UNIFORM SYSTEM OF ACCOUNTS FOR Telephone Corporations AS PRESCRIBED BY THE PUBLIC SERVICE COMMISSION SECOND DISTRICT STATE OF NEW YORK FIRST ISSUE Effective January 1, 1912 ALBANY 1911 657 N483ut STATE PUBLIC OF NEW SERVICE SECOND YORK COMMISSION DISTRICT ALBANY, To. The following resolution has been adopted by this Commission, and is hereby served on you. Please acknowledge receipt a t once. Yours very truly, STATE OF N E W YORK, Officeof tbe public Service Commission SECOND DISTRICT I have compared the following copy with the original on file in this office, and I do HEREBY CERTIFY the same to be a correct transcript therefrom and of the whole thereof. Witness my hand and the Seal of Office of the Publice Service Commission, Second District, at the City of Albany, this day of one thousand nine hundred and Secretary. STATE OF N E W YORK, PUBLIC SERVICE COMMISSION, SECOND DISTRICT. A t a session of the Public Service Commission, Second District, held a t the Capitol, Albany, on the 13th day of November, 1911. Present: F R A N K W. STEVENS, Chairman, MARTIN S. DECKER, J A M E S E. SAGUE, J O H N B. OLMSTED, WlNFIELD A. HUPPUCH, Commissioners. It is Ordered: F i r s t : That the Uniform System of Accounts for Telephone Corporations, with the text thereto, prepared under the direction of this Commission and embodied in printed form, a copy of which is before the Commission, be and the same is hereby approved. Second: T h a t the said Uniform System of Accounts for Telephone Corporations be and is hereby prescribed for the use of all telephone corporations subject to the provisions of the Public Service Commissions Law of the State of New York, in the keeping and recording of their accounts; t h a t a copy of the said Uniform System of Accounts for Telephone Corporations be sent to every such corporation in this State, and each such telephone corporation be required, and it is hereby required on and after J a n u a r y 1, 1912, to keep its accounts in conformity therewith. The term "telephone corporation" is used herein in the sense denned in the Public Service Commissions Law. Third: That during the year beginning J a n u a r y 1, 1912, any telephone corporation may, for purposes of comparison, keep on its books, in addition to the accounts hereby prescribed, such portion or portions of its present accounts as may be deemed desirable by any such corporation. F o u r t h : That for purposes of efficiency of administration and operation, any corporation may, unless or until otherwise ordered, keep upon its books any temporary or experimental accounts and any accounts covering particular divisions of its operations, provided t h a t such temporary, experimental, or divisional account shall not impair the integrity of any account hereby prescribed. Fifth: T h a t every telephone corporation be required, and is hereby required, subject to the modifying provisions hereinafter contained, to keep its accounts and subsidiary records so t h a t when requested by the Commission it can show for each exchange system and each toll system in the State of New York, the cost of the corporation's property devoted to the service of such system and the revenues and expenses of each such system. For this purpose, the revenues of an exchange system shall include such proportion of any tolls exacted for the use of toll lines as may be properly credited to the exchange system which originates the toll business, and the revenues of a toll system shall include the amount of tolls, after deducting such proportion as may be properly credited t o an exchange [5] 6 P U B L I C SERVICE COMMISSION, SECOND DISTRICT system or systems for originating the business. The proportion of tolls which shall be credited to the exchange system shall be determined by agreement between the corporations owning the two systems, if they are separately owned; if they are owned by one corporation, by resolution of the board of directors; unless otherwise lawfully ordered by the Commission. The expenses of an exchange system shall include such parts of the operating expenses of toll lines as are not separable from those of the exchange system, and t h e expenses of a toll system shall include all operating expenses which are separable from the expenses of exchange systems. An exchange system is intended to include the property devoted to telephone service in any area within which subscribers are furnished exchange service a t standard rates established for exchange service between stations in t h a t area. An exchange system may include one or more central offices, and t h e local toll lines maintained and operated as p a r t of such exchange system. A toll system is intended to include the property devoted to the operation of long distance lines or toll lines which connect different exchange systems where a charge is made for the use of such lines separate and a p a r t from the charge for exchange service. Telephone corporations which can, upon request, furnish for particular exchange systems and toll systems the information indicated in the foregoing paragraphs, are not required for the present to keep any further subdivisions of the accounts herein prescribed than are necessary to show separately the accounts of a territorial division or district such as is now established by them for operating purposes. But all corporations are required to keep as permanent subsidiary records the operating revenues accruing from each exchange system and each separate toll system and the direct operating expenses of each such system. By the direct operating expenses of an exchange or toll system are meant those expenses which are not apportioned to two or more exchange systems or toll systems. All corporations are required also to keep permanent records of the total amount of all apportioned expenses and the basis of any apportionment, whether such expenses are apportioned to exchange systems, toll systems, or territorial subdivisions comprising two or more such systems. ACCOUNTS FOR TELEPHONE CORPORATIONS 1 UNIFORM SYSTEM OF ACCOUNTS FOR TELEPHONE CORPORATIONS. INTRODUCTORY. This Uniform System of Accounts for Telephone Corporations is established and issued by the Public Service Commission, Second District, under tho following provision of chapter 673 of the laws of 1910: Section 95, subdivision 2 : The commission may establish a system of accounts to be used by telegraph corporations and telephone corporations, which are subject to its jurisdiction, and are required to make annual reports to i t or classify the said corporations, and prescribe a system of accounts for each class and may prescribe the manner in which such accounts shall be kept. Section 1, subdivision 17, of this law defines a telephone corporation as follows: The term "telephone corporation," when used in this chapter, includes every corporation, company, association, joint-stock association, partnership and person, their lessees, trustees or receivers appointed by any court whatsoever, owning, operating or managing any telephone line or p a r t of telephone line used in the conduct of the business of affording telephonic communication for h i r e ; excepting, however, any corporation, company, association, joint-stock association, partnership or person, their lessees, trustees or receivers having property actually used in the public service within the State of a value not exceeding ten thousand dollars, or which do not operate the business of affording telephonic communication for profit. Section 2, subdivision 7: Corporations formed to acquire property or to transact business which would be subject to the provisions of this chapter, and corporations possessing franchises for any of the purposes contemplated by this chapter, shall be deemed to be subject to the provisions of this chapter although no property may have been acquired, business transacted or franchises exercised. For the purpose of this system of accounts, telephone corporations aro •divided into three classes as follows: Class A.— Corporations having average annual operating revenues* exceeding $100,000. Class B.— Corporations having average annual operating revenues* exceeding $25,000, but not more than $100,000'. Class C.— Corporations having average annual operating revenues* of $25,000 or less. * NOTE.— In order that frequent changes may be avoided, corporations operating established telephone plants may use the average of their annual revenues for three years preceding the date of this order. If at the close of any fiscal year the average of the annual revenues for the three preceding years is greater than the amount given for the class in which the corporation has been grouped, the next higher scheme of accounts will be adopted. New corporations will estimate the amount of their annual revenues and adopt the scheme of accounts provided for •corporations with average annual revenues equal to the amount of the estimate. 8 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T Three schemes of accounts, designed to meet the respective needs of corporations of the classes indicated above, are provided. The first scheme includes the more important general and primary accounts, the titles of which are printed in CAPITALS. The second scheme includes the first b u t divides some of the accounts into others, the titles of which are printed in CAPITALS and SMALL CAPITALS. The third scheme provides for a still further extension by subdividing some of the accounts in the second scheme. The titles of the sub-accounts of this last division are shown in italics. I n so far as the accounts may be applicable to their respective affairs, corporations in Class C will keep at least those accounts provided for in the first scheme; corporations in Class B will keep a t least t h e accounts provided for in the second scheme; corporations in Class A will keep the full echeme of accounts. Where the subdivisions of any primary or general account are kept it will not be necessary also to keep the account which has been subdivided. Any corporation in Class B or Class C may keep the more extended divisions or subdivisions of any or all the accounts shown herein; if desired, further refinements or extensions of the scheme of accounts to meet the needs of individual corporations may be made by subdividing the accounts herein established, provided t h a t the integrity of the accounts is not impaired and t h a t the titles and purposes of any accounts so raised shall first be filed w i t b the Public Service Commission, Second District. GENERAL INSTRUCTIONS. 1. Accounts to be kept by double-entry method. All accounts kept by any corporation or person within the scope of the present order shall be kept by t h e double-entry method. NOTE.