for dividends on capital stock issued or assumed by the accounting company and owned by it, whether held in the treasury, in special deposits, in sinking or other funds, or pledged as collateral. 502. Appropriations to Reserves, This account shall include appropriations from surplus for sinking fund and other reserves and allotments of surplus or payment of definite amounts from surplus into sinking fund and other reserves under the terms of mortgages, deeds of trust, or other contracts; amounts estimated to be necessary to bring the retirement reserve up to an adequate figure; and such other appropriations of surplus to be set aside in special reserve accounts as the accounting company may have the right or duty to make. 503. Miscellaneous Credits to Profit and Loss. This account shall include all credits affecting the accounting com- pany's surplus or deficit and not elsewhere provided for, such as : Adjustments or cancellation of balance sheet accounts. Cancellation of balance sheet accounts representing unclaimed wages and vouchered accounts written off because of the accounting com- pany's inability to locate the creditor. Profit derived from the sale of miscellaneous investments. Credits resulting from adjustments required to bring to par securities issued or assumed by the accounting company and reacquired at a cost less than par value. Premiums on capital stock at the time of its reacquirement. (See "Balance Sheet Accounts— General Instructions and Definitions," Section 11, page 5). Unreleased premiums on funded debt reacquired before maturity. (See "Balance Sheet Accounts— General Instructions and Definitions," Section 12, page 7). PROFIT AND LOSS ACCOUNTS 61 Note. — If old accounts are collected which have been previously written off as uncollectible, the amount received should be credited to the account which was originally charged when the amount in question was written off, and not to "Profit and Loss." 504. Miscellaneous Debits to Profit and Loss. This account shall include all debits affecting the accounting com- pany's surplus or deficit and not elsewhere provided for, such as : Adjustments or cancellation of balance sheet accounts. Losses or deficits not properly chargeable to income and for which no reserve has been provided. Losses resulting from the sale of miscellaneous investments, and debits resulting from adjustments required to bring to par securities issued or assumed by the accounting company and reacquired at a cost exceeding the par value. Unextinguished discounts on funded debt reacquired before ma- turity. Donations to charitable institutions and organizations for promot- ing social welfare. Penalties and fines for violations of law. 62 OPERATING REVENUE ACCOUNTS OPERATING REVENUE ACCOUNTS Sales of Water: 601. Metered sales to general consumers 602. Flat rate sales to general consumers 603. Flat rate sales to irrigation customers 604. Other water utilities 605. Municipal hydrants 606. Miscellaneous municipal sales 607. Forfeited discounts Miscellaneous Revenues: 611. Commissions on others' water 612. Rent from water appliances 613. Merchandise and jobbing 614. Miscellaneous operating revenues General Instructions and Definitions 1. Operating Revenue Accounts Defined. Operating revenue accounts are those in which are recorded the amount which the accounting company receives or becomes lawfully entitled to recover for services rendered, for products or merchandise sold, as a return on property used in the company's own operations, and as interest on current funds, such as daily bank balances. 2. Basis of Credits to Operating Revenue Accounts. Credits to the various revenue accounts shall be made upon the basis of bills rendered or of gross prices. Discounts for prompt pay- ment, corrections of overcharges, over-collections theretofore credited and afterward corrected, authorized abatements and allowances and other corrections and deductions shall be charged to the revenue account to which they relate. Note A. — If a water corporation desires to credit its revenue accounts upon the basis of net price charged to consumers, it may be allowed to do so upon filing with the regulatory commission a notice of its intention. In such case, all discounts forfeited or penalties charged for delayed payments shall be credited to the revenue accoimts involved and kept in such form as to permit their being separately re- ported. Note B. — If the accoimting company sells all or part of its water through an agent imder contract by which the agent pays distribution and other expenses and turns over to the accounting company the amount collected from sales of water less his agent's commission, the accoimting company should credit its revenue accoimts with the full amount collected by its agent and charge the amount of the agent's commission to operating expense accoimt No. 761 — 4, "Collecting." The agent should credit the amount of the commission received to operating revenue account No. 611, "Commissions on Others' Water," and credit the remainder of the revenue from water sold on commission to the accoimt of the company supply- ing such water. OPERATING REVENUE ACCOUNTS 63 3. Delayed Items. Delayed items are those representing transactions which occurred prior to the period for which a revenue account is stated, but which were not recorded currently. Such items may be charged or credited to the appropriate revenue account for the fiscal period in which the transactions are actually recorded. If, however, the amount of sucl:. items is relatively so large that its inclusion in the revenue accounts for a single year would result in a seriously abnormal income state- ment and no provision has been made through accruals to reserves or suspense accounts for anticipating such transactions, the account- ing company may distribute the amount or any part thereof to Profit and Loss. 4. No Revenue from Water Used in Operations or Supplied without Direct Charge. If the accounting company desires to charge its various depart- mental accounts with water used in such departments, the value of such water shall not be credited to revenue, but to the operating ex- pense account 749, "Production Expenses Transferred — Cr." Simi- larly, if water is supplied without direct charge in accordance with the terms of a municipal or other contract calling for limited "free" service, in accordance with franchise requirements, as compensation for the services of employees, etc., and it is desired to charge the value of the water so furnished to appropriate operating expense accounts, the concurrent credit shall be, not to a revenue account, but to account 749, "Production Expenses Transferred — Cr." 64 OPERATING REVENUE ACCOUNTS TEXT PERTAINING TO OPERATING REVENUE ACCOUNTS 601. Metered Sales to General Consumers. This account shall include all revenues received for measured water supplied for residential, commercial and industrial purposes where the total receipt is dependent upon quantity of water supplied except revenues from the sal^ of water to municipal corporations and other governmental agencies at rates not available to non-municipal users. NoTE-^This account shall be subdivided to show the sales of water for resi- dential, commercial, and industrial purposes, by tariff schedules, unless otherwise authorized by the regulatory body. 602. Flat-Rate Sales to General Consumers. This account shall include all revenues received for water supplied at flat-rates per year, per night, per hour, or other time unit or on any basis independent of the quantity of water supplied except revenues from the sales of water to municipal corporations and other govern- mental agencies at rates not available to non-municipal users. Note. — ^This account shall be subdivided to show the sales of water for residential, commercial, and industrial purposes, by tariff schedules, unless otherwise authorized by the regulatory body. 603. Flat Rate Sales to Irrigation Consumers. Credit to this account all earnings from the sale of water for irriga- tion purposes at rates specially made, in any manner applied to units of consumption. 604. Other Water Utilities. This account shall include all revenues derived from water sold to other water utilities to be by them distributed through their own system to consumers. If any portion of such water is incidentally consumed by such utilities for their own benefit, it shall be included herein if not separately measured or if included under the same con- tract with that which is distributed by them to consumers. 605. Municipal Hydrants. This account shall include all revenue from the municipality for hydrant rental. Where the hydrant rental paid by the municipality includes the use of water for street sprinkling and flushing purposes and such water is not being separately metered, the total revenue collected under the contract for hydrant rental shall be credited to this account. OPERATING REVENUE ACCOUNTS 65 606. Miscellaneous Municipal Sales. This account shall include all revenues derived from water supplied to municipal corporations at special rates not available to non-munici- pal consumers; also all revenues from water supplied under special contract with federal, state, or county governments. 610. Forfeited Discounts. Where permitted by the regulatory body revenues from forfeited discounts for prompt payment should be included in this account. Note — Where required, sub-divisions of this account appertaining to the differ- ent revenue accounts, will be kept. MISCELLANEOUS REVENUES 611. Commissions on Others' Water. This account shall include all revenues accruing to the accounting company for distributing water of other companies over its distribu- tion system and selling the same, and for all other services performed in connection therewith. (See Operating Revenue Accounts — General Instructions and Definitions). 612. Rent from Water Appliances. This account shall include all revenues derived from letting of water motors, meters and other water apparatus and appliances. Where the contract of letting names only a single consideration for both the letting and the maintenance of the appliance so let, the entire revenue shall be included in this account. 613. Merchandise and Jobbing. This account shall include all revenues derived from the sale of water merchandise and water jobbing. To this account shall be charged the cost to the accounting company of such merchandise sold including transportation costs, and the cost of labor employed in merchandise and jobbing work so far as it is the practice of the ac- counting company to segregate such labor cost; also discounts and allowances made in connection with settlement of bills for merchandise and jobbing. To this account shall also be credited the profit or commission accruing to the accounting company on all piping and jobbing work performed by it as agent under contracts whereunder it undertakes to do jobbing work for another for a stipulated profit or commission. Note A. — ^The accounting company should keep this a(icount in such detail as to enable it to analyze the credits and debits in its annual report. 