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FOR OUTSIDE OPERATIONS-FIRST ISSUE.
from insurance companies for loss, damage, or injury to persons or property reinsured by them.
(159 Note B.-No charge should be made to this account except for additional expense occasioned by the conducting of the outside operation.
Note C.-When officers and others above enumerated have charge of other departments also, their salaries and expenses should be apportioned among the departments over which they have supervision.
Note D.-The pay and expenses of purchasing agent, assistant purchasing agent, assistant to purchasing agent, general storekeeper, division storekeeper, and their clerks should be charged to “Material” account through clearing account “Store Expenses" prescribed on page 58 of the Classification of Operating Expenses of Steam Roads, Third Revised Issue.
This account includes services, material, and supplies furnished the rail department or another outside operation, the cost of which has previously been charged to the outside operation under consideration.
Note A.-When the actual cost of such services, material, and supplies can not be ascertained, the amount to be credited to this account should be approximated as closely as possible.
Note B.-An amount equal to the total of this account should be charged in the same month to the proper account in Classification of Operating Expenses (Rail) or other outside operations.
Note C.—No credit shall be made to this account on account of services, material, and supplies furnished employees of the operating carrier at reduced rates, the actual amounts received being simply credited to “Operating Revenues'' account.
ACCOUNTING BULLETIN No. 1
DECISIONS UPON QUESTIONS
THE INTERSTATE COMMERCE
IN ACCORDANCE WITH
SECTION 20 OF THE ACT TO REGULATE COMMERCB
EFFECTIVE ON JULY 1, 1908
Interstate Commerce Commission,
Washington, June 16, 1908. To Carriers Concerned:
This bulletin, entitled “Accounting Bulletin No. 1,” contains the final answers to a series of questions submitted to the Division of Statistics and Accounts since the promulgation of the accounting orders under date of June 3, 1907. The cases selected are those which are regarded as important for the reason that they make clear the meaning or application of the text descriptive of the primary accounts covered by the Classification of Operating Expenses, the Classification of Operating Revenues, and the Classification of Expenditures for Road and Equipment. For convenient reference, the case numbers of Accounting Series Circulars Nos. 12 and 12a are preserved in this bulletin, and wherever, for any reason, a Case is omitted, a statement explanatory of the omission is inserted.
As a matter of information it may be proper to state that most of the answers to questions recorded in this bulletin have received the approval of the Association of American Railway Accounting Officers, minor changes having been made only where a modification of the language seemed desirable. This bulletin, taken in connection with Accounting Series Circular No. 12b, will comprise a complete file of important cases answered by this office previously to May 1, 1908.
Henry C. Adams,
INTERSTATE COMMERCE COMMISSION ACCOUNTING
BULLETIN NO. 1.
[Accounting Series Circulars have been omitted, as matter contained therein is largely of a tentative nature.]
QUESTIONS AND DECISIONS.
Case 1. Query. How shall debits and credits not provided for in Classifications of Operating Expenses and Revenues, such as Outside Operations and Additions and Betterments, be disposed of prior to receipt of formal order of Commission ?
Answer. All accounting matters must be disposed of in conformity with the principles embodied in the orders of the Interstate Commerce Commission. Subject to this limitation, where not covered by such orders, they may be disposed of according to the judgment of the carrier.
Case 2. Query. When a carrier assumes proportion of switching charges collectible from another carrier, should such proportion be charged to freight revenue as ""Switch ing Absorbed” and credited to freight revenue when collected ?
Answer. This is a matter of bookkeeping, in which each carrier is for the present permitted to use its own discretion so long as the integrity of the prescribed accounts is maintained. (See Case 214.)
Case 3. Query. Is it essential that books be written up monthly by a road which has been heretofore in the habit of writing books up once in six months ? Answer. Accounts should be written up monthly.
Case 4. Query. Is it permissible after July 1, 1907, to carry over balances in reserve funds? Such balances may consist of estimated amounts of overcharges, switching, loss, damage, and personal injury claims.
Answer. Such balances in reserve accounts may be carried over. There is no objection to the creation and maintenance of reserves of this character, provided the charges to the various operating expenses and revenue accounts are adjusted yearly as far as practicable. Reserves should be held until liabilities are paid.
Case 5. Query. A judgment is rendered against a carrier, which is chargeable to operating expenses. Is it permissible to spread the amount thereof over several months, and even over more than one fiscal year?
Answer. Judgments and heavy or extraordinary expenses, due to fires, accidents, etc., may be spread over several months of a fiscal year, but permission must be obtained from the Interstate Commerce Commission if it is desired to extend the charges to “Operating Expenses'' into the succeeding fiscal year.
Case 6. Query. To what account should the expense of “studies" by the Engineering Department be charged? By “studies'' are meant tentative surveys, sinking test pits, etc., in connection with proposed work, prior to any authorization for the