— This requirement is not intended to apply to purely statistical accounts. 2. First entries m u s t enable identification. The first entry relating to .anything for which a charge or a credit is made t o any fixed capital or investment account shall describe the property in respect of which the entry i s made with such fullness and particularity as to enable its identification. 3. Costs to be actual money costs. All charges made to fixed capital or o t h e r property accounts with respect to any property acquired on or after J a n u a r y 1, 1912, shall be the actual money costs of the property. When t h e consideration actually given for anything with respect to which a charge is made to any fixed capital or other property account is anything other than money, the actual consideration shall be described in the entry with sufficient fullness and particularity to identify it, and the amount charged •shall be the actual money value of such consideration a t the time of the transaction. 4. Discounts upon securities not to be included in costs. Discounts upon securities and other commercial paper issued are to be provided for in other accounts and must in no case be included as part of the cost of any property acquired. 5. Costs of labor, materials and supplies. Cost of labor (employed in construction) includes not only wages, salaries, and fees paid employees, but -also such personal expenses of employees as are borne by the corporation. Cost of materials and supplies consumed in construction is the cost at the places where they enter into construction, including cost of transportation and inspection when specifically assignable. If such materials and supplies a r e passed through storehouses, their cost entered in the account may include a suitable proportion of store expense. The term " cost" as used herein means the actual cost in money of labor and materials used in construction, •or the actual cost in money of property acquired after construction, or if the consideration given is other than money, the actual money value of such other consideration a t the time of the purchase. 6. Withdrawals or retirements. When anything (not including minor p a r t s t h e replacements of which are considered as repairs) is withdrawn or retired from service, the amount a t which it stood charged shall be credited to the account in which it stood charged a t the time of withdrawal, 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 withdrawn. If there is no such original entry, t h a t fact shall be stated in connection with the credit entry, and the actual amount originally charged shall be credited. If such amount is not known, [9] 10 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T it shall be estimated, the facts upon which the estimate is based and the name of the person by whom estimated shall be shown, and the amount thus estimated to be the original charge in respect of such thing withdrawn shall be credited. 7. Plant and equipment and other property purchased. When any property in the form of a going or completed plant is purchased, an appraisal of the property so acquired shall be made, and the different constituent elements of the plant (and equipment, if any) or other property acquired shall be appraised at their structural value; that is to say, at the estimated cost of replacement or reproduction less deterioration to the then existing conditions through wear and tear, obsolescence, and inadequacy. If the actual money value of the consideration given for the plant or other property was at the time of the acquisition in excess of such appraised value, the excess shall be charged to the account " Other Intangible Capital," and the appraised values of the constituent elements shall be charged to the appropriate Fixed Capital accounts as hereinafter designated. If the actual money value of the consideration given was not in excess of such appraised value, such actual money value shall be distributed through the said accounts in proportion to the said appraised value of the constituent elements appropriate to the respective accounts. Full report of the contract of acquisition, the consideration given therefor, the determination of the actual money value of such consideration, the appraisal, and the amounts charged to the respective accounts for each plant or other such fixed capital purchased, will be required to be filed with the Public Service Commission, Second District, within sixty days after the date of acquisition. The purchaser is required to procure in connection with the acquisition of any such plant or other fixed capital all existing records, memoranda, and accounts in the possession or control of the grantor relating to the construction and improvement of such plant, and to preserve such records, memoranda, and accounts until authorized by law to destroy or otherwise dispose of them. LIST OF ACCOUNTS BALANCE SHEET ACCOUNTS. ASSET ACCOUNTS. SEE PAGE 100. F I X E D CAPITAL INSTALLED PRIOR TO JANUARY 1, 1912 101. F I X E D CAPITAL INSTALLED SINCE DECEMBER 31, 1911 17 17 (See page, 12 for list of required accounts) 105. CONSTRUCTION WORK I N PROGRESS 110. INVESTMENTS 17 17 111. SECURITIES OF OTHER CORPORATIONS a. b. c. d. 18 Stocks of System Corporations Funded Debt of System Corporations Miscellaneous Stocks Miscellaneous Bonds 18 18 18 18 112. ADVANCES TO SYSTEM CORPORATIONS FOR CONSTRUCTION, E Q U I P MENT, AND BETTERMENTS 18 113. MISCELLANEOUS INVESTMENTS 18 120. CASH AND DEPOSITS 18 121. CASH 18 122. SPECIAL DEPOSITS 18 125. BILLS RECEIVABLE 130. ACCOUNTS RECEIVABLE . 19 19 131. ACCOUNTS WITH SYSTEM CORPORATIONS 19 132. D U E FROM SUBSCRIBERS AND AGENTS 19 133. MISCELLANEOUS ACCOUNTS RECEIVABLE 135. 136. 137. 138. 139. 140. 19 INTEREST AND DIVIDENDS RECEIVABLE. OTHER CURRENT ASSETS MATERIALS AND SUPPLIES SINKING FUNDS OTHER SPECIAL FUNDS PREPAYMENTS 19 19 20 20 20 21 141. PREPAID RENTS 21 142. PREPAID TAXES 21 143. PREPAID INSURANCE 21 144. PREPAID DIRECTORY EXPENSES 21 145. OTHER PREPAYMENTS 21 147. UNAMORTIZED DEBT DISCOUNT AND EXPENSE 148. OTHER SUSPENSE 149. CORPORATE D E F I C I T 21 22 22 LIABILITY ACCOUNTS. 150. CAPITAL STOCKS 157. STOCK LIABILITY FOR CONVERSION OF SECURITIES OF CONSTITUENT COMPANIES 158. PREMIUMS ON STOCKS [13 22 OUTSTANDING 23 23 12 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T FOB DEFINITIONS SEE PAGE 160. FUNDED DEBT 23 166. RECEIVERS' CERTIFICATES 24 167. ADVANCES FROM SYSTEM CORPORATIONS FOR CONSTRUCTION, EQUIPMENT, AND BETTERMENTS 25 168. JUDGMENTS UNPAID 25 169. BILLS PAYABLE 25 170. ACCOUNTS PAYABLE 25 171. ACCOUNTS WITH SYSTEM CORPORATIONS 25 172. AUDITED VOUCHERS AND WAGES UNPAID 26 173. SUBSCRIBERS' DEPOSITS 26 174. MISCELLANEOUS ACCOUNTS PAYABLE 26 175. 176. 177. 178. 181. 182. 183. 191. 192. TAXES ACCRUED 26 INTEREST ACCRUED 26 DIVIDENDS DECLARED 26 SERVICE BILLED IN ADVANCE 26 RESERVE FOR ACCRUED DEPRECIATION 27 RESERVE FOR AMORTIZATION OF INTANGIBLE CAPITAL 27 UNAMORTIZED PREMIUM ON DEBT 28 CASUALTY AND INSURANCE RESERVES 28 INCOME INVESTED SINCE DECEMBER 31, 1911, IN FIXED CAPITAL 28 193. RESERVES INVESTED IN SINKING FUNDS 29 194. OTHER RESERVES FROM INCOME OR SURPLUS 29 199. CORPORATE SURPLUS UNAPPROPRIATED 29 FIXED CAPITAL ACCOUNTS. 100. FIXED CAPITAL INSTALLED PRIOR TO JANUARY 1, 1912 101. FIXED CAPITAL INSTALLED SINCE DECEMBER 31, 1911 200. INTANGIBLE CAPITAL 31 31 31 201. ORGANIZATION 31 202. FRANCHISES 32 203. PATENT RIGHTS 32 204. OTHER INTANGIBLE CAPITAL 207. RIGHT OF WAY 210. OTHER TELEPHONE REAL ESTATE 211. LAND 212. BUILDINGS 220. CENTRAL OFFICE EQUIPMENT 32 33 33 33 33 34 221. CENTRAL OFFICE TELEPHONE EQUIPMENT 34 222. OTHER EQUIPMENT OF CENTRAL OFFICES 34 230. SUBSCRIBERS' STATION EQUIPMENT 34 231. STATION APPARATUS 232. STATION INSTALLATIONS 34 34 233. INTERIOR BLOCK WIRES 34 234. PRIVATE BRANCH EXCHANGES 34 235. BOOTHS AND SPECIAL FITTINGS 34 ACCOUNTS FOR TELEPHONE CORPORATIONS FOR 240. E X C H A N G E LINES 13 DEFINITIONS SEE PAGE 34 241. EXCHANGE POLE LINES 35 242. EXCHANGE AERIAL CABLE ., 35 243. EXCHANGE AERIAL WIRE 35 244. EXCHANGE UNDERGROUND CONDUIT 35 245. EXCHANGE UNDERGROUND CABLE 35 246. E X C H A N G E SUBMARINE C A B L E 35 250. T O L L LINES 35 251. TOLL POLE LINES 35 252. TOLL AERIAL CABLE 35 253. TOLL AERIAL W I R E 36 254. TOLL UNDERGROUND CONDUIT 36 255. TOLL UNDERGROUND CABLE 36 256 TOLL SUBMARINE CABLE 36 260. GENERAL E Q U I P M E N T 261 OFFICE FURNITURE AND FIXTURES 262. OTHER GENERAL EQUIPMENT 36 36 36 a. General Shop Equipment 36 b . General Store Equipment 36 c. General Stable and Garage Equipment 36 d. General Tools and Implements 36 268. I N T E R E S T D U R I N G CONSTRUCTION 37 270. U N D I S T R I B U T E D CONSTRUCTION E X P E N D I T U R E S 37 271. ENGINEERING AND SUPERINTENDENCE 37 272. LAW EXPENDITURES DURING CONSTRUCTION 37 273. TAXES DURING CONSTRUCTION 38 274. MISCELLANEOUS CONSTRUCTION EXPENDITURES 38 280. F I X E D CAPITAL I N OTHER D E P A R T M E N T S 38 INCOME ACCOUNT. 500. OPERATING REVENUES 39 510. OPERATING E X P E N S E S 39 511. UNCOLLECTIBLE T E L E P H O N E BILLS 39 517. TAXES ASSIGNABLE TO T E L E P H O N E OPERATIONS 40 520. NON-OPERATING REVENUES 40 521. R E N T ACCRUED FROM LEASE OF TELEPHONE PLANT 40 522. MISCELLANEOUS R E N T REVENUES 40 523. INTEREST AND DIVIDEND REVENUES 40 a. Interest Revenues on Funded Debt Owned 40 b. Miscellaneous Interest Revenues 40 c. Dividend Revenues 40 525. SINKING AND OTHER RESERVE FUND ACCRETIONS 41 526. PROFITS FROM OPERATIONS OF OTHERS 41 527. MISCELLANEOUS NON-OPERATING REVENUES 41 14 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T FOR DEFINITIONS SEE PAGE 530. NON-OPERATING REVENUE DEDUCTIONS 41 531. R E N T EXPENSE 41 532. INTEREST EXPENSE 41 533. DIVIDEND EXPENSE 41 534. OTHERS' OPERATIONS EXPENSE 41 535. MISCELLANEOUS NON-OPERATING E X P E N S E 41 536. NON-OPERATING TAXES 42 537. UNCOLLECTIBLE NON-OPERATING REVENUES 541. I N T E R E S T ACCRUED ON F U N D E D D E B T 542. OTHER INTEREST DEDUCTIONS 550. R E N T DEDUCTIONS 551. R E N T FOR LEASE OF OTHER TELEPHONE PLANT 552. R E N T FOR TELEPHONE OFFICES 42 .... . 42 42 42 42 43 553. R E N T FOR CONDUITS, POLES AND OTHER SUPPORTS 43 554. R E N T FOR INSTRUMENTS AND EQUIPMENT 43 555. MISCELLANEOUS R E N T DEDUCTIONS 562. AMORTIZATION OF D E B T DISCOUNT AND E X P E N S E 563. AMORTIZATION OF P R E M I U M ON D E B T — CR 570. MISCELLANEOUS DEDUCTIONS FROM INCOME 43 43 43 43 571. Loss ON OPERATIONS OF OTHERS 44 572. AMORTIZATION OF LANDED CAPITAL 44 573. OTHER CONTRACTUAL DEDUCTIONS FROM INCOME 44 CORPORATE SURPLUS OR DEFICIT ACCOUNT. 