66 OPERATING REVENUE ACCOUNTS Note B. — ^This account does not include receipts from the sale of superseded equipment or of junk or other scrap or salvage. Such receipts should be credited to the account to which the cost of the superseded equipment is charged or (in the case of the sale of jimk, etc.) to account No. 781, "Undistributed General Expenses") or the appropriate subdivision thereof. Note C. — Loss from such operation shall show as a debit balance in the account. Note D. — If the accotmting company is engaged in merchandising or jobbing primarily for direct profit rather than for stimulating the consumption of water, such merchandising and jobbing may be organized and accounted for as a distinct department of the accoimting company co-ordinate with the water department. Note E. — ^The regulatory body may, if it so desires, require that this account be treated as a non-operating revenue accoimt. ' ^14. Miscellaneous Operating Revenues. This account shall include all revenues derived from water opera- tions not includible in any of the foregoing accounts. This covers such items as profit on the sale of materials and supplies not ordinarily purchased for resale, sale of overflow water, interest on daily bank balances, etc. OPERATING EXPENSE ACCOUNTS 67 OPERATING EXPENSE ACCOUNTS 700. SOURCE OP WATER SUPPLY EXPENSES 701. Superintendence and Labor 701-1 Superintendence 701-2 Operating Labor 702. Operating Supplies and Expenses 703. Maintenance of Source of Supply 703-1 Repairs to Water Supply Buildings and Fixtures 703-2 Repairs to Surface Source of Supply Facilities 703-3 Repairs to Ground Source of Water Supply 704. Water Purchased for Resale 710. STEAM POWER PUMPING 711. Superintendence and Labor 711-1 Superintendence 711-2 Boiler Labor 711-3 Pumping Labor 711-4 Miscellaneous Labor 712. Steam Pumping Supplies and Expenses 712-1 Fuel 712-2 Water for Steam 712-3 Lubricants- 712-4 Miscellaneous Steam Power Pumping Station Supplies and Expenses 713. Maintenance of Steam Pumping Plant 713-1 Maintenance of Steam Power Ptmiping Buildings and Fixtures 713-2 Maintenance of Boilers and Accessories 713-3 Maintenance of Steam Power Pumping Equipment 713-4 Maintenance of Miscellaneous Steam Pumping Plant Equipment 714. Steam from other Sources 715. Steam Generated — Apportionment Account 720. ELECTRIC POWER PUMPING 721. Labor and Superintendence 721-1 Superintendence 721-2 Pimiping Labor 721-3 Miscellaneous Labor 722. Electric Pumping Supplies and Expenses 722-3 Lubricants 722-4 Miscellaneous Electric Power Pumping Supplies and Expenses 723. Maintenance 723-1 Maintenance of Electric Pimiping Buildings and Fixtures 723-2 Maintenance of Electric Pumping Equipment 723-3 Maintenance of Miscellaneous Pumping Station Equipment 724. Power Purchased cr Transferred from other Departments 68 OPERATING EXPENSE ACCOUNTS 730. GAS OR OIL POWER PUMPING 731. Labor and Superintendence 731-1 Superintendence 731-2 Producer Labor 731-3 Pumping Labor 731-4 Miscellaneous Pumping Labor 732 Gas or Oil Pimiping Supplies and Expenses 732-1 Fuel 732-2 Water 732-3 Lubricants 732-4 Miscellaneous Gas or Oil Pumping Station Supplies and Expenses 733. Maintenance 733-1 Maintenance of Gas or Oil Power Pumping Buildings and Fixtures 733-2 Maintenance of Gas Producer and Auxiliary Equipment 733-3 Maintenance of Gas or Oil Power Pumping Equipment 733-4 Maintenance of Miscellaneous Gas or Oil Power Pumping Station Equipment 734. Power Gas Purchased or Transferred from other Departments H-730. HYDRAULIC POWER PUMPING H-731. Superintendence and Labor H-731-1 Superintendence H-731-2 Hydraulic Labor H-731-3 Pump Labor H-731-4 Miscellaneous Labor H-732. Hydraulic Pimiping Supplies and Expenses H-732-3. Lubricants H-732-4. Miscellaneous Pimiping Station Supplies and Expenses H-733. Maintenance H-733-1. Maintenance of Dams, Canals, and Flumes and Buildings and l^ixtures H-733-2. Maintenance of Turbines and Water Wheels H-733-3. Maintenance of Hydraulic Power Pumping Equipment H-733-4. Maintenance of Miscellaneous Hydraulic Power Pumping Equipment H-734. Hydraulic Power Purchased 740. PURIFICATION 741. Superintendence and Labor • 741-1. Superintendence 741-2. Purification Labor 742. Purification Supplies and Expenses 743. Maintenance 743-1. Maintenance of Purification Buildings and Fixtures 743-2. Maintenance of Purification Equipment 748. Duplicate Production Charges — Cr. 749. Production Expenses Transferred- — Cr. 750. TRANSMISSION AND DISTRIBUTION 761. Labor, Supplies and Expenses OPERATING EXPENSE ACCOUNTS 69 751-1. Superintendence 751-2. Storage Reservoir, Tank and Standpipe Labor 751-3. Maps and Records 751-4. Inspecting and Testing Meters and Measuring Devices 751-5. Removing and Resetting Meters and Measuring Devices 751-6. Inspecting Customers' Installations 751-7. Other Transmission and Distribution Operating Labor 752. Miscellaneous Distribution Supplies and Expenses 753. Maintenance 753-1. Maintenance of Transmission and Distribution Buildings and Fix- tures 753-2. Maintenance of Transmission Mains 753-3. Maintenance of Storage Reservoir Tanks and Standpipes 753-4. Maintenance of Distribution Mains 753-5. Maintenance of Services 753-6. Maintenance of Meters 753-7. Maintenance of Hydrants 753-8. Maintenance of Fountains and Troughs 760. COMMERCIAL AND NEW BUSINESS 761. Commercial 761-1. Superintendence 761-2. Meter Reading 761-3. Consumers' Accounts 761-4. Collecting 761-5. Contract Department 761-6. Miscellaneous Commercial Department Expenses 770. New Business Expenses 770-1. New Business — Salaries 770-2. New Business — Supplies and Expenses 780. GENERAL AND MISCELLANEOUS EXPENSES 781. Undistributed General Expenses 781- 1. General Office Salaries 781-11. Administrative Salaries 781-12. Other General Office Salaries 781- 2. Miscellaneous General Expenses 781-21. General Office Supplies and Expenses 781-22. General Stationery and Printing 781-23. Maintenance of General Structures 781-24. Law Expenses 781-25. Insurance 781-26. Store Expenses 781-27. Transportation Expenses 781-28. Other Miscellaneous General Expenses 781-29. Undistributed Adjustments 782: Retirement Expense 783. Injuries and Damages 783- 1. Claim Depaitment Expenses 783- 2. Medical Expenses 70 OPERATING EXPENSE ACCOUNTS 783- 3. Injuries to Employees 783- 4. Other Personal Injuries and Property Damage 783- 5. Miscellaneous Accident Expenses 784. Regulatory Commission Expenses 785. Relief and Welfare Work 785- 1. Employees' Welfare Department 785- 2. Pensions 786. Franchise Requirements 787. Amortization of Franchises 788. Water Expenses Transferred — Cr. 789. Joint Operating Expenses — Cr. 790. Duplicate Miscellaneous Charges — Cr. OPERATINQ EXPENSE ACCOUNTS General Instructions and Definitions 1. Operating Expenses Defined. The term operating expenses as used in this classification means such expenses as are necessary to the maintenance of the corporate organization, the rendering of service required or authorized by law, the sale of merchandise, the production (including herein capital con- sumed), and disposition of commodities produced, and the collection of the revenues therefor. Expenses directly incident to the collection of non-operating revenues and the maintenance of property from which non-operating revenues are derived are excluded from operat- ing expenses. 2. Definitions of Certain Terms Used in Connection with Ex- pense Accounts. Except where some other meaning is clearly specified in the defini- tions of the accounts, the following words, wherever used hereunder have the meanings below stated. Cost means cash or money cost, and not price based on a term of credit. Labor means human services of whatever character. Cost of labor includes wages, salaries, and fees paid to persons for their services. Cost of materials and supplies includes all specifically assignable transportation charges incurred in obtaining the delivery of such ma- terials and supplies upon the premises of the purchaser, such as pack- ing, drayage, freight, insurance, customs duties, commissions, etc., and cost of any special tests made thereon prior to their acceptance; and in case the accounting person or corporation desires, it may in- clude a suitable proportion of store expenses (when the materials and OPERATING EXPENSE ACCOUNTS Tl nipplies are passed through stores) and the cost of further transporta- tion to the place of consumption, and a suitable proportion of the ex- penses of the purchasing department, in which case a corresponding credit shall be made to the suitable expense account as hereinafter provided. Cost of repairs, when made by the accounting person or corporation, includes cost of labor expended and material consumed, and incidental expenses such as carfare, permits, inspection, etc., less salvage, if any. Current maintenance includes such expenses necessary to maintain the tangible property in a state of operating efficiency as do not result in a substantial change of identity in any particular unit of property. It includes the cost of minor replacements of small parts commonly called the cost of repairs, but it does not include the cost of replacing individual structures, facilities or units of equipment or important sections of continuous structures such as water main. Current main- tenance costs are chargeable to operating expenses and wherever the word "maintenance" is used in the definition of an operating expense account curi'ent maintenance is to be understood. The cost of replac- ing the larger units is chargeable to fixed capital from which the cost of the property replaced must be deducted. Note. — It is not required that the transportation element of cost shall be assigned with a greater degree of accuracy than to the nearest cent per imit of material or supply. Where a single transportation item covers a multitude of things the portion of the expense not assigned to specific things should be charged to the same account that store expenses are charged to. 3. Unaudited Bills and Vouchers. When bills covering operating expense items are not received in time for audit, and when vouchers are not made in time for inclusion in the operating accounts for the month in which the transactions occur, the items may be estimated and in such form charged or credited to operating accounts, and credited or charged to operating reserves, the necessary adjustments being made later when the bills and vouchers are taken into the accounts. »,^ 4. Delayed Items. Delayed items are those representing transactions which occurred prior to the period covered by the income account, but which were- not recorded currently. Such items may be charged or credited to the appropriate expense account for the fiscal period in which the transactions are actually recorded. If, however, the amount of suqh items is relatively so large that its inclusion in the expense accounts for a single year would result in a seriously abnormal income state- ment, and no provision has been made through accruals to reserves or 72 OPERATING EXPENSE ACCOUNTS suspense accounts for anticipating such transactions, the accounting company may distribute the amount or any part thereof to Profit and Loss. 5. Salvage and Insurance. Salvage and insurance received in connection with maintenance jobs not involving deductions from fixed capital shall be credited to the appropriate maintenance account. (See "Fixed Capital Accounts — General Instructions and Definitions," Section 6, Page 30). If the insurance for damaged property is relatively large, and is received before the repairs have been completed, a disproportionate