INCOME ACCOUNTS

As electric current is now largely sold by meter measurement, and as the circuits have connected thereto, indiscriminately, incandescent lamps of the numerous varieties, arc lamps, vapor tubes, and so forth, it is not possible to differentiate the income as derived from the various translating devices. Power is usually separately metered. Local conditions must largely govern the scheme of classification of income accounts, and the committee therefore suggests only a broad generalization.

INCOME CLASSIFICATION

Sale of Electric Current

Commercial lighting

Commercial power

Municipal street lighting, arc

Municipal street lighting, incandescent

Municipal building lighting

Sales to other public-service corporations

Profit on Merchandise Sales

Rents from Real Estate

Interest and Dividends from Investments

Respectfully submitted,

H. M. EDWARDS, Chairman,
A. S. KNIGHT,

Committee G. W. CURRAN,

C. N. JELLIFFE,

PAUL R. JONES.

MR. EDWARDS: This report has been prepared as a basis of discussion, and it is hoped that all its weaknesses will be brought out.

THE PRESIDENT: The report is now open for discussion and, as announced, Mr. Edwards will take the chair and preside during this portion of the session.

DISCUSSION

(Mr. Edwards in the chair.)

CHAIRMAN EDWARDS: Gentlemen and Fellow MembersYour president, in selecting an accountant to preside at this ses

sion of the convention, had it in mind to emphasize the importance of the subject to the association at this time. The accounting officers of the different companies will not fail to appreciate the honor thus done to their profession, and I am convinced that this action can not fail to be of benefit to all concerned.

It is the hope of the committee, gentlemen, as I stated, that this report may be discussed freely. We believe that it is of the utmost importance that this body should adopt a classification of accounts. It is a fact that those who have prepared this report have been, possibly unconsciously, governed by their own local methods. It would be impossible for any two or three men to get together and prepare a classification that would meet the requirements of every company, large and small, in every detail. We believe that in the broad classifications there is little to be said; in the details there is much to be said, and as this convention should be fully informed before it adopts so important a resolution, it is hoped that the fullest discussion may be had.

MR. ISAAC B. SMITH (Cedar Rapids, Ia.): You suggest the importance of adopting a uniform system of accounting. There can be no dispute on that question, and I presume the forms adopted in the several states can be brought into uniformity with that which it is proposed to have this convention adopt. There is one point, however, that should be carefully considered before the convention adopts the report, and it is this: A particular condition confronts my company, which, no doubts, affects a considerable number of the member companies of this association. I represent a company that will, no doubt, be obliged to report to the Interstate Commerce Commission. We are operating an electric railway in connection with an electric-light plant. The Interstate Commerce Commission has held that in case an electric railway operating in connection with an electric-light plant (the line being wholly within one state) should be fortunate or unfortunate enough to receive and transport any freight over its line that originated without the borders of that state, that company is engaged in interstate commerce. If the law applies, it will be necessary for such company to conform to the system of accounts that the Interstate Commerce Commission will provide.

I have already had some correspondence with Mr. Adams, chief statistician and expert accountant, and he tells me that this question will be held in abeyance until the commission has had

further time to organize itself and take up the matter under proper conditions. I therefore ask if it would not be a good idea for this association to take up the proposition with the Interstate Commerce Commission, and receive the co-operation, or at least the tentative approval, of that body. I believe that there are many gentlemen here who will find that their companies will be obliged to report to the commission. If so, they will be obliged to report under the forms that the commission will adopt, regardless of what this convention will recommend.

An additional provision of the Interstate Commerce act is one that provides that companies subject to the act shall not only report under the forms recommended by the commission, but, under penalty, they are forbidden to keep any other form of records. Unless this phase of the question is brought to a proper solution, the system of accounts recommended by the committee. may be of no use whatever to many members of the association.

MR. F. L. DAME (New York city): During the past two or three years I have made examinations of many properties, in various parts of the country. I have found great difficulty in making satisfactory comparisons, through the lack of uniform systems of accounting, and the lack of uniformity between the present railway and gas systems of accounting and the electriclight systems of accounting. The committee has evidently given this subject most careful consideration, but it seems to me that before this convention adopts any definite system it would be advisable to appoint a conference committee to take up the matter with the branch of the American Street and Interurban Railway Association known as the Accountants' Association, and see if a uniform system can not be adopted that would apply to both railway and lighting. The general divisions of the business are similar, and it seems to me that there is no reason why we can not keep the two systems on practically the same basis.

One of the first things we always look for in investigating a new property is the amount expended on maintenance or repairs, as the item is given in the report of the committee. I should like to see the maintenance charges separated from the rest of the operating charges, and made a separate item.

With reference to the matter of depreciation, I think it is something that few companies have recognized in the past; it is something we must recognize in the future. It is probable,