600. DIVIDENDS ON OUTSTANDING STOCKS 605. SINKING FUND APPROPRIATIONS 610. MISCELLANEOUS DEDUCTIONS FROM SURPLUS 45 45 45 611. EXPENSES UNPROVIDED FOR ELSEWHERE 45 612. REALIZED DEPRECIATION N O T COVERED BY RESERVES 45 613. AMORTIZATION UNPROVIDED FOR ELSEWHERE 45 614. G I F T S TO CONTROLLED CORPORATIONS 46 615. APPROPRIATIONS TO RESERVES 46 616. OTHER APPROPRIATIONS FROM SURPLUS 46 617. OTHER DEDUCTIONS FROM SURPLUS 620. MISCELLANEOUS ADDITIONS TO SURPLUS 46 46 OPERATING REVENUE ACCOUNTS. 700. EXCHANGE SERVICE REVENUES 47 701. SUBSCRIBERS' STATIONS 47 702. PUBLIC PAY STATIONS 47 703. MISCELLANEOUS EXCHANGE SERVICE REVENUES a. b. c. d. Service Stations (switching charges) Private Exchange Lines Minor Rents of Exchange Plant Other Exchange Revenues 47 47 47 47 48 ACCOUNTS FOE TELEPHONE CORPORATIONS 15 FOR DEFINITIONS S E E PAGE 710. TOLL SERVICE REVENUES 711. COMPANY L I N E TOLLS 48 48 712. PROPORTION OF FOREIGN L I N E TOLLS 48 713. MISCELLANEOUS TOLL L I N E REVENUES 48 a. Leased Toll Lines b. Telegraph Prorates c. Telegraph Service on Toll Lines d. Minor Rents of Toll Plant e. Other Toll Line Revenues 720. MISCELLANEOUS OPERATING REVENUES 721. MESSENGER SERVICE 722. 48 48 48 48 48 48 48 TELEGRAPH COMMISSIONS 48 723. ADVERTISING AND DIRECTORY 49 724. RENTS FROM OTHER OPERATING PROPERTY 49 725. OTHER MISCELLANEOUS REVENUES 49 726. LICENSEE REVENUE — CR 727. LICENSEE REVENUE — DR 49 49 OPERATING EXPENSE ACCOUNTS. I. MAINTENANCE EXPENSES. 801. SUPERVISION OF MAINTENANCE 810. REPAIRS OF W I R E PLANT 52 52 811. REPAIRS OF AERIAL P L A N T 52 812. REPAIRS OF U N D E R G R O U N D P L A N T 53 820. REPAIRS OF EQUIPMENT 53 821. REPAIRS OF CENTRAL OFFICE EQUIPMENT 825. 827. 831. 832. 834. 836. 838. 53 822. 53 REPAIRS OF STATION EQUIPMENT REPAIRS OF BUILDINGS AND GROUNDS STATION REMOVALS AND CHANGES DEPRECIATION OF PLANT AND EQUIPMENT EXTRAORDINARY DEPRECIATION OTHER MAINTENANCE EXPENSES REPAIRS CHARGED TO RESERVES — C R JOINT MAINTENANCE EXPENSES — CR 53 53 54 54 55 55 55 II. TRAFFIC EXPENSES. 840. CENTRAL OFFICE SUPERINTENDENCE 841. TRAFFIC SUPERINTENDENCE 55 55 842. SERVICE INSPECTION 55 843. OPERATING CLERICAL WAGES 55 848. OPERATORS' WAGES 850. CENTRAL OFFICE SUPPLIES AND EXPENSES 55 55 851. R E S T AND LUNCH ROOMS 55 852. OPERATORS' 56 853. TRANSMISSION POWER 56 854. CENTRAL OFFICE STATIONERY AND PRINTING 56 SCHOOLING 16 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T 850. CENTRAL OFFICE SUPPLIES AND EXPENSES (continued) see page 855. MESSENGER SERVICE 56 856. MISCELLANEOUS CENTRAL OFFICE EXPENSES 56 858. PAY STATION EXPENSES 859. OTHER TRAFFIC EXPENSES 56 56 III. COMMERCIAL EXPENSES. 860. COMMERCIAL EXPENSES 56 861. COMMERCIAL ADMINISTRATION 862. PROMOTION EXPENSES a. Advertising b. Canvassing c. Sub-licensee Relations 863. COLLECTION EXPENSES a. Revenue Accounting b. Revenue Collecting c. Pay Station Commissions 864. DIRECTORY EXPENSES 56 56 56 57 57 57 57 57 57 57 IV. GENERAL AND MISCELLANEOUS EXPENSES. 870. GENERAL ADMINISTRATION 871. GENERAL OFFICE SALARIES a. Salaries of General Officers b. Salaries of General Office Clerks 873. GENERAL OFFICE SUPPLIES AND EXPENSES a. Expenses of General Officers and Clerks b. General Stationery and Printing c. Other General Office Supplies and Expenses 874. 875. 876. 877. 880. GENERAL LAW EXPENSES INSURANCE ACCIDENTS AND DAMAGES LAW EXPENSES CONNECTED W I T H DAMAGES MISCELLANEOUS GENERAL EXPENSES 57 57 57 57 57 57 57 57 58 58 58 58 58 881. R E L I E F DEPARTMENT AND PENSIONS 58 882. 59 TELEPHONE FRANCHISE REQUIREMENTS 883. AMORTIZATION OF FRANCHISES AND PATENTS 59 884. OTHER GENERAL EXPENSES 59 885. UNDISTRIBUTED ADJUSTMENTS — BALANCE 889. JOINT GENERAL EXPENSES — C R 59 59 CLEARING ACCOUNTS. 901. SHOP EXPENSE 902. STABLE AND GARAGE EXPENSE 903. TOOL EXPENSE 60 60 60 904. SUPPLY EXPENSE 60 905. ENGINEERING EXPENSE 61 906. PLANT SUPERVISION EXPENSE 61 BALANCE SHEET ACCOUNTS. DEFINITIONS AND I N S T R U C T I O N S . 8. 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 profit or loss of the business a t a given time. Where the title and definition of a Balance Sheet account clearly indicate t h a t it is a summary of other accounts, it is not required t h a t a special ledger account shall be raised under such a title to include the balance from the accounts usually carried on the ledger. The figures and letters prefixed to the titles of accounts in the following definitions and instructions are solely for convenience of reference, and are no p a r t of the title or definition. A S S E T ACCOUNTS. ioo. FIXED CAPITAL INSTALLED PRIOR TO JANUARY 1, 1912: I n this account (on the balance sheet statement) shall be shown the total oi the balances in the ledger accounts representing the corporation's fixed capital which was installed prior to J a n u a r y 1, 1912, and which is still in service a t the date of the balance sheet. (See text of this account on page 31.) 101. FIXED CAPITAL INSTALLED SINCE DECEMBER 31, 1911: This account is a summary of the accounts representing the corporation's fixed capital installed since December 31, 1911, and should show the cost of the fixed capital which has been installed since t h a t date and is still in service a t the date of the balance sheet. (For the primary Fixed Capital accounts, see pages 31 to 38.) 105. CONSTRUCTION WORK IN PROGRESS: In this account may be included amounts expended upon plant t h a t is in process of construction under estimates or work orders but is not ready for service at the date of the balance sheet. I t includes also such proportion of plant supervision expenses, engineering expenses, tool expenses, supply expenses and general expenses as may be properly chargeable to the construction work included under this account. When the work is completed on any job the cost of which has been included in this account, the sub-account covering t h a t job shall be credited with the amount a t which it stands charged, and the appropriate fixed capital or other accounts shall be concurrently charged; but in no case shall any expenditure be carried in this account beyond the close of the fiscal year next succeeding t h a t in which the expenditure is made. n o . INVESTMENTS: This account includes the cost of all properties acquired or held not for use in present operations, but as a means of obtaining and exercising control over other corporations, or for income to be derived from them, or for a rise 2 [ 17 ] 18 P U B L I C SERVICE COMMISSION, SECOND DISTRICT in value, or for devotion to future operations, and for securing other business advantages t h a t may seem possible through their acquisition and possession. I t is subdivided as follows: 111. SECUKITIES OF OTHER CORPORATIONS: Include in this account the cost of stocks and bonds and other evidences of indebtedness issued by other companies. This account does not include any stocks, bonds, or other evidences of indebtedness issued or assumed by the accounting corporation. Class A corporations will subdivide this account so as to show separately the cost of a. Stoclcs of System Corporations,* b. Funded Debt of System Corporations.* c. Miscellaneous Stocks. d. Miscellaneous Bonds. NOTE.— In the annual reports to the Public Service Commission, Second District, investments will be required to be classified so as to show those held subject to a lien of some character and those held free of all lien or pledge. 112. ADVANCES TO SYSTEM CORPORATIONS FOR CONSTRUCTION, E Q U I P M E N T , AND BETTERMENTS : Include in this account advances to proprietary, affiliated, controlled, and controlling corporations to enable such corporations to pay for construction, equipment, or additions and betterments, when such advances are of a permanent nature \i. e. where there is not an understanding t h a t the advances are to be repaid within one year) or when i t is understood and intended t h a t reimbursement shall be made by the issue of the securities of the debtor corporation. NOTE.— Temporary advances on open accounts to system corporations and such advances for purposes other than construction, equipment, or additions and betterments shall be included in accounts receivable. 113. MISCELLANEOUS INVESTMENTS: Include in this account all other investments of a permanent nature in intangibles and in physical property not held for the operation of the company's plant as a telephone system. NOTE.— In the annual reports to the Public Service Commission, Second District, investments will be required to be classified so as to show those held subject to a lien of some character and those held free of all lien or pledge. 120. CASH AND DEPOSITS: This account includes: 121. C A S H : Charge to this account the amount of current funds available for use on demand in the hands of financial officers and agents, or deposited in banks or with t r u s t companies, and cash in t r a n s i t for which agents receive current credit. 122. SPECIAL DEPOSITS: Charge to this account special deposits to pay declared dividends or matured interest, cash realized from the sale of securities held by trustees for disbursement when the purposes for which the securities are sold are accomplished; amounts realized from the sale of property and held by trustees other than for sinking funds until the property is replaced; special deposits other than in sinking funds for the payment of • By a " System Corporation " is meant any controlling, affiliated, controlled, or subsidiary corporation. ACCOUNTS FOR TELEPHONE CORPORATIONS 19 debts and interest, not matured; also money and securities deposited to secure the performance of contracts, and other deposits of a special nature not provided for elsewhere. 125. BILLS RECEIVABLE: Include in this account the cost of all collectible obligations in the form of bills receivable or other similar evidences of money receivable on demand or within a time not exceeding one year. This does not include interest coupons. Time loans t h a t mature more than one year after date of issue shall be considered as investments and shall not be included in this account. NOTE.—When loans to system corporations for construction purposes are evidenced by demand or short term notes intended later to be exchanged for other securities, the amount of such loans should be included in account No. 112, "Advances to System Corporations for Construction, Equipment, and Betterments," 130. ACCOUNTS RECEIVABLE: Include in this account all amounts owing to the corporation upon accountswith solvent concerns other than banks, also the cost of all accounts and claims (except notes or negotiable bills) upon which responsibility is acknowledged by solvent concerns or which are sufficiently secured t o be considered good, and of all judgments against solvent concerns where the judgment is not appealable or suspended through appeal. The following sub-accounts are provided: 131. ACCOUNTS WITH SYSTEM CORPORATIONS: Include in this account amounts due from proprietary, affiliated, controlled, and controlling corporations on open accounts other than those provided for in account No. 112, "Advances to System Corporations for Construction, Equipment, and Betterments." 