credit to operating expenses may be avoided by crediting the amount of the insurance recovered to a suspense account to which the cost of the repair shall then be charged to the extent that it is covered by insurance. Insurance recovered in connection with personal injuries shall be credited to account No. 783, "Injuries and Damages" or the appro- priate sub-division thereof. Dividends distributed by mutual insur- ance companies shall be credited to the account to which the insurance premium is charged. Recoveries under fidelity bonds shall be credited to the account charged with the loss. 6. Retirement Expense. An account is provided in which to include charges made in order that corporations may, through the creation of adequate reserves, equalize from year to year, as nearly as is practicable, the losses in- cident to important retirements of buildings, dams, etc., or of large sections of continuous structures like water main, or of definitely identifiable units of plant or equipment. "Losses" used above means in each case the excess of the original cost to the accounting company of the property retired plus the cost of dismantling or removing, over its salvage value at the time of its retirement. The cost of replacing minor parts, which is not recorded by any entries in the fixed capital accounts, and which is commonly called the cost of "repairs" or ** maintenance" as distinguished from the cost of "replacements" of laige imits, need not be provided for through a retirement reserve. The amounts charged to retirement expense should be upon a basis determined to be equitable according to the accounting company's experience and best sources of information, and should in all cases be sufficient to provide during a period of years a reserve against which can be written off all losses sustained upon the retirement of property for any cause whatsoever. A statement of the rule used by the accounting company for com- puting these charges shall be included in its annual report to the regulatory commission. If the accounting company so desires, it may OPERATING EXPENSE ACCOUNTS 73 file with the commission a verified copy of its rule for determining annual retirement charges, and refer to such rule in its annual report in place of repeating it in full each year. 7. Classification of Corporations by Revenue. For the purpose of this classification of accounts water corporations are divided into four classes as follows : Class A. — Corporations having average annual operating revenues exceeding $250,000. Class B. — Corporations having average annual operating revenues exceeding $50,000, but not over $250,000. Class C. — Corporations having average annual operating revenues exceeding $10,000, but not over $50,000. Class D. — Corporations having average annual operating revenues of $10,000 or less. In order that frequent changes may be avoided, the class to which a water corporation belongs may be determined by the average of its annual revenues for the three years next preceding the effective date of this accounting classification. If at the close of any fiscal year following, the average of its annual revenues for the three next pre- ceding years is greater than the maximum for the class in which the corporation has been grouped, it shall automatically be grouped with the higher class in which it falls by virtue of such increased annual revenues. Corporations engaged in new enterprises the annual revenue from which is not known in advance shall be classed in accordance with a reasonable estimate of their prospective revenue. The classification of operating expenses which follows is adapted to corporations in all four classes. The primary accounts are expanded and subdivided as will be indicated to meet the needs of each class. No separate definitions are stated for accounts which are thus divided, but the content of such accounts is to be found in the definitions of the final subdivisions. When such subdivisions are kept as primary ledger accounts it will not be necessary to keep also the account which has been subdivided. Each corporation will be expected to keep, so far as they are appli- cable to its business, at least the accounts provided for the class to which it belongs. Any corporation may, however, keep any or all of the accounts of the more extended schemes provided for those corpora- tions which are in higher revenue classes. If desired further refine- ments or extensions of the scheme of accounts to meet the needs of individual corporations may be made by subdividing the accounts herein established, provided that the integrity of the required accounts is not impaired. 74 OPERATING EXPENSE ACCOUNTS TEXT PERTAINING TO OPERATING EXPENSE ACCOUNTS 700. Source of Water Supply Expenses. 701. Superintendence and Labor. 701-1. Superintendence. This account shall include the salaries and expenses of the superin- tendent and assistants, chemists, draftsmen, foremen, and all clerical help upon records and accounts pertaining to the source of water supply, whether such service is performed at. the general office, or at the plants. 701-2. Operating Labor. This account shall include the wages of patrolmen, inspectors, caretakers, and other employees engaged in operating head gates, patrolling of drainage area, reservoirs, dams, and other facilities appurtenant to the water supply. Do not include maintenance labor or labor pumping water. 702. Operating Supplies and Expenses. This account shall include the cost of supplies consumed and ex- penses incurred in the operation of the source of water supply. Do not include maintenance supplies or expenses. 703. Maintenance of Source of Supply. 703-1. Repairs to Water Supply Buildings and Fixtures. This account shall include the cost of labor and material used in repairs to buildings, fixtures, and grounds used in connection with the source of water supply, such as dwellings occupied by patrolmen, in- spectors, caretakers > and other employees engaged in the operation of the source of water supply, pump houses, well houses, and other buildings. Note. — If source of water supply pumping is done in the pumping station where water is pumped into t^e distribution system, this account may be charged with an equitable portion of the cost of maintaining such station buildings, fixtures and jgrounds. 703-2. Repairs to Surface Source of Supply Facilities. This account shall include the cost of labor and material used in repairs to impounding reservoirs, dams, artificial lakes and ponds, canals, conduits, embankments, channels, waste weirs, gates, valves, gate structures, pipe lines, flumes, aqueducts, supporting' trestles, OPERATING EJCPENSE ACCOUNTS 75 viaducts, and appurtenant equipment when used for collection or diversion of water from a surface source of supply. 703-3. Repairs to Ground Source of Water Supply. This account shall include the cost of labor and material used in repairs to large open wells, shallow tubular wells, deep wells, artesian wells, springs, and repairs to infiltration galleries. Include also re- pairs to collecting reservoirs, intake wells, and conduits and appurte- nant equipment when used for the collection of water from a ground source of water supply. 704. Water Purchased for Resale. This account shall include the cost at the point of delivery to the utility of all water purchased for resale. Note. — Details of this account shall be kept so as to show from whom purchased, quantity purchased, and the rate and amount paid therefor. 710. Steam Power Pumping. Note. — The accounts for pumping are divided according to the source of power used, into three general groups, namely: steam power pumping, electric power pumping, and gas, oil or hydraulic power pumping. The steam power pumping group includes all accoimts for steam power pumping operations from the source of water supply to and including the distribution system. In like manner the elec- tric power pumping group includes all pumping operations by electric power, and the gas or oil, or hydraulic power pumping includes all pumping operations by gas, oil or hydraulic power. Whenever two or more distinct operations are involved, and the cost of each can be ascertained, sub-accounts should be raised under the various primary accounts of the appropriate group, to show separately the portions thereof relating to source of water supply pumping, purification pumping and distribution pumping. 711. Superintendence and Labor. 711-1. Superintendence. This account shall include the cost of superintendence of steam power pumping. Charge to this account the salaries of the superin- tendent and assistants, draftsmen, foremen, and all clerical help upon records and accounts pertaining to steam power pumping. Include also that portion of the salaries of the engineering staff chargeable to steam power pumping. No material should be charged to this ac- count. Note. — If, in addition to steam power pumping, water is pumped at the same station by electric, oil or gas power the cost of superintendence at such station should be apportioned and the appropriate accouilt under each method used should be charged accordingly. 711-2. Boiler Labor. This account shall include the cost of all labor incident to steam generation » Charge to this account the wages of boiler house fore- 76 OPERATING EXPENSE ACCOUNTS men, firemen, helpers, shovelers, weighers, feed pump men, stokers, boiler room watchmen and janitors, also labor employed in blowing flues, cleaning boilers and handling coal and ashes. Exclude mainte- nance labor. • 711-3. Pumping Labor. This account shall include the cost of all labor engaged in operating steam power pumping equipment. Charge to this account the salaries and wages of chief engineers and assistants, engineers, oilers, wipers, machinists and all other employees whose duties concern the operation of such steam power pumping equipment. Exclude maintenance labor. Note — If, in addition to steam power pumping, water is pumped at the same station by electric, oil, or gas power, the labor cost of operating the pumps at such station should be apportioned and the appropriate accoimt under each method used should be charged accordingly. 711-4. Miscellaneous Labor. This account shall include the salaries and wages of the employees in and about the steam power pumping plant not assignable to any of the foregoing accounts. Exclude maintenance labor. Note. — ^When another department within the company makes demand upon the same boiler plant, sub-accounts should be raised to show separately. (a) Labor for production of steam. (b) Labor for piunping water. Note. — If, in addition to steam power pumping, water is pumped by electric, oil, or gas power, the cost of miscellaneous labor at such station should be appor- tioned and the appropriate accoimt imder each method used should be charged accordingly. 712. Steam Pumping Supplies and Expenses. 712-1. Fuel. This account shall include the cost of all fuel for producing steam. Charges shall be based on the cost delivered at plant for storage and include the invoice cost of fuel, freight, switching, demurrage, cost of unloading and cartage to point of delivery at plant, and cost of trans- ferring fuel from one storage plant to another. Appropriate debits or credits shall be inade to this account to adjust the' book figures for fuel in stock to the actual amount on hand when discrepancies are disclosed by inventory. Note. — Charges to this account should be concurrently credited to fuel stock account under "Material and Supplies." 