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cost per kilowatt-hour generated or sold. It is not possible to have such a unit in construction operations, and hence the original estimate has been employed as the standard for comparison.

This job system is a very useful feature of modern accounting. The committee can only glance at it at this time; it may well be a subject for future consideration and in the interim the committee recommends that the managers and accountants of the various companies investigate the system in those companies where it now exists.



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Cost of effecting organization and such capital exploit expenses as may be properly connected therewith.

Royalties or licenses paid to licensors, payments to city, town or state for franchises (other than taxes), or on capitalization and rights of way, easements, and so forth.

Real estate, station structure, steam and electrical plant, and all apparatus and devices to generate electric current and conduct same to the terminal board in the station.

Real estate, flowage rights, buildings, dams, canals, and tail races, gates, valves, bridges, roads, water wheels, generators, and all apparatus and devices to generate electric current and conduct same to the terminal board in the station.

Real estate, station structure, gasmaking apparatus, gas engines, and all apparatus and devices to generate electric current and conduct same to the terminal board in the station.

Subways, overhead lines, conductors, substation real estate and buildings,

Distribution Plant

Arc Lamps


Municipal Street

Furniture and Fix


General Office and

Branches Miscellaneous Equip


converting apparatus and devices in substation to transform electric current and deliver same to the distributing system.

Subways, overhead lines, feeders and mains, house services, and all apparatus and devices to deliver electric current to customer's premises.

Lamp posts, services, and cost of installation of system ready to light lamps. In general and branch offices.

Real estate, buildings and appoint


Coal storage facilities, repair shops, storerooms, laboratories and apparatus, tools and instruments.

NOTE. These general classifications may be subdivided as required and in a condensed financial exhibit may be included under one general caption, as "Construction and Property."


The scheme of analysis of operating expense disbursements follows broadly the plan outlined for construction disbursements. The sub-classifications are, however, carried to a much greater extent. Analysis of expenses is one of the main secrets of economic operation. The broad divisions illustrate the character of the expenditures, but the sub-accounts enable the management to keep in close touch with each detail of the business. Books should be written up, and trial balances taken off at monthly intervals, and these statements should be complete exhibits so far as it is possible to make them complete.

In addition to the expenses as shown by the actual disbursements for materials purchased, pay rolls and petty cash items, there should be charged each month an estimate of those disbursements that are made once or twice a year, such as taxes, interest on bonds, city water, and so forth. These charges must of necessity be by journal entry, crediting accrued expense

and debiting the proper expense classification. In the form of balance sheet heretofore given, it will be noticed that this form of liability is included. On the other side only the monthly proportion of those expenses that are paid yearly in advance should be charged each month. Fire insurance premiums, for instance, when paid should be charged to deferred operating charges, and this asset should be diminished each month by one-twelfth of the total being charged to the proper expense classification.

Most important of all, however, is the supply account. It is the practice of some companies to charge supplies when purchased to an operating or construction account, no note being made of the fact that some of the supplies are on hand or 'not used.

The care of and accounting for supplies is a very important feature of accounting, and this is also a subject that may well be treated in a special report. The principle that the committee lays down is that only those supplies shall be charged each month that are actually consumed in the operating or construction processes, and that the ledger of the company should always show the value of supplies on hand that have not been used.

The committee, in its scheme, has endeavored to provide for all expenses and that they shall be charged up uniformly each month, leaving nothing to be charged against the net earnings as shown in profit and loss at the time the books are closed except fixed charges. This refers particularly to depreciation. The committee does not recommend whether depreciation shall or shall not be provided for, as this is a subject that must be considered by itself. It does, however, recommend that if the management does provide for depreciation the amount thereof shall be charged monthly and included as an item in the regular summary of operating expenses and not treated as an appropriation from the surplus as shown in profit and loss.

The unit of cost adopted herein is the kilowatt-hour sold. The "kilowatt-hour sold" is not a good gauge by which to determine the economy of operation in detail. For instance, in order to determine the economy of the generating plant, the kilowatthour generated must be used, as representing the work done by the plant during the period in question. The "cost per kilowatthour sold" is the only one, however, that has a commercial sig

nificance and that is directly comparable with the corresponding unit "income per kilowatt-hour sold."

The system of index numbers used in the following expense classification is for this report only. Numerical or alphabetical symbols or a combination of the two are a great convenience and may well be standardized, but the committee makes no definite recommendation in this respect at this time.

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2 Generation-Hydraulic : Cost of electric current delivered

3 Generation-Gas En-to station terminal board.


4 Transmission

5 Storage Battery

6 Distribution

7 Consumers'

8 Municipal Street Light


9 Technical

10 Depreciation

II New Business

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Cost of conducting electric current from substation terminal board to customers' premises and metering same therein.

Costs in customers' premises. Cost of operation of street-lighting system.

Costs in laboratory, drafting room, engineering, testing and all investigation and engineering exploit expenses that may not be pro-rated over any of the foregoing classifications or charged to construction.

The amount that may be appropriated for this purpose.

Canvassing, advertising, free wiring, signs, and all expenses in connection with securing business.

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