132. D U E FROM 'SUBSCRIBERS AND AGENTS: Include in this account amounts due from subscribers and agents for services rendered or billed. NOTE.— Accounts with subscribers and agents shall be kept in such manner as will enable corporations to show amounts due from subscribers and agents for current accounts, for delinquent accounts, and amounts due from subscribers whose service has been suspended. 133. MISCELLANEOUS ACCOUNTS EECEIVABLE: Include in this account amounts due from employees for working funds advanced, and amounts due from miscellaneous debtors upon open accounts considered collectible. 135. INTEREST AND DIVIDENDS RECEIVABLE: Charge to this account all interest considered collectible accrued but not yet collected upon bonds, notes, or other commercial paper, held by or for the benefit of the corporation; all dividends declared or guaranteed by solvent concerns but not yet collected, the right to which is in the corporation. 136. OTHER CURRENT ASSETS: Include in this account the cost of all current assets which are not includible under any of the foregoing accounts. By current assets are meant only those things t h a t are readily convertible into money and which are held not as investments b u t with the intent of being presently converted into money. 20 P U B L I C SERVICE COMMISSION, SECOND DISTRICT 137. MATERIALS AND SUPPLIES: Charge to this account the cost (including transportation) of all materials and supplies acquired, and the value of discarded equipment and of equipment, materials, and supplies returned to store, regardless of whether the same are intended to be consumed in construction or in operation, or later to be sold. Where discounts recovered through prompt payment are not credited to the particular bills, the cost a t which such materials and supplies shall be charged shall be the invoice cost, and any discounts recovered through prompt payment of bills for such materials and supplies shall be credited to account No. 268, "Interest During Construction," or to account No. 885, " Undistributed Adjustments — Balance," according as such materials and supplies are intended for construction or for operation. When the use of any tangible fixed capital is discontinued i t shall be treated as retired; the original cost of such capital shall be credited to the Fixed Capital account in which carried, and its value, if any, as second-hand material or junk shall be charged to this account, or an appropriate subaccount. If such value is not known and can not readily be determined it shall be estimated, and errors in such estimates when determined shall be adjusted through the accounts involved during the year in which the estimates were made; if later, then through the " C o r p o r a t e Surplus or Deficit" account. Inventories of materials and supplies shall be taken a t least annually, and any shortages or overages disclosed by such inventories shall be credited or debited to this account and debited or credited to account No. 885, " Undistributed Adjustments — Balance," or to account No. 904, "'Supply Expense" (if t h a t account is used), in case such shortages or overages can not be assigned to specific accounts. Shortages may however be charged directly to " Corporate Surplus or Deficit." Where materials and supplies from stores have been used in construction, and it is estimated t h a t part of the shortage or overage is due to such materials and supplies having been actually applied to construction, a proper proportion of the inventory shortage or overage should be charged or credited to account No. 274, " Miscellaneous Construction Expenditures," directly or through account No. 904, "Supply Expense." 138. SINKING FUNDS: Include in this account the amount of cash and the cost of live securities in the hands of trustees of sinking and other funds for the purpose of redeeming outstanding obligations, also amounts deposited with such trustees on account of mortgaged property sold. A separate account shall be raised for each sinking fund. When any security of the same issue as t h a t for which a sinking fund is created is acquired through the operation of the sinking fund, the par value of the security shall be charged to the liability account to which it stands credited and not to the sinking fund account. {See section 11, page 24.) 139. OTHER SPECIAL FUNDS: Include in this account the amount of cash and the cost of securities held in t r u s t by or for the corporation in insurance funds, pension funds, hospital ACCOUNTS FOR TELEPHONE CORPORATIONS 21 funds, and other similar special funds not provided for in the preceding accounts. A separate account shall be raised for each fund. NOTE.— Securities issued or assumed by the corporation may be included among the assets of special funds only when they represent the actual investment of funds held in trust and when the fund so held would share in the distribution of assets covered by the securities in case of foreclosure or dissolution. 140. P R E P A Y M E N T S : Include in this account, or the appropriate sub-accounts hereunder, the balances arising from the payment of taxes, insurance, rents, and like expenses, in advance of the period to which they pertain. 141. PREPAID R E N T S : Charge to this account the amount of rents paid in advance of the enjoyment of the term. As the term is consumed, credit this account at monthly intervals and debit the appropriate rent account with the amount applicable to the month. 142. PREPAID T A X E S : Include in this account the excess of taxes paid over the amount properly chargeable to Income or other accounts as shown by the debit balance in the Tax Liability account. (See note under account No. 175, "Taxes Accrued," page 26.) 143. PREPAID INSURANCE: When premiums on insurance policies are paid in advance of their accrual the amount prepaid shall be charged to this account. As such premiums accrue, they shall be credited at monthly intervals to this account and charged to the appropriate expense account. 144. PREPAID DIRECTORY E X P E N S E S : Charge to this account the cost of preparing, printing, binding, and delivering directories. When directories are issued, this account should be credited each month and operating expense account No. 864, "Directory Expenses," should be charged with the proportion of the cost based on the number of months the directory will be in use. 145. OTHER PREPAYMENTS : When prepayments are made for anything other than as provided for in the four preceding accounts, the amount of such prepayments shall be included in this account. 147. UNAMORTIZED DEBT DISCOUNT AND E X P E N S E : When funded debt securities and other evidences of indebtedness are disposed of for a consideration whose cash value is less t h a n the sum of the par value of the securities or other evidences of indebtedness and the interest thereon accrued at the time the transfer takes place, the excess of such sum of the par value and accrued interest over the cash value of the consideration received shall be charged to this account. To this account shall also be charged all expense connected with the issue and sale of evidences of debt, such as fees for drafting mortgages and t r u s t deeds, fees and taxes for recording mortgages and t r u s t deeds; cost of engraving and printing bonds, certificates of indebtedness, and other commercial paper having a life of more than one year; fees paid trustees, provided for in mortgages and t r u s t deeds; fees and commissions paid underwriters and brokers for marketing such evidences of debt, and other like expense. At or before the close of each fiscal period thereafter, a proportion of such discount and expense based upon the life of the security to maturity shall be credited to this account and charged 22 P U B L I C SERVICE COMMISSION, SECOND DISTRICT to account No. 562, "Amortization of Debt Discount and Expense." Such discount and expense may, if desired, be amortized more rapidly through charges of all or any p a r t of it, either a t the time of issue or later, to account No. 617, " Other Deductions from Surplus." 148. OTHER SUSPENSE: This account includes all debits not elsewhere provided for and the proper final disposition of which is uncertain. I t will include all such matters as expense of preliminary surveys, plans, investigations, etc., made for determining the feasibility of projects under contemplation. Should any such project later be carried to completion, such amounts shall be credited to this account and charged to the proper capital account or accounts; should it be abandoned, such amounts shall be charged to " Corporate Surplus or Deficit." When the proper disposition of any matter charged to this account is determined, it shall be credited to this account and charged to the appropriate account or accounts. 149. CORPORATE DEFICIT: Under this head should be shown the debit balance, if any, in the " Corporate Surplus or Deficit Account." (See section 18, page 44.) LIABILITY ACCOUNTS. 9. Stocks Defined. By the stocks of a corporation, as the term is here used, are meant those securities which represent permanent interests in the corporation, or interests which, if terminable, are so only a t the option of the corporation. Stocks are classified as — Common stocks, those whose claims in the distribution of dividends are subordinate to the claims of all other stocks. Preferred stocks, those having a first claim upon those dividends which may be distributed. Debenture stocks, those issued under a contract to pay a specified return a t specified intervals. No two stocks shall be considered of the same class unless they are equal in their dividend or interest rights, their voting rights, and the conditions under which they may be retired. 150. CAPITAL STOCKS: Credit to this account or t o separate sub-accounts in the case of the issue of two or more classes of stocks, the par value of stocks actually issued. Credit to a sub-account entitled "Instalments on Stock Subscriptions," the amount of instalments paid on subscriptions for capital stocks; when certificates of stock are issued for instalments paid, this sub-account shall be cleared and the par value of the stock so issued shall be credited to the account appropriate for such stock. If any issue of stock is for money, that fact shall be stated; and if for any consideration other t h a n money, the person to whom issued shall be designated, and the consideration for which issued shall be described with sufficient particularity to identify it. If such issue is to the treasurer or other agent of the corporation, to be by him ACCOUNTS FOR TELEPHONE CORPORATIONS 23 disposed of for the benefit of the corporation, t h a t 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 t h a n the par value of such stock, the excess shall be credited to account Ko. 158, "Premiums on Stocks," and corresponding reference thereto shall be contained in the entry relating to such stock in the stock account. 