712-2. Water for Steam. This account shall include the cost of water for boilers, condensers, and for cooling engines. Such cost, when water is purchased, should OPERATING EXPENSE ACCOUNTS 77 be based on the contract price or meter rate. Include also the cost of boiler compounds. If special pumping equipment is required in sup- plying water for such purposes, this account should be charged with the cost of operation and maintenance of the equipment involved. When the water for such purposes is taken from the supply pumped for general distribution, the utility may, at its option, charge to this account the pumpage cost of the water so i;sed, crediting such charges to account No. 748, ''Duplicate Production Chargfes — Cr." 712-3. Lubricants. This account shall include the cost of lubricants for all machinery and apparatus in the steam power pumping plant, including engines, and pumping equipment driven by steam power. Oil used in pumping water for steam should be charged to the account "Water for Steam." Charge also to this account the cost of recovering oil from waste and the cost of filtering and handling. 712-4. Miscellaneous Steam Power Pumping Station Supplies and £ penses. This account shall include the cost of all operating supplies used, and expenses incurred, in pumping water by steam power, not charge- able to any of the preceding accounts. This will include power plant records, boiler inspection, water for fire protection and general use, light and heat at pumping station, telephone service, gaskets, fire tools, gauge glasses and washers, waste, packing, wipers, hand tools, ice, janitors supplies, and items of similar nature. Note. — ^When another department within the company makes demand upon the same boiler plant, sub-accounts should be raised to show separately. (a) Supplies and expenses for production of steam. (b) Supplies and expenses for pimiping water. Note — If, in addition to steam power pumping, water is pumped at the same station by electric, oil or gas power, the cost of pumping station supplies and expenses at such station should be apportioned and the appropriate account under each method used should be charged accordingly. 713. Maintenance of Steam Pumping Plant. 713-1. Maintenance of Steam Power Pumping Buildings and Fixtures. This account shall include the cost of repairing and maintaining steam power pumping station buildings, fixtures, and grounds. This will include repairs to structures and all fixtures permanently attached thereto, such as water pipes and fixtures; pipes and fixtures for warm- ing and ventilation ; gas pipes and fixtures for lighting purposes, elec- 78 OPERATING EXPENSE ACCOUNTS trie wiring and fixtures for lighting, signalling, and elevator purposes, and the engines and motors operating them; furnaces, boilers, etc., used for producing steam for such engines and for heating; electric generators especially provided for producing current for lighting such buildings ; all brick and concrete smokestacks used for heating or power plant purposes; fences, walls, sidewalks, and pavements, adja- cent to such buildings. Repairs to foundations and settings prepared especially for certain units of equipment and designed to last no longer than such units shall be charged to the account to which is charged the maintenance of such equipment. 713-2. Maintenance of Boilers and Accessories. This account shall include the cost of repairing and maintaining metal smokestacks, furnaces, boilers, feed pumps, economizers, feed water heaters, hot wells, cold wells, superheaters, flues to smokestack entrance, boiler water purification equipment, stokers, boiler room cranes, coal and ash handling equipment, coal crushers, and auxiliary equipment. Also the specially provided foundations and settings for such equipment. It will also include valves, traps, injectors, expan- sion joints, pipe supports, gauges, gauge boards, and similar equip- ment. Repairs to conduits for station wiring, pipes for heating build- ings, and pipes supplying water for general station purposes, should be charged to account No. 713-1, "Maintenance of Steam Power Pumping Buildings and Fixtures." 713-3. Maintenance of Steam Power Pumping Equipment. This account shall include the cost of repairing all pumping equip- ment driven by steam power. This includes steam pum.ps and their prime movers whether combined into one machine, or are separate units of equipment. Include also repairs to appurtenant equipment, such as condensers, lubricating systems, belting, etc. 713-4. Maintenance of Miscellaneous Steam Pumping Plant Equipment. This account shall include the cost of repairing and maintaining all steam power pumping station plant equipment, not includible in any of the preceding accounts, such as cranes, hoists, machine tools, safety appliances, and other miscellaneous steam power pumping station equipment. Note. — If, in addition to steam power pumping, water is pumped by electric, oil or gas power, the cost of maintenance of miscellaneous pumping station equipment should be apportioned and the appropriate account under each method used should be charged accordingly, in so far as the use of such equipment is common to the different methods of pumping involved. OPERATING EXPENSE ACCOTTNTS 79 714. Steam from other Sources. This account shall include the cost of all steam purchased or jointly- produced steam consumed in pumping water. Note. — In case such steam is jointly produced, i. e., produced by another person or corporation under a joint arrangement for sharing the cost of production in pro- portion to the benefits to the several participants, the charge to this account may include a proportion to cover depreciation of plant employed, as well as a proportion of direct expense, but it must not include any allowance or return upon the cost or value of the plant. The amount representing such allowance if any, will be charged to account No. 421, "Miscellaneous Rent Revenues." 715. Steam Generated — Apportionment Account. This account shall be raised only by companies operating in con- nection with the water utility, other utilities (see third paragraph) or departments which make demand upon the same boiler plant. Where a demand of this character is made upon a boiler plant; the expenses incident to generating steam shall be transferred from the foregoing accounts to this account at the close of the month. The total cost of generating steam as then shown shall be apportioned to the utilities or departments using the steam and this account credited with such amounts as charged to other utilities. If the water utility is operated in connection with an electric utility and the steam supplied is obtained from a common boiler plant, the cost of generating steam will be kept according to the electric group of accounts, the total cost thereof apportioned, and the amount chargeable to the water utility shall be included in this account. The details of the cost of generating steam, and the amounts appor- tioned to the different utilities or departments using the steam, and the basis used for the apportionment will be called for in the annual report to the Commission. . 720. Electric Power Pumping. Note. — See note under Account No. 710, "Steam Power Pumping." 721. Superintendence and Labor. 721-1. Superintendence. This account shall include the cost of superintendence of electric power pumping. Charge to this account the salaries of the superinten- dent and assistants, draftsmen, foremen, and all clerical help upon records and accounts pertaining to electric power pumping. Include also that portion of the salaries of the engineering staff chargeable to electric power pumping . No material should be charged to this account . Note. — If, in addition to electric power pumping, water is pumped at the same station by steam, oil or gas power, the cost of superintendence at such station should be apportioned and the appropriate account under each method used should be charged accordingly. 80 OPERATING EXPENSE ACCOUNTS 721-2. Pumping Labor. This account shall include the cost of all labor engaged in operating electric power pumping equipment. Charge to this account the salaries and wages of motor attendants, assistants, pumpmen, oilers, wipers, machinist and all other employees whose duties concern the operation of such electric power pumping equipment. Exclude main- tenance labor. Note. — If, in addition to electric power pumping, water is pumped at the same station by steam, oil or gas power, the labor cost of operating pumps at such station should be apportioned and the appropriate accoiint under each method used should be charged accordingly. 721-3. Miscellaneous Labor. This account shall include the salaries and wages of all employees in and about the electric power pumping plant not assignable to any of the foregoing accounts. Exclude maintenance labor. Note. — If, in addition to electric power pimiping, water is pumped at the same station by steam, oil or gas power, the cost of miscellaneous labor at such station should be apportioned and the appropriate account \mder each method used should be charged accordingly. 722. Electric Pumping Supplies and Expenses. 722-3. Lubricants. This account shall include the cost of lubricants for all machinery and apparatus in the electric power pumping plant, including motors and pumping equipment driven by electric power. Charge also to this account the cost of recovering oil from waste and the cost of filtering and handling. 722-4. Miscellaneous Electric Power Pumping Supplies and Expenses. This account shall include the cost of all operating supplies used and expenses incurred in pumping water by electric power, not charge- able to any of the preceding accounts. This will include power plants records, water for fire protection and general use, light and heat at pumping station, telephone service, waste, packing, wipers, hand tools, and ice, janitors supplies and items of similar nature. Note. — If, in addition to electric power pumping, water is pumped at the same station by steam, oil or gas power, the cost of pumping station supplies and expenses at such station should be apportioned and the appropriate account under each method used should be charged accordingly. 723. Maintenance. 723- L Maintenance of Electric Pumping Buildings and Fix- tures. This account shall include the cost of repairing and maintaining 1 OPERATING EXPENSE ACCOUNTS 81 electric power pumping auicion buildings, fixtures and grounds. This will include repairs to structures and all fixtures permanently attached thereto, such as water pipes and fixtures; pipes and fixtures for warm- ing and ventilating; gas pipes and fixtures for lighting purposes; elec- tric wiring and fixtures for lighting, signalling and elevator purposes, and the engines and motors operating them; furnaces, boilers, etc., used for producing steam for such engines and heating ; electric gener- ators especially provided for producing current for lighting such build- ings; all brick, concrete, iron or steel smokestacks used for heating or power plant purposes; fences, walls, sidewalks and pavements, adja- cent to such buildings. Repairs to foundations and settings prepared especially for certain units of equipment and designed to last no longer than such units shall be charged to the account to which is charged the maintenance of such equipment. Note. — If, in addition to electric power pumping, water is pumped at the same station by steam, oil or gas power, the cost of maintenance of electric power pump- ing buildings and fixtures at such stations should be apportioned and the appro- priate account under such method used should be charged accordingly. 