157. STOCK LIABILITY FOR CONVERSION OF OUTSTANDING SECURITIES OF CONSTITUENT COMPANIES: Include in this account the par value of stock t h a t the corporation has agreed to issue in exchange for securities of constituent companies whose physical property has been acquired under such agreements, but whose securities have not yet been surrendered for exchange. 158. PREMIUMS ON STOCKS: Premiums on stocks shall be classified with respect to the several classes of stocks, and a separate account shall be kept for the premiums on each particular class of stock. When a premium is realized upon an issue of any particular class the amount shall be credited to the proper account and shall remain in such account so long as such stock remains outstanding. By a premium realized is meant the excess of the actual money value at the time of issue of the stocks, of the consideration received for such issue over the par value of the stocks issued. If the stock is issued by the corporation through its treasurer or other agent, the excess of the actual money value of the consideration obtained by such agent for such stock, over the par value thereof, shall be considered a premium realized. 10. Funded Debt Defined. By funded debt, as the term is here used, is meant the face value of all bonds, notes, and other evidences of indebtedness (except, receivers' certificates and open accounts for advances) which, by the terms of the creation of the debt, do not mature until more t h a n one year after the date of such creation. Funded debt is classified in accordance with four principal characteristics: viz., (1) mortgage or other lien or security therefor; (2) rate of interest; (3) interest dates; and (4) date of maturity. No two amounts of funded debt shall be considered of the same class unless agreeing in all four of the above characteristics except t h a t any issue of securities agreeing in the first three characteristics but maturing serially may be treated as of the same class. Where any portion of the funded debt rests only on the general credit of the corporation and is not specially secured or supported by lien of any character, it shall, for the purpose of these accounts, be known as a debenture. Debentures include promissory notes unsecured by mortgage or other lien, also securities commonly known as plain bonds. 160. FUNDED DEBT: Credit to this account, or to separate sub-accounts in the case of the issue of two or more classes of funded debt, the par value of funded debt actually 24 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T issued. Credit to a sub-account entitled "Instalments on Funded Debt Subvscriptions," the amount of instalments paid on subscriptions t o funded debt issues. When bonds, notes, or other evidences of indebtedness are delivered, this sub-account shall be cleared and the par value of the funded debt so issued shall be credited to the account appropriate for such funded debt. The entry in any account shall show also the purpose for which funded debt is issued and shall make intelligible reference to the book, page, and account whereon are shown any discounts or premiums realized on the amount issued or assumed. If the consideration received for any issue of funded debt is anything else than money, the entry shall show the principal to whom issued and shall describe with sufficient particularity to identify it the consideration actually received for the issue. If the issue is in any case to an agent of an undisclosed principal, the name and business address of such agent and the fact of his agency shall be shown in the entry. I I . Reacquired Securities, How Treated. When securities, whether funded debt or stocks, have been actually issued to bona fide holders for value (or after such issue by another corporation have been assumed by the accounting corporation) and after such issue (or assumption) have been acquired by the corporation under circumstances which require t h a t they shall not be treated as repaid or retired, they shall be charged a t face values to an account entitled " Reacquired Securities," except when acquired for investment of special t r u s t funds or sinking funds other t h a n those created in respect of the issue of which the reacquired securities are a part, in which case they shall be charged to the funds a t cost. I n reports t o the Public Service Commission, Second District, securities charged to the account " Reacquired Securities" will be deducted from the par value of securities issued and will not appear upon the balance sheet statement as a liability of the corporation. The liability of the corporation for capital stock and funded debt outstanding shall include only the p a r value of such securities as have been actually issued to bona fide holders for value and are actually outstanding a t the date of the balance sheet, except t h a t if any such securities have been actually reacquired by the corporation for the investment of special t r u s t funds, such securities may be included among the assets of such funds a t cost and among the liabilities of the corporation as actually outstanding securities. ••' NOTE.—When bonds or other evidences of indebtedness issued or assumed by the corporation are reacquired by the investment of sinking funds created in respect of the issue of which the reacquired securities are a part, such securities shall not be carried as an asset of the corporation but shall be charged at par value to the liability account to which they stand credited or to the account " Reacquired Securities" in case circumstances require that they shall not be treated as paid or retired. If any such securities are reacquired for less or more than their par value, the difference between the par value and the cost of reacquirement shall be credited or charged to Corporate Surplus or Deficit account. 166. RECEIVERS' CERTIFICATES: When any receiver acting under the orders of a court of competent jurisdiction is in possession of the property of the corporation and under t h e orders of such court issues certificates of indebtedness chargeable upon such ACCOUNTS FOE TELEPHONE CORPORATIONS 25 property, the par value of such certificates shall be credited to this account. Interest accruing upon such certificates shall also be credited monthly t o this account. 167. ADVANCES FROM SYSTEM CORPORATIONS FOR CONSTRUCTION, EQUIPMENT, AND BETTERMENTS: Include in this account advances from proprietary, affiliated, controlled, and controlling corporations to enable the accounting corporation to pay for construction, equipment, or additions and betterments when such advances are of a permanent nature (i. e. where there is not a n understanding t h a t the advances are to be repaid within one year) or when i t is understood and intended t h a t a reimbursement shall be made by the issue of the securities of the debtor corporation. NOTE.— Temporary advances on open accounts from system corporations and such advances for purposes other than construction, equipment, or additions and betterments shalltoeincluded in accounts payable. 168. JUDGMENTS UNPAID: When any judgment of indebtedness is rendered by a court of competent jurisdiction against the corporation, or any fine or penalty requiring the pay* ment of money is assessed by such a court against the corporation, and no appeal accompanied by stay of execution has been taken therefrom within t h e time allowed by law for such appeal, the amount of such judgment shall be credited t o this account, and the entry shall designate the action or suit as a consequence of which such judgment is pronounced or such fine or pena l t y assessed. The designation of the action or suit shall show the court, the term thereof, the parties, and the character of the action or suit. Interest accruing upon any such judgment shall be credited monthly t o this account. N O T E — I n case of appeal and affirmance in whole or in part from which judgment of affirmance a further appeal lies, the same rule shall apply as upon entry of original judgment. 169. BILLS PAYABLE: When any note, draft, or other bill payable which matures not later t h a n one year after date of issue or of demand is issued or t h e primary liability thereon assumed by the corporation, the p a r value thereof shall be credited to this account, and when it is paid it shall be charged to this account and credited to " Cash " or other suitable account. NOTE.—When loans from system corporations for construction purposes are evidenced by demand or short term notes intended later to be exchanged for other securities, the amount of such loans should be included in account No. 167, "Advances from System Corporations for Construction, Equipment, and Betterments." 170. ACCOUNTS PAYABLE: Include in this account the credit balances showing all liabilities of the corporation upon open accounts as provided for in the following sub-accounts: 171. ACCOUNTS W I T H SYSTEM CORPORATIONS: Include in t h i s account the amounts owing to proprietary, affiliated, and controlled or controlling corporations on open accounts, other t h a n those provided for in account No. 167, "Advances from System Corporations for Construction, Equipment, and Betterments." 26 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T 172. AUDITED VOUCHERS AND WAGES U N P A I D : Include in t h i s account t h e amount of audited vouchers or accounts and audited payrolls unpaid on t h e date of t h e balance sheet. Include also the amount of unclaimed wages and outstanding pay and time checks issued in payment of wages. 173. SUBSCRIBERS' DEPOSITS: Credit to this account as such deposits are made all cash deposited with the corporation by subscribers for telephone service as security for the payment of bills. Deposits refunded should be charged to this account and credited to cash. Deposits applicable t o uncollectible telephone bills should be credited to the account of the subscriber and debited to this account. 174. MISCELLANEOUS ACCOUNTS PAYABLE: Include in this account all amounts owing to miscellaneous creditors on open accounts and not provided for elsewhere. 175. TAXES ACCRUED: Include in this account the amount of taxes accrued and properly charged against income or other accounts in excess of the amount of taxes paid. NOTE.— An open account entitled " Tax Liability Account" should be raised, and to it should be credited at the close of each month the taxes accrued during the month, corresponding debits being made to the appropriate Taxes accounts. 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 monthly credits should 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 should be charged to the " Tax Liability Account," and credited to " Cash" or other suitable account. A debit balance in the " Tax Liability Account," due to the prepayment of taxes applicable to a period subsequent to that for which the Income account is stated, should be shown under " Taxes Prepaid," while a credit balance should be shown under " Taxes Accrued." 176. I N T E R E S T ACCRUED: Credit to this account at the close of each month the interest accrued during the month upon the interest-bearing indebtedness issued or assumed by the corporation, except interest on judgments and receivers' certificatesWhen such interest is paid it should be charged to this account and credited to " C a s h " or other suitable account. The interest accruing on any judgment against t h e corporation or upon any receivers' certificates shall be credited to the account t o which such judgment or receivers' certificates stand credited. 177. DIVIDENDS DECLARED: When any dividend is declared, the ^amount of the dividend shall be credited to this account and here remain until it is paid, when the amount of t h e payment shall be charged to this account and credited to " Cash " or other suitable account. 178. SERVICE BILLED IN ADVANCE: When bills are made for service to be rendered in future months, and t h e amount of the bills is included in " Accounts Receivable," but not in t h e revenue accounts, the proportion of the bills applicable to future months shall be credited to this account. As the term for which the bill is made ACCOUNTS FOE TELEPHONE CORPORATIONS 27 expires, the appropriate revenue account should be credited and this account debited with the amount applicable to the current month. When toll coupons or tickets are sold, this account should be credited with the amount representing the service to be rendered. At the end of each month, this account should be charged and the appropriate revenue accounts credited with the amount of coupons and tickets redeemed during t h a t month. 181. RESERVE FOR ACCRUED DEPRECIATION: Credit to this account or to appropriate sub-accounts such amounts as are concurrently charged to account No. 831, "Depreciation of P l a n t and Equipment." Charge to this account or to appropriate sub-accounts (except as prescribed in the notes hereunder) the realized depreciation in the several classes of tangible fixed capital, t h a t is, the difference between the original cost (estimated if not known) of property relinquished, retired, or destroyed, and the value of any salvage recovered. Charge also to this account such p a r t of the expenditures for repairs concurrently credited to account No. 836, " R e p a i r s Charged to Reserves—Cr.," as may have been provided for in estimating the rate of depreciation. (See account No. 831, "Depreciation of P l a n t and Equipment. 5 ') NOTE A.— When any property is retired which was installed prior to the raising of the " Reserve for Accrued Depreciation,'' only such portion of the realized depreciation shall be charged to the reserve as is due to life in service after the establishment of the reserve; this portion may he estimated on the basis of the proportion which the life in service of the property in question after the establishment of the reserve bears to its entire life in service. The remainder of the realized depreciation shall be charged to account No. 612, " Realized Depreciation Not Covered by Reserves," unless the corporation has on its books a depreciation reserve accumulated prior to the establishment of the prescribed depreciation rules, in which case such other remainder, or so much of it as may be provided for, shall be charged to such other reserve account. NOTE B.—When any property is retired whose took value has been reduced by writing off estimated depreciation, only that part of the realized depreciation which has not already been written off shall be charged as above to the " Reserve for Accrued Depreciation," or account No. 612, " Realized Depreciation Not Covered by Reserves." NOTE C.—When any property is retired whose oooh value is greater than the known or estimated cost, such excess shall be charged to " Corporate Surplus or Deficit" and the realized depreciation shall be charged as elsewhere directed. NOTE D.— If any property is sold for more than its original cost, the amount of depreciation, if any, accrued and credited to a reserve in respect thereof, shall be determined as accurately as possible and charged to such reserve. The sum of the amount so charged and the excess of the selling price over the cost of the property shall be credited to account No. 620, "Miscellaneous Additions to Surplus." 182. RESERVE F O R AMORTIZATION O F INTANGIBLE CAPITALS Credit to this account such amounts as are concurrently charged to account No. 572, "Amortization of Landed Capital," and to account No. 883, "Amortization of Franchises and Patents." Charge to this account when any franchise, patent, or landed capital expires or is relinquished, the amount a t which it stood charged in the corporation's fixed capital accounts, or such amount as has been previously credited to this reserve in respect of 28 P U B L I C SEKVICE COMMISSION, SECOND DISTRICT such capital if the amortization has not been fully accomplished. That portion of its cost which has not been covered by credits to the reserve or previously written off shall be charged to Corporate Surplus or Deficit account as "Amortization Unprovided for Elsewhere." 183. UNAMORTIZED PREMIUM ON DEBT: When funded debt securities or other evidences of indebtedness issued or assumed by the corporation are disposed of for a consideration whose cash value is greater than the sum of the par value of such securities or other evidences of indebtedness and the interest thereon accrued a t the time the transfer takes place, the excess of the cash value of such consideration received over the sum of the par value of the securities or other evidence of indebtedness and the accrued interest shall be credited to this account. At monthly intervals thereafter a proportion of such premium based upon the life to maturity of the security or other evidence of indebtedness shall be charged to this account and credited to account No. 563, "Amortization of Premium on Debt — Cr." in the Income account. 191. CASUALTY AND INSURANCE RESERVES: 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 the liability may (if not previously provided for by insurance or self-insurance) be charged to the appropriate operating expense or other accounts and credited to this account, against which (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 liability is definitely ascertained. If the loss is of such character t h a t it is in whole or in p a r t indemnifiable under any contract of insurance carried by the corporation, the indemnifiable portion of the loss shall be charged to the insurer and credited to "Casualty and Insurance Reserves." Also credit to this account the amounts charged t o operating expense account No. 875, "Insurance" to cover self-carried risks. 192. INCOME INVESTED SINCE DECEMBER 31, 1911, IN FIXED CAPITAL: Credit to this account such amounts from income or surplus as are definitely set aside to cover expenditures for extensions or improvements of the fixed capital of the accounting corporation; such appropriations include those made discharging the principal (less the discount, if any, suffered a t the time of sale) of any obligations incurred in the acquisition of any property whose cost is carried in the fixed capital accounts. The amounts credited to this account shall be concurrently charged to " Corporate Surplus or Deficit" account as "Appropriations to Keserves." This account should not include temporary appropriations for the acquisition of property the cost of which is intended later to be met by an issue of securities, nor appropriations for the payment of obligations which are intended to be replaced by new issues. ACCOUNTS FOR TELEPHONE CORPORATIONS 29 193. RESERVES INVESTED IN SINKING FUNDS: Include in this account appropriations from surplus specifically invested or set aside in the hands of trustees for sinking and redemption funds, including accretions to such funds. 194. OTHER RESERVES FROM INCOME OR SURPLUS: Include in this account all appropriations of income or surplus held in reserve, other than appropriations invested in fixed capital since December 31, 1911, and appropriations invested in sinking or redemption funds. A separate sub-account shall be raised for each reserve, and the entries in such sub-accounts will be required to be shown separately in the annual report to the Public Service Commission, Second District. This account includes the unexpended balance, if any, of appropriations intended to be invested in fixed capital, and such appropriations to sinking or redemption fund reserves as are not specifically invested. 199. CORPORATE SURPLUS U N A P P R O P R I A T E D : Under this head should be shown the credit balance, if any, in the " Corporate Surplus or Deficit Account." (See section JSTo. 18, page 44,) FIXED CAPITAL ACCOUNTS. DEFINITIONS AND I N S T R U C T I O N S . 12. Fixed Capital Defined. By the fixed capital of a corporation is m e a n t 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 (exception being made in the case of hand tools and other small portable tools t h a t may be lost or stolen). 13. Classification of Fixed Capital. Fixed capital is divisible into original capital, additions, betterments, renewals, and replacements. Original capital is the fixed capital installed or acquired prior to the beginning of regular operations by the corporation; as applied to a telephone corporation, it includes the acquisition or construction of the plant necessary to begin the regular operation of an exchange or toll system. Additions are structures, facilities, equipment, and other properties added to those in service a t the beginning of operations and not taking the place of any property of like purpose previously held by the corporation. Betterments are mechanical changes in structures, facilities, or equipment which have as their primary aim and result the making of the properties affected more useful or of greater capacity t h a n they were a t the time of their installation or acquisition. Fixed capital should include only such portion of the cost of the changes incident to betterments as will, when added to the original cost of the property bettered, give the cost of replacement or reconstruction in present condition of the property as bettered. The remainder of the cost of the change shall be classed as a repair and be charged to t h e appropriate expense account. Renewals are extensions of the term of duration of the corporation's interests in land and other tangible fixed capital and extensions of the life period of franchises, rights, and other intangible fixed capital. Replacements are those installations of fixed capital which have for their purpose the substitution of one building, structure, piece of equipment or machinery, for another which it has become necessary to retire, the substitute having substantially no greater capacity t h a n the property replaced. If the substitute has substantially greater capacity t h a n the property replaced, such p a r t of its cost as would equal the cost of a substitute of the same capacity is to be classed as a replacement, and the remainder of t h e cost as a betterment. 