723-2. Maintenance of Electric Pumping Equipment. This account shall include the cost of repairing all pumping equip- ment driven by electric power. This will include pumps, motors, switchboards, air and circulating pumps, lubricating systems, motor generator sets and other accessory equipment. 723-3. Maintenance of Miscellaneous Pumping Station Equipi- ment. This accoimt shall include the cost of repairing and maintaining all electric power pumping station equipment not includible in any of the preceding accounts, such as cranes, hoists, machine tools, safety appliances and other miscellaneous pumping station equipment. Note. — If, in addition to electric pumping, water is pumped at the same station by steam, oil or gas power, the cost of maintenance of miscellaneous pumping station equipment at such station should be apportioned and the appropriate account imder each method used should be charged accordingly in so far as the use of such equip- ment is common to the different methods of pumping involved. 724. Power Purchased or Transferred from other Departments This account shall include the cost, at the point of delivery to the utility, of all electric power purchased. This account shall also in- clude the cost to the utility of all electric power produced by' another company under any joint arrangement for the sharing of expenses, upon the basis of the relative amounts of benefits to the several par- ticipants; such cost may include a proportion to cover depreciation on the property involved, as well as a proportion of direct expense 82 OPERATING EXPENSE ACCOUNTS but it must not include any allowance or return upon the cost or value of the property. When electric power is transferred from another department, such as electric utility, this account shall include an equitable proportion of operating expenses incurred by the department of the utility pro- ducing the electric power consumed by the water department for pumping. This charge should not include any allowance or return upon the cost or value of the property employed, nor should the charge include any portion of general and miscellaneous expenses. Only expenses directly related to the production of electric energy may be included in this account. 730. Gas or Oil Power Pumping. See note under 710, "Steam Power Pumping." 731. Superintendence and Labor. 731-1. Superintendence. This account shall include the cost of superintendence of gas or oil power pumping. Charge to this account the salaries of the superin- tendent and assistants, draftsmen, foremen and all clerical help upon records and accounts pertaining to gas or oil power pumping. Include also that portion of the salaries of the engineering staff chargeable to gas or oil power pumping. No material should be charged to this account. Note. — If, in addition to gas or oil power pumping, water is piimped at the same station by steam or electric power, the cost of local superintendence at such station should be apportioned and the appropriate account under each method used should be charged accordingly. 731-2. Producer Labor. This account shall include all operating labor engaged in the pro- duction of power gas, including the handling of fuel from storage to the gas generator building, and handling of residuals from the gener- ator building to the point where residuals are placed when removed from the building. Exclude maintenance labor. 731-3. Pumping Labor. This account shall include the cost of all labor engaged in operating gas or oil power pumping equipment. Charge to this account salaries and wages of chief engineers and assistant engineers, oilers, wipers, machinists. and all other employees engaged in the operation of the gas or oil power pumping equipment. Exclude maintenance labor. OPERATING EXPENSE ACCOUNTS 83 Note. — If, in addition to gas or oil power pumping, water is pumped at the same station by steam or electric power, the labor cost of operating pumps at such stations should be apportioned and the appropriate account under each method used should be charged accordingly. 731-4. Miscellaneous Pumping Labor. This account shall include the salaries and wages of all employees in and about the gas or oil power pumping plant not assignable to any of the foregoing accounts. Exclude maintenance labor. Note. — If, in addition to gas or oil power pumping, water is pumped at the same station by steam or electric power, the cost of miscellaneous labor at such station should be apportioned and the appropriate account imder each method used should be charged accordingly. 732. Gas or Oil Pumping Supplies and Expenses. 732-1. Fuel. This account shall include the cost of all fuel used for producing gas for gas engines and also fuel for oil or gasoline engines. Charges shall be based on the cost delivered at plant for storage, and include the invoice cost of fuel, freight, switching, demurrage, cost of unloading and cartage to point of delivery at plant, and the cost of transferring fuel from one storage point to another. Appropriate debits or credits shall be made to this account to adjust the book figures for fuel in stock to the actual amount on hand when discrepancies are disclosed by inventory. Note. — Charges to this account should be concurrently credited to fuel stock account under "Materials and Supplies." 732-2. Water. This account shall include the cost of water used in the production of gas for power purposes, and water used for cooling gas or oil prime movers. . If water is purchased, charge at the contract price or the meter rates. If special pumping equipment is required in supplying water for such purposes, this account shall be charged with the cost of operation and maintenance of the equipment involved. When the water for such purposes is taken from the supply pumped for general distribution, the utility may, at its option, charge to this account the pumpage cost of the water so used, crediting such charges to account No. 749, Production Expenses Transferred— Cr. 732-3. Lubricants. This account shall include the cost of lubricants for all machinery and apparatus in the gas or oil power pumping plant, including gas producer machinery, engines, pumps, and auxiliary equipment. 84 OPERATING EXPENSE ACCOUNTS Oil used in pumping water for power gas purposes should be charged to the account "Water." Charge also to this account the cost of recovering oil from waste and the cost of filtering and handling. 732-4. Miscellaneous Gas or Oil Pumping Station Supplies and Expenses. This account shall include the cost of all operating supplies used and expenses incurred in pumping water by gas or oil power, not chargeable to any of the preceding accounts. This will include power plant records, boiler inspection, water for fire protection and general use, light and heat at pumping station, telephone service, gaskets, fire tools, gauge glasses and washers, waste, packing, wipers, hand tools, ice, janitors supplies and items of similar nature. Note. — If, in addition to gas or oil power pumping, water is pumped at the same station by steam or electric power, the cost of pumping station supplies and expenses at such station should be apportioned and the appropriate accoimt under each method used should be charged accordingly. 733. Maintenance. 733-1. Maintenance of Gas or Oil Power Pumping Buildings and Fixtures. This account shall include the cost of repairing and maintaining gas or oil power pumping station building and fixtures. This will in- clude repairs to structures and all fixtures permanently attached thereto, such as water pipes and fixtures ; pipes and fixtures for warm- ing and ventilating; gas pipes and fixtures for lighting purposes; elec- tric wiring and fixtures for lighting, signaling, and elevator purposes, and the engines and motors operating them, furnaces, boilers, etc., used for producing steam for such engines and for heating; electric generators especially provided for producing current for lighting such buildings; all brick, concrete, iron or steel smokestacks used for heat- ing or power plant purposes; fences, walls, sidewalks and pavements, adjacent to such buildings. Repairs to foundations and settings pre- pared especially for certain units of equipment and designed to last no longer than such units shall be charged to the account to which is charged the maintenance of such equipment. Note. — If, in addition to gas or oil power pumping, water is pumped at the same station by steam or electric power, the cost of maintenance of buildings and fixtures at such station should be apportioned and the appropriate account for each method of operating should be charged accordingly. . 733-2. Maintenance of Gas Producer and Auxiliary Equip- ment. This account shall include the cost of repairing and maintaining gas OPERATING EXPENSE ACCOUNTS 85 producers and accessories devoted to the production of gas for operat- ing gas engines. This will include producers, economizers, regener- ators, vaporizers, steam injectors, scrubbers, exhausters, seals, espe- cially provided boilers and pumps, flues, blower engines and accessory- apparatus. 733-3. Maintenance of Gas or Oil Power Pumping Equipment. This account shall include the cost of repairing all pumping equip- ment driven by gas or oil power. This will include pumps, engines, lubricating systems, igniting and starting apparatus and other acces- sory equipment. 733-4. Maintenance of Miscellaneous Gas or Oil Power Pump- ing Station Equipment. This account shall include the cost of repairing and maintaining all gas or oil power pumping station equipment, not includible in any of the preceding accounts such as cranes, hoists, machine tools, safety appliances and other miscellaneous gas or oil power pumping station equipment. Note. — If, in addition to gas or oil power pumping, water is pumped at the sam e station by steam or electric power, the cost of maintenance of miscellaneous pump- ing station equipment should be apportioned and the appropriate account under each method should be charged accordingly, in so far as the use of such equipment is common to the different methods of pumping involved. 734. Power Gas Purchased or Transferred from other Depart- ments. This account shall include the cost, at the point of delivery to the utility, of all power gas purchased. This account shall also include the cost to the utility of all power gas produced by another company, under any joint arrangement for the sharing of expense, upon the basis of the relative amounts of benefits to the several participants; such cost may include a proportion to cover depreciation on the prop- erty employed, as well as a proportion of direct expense, but it must not include any allowance or return upon the cost or value of the property. When power gas is transferred from another department, this account shall include an equitable proportion of operating expenses incurred by the department of the utility producing the power gas used by the water utility for pumping water. This charge should not include any allowance or return upon the cost or value of the property employed nor should the charge include any portion of general or miscellaneous expenses. Only expenses directly related to the produc- tion of gas may be included in this account. 86 OPERATING EXPENSE ACCOUNTS H-730. Hydraulic Power Pumping. See note under account 710, "Steam Power Pumping, ft H-731. Superintendence and Labor. H-731-1. Superintendence. This account shall include the total cost of superintendence of the hydraulic power pumping plant. This account includes the salaries of the superintendent of pumping plant, foremen, draftsmen, chemists and all clerical help upon records and accounts pertaining to hydraulic power pumping, whether such services are performed at the general office or at the plant. Cfiarge also with the proportion of salaries of engineering staff assignable to the hydraulic power pumping plant. Note. — If water is also pumped by other than hydraulic power at the same station, . the total cost of superintendence will be apportioned over the corresponding super- intendence accounts in the respective groups of pumping accounts. H-731-2. Hydraulic Labor. This account shall include the salaries and wages of all employes operating the hydraulic works, including hydraulic foremen, gatemen, wheelmen, canal men, patroUers of reservoirs, dams, and channels and all other employes whose duties concern the operation of hydraulic power equipment. Exclude maintenance labor. H-731-3. Pump Labor. This account shall include the cost of all labor engaged in operating the hydraulic power pumping equipment. This includes such labor as that of foremen and assistants, oilers, wipers and all other employes whose duties concern the operation of such hydraulic power pumps. Exclude all maintenance labor. Note. — If water is also pumped at the station by other than hydraulic power, pump labor jointly incurred will be apportioned over the corresponding accounts in the respective groups of pumping accounts. H-731 -4. Miscellaneous Labor. This account shall include the salaries and wages of all employes in and about the hydraulic power pumping plant engaged in operating such plant, including watchmen, labor cleaning btiildings and yards, janitors, messengers and general labor not chargeable to any of the foregoing hydraulic power pumping operating labor accounts. Ex- clude maintenance labor. Note. — If water is also pumped by other than hydraulic power, labor charges jointly incurred will be apportioned accordingly over the appropriate classes of pumping accounts. OPERATING EXPENSE ACCOUNTS 87 H-732. Hydraulic Pumping Supplies and Expenses. H-732-3. Lubricants. Charge to this account the cost of all lubricants for hydraulic power pumping equipment and all machinery connected therewith in the hydraulic power pumping plant. This includes machine oil, pump oil, graphite and other lubricants, but does not include wagon grease or oils for lanterns. Note. — If water is also ptimped at the plant by other than hydraulic power, the total cost of lubricants will be apportioned over the corresponding accounts in the respective groups of pumping accounts. H-732-4. Miscellaneous Pumping Station Supplies and Expenses. This account shall include all the operating supplies and expenses incurred in the pumping of water by hydraulic power not chargeable to any of the preceding accounts. This includes such items as waste packing, wipers, hand tools, gas or electricity for lighting, heating and cleaning pumping station, laboratory apparatus and supplies, ice, water for general use and fire protection, and all other items of similar nature. Charge this account also with stationery, telephones, etc., if it is desired to distribute such expenses. Note. — ^Where water is also pumped at the station by other than hydraulic power, the total cost of miscellaneous pumping station supplies and expenses will be appor- tioned over the corresponding accounts in the respective groups of pumping accounts. H-733. Maintenance. H-733-1. Maintenance of Dams, Canals and Flumes and Buildings and Fixtures. This account shall include all expenses for labor and materials in- curred in repairing hydraulic structures. Such structures include dams, embankments, etc., for impounding water and all appurtenant gates, valves, weirs, waste-ways, canals and conduits, and other chan- nels, including riprap, lining walls, etc., pipe lines, flumes, aqueducts and supporting trestles, forebays and appurtenant sieves and grigs, waste ways, etc., all viaducts, bridges, foot bridges, etc., over and accessory to or necessitated by such canals, aqueducts and flumes, and also the wasteways, conducting the water from the outlet of the draft tube to the point of final discharge. Exclude opemting labor. H-733-2. Maintenance of Turbines and Water Wheels. This account shall include all expenses for labor and supplies in- curred in repairing the hydraulic motive power, including head gates, pen stocks, wheel gates, wheel governors, valves, turbines, water 88 OPERATING EXPENSE ACCOUNTS wheels, draft tubes, and connections. The maintenance of power transmission apparatus as shafts, belts, etc., will not be charged to this account. Exclude operating labor. H-733-3. Maintenance of Hydraulic Power Pumping Equip- ment. # Charge this account with all expenses for labor and material in- curred in repairing hydraulic power pumping equipment. Do not charge this account with repairs to hydraulic power transmission equipment. Exclude operating labor. H-733-4. Maintenance of Miscellaneous Hydraulic Power Pumping Equipment. This account shall include all expenses for labor and material in- curred in making repairs to the hydraulic power pumping station auxiliary equipment. This includes repairs to oiling systems, power transmission equipment such as shafting, belting, rope and cable, drivers, clutches, pulleys, idler wheels, and auxiliary motors, hoists, cranes, blacksmiths' and machinists' tools and all other accessory equipment other than hand tools, the cost of which is to be included in operating expenses. Exclude operating labor. Note. — If water is also pumped at the station by other than hydraulic power, the cost of maintaining pumping station auxiliary equipment used for the joint benefit of the different methods of piunping will be apportioned over the appropri- ate maintenance accoimts of the respective classes of pimiping accounts. H-734. Hydraulic Power Purchased. This account shall include the cost of all water purchased for the purpose of operating the hydraulic power pumping equipment. It is desired that this account shall be so kept, as to indicate the name of the company or individual from whom such water was purchased, the amount of water power purchased and the terms under which it was purchased^ 740. Purification. 741. Superintendence and Labor. 741-1. Superintendence. This account shall include the cost of all operating labor employed in the superintendence of purification and filtration. This will in- clude the salaries and expenses of superintendents, assistants, chemists, general foremen, clerical help on records and accounts, and such por- tion of the salaries of the engineering staff as may be assignable to purification and filtration. OPERATING EXPENSE ACCOUNTS 89 741-2. Purification Labor. This account shall include the cost of labor engaged in the different processes of purification, from the point where water is received into the system to the point where it is ready for distribution. This will include labor for operating filters, and water treatment equipment, cleaning basins, removal of ice and sediment, etc. Exclude main- tenance labor. 742. Purification Supplies and Expenses. This account shall include the cost of supplies consumed, and ex- penses, elsewhere unprovided for, incurred by the utility in the opera- tion of its purification facilities. This will include the cost of all chemicals consumed in the purification process; light and heat, ice, towels and soap, brooms and similar items. Utilities may, at their option, charge to this account the cost of water used for washing filters, and cleaning other structures and equipment for the purification of water. Such charges when made should be credited to account No. 749, Production Expenses Transferred — Cr. 743. Maintenance. 743-1. Maintenance of Purification Buildings and Fixtures. This account shall include the cost of repairing and maintaining buildings, fixtures, and grounds devoted to the purification of water. 743-2. Maintenance of Purification Equipment. This account shall include the cost of repairing and maintaining all equipment used in the various stages of water purification. This will include repairs to sedimentation and coagulating basins, clear water basins, filters and their appurtenant equipment, water treatment equipment, renewing sand, washing sand, etc. 748. Duplicate Production Charges— Cr. This account shall be credited with all charges made to production accounts for water consumed at pumping and purification plants ,and not otherwise provided for. 749. Production Expenses Transferred — Cr. This account shall include such part of the utility's cost of producing water as is properly chargeable to another co-ordinate department, as, for example, an electric or gas department. 90 OPERATING EXPENSE ACCOUNTS 750. Transmission and Distribution. 751. Labor Supplies and Expenses. 751-1. Superintendence. This account shall include the cost of all operating labor employed in the superintendence of the transmission and distribution system. This will include the salaries and expenses of superintendents, assis- tants, general foremen, clerical help on records and accounts, and such portion of the salaries of the engineering staff as may be assignable to transmission and distribution. 751-2. Storage Reservoir, Tank and Standpipe Labor. This account shall include the cost of labor engaged in patrolling, inspecting, and operating the distribution storage facilities, including distribution reservoirs, tanks and standpipes. Exclude maintenance labor. 751-3. Maps and Records. This account shall include the upkeep cost of maps and records of the transmission and the distribution system, including salaries and expenses of mappers, draftsmen, cost of drawing material, stationery and other miscellaneous items. 751-4. Inspecting and Testing Meters and Measuring Devices. This account shall include the salaries and expense of superinten- dents and clerks in the meter bureau and that portion of the salaries of the engineering staff assignable to this account; also the cost of light, heat, ice, water, and other supplies and expenses of the meter testing bureau; and the cosi of testing meters on consumers' premises or in meter shops. 751-5. Removing and Resetting Meters and Measuring Devices. This account shall include the cost of labor and other expense in- cident to removing and resetting meters and measuring devices on consumers' premises; also the cost of disconnecting and reconnecting services. For the cost of the first setting meters on new service lines, or lines not previously metered, see text of accounts No. 323-324. 751-6. Inspecting Customers' Installations. This account shall include labor and expense incurred in inspecting and testing plumbing and fixtures of consumers in connection with complaints; and all other services performed on the premises of con- sumers for which no charge is made by the utility. OPERATING EXPENSE ACCOUNTS 91 751-7. Other Transmission and Distribution Operating Labor. This account shall include the cost of labor engaged in inspecting and patrolling transmission and distribution mains and ditches, serv- ice pipes and stops, fire hydrants, fountains and troughs; flushing mains and hydrants, and taking street pressure ; and the cost of other labor similarly employed. Also include such other operating labor in the transmission and distribiition system as is not provided for in any of the preceding accounts. 752. Miscellaneous Distribution Supplies and Expenses. This account shall include the tost of such tools as are not a proper charge to plant and equipment, used by street department employees; office supplies of such department, and other miscellaneous distribu- tion operations, supplies and expenses not elsewhere provided for. 753. Maintenance. 753-1. Maintenance of Transmission and Distribution Build- ings and Fixtures. This account shall include the cost of maintaining transmission and distribution buildings and fixtures. 753-2. Maintenance of Transmission Mains. This account shall include the cost of labor, material and supplies consumed, and other expenses incident to repairing transmission mains. This includes such items as seeking and repairing leaks, re- moving and repairing worn sections and fittings, calking, digging and repaving in connection with such work, repairing manholes, thawing pipes, and scraping to remove incrustations. 753-3. Maintenance of Storage Reservoirs, Tanks and Stand- pipes. This account shall include the cost of repairing and maintaining distribution storage reservoirs, tanks and standpipes, including re- pairs to masonry, painting, calking, replacing decayed parts, hoops, etc. Include also repairs to appurtenant equipment, such as inlet, outlet, flush, drain, and overflow pipes; gate, check and other control valves ; gauges, floats, high water alarms, and other apparatus used in connection with distribution reservoirs, tanks and standpipes. 753-4. Maintenance of Distribution Mains. This account shall include the cost of labor, material and supplies, and other expenses incident to repairing distribution mains. This in- 92 OPERATING EXPENSE ACCOUNTS eludes such items as seeking and repairing leaks, removing and re- placing worn sections and fittings, calking, digging and repaying in connection with such work, repairing manholes, thawing pipes and scraping to remove incrustations. 753-5. Maintenance of Services. This account shall include the cost of labor, material and supplies, and other expenses incident to repairing water services. This includes such items as seeking and repairing leaks, removing and replacing worn out pipes and fittings, including stop cocks, and service boxes, digging and repaving in connection with such work, cleaning pipes, thawing pipes, and other expense of a similar nature. 753-6. Maintenance of Meters. This account shall include the cost of repairing meters used to measure water sold to consumers. This will include readjusting, painting, replacing worn gears, wearing parts, dials, meter fittings, unions, etc. This account should also include the cost of labor and material to repair meter boxes or vaults, and other expense incident thereto. Note. — ^When meters are permanently withdrawn or retired from service, and re- placed, the original cost of such meters withdrawn or retired, shall be credited to plant and equipment account No. 323, "Water Meters." and concurrently a charge shall be made to this account for like amount, (less salvage value), or for the portion of such charge that has not been provided for in the reserve for accrued depreciation. 753-7. Maintenance of Hydrants. This account shall include the cost of labor and material, and other expense incurred in repairing hydrants. This includes renewal of worn out parts, painting, calking, digging and repaving in connection with repairs. 753-8. Maintenance of Fountains and Troughs. This account shall include the cost of labor and material and other expense incurred in making repairs to fountains and troughs. This includes renewal of worn out pipe, valves, painting, digging and re- paving in connection with such repairs. 760. Commercial and New Business. 761. Commercial. 761-1. Superintendence. This account shall include the salaries (or the proper portion there- of) of employees having supervision over the commercial department. OPERATING EXPENSE ACCOUNTS 93 761-2. Meter Reading. This account shall include the cost of labor employed in meter reading. 761-3. Consumers' Accounts. This account shall include the salaries (or the proper portion there- of) of employees engaged in keeping service accounts with consumers. Salaries of mercantile ledger bookkeepers should be charged to "Mer- chandise and Jobbing Revenue," or to "New Business — Salaries" or as may be appropriate. 761-4. Collecting. This account shall include the cost of labor incurred in the collec- tion of consumers* accounts, including the salaries (or proper portion thereof) of employees in the collection office; cost of distributing service bills; wages of employees while engaged in removing meters for non-payment of bills; commissions paid for collecting bills. 761-5. Contract Department. This account shall include the salaries (or the proper portion there- of) of Employees in the contract department. Items assignable to "New Business — Salaries" should not be included. 761-6. Miscellaneous Commercial Department Expenses. This account shall include the cost of supplies and incidental ex- penses of the commercial office. This covers meter readers,- lamps and carfare of employees in commercial department and other incidental expenses in connection with the commercial department. 770. New Business Expenses. 770-1. New Business — Salaries. This account shall include the salaries (or the proper portion there- of) of employees engaged in the promotion and extension of the utility's water business. This will include office clerks, solicitors and salesmen, and commissions paid solicitors and salesmen for the intro- duction and sale of water appliances. 770-2. New Business Supplies and Expenses. This account shall include the cost of all supplies consumed. and expenses incurred in connection with the new business department This includes office supplies, traveling and personal expenses of sales- men and solicitors, advertising, demonstrations and the cost of piping. 94 OPERATING EXPENSE ACCOUNTS devices and appliances (including labor and expense on installation) furnished to the consumer for which no charge is made, in order to secure new business. If a portion of the cost of such installation is chargeable to the consumer, the loss only will be charged to this account. 780. General and Miscellaneous Expenses. 781. Undistributed General Expenses. 781-1. General Office Salaries^ 781-11. Administrative Salaries. This account shall include the salaries of the chairman of the board, president, vice-president, treasurer, secretary, comptroller, general auditor, general manager, assistant general manager, chief engineer, general superintendent, purchasing agent, and all other employees whose jurisdiction extends to the entire system and whose services can not be allocated to the several departments. 781-12. Other General Office Salaries. This account shall include the salaries of auditors, bookkeepers, cashiers, janitors, porters, messengers, and other clerks and employees whose time is devoted to the work of the general office. Note. — The cost of labor of clerks and other employees in the commercial de- partment shall not be included in this account, but in account No. 761, "Commercial" or the appropriate subdivision thereof. 781-2. Miscellaneous General Expenses. 781-21. General Office Supplies and Expenses. This account shall include the cost of office supplies, stationery, telegrams, telephone service and the maintenance of office furniture; rented rooms in office buildings and maintenance of such rented rooms ; rental of office equipment such as statistical machines, and all other miscellaneous expenses of general offices. Expenses of departmental employees should be charged to the appropriate departmental accounts. 781-22. General Stationery and Printing. This account shall include the cost of stationery, stationery supplies, and postage not elsewhere provided for. Note A. — The cost of printing briefs and other legal papers should be charged to account No. 781-24, "Law Expenses." Note B. — The cost of printing signs, posters, and other advertising matter should be charged to account No. 770-2, "New Business Supplies and Expenses." Note C. — The cost of such mechanical calculators, typewriters, duplicating ma- chines, and other office appliances as are not properly capitalized, should, if for use OPERATING EXPENSE ACCOUNTS 95 in general office be charged to account No. 781-21, "General Office Supplies and Expenses," or if not for the use of department officers, to the proper departmental accounts. 781-23. Maintenance of General Structures. This account shall include the cost of maintaining general office buildings or other structures for general purposes. This covers main- tenance of walks, driveways, and grounds connected therewith and all incidental expenses connected with the maintenance of such build- ings or structures. 781-24. Law Expenses. This account shall include all law expenses such as salaries and ex- penses of counsel, solicitors and attorneys, their clerks and attendants and expenses of their offices; cost of law books, printing bqefs, legal forms, testimony, reports, etc., fees and retainers for services of attorneys not regular employees, court costs" and payments of special notarial and witness fees not provided for elsewhere, expenses con- nected with taking depositions, and all law and court expenses not provided for elsewhere. 781-25. Insurance. This account shall include premiums paid for fire, fidelity, boiler, casualty, burglar, lightning and all other insurance; also charges by which self -insurance is provided. This account shall be credited with dividends paid or surplus re- turned to the accounting company in any other form by mutual in- surance companies. - Note. — ^That portion of the premium for liability insurance based on the payroll expended on construction accounts may be charged to the construction accounts affected. 781-26. Store Expenses. This account shall include all salaries and expenses in connection with store rooms. This covers the cost of sending materials and sup- plies from general storerooms and the collection of scrap material. To this account shall be credited all discounts recovered through the prompt payment of bills for material and supplies consumed in operation unless such discounts are applied to the particular bills. Note. — Expenses charged to this account may be distributed over materials passed through the store department on the basis of a percentage of invoice cost of such materials or other basis deemed appropriate by the management of the account- ing company. Amounts so distributed should be credited to this account and charged to the accounts to which the cost of such material is charged as they are issued or used. Credits should be made in such details as to permit the accounting company to analyze them. 96 OPERATING EXPEi^SE ACCOUNTS 781-27. Transportation Expenses. This account shall include the cost of feed, keep and shoeing of horses, wages of stablemen, hostlers, veterinary expenses and all other expenses of stabling horses; also wages of garage men, cost of gasoline, lubricants and other garage supplies, and the cost of repairing harness and vehicles. Note A. — ^The cost of horses piirchased to replace others should be charged to account No. 327, "General Equipment." Note B. — Charges to this account may be distributed to the work done by the stable and garage equipment on the basis of hourly rates, rates per ton per mile hauled, or other basis deemed appropriate by the management of the accounting company. Amoimts so distributed should be credited to this account and charged to the accoimt representing the construction or operation benefited. Credits should be made in such detail as to permit the accounting company to analyze them. 781-28. Othei: Miscellaneous General Expenses. This account shall include the cost of publishing and distributing annual reports to stockholders, advertising notices of stockholders' meetings, dividend notices and other corporate and financial notices of a general character, association dues, contributions for conventions and meetings of the industry, cost of experimental work conducted for the benefit of the industry or the improvement of service, traveling and incidental expenses of general officers and other general office employees, fees of transfer agents, registrars of stocks, and fiscal agents, directors' fees, compensation to management corporations, and other miscellaneous expenses connected with the general management not otherwise provided for. 781-29. Undistributed Adjustments. At least-jDnce a year an inventory of material and supplies should be taken and the difference in respect of any particular class of ma- terial and supplies between the ledger and inventory balances should be debited or credited to this account in case it can not be assigned to a specific account. This account shall also be charged or credited with miscellaneous minor operating items of such a nature that an exact distribution among the accounts to which they are applicable can not be deter- mined. This covers such transactions as receipts from sale of junk. Note. — ^Where materials and suppHes have been used in construction as well as in operation a suitable proportion of the shortages or overages disclosed by the in- ventory may be debited or credited to account No. 350, "Miscellaneous Construc- tion Expenditures." 782. Retirement Expense. This account shall include such amounts as the accounting company OPEfeATiNG Expense accounts 9^ may determine to be necessary (or as it may be required by law or by the order of the regulatory commission to charge) to provide a re- serve against which may be charged the original cost of all property retired from service, plus the cost of dismantling, less salvage. The amounts charged to this account and credited to "Retirement Reserve" shall be in addition to the necessary cost of keeping the plant and equipment in a high state of efficiency through charges to the regular maintenance accounts. Note. — It is the intent of the classification that a reserve shall be provided suffi- cient to cover all retirement losses that may reasonably be expected. If the account- ing company does not do this and later finds that retirement losses are incurred in excess of the amount that has been provided the charging of such losses to operating expenses either directly or through the suspense accoimt "Property Abandoned" does not bind the regulatory commission to the acceptance of such charges as part of the necessary current cost of maintenance. 783. Injuries and Damages. 783-1. Claim Department Expenses. This account shall include salaries and expenses of claim agents, investigators, adjusters, and others engaged in the investigation of accidents and adjustment of claims. 783-2. Medical Expenses. This account shall include salaries, fees, and expenses of surgeons and doctors, nursing, hospital attendants, medical and surgical sup- plies ; fees and expenses of coroners and undertakers ; and contributions to hospitals. 783-3. Injuries to Employees. This account shall include the amounts paid in settlement of claims of employees for injuries arising in their employment; also injuries paid to disabled employees while off duty. 783-4. Other Personal Injuries and Property Damage. This account shall include amounts paid in settlement of claims of persons other than employees for personal injuries sustained in con- nection with the operation of the plant and amounts paid in settlement of claims for damage to property not owned by the accounting company. 783-5. Miscellaneous Accident Expenses. This account shall include all expenses in connection with accidents and damages not provided for in the foregoing accounts. Note. — If it so desires, the accounting company may charge each month to "In- juries and Damages" (or to the appropriate sub-account) and credit to account No* 262, "Casualty and Insurance Reserve" a proportion of the total amount estimated 98 ■ OPERATING EXPENSE ACCOUNTS to be necessary to expend during the year for injury and damage claims, and the actual disbiirsements above designated shall then be charged against said reserve accounts. The charges to this accoimt shall be adjusted at the close of the fiscal year to actual expenses \xn less a balance remains representing liability for unsettled claims. 784. Regulatory Commission Expenses. This account shall include expenses incurred by the accounting com- pany in its transactions with governmental regulative commissions. This covers fees and retainers and expenses of counsel, solicitors, attorneys, clerks and attendants, witnesses, and others whose services are secured especially for the defense or prosecution of those petitions presented to a regulatory commission that affect the accounting com- pany; the pa3^ traveling, and other expenses of those specially em- ployed or assigned to ascertain the value of property owned or used by the accounting company; the cost of stationery and printing and engineering supplies consumed, and other necessary expenses of a similar character. This account does not include expenses for improvement of service, for additional inspection, etc., which are made necessary by the rules, regulations or orders of a regulatory commission. Such expense should be charged to the appropriate specific operating expense account. Note. — Expenses incident to the sale or issue of securities should not be charged to this account but to the appropriate discoimt account. See "Balance Sheet Ac- counts — General Instructions and Definitions," Section 12, page 7. 785. Relief and Welfare Work. 785-1. Employees' Welfare Department. This account shall include all salaries and expenses incurred in con- ducting accident prevention, relief, and welfare departments; alsox^on- tributions to such departments. 785-2. Pensions. This account shall include all pensions paid to retired employees and all expenses in connection therewith. 786. Franchise Requirements. This account shall include the value at the normal selling price of all water and material and supplies furnished municipal corporations in compliance with franchise requirements and for which no payment is received by the accounting company; also all direct expenses in- curred in the compliance with such requirements for which no reim- bursement is received by the accounting company. Amounts charged to this account for which there is no direct money outlay shall be credited to account No. 790, "Duplicate Miscellaneous Charges— Cr." OPERATING EXPENSE ACCOUNTS 99 787. Amortization of Franchises. This account shall include for each accounting period the amount charged to distribute the cost of limited franchises* equitably over the life of the franchise. Amounts charged to this account shall be con- currently credited to fixed capital account No. 302, "Franchises." 788. Water Expenses Transferred — Cr. This account shall include such part of the operating cost (other than production expenses, for which see Production Account No. 749, "Production Expenses Transferred — Cr.") borne in the first in- stance by the accounting company's water department as are properly chargeable to another co-ordinate department such as an electric or gas department. This is not intended to prohibit the apportioning of primary ac- counts between departments, and so far as practicable departmental cost should be determined in that way. There may, however, be cases where it is desirable to assign to other operations a flat per- centage of total water operating expenses or of some group of water operating expenses or some similar arbitrary amount, and when this is so, the credit should be made to this account. 789. Joint Operating Expense — Cr. When any plant or equipment is maintained or operated by the accounting company for the joint benefit of itself and others under an arrangement for apportioning the operating expenses, the portion of such expenses chargeable to others under the arrangement may be credited to this account if it is based on a percentage of the total operating expenses or a percentage of the total of some group of primary operating expense accounts or determined in some similar fashion. So far as practicable joint operating cost should be appor- tioned by primary accounts and that part of such cost borne in the first instance by the accounting company but chargeable to the other party or parties to the joint agreement, should be credited to the primary accounts involved. 790. Duplicate Miscellaneous Charges— Cr. This account shall include the concurrent credits for all charges which may be made to any operating expense account, except as pro- vided for in account No. 748, "Duplicate Production Charges— Cr.," in respect of the consumption of gas produced or purchased primarily for resale by the accounting company; also all similar charges in re- spect of any services rendered for which there is no direct money out- 100 OPERATING EXPENSE ACCOUNTS lay. This covers such items as water supplied to a municipality without charge in accordance with franchise requirement; water fur- nished to employees in lieu of wages; housing for employees as part compensation for their services, etc. This account is optional to the extent that charges of the sort de- scribed, not involving arfy direct money outlay, are not required to be made. If the accounting company desires to make such charges, however, the concurrent credit must be to this account. UNIVERSITY OF CALIFORNIA LIBRARY, BERKELEY THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW Books not returned on time are subject to a fine of 50c per volume after the third day overdue, increasing to $1.00 per volume after the sixth day. Books not in demand may be renewed if application is made before expiration of loan period^ NOV ]0 1925 25»n-7.'2.5 w :iir: »^ ^j ?^ I »i • /V TT/ .,. . a A UNIVERSITY OF CALIFORNIA LIBRARY