14. Cost of Fixed Capital. The term "cost" as used in the texts for fixed capital accounts means the original cost to the corporation. I t includes not only the costs of labor, materials and supplies (as defined in section 5, page 7) directly employed or consumed in the construction and installation of property classed as fixed capital, but also the cost of preliminary plans [30] ACCOUNTS FOB TELEPHONE CORPORATIONS 31 and surveys and such portion of the expenses for engineering and plant supervision and general expenses as may be chargeable to the fixed capital accounts under an equitable plan for the apportionment of such expenses. IOO. FIXED CAPITAL INSTALLED PRIOR TO JANUARY 1, 1912: This account is a summary of those accounts which include the fixed capital of the corporation installed prior to J a n u a r y 1, 1912, and which is still in service a t the date of the balance sheet. The accounts representing the fixed capital of the corporation as carried on its books a t the close of December 31, 1911, shall be so designated upon the books of the corporation as to show clearly t h a t they relate only to fixed capital installed prior to the close of t h a t date. No debits shall be made to such accounts with respect to any property subsequently acquired, but the cost of such property shall be charged to the accounts hereinafter provided. When any property acquired prior to J a n u a r y 1, 1912, is withdrawn or retired from service, the amount at which it stands charged shall be credited to the account in which it is charged and concurrent debits shall be made (1) to "Cash," "Materials and Supplies," or other account, as may be appropriate, for the value of any salvage; (2) to account No. 181, "Reserve for Accrued Depreciation," or to account No. 182, "Reserve for Amortization of Intangible Capital," for the amount of depreciation or other amortization applicable to the period subsequent to December 31, 1911; and (3) to "Corporate Surplus or Deficit" account for the remainder of the amount a t which the property is carried in the accounts for fixed capital; unless the corporation had on t h a t date a reserve for retirements, in which case the latter amount, or so much of it as may be applicable, shall be charged to such reserve account. NOTE.— In the reports to the Public Service Commission, Second District, a statement will be required showing the names of the accounts for fixed capital actually carried by the corporation on December 31, 1911, and the balances therein at the date of the report. 101. FIXED CAPITAL INSTALLED SINCE DECEMBER 31, 1911: This account is a summary of those accounts which include the cost of fixed capital installed since December 31, 1911. The sum of the balances in accounts Nos. 200 to 274, inclusive, should be shown on the balance sheet statement under this account. 200. INTANGIBLE CAPITAL: This account includes: 201. ORGANIZATION: Charge to this account all fees paid to governments for the privilege of incorporation, and all office and other expenditures incident t o organizing the corporation or other enterprise and putting it in readiness to do business. This includes the cost of preparing and distributing prospectuses, the cost of soliciting subscriptions for stock (but not for loans nor for the purchase of bonds or other evidence of indebtedness), cash fees paid to promoters, and the actual cash value a t 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. This account shall not include any discounts upon stocks or other securities 32 PUBLIC SERVICE COMMISSION, SECOND DISTRICT issued, nor shall it include any costs incident to negotiating loans or selling bonds or other evidence of indebtedness. NOTE.—- Costs incident to preparing and filing certificates of authorization of increase of capital stock, and to the negotiation and issue of stock thereunder, are classed as additions. The cost of preparing and filing certificates of amendment of articles of incorporation is classed as a betterment. The cost of preparing and filing papers in connection with the extension of the term of incorporation or with reincorporation consequent upon reorganization shall be classed as a renewal. 202. FRANCHISES: Charge to this account " t h e amount (exclusive of any t a x or annual charge) actually paid to the State or to a political subdivision thereof as the consideration for the grant of such franchise or r i g h t " (section 101 of the Public Service Commissions Law) as is necessary to the conduct of the corporation's telephone operations. If any such franchise is acquired by assignment, the charge to this account in respect thereof must not exceed the amount actually paid therefor by the corporation to its assignor, nor shall it exceed the amount specified in the statute above quoted. Any excess of the amount actually paid by the corporation over the amount paid by the original grantee to the grantor of the franchise shall be charged to account No. 204, "Other Intangible Capital." If any such franchise has a life of not more than one year after the date when it is first exercised by the corporation, it shall not be charged to this account but to the appropriate accounts in operating expenses (and in account No. 140, "Prepayments," if extending beyond the fiscal y e a r ) . NOTE.— Payments made to the State or to some subdivision thereof as a consideration for granting an extension for more than one year of the life period of a franchise are classed as renewals. Those made as a consideration for franchises or extensions thereof covering additional territory to be operated as part of an existing system are classed as additions. If the franchises cover separate and distinct new exchange or toll systems, the payments therefor are classed as original capital. Annual or more frequent payments in respect of franchises must not be charged to this account but to the appropriate tax or operating expense account. 203. PATENT E I G H T S : Charge to this account the cost of all rights (having a life of more t h a n one year from the date when placed in service) acquired by the corporation in or under valid patents granted by the United States to inventors for inventions and discoveries which are necessary to the economical conduct of the corporation's telephone operations. NOTE.— If a patent right is extended to cover a further period of time than that covered by the original grant, the cost of such extension is classed as a renewal. A patent right acquired for use in an existing system and necessary to the economical operation thereof is classed as an addition. 204. OTHER INTANGIBLE CAPITAL: Charge to this account the cost of all other intangible capital devoted to telephone operations. Entries of charges to this account shall describe the acquired property with sufficient particularity clearly to identify it, and shall also show specifically the principal from whom acquired and all agents representing such principal in the transaction; also the term of life of such property, estimated if not knowrn, and if estimated, the facts upon which the estimate is based. ACCOUNTS FOR TELEPHONE CORPORATIONS 33 207. RIGHT OF WAY: Charge to this account the cost of all landed capital * acquired for the location of telephone wires, cables, pole lines, and conduits; expenses of appraisals, and of juries, commissioners, or arbitrators in condemnation cases; real estate brokers' commissions; cost of plats, abstracts, notarial fees, examinations of titles, recording deeds, etc. 210. OTHER TELEPHONE REAL E S T A T E : This account includes: 211. LAND: Charge to this account the cost of all landed capital,* other than right of way, acquired for use in the operation of the telephone plant, such as land occupied by general offices, exchanges, shops, stables, etc. I t includes the cost of examination and registration of title, conveyancer's and notary's fees, purchasing agent's commissions or proportion of purchasing agent's salary, taxes accrued to date of transfer of title and all liens upon the title, when such costs are assumed or paid by the purchaser in its own behalf; also costs of obtaining consents and payments for abutting damages and expenses of condemnation proceedings. NOTE.— Cost of buildings and other improvements must not be included in this sub-account. If at the time of acquisition of an interest in lands such interest extends to buildings or other improvements thereon, which improvements are devoted by the corporation to telephone operations, and if the price of such improvements is not determined by the contract, the buildings or improvements shall he appraised at their fair cash value for use in such operations, and such appraised value shall be charged to account No. 212, " Buildings." If such improvements are devoted to operations other than telephone or held as investments, the cost (or the appraised value, if the cost is not determined in the contract of acquisition) shall be charged to the appropriate investment account or capital account for other operations. If the improvements are removed or wrecked, the salvage (less the cost of removal or wreckage) shall be excluded from this account. 212. BUILDINGS: Charge to this account the cost of all buildings, such as general and central offices, shops, stables, garages, etc., devoted to the general purposes of the corporation; also of all permanent fixtures such as water, steam, and gas pipes and fixtures, electric wiring and fixtures for lighting, signaling, etc.; elevators and the engines and motors specially provided for operating them; furnaces, boilers, and other apparatus provided for producing steam for such engines and for heating; electric generators specially provided for producing current for lighting such buildings, etc. This account includes such piers and other foundations for machinery and apparatus as are designed to be as permanent as the buildings in (or in connection with) which they are constructed, and to outlast the first machinery or apparatus mounted thereon. I t also includes the cost of real estate broker's commissions, examinations and registrations of titles, and other expenses, such as architect's fees, supervision, etc., incident to the construction or purchase; and the cost of sidewalks, fences, hedges, etc., on grounds attached to such buildings. I t does not include any telephone equipment, * Landed capital includes all interests in land (exclusive of any improvements thereon) the term of which is more than one year. 3 34: PUBLIC SEBVICB COMMISSION, SECOND DISTRICT wiring, or apparatus for generating or controlling electricity for operation of the telephone system. 220. CENTRAL OFFICE EQUIPMENT: This account includes the cost of all central office equipment as follows: 221. CENTRAL OFFICE TELEPHONE EQUIPMENT: Charge to this account the cost of local and toll switch-boards, chief operators', monitors', and supervisors' desks and tables, wire chiefs' testing outfit, main and intermediate frames, jumper wires, and cables, call registers or meters, relay racks, and coil racks; and power plants including generators, batteries, power switchboards, and fuse boards; telegraph instruments and other electrical instruments and apparatus devoted to the operation of the telephone plant. 222. OTHER EQUIPMENT OF CENTRAL OFFICES: Charge to this account the cost of furniture and equipment (other than telephone equipment) in telephone exchanges or central offices, including the furniture and equipment ID operating, rest, and lunch rooms, and operators' schools. 230. SUBSCRIBERS'STATION EQUIPMENT: Charge to this account the cost of all telephone terminal equipment installed in service, including the cost of installation, as follows: 231. STATION APPARATUS: Charge to this account the cost of station apparatus, such as telephone sets, intercommunicating sets, bells, backboards, desk stands, coin boxes, protectors, battery boxes, initial batteries and cords, special station switching devices not otherwise classified, and telephone instruments or parts thereof when owned by the company and installed in service. 232. STATION INSTALLATIONS : Charge to this account the cost of installing station apparatus and the cost of inside wires, that is, the wires (or cables) from the instruments to the point of entrance to the building where the drop wires or interior block wires terminate, or to the junction boxes where the house cable or other cable terminates, including wires on the same premises to connect main and extension stations, or to connect the private branch exchange distributing frames with their terminal stations. 233. INTERIOR BLOCK WIRES: Charge to this account the cost of interior block wires (or cables) from the point of entrance to the building, where connection is made with the inside wires, to the point of connection with the permanent underground circuits at the terminals (block cable boxes) of tho subsidiary underground cable (interior block cables). 234. PRIVATE BRANCH EXCHANGES: Charge to this account the cost of private branch exchange switchboards, their distributing frames and connecting switchboard cables, and the cost of installation. 235. BOOTHS AND SPECIAL FITTINGS: Charge to this account the cost of booths and special fittings, such as desks, chairs, fans, and cash registers, and the cost of installation. 240. EXCHANGE LINES: This account includes the cost, as described in the following sub-accounts, of the telephone lines (excluding switching and terminal equipment) used for the transmission of messages within the area covered by an exchange system (see definition on page 6 ) . The distinctions between exchange lines ACCOUNTS FOE TELEPHONE CORPORATIONS 35 and toll lines should follow as closely as practicable t h e distinctions between revenue from exchange service and revenue from toll service. NOTE.—Where any plant is used both for exchange and toll service the principal use of such plant shall determine its classification. 241. EXCHANGE P O L E L I N E S : Charge t o t h i s account t h e cost of poles, cross-arms, pins, brackets, braces, guy wire, g u y stubs, and other material actually used in t h e construction of exchange service pole lines. 242. EXCHANGE AERIAL CABLE: Charge to t h i s account t h e cost of cables devoted to exchange service, including t h e cost of suspension wire, cable clips and rings, cable boxes and fittings, pole seats and platforms, loading coils, pot heads, protectors, sleeves, and other material used in hanging such cables. 243. EXCHANGE AERIAL W I R E : Charge to t h i s account the cost of exchange service wires, including insulators and sleeves and other materials used in attaching such wires to the insulators. The exchange wire includes t h e wire up t o the point of entrance to the building. 244. EXCHANGE UNDERGROUND CONDUIT: Charge t o t h i s account t h e cost of exchange service conduits, including t h e cost of pipe, cement, manholes, manhole furnishings, and other material used, and t h e cost of pole and building connections, and other costs incident t o t h e installation of underground conduits for exchange service. 245. EXCHANGE UNDERGROUND CABLE: Charge to t h i s account t h e cost of exchange service underground cables, including cable boxes and fittings, loading coils and other material used in t h e work of installing underground cables, including a s such, branch cables through laterals t o pole or building terminals and their branches to the interior of city blocks for connection with interior block wires, and their branches vertically, a s house cables, into buildings for connection there with inside wires. NOTE.— House cables are considered to be vertical extensions of underground cables or plant similar thereto. They do not include the inside wires extending from terminal boxes of house cables to subscribers' stations, nor the cables for subscribers' private branch exchange switchboards. 246. EXCHANGE SUBMARINE CABLE: Charge t o t h i s account t h e cost of exchange submarine cable, cable towers, loading coils, cable boxes and fittings, and other materials used in t h e installation of such cables. 250. TOLL L I N E S : This account includes t h e cost, as described in t h e following sub-accounts, of t h e telephone lines (excluding switching and terminal equipment) used as a toll system. (See definition on page 6.) NOTE.—Where any plant is used both for exchange and toll service the principal use of such plant shall determine its classification. 251. TOLL POLE L I N E S : Charge t o this account t h e cost of poles, crossarms, pins, brackets, braces, guy wires, guy stubs, and other materials used in the construction of toll service pole lines. 252. TOLL AERIAL CABLE: Charge to this account t h e cost of cables devoted to toll service, including t h e cost of suspension wire, cable clips and rings, cable boxes and fittings, pole seats and platforms, loading coils, pot heads, protectors, sleeves, and other materials used in hanging such cables. 36 P U B L I C SERVICE COMMISSION, SECOND DISTRICT 253. TOLL AEEIAL W I R E : Charge to this account the cost of toll service wires, including insulators and sleeves and other materials used in attaching such wires to the insulator. 254. TOLL UNDEEGEOUND CONDUIT: Charge to this account the cost of toll service conduits, including the cost of pipe, cement, manholes, manhole furnishings, and other material used, and the cost of pole and building connections, and other costs incident to the installation of underground conduits for toll service. 255. TOLL UNDEEGEOUND CABLE: Charge t o this account the cost of toll service underground cables, including cable boxes and fittings, loading coils, and other material used in the work of installing underground cables. 256. TOLL SUBMARINE CABLE: Charge to this account the cost of toll submarine cables, cable towers, loading coils, cable boxes and fittings, and other material used in the installation of such cables. 260. GENERAL EQUIPMENT: This account includes: 261. OFFICE FUBNITUEE AND FIXTURES: Charge to this account the cost of desks, tables, chairs, carpets, cases, movable partitions, railings, shelve*, typewriters, addressographs, adding machines, and other office devices; stoves, portable gas and electric fixtures, and other office fittings, except fittings considered a p a r t of the building and telephone equipment provided for under account No. 220, ''Central Office Equipment." 262. OTHEE GENEEAL E Q U I P M E N T : Charge to this account the following: a. General Shop Equipment: The cost of all equipment specially provided for general shops, such as furnaces, boilers, gas producers, engines, electric generators, and other power apparatus used in operating machinery in such shops; machine tools, cranes, hoists, shafting, belts, and the like shop equipment; also such smithing equipment in general shops as is used principally for general purposes other than shoeing horses and repairing vehicles. NOTE.— Hand and other small portable tools liable to be lost or stolen shall not be Included herein, but portable tools and apparatus of special value maybe charged to this account and remain herein so long as record is kept of the persons to whom such tools and apparatus are issued and such persons are made responsible therefor. b. General Store Equipment: The cost of all equipment of general store structures, such as movable counters, movable shelving and other movable equipment of like nature, carts, barrows, trucks, tools, etc., and other appar a t u s and appliances used in handling, storing, or packing materials and supplies. NOTE.— Counters, shelving and the like which are permanently attached to the structure shall be charged to account No. 212, " Buildings," and not to this account. c. General Stable and Garage Equipment: The cost of all equipment of general stables, including horses, harness, drays, wagons, automobiles and other vehicles, equipment of shoeing shops, harness repair shops, vehicle repair shops, etc. d. General Tools and Implements: The cost of portable testing apparatus and valuable tools and implements devoted to the maintenance or construe- ACCOUNTS FOB TELEPHONE CORPORATIONS 37 tion of the telephone plant and not provided for in the equipment accounts. This does not include tools not yet in use carried as supplies unissued, nor any small hand tools for which the person to whom they are issued is not held responsible. 268. INTEREST DURING CONSTRUCTION: Charge to this account the interest accrued upon all moneys (and credits available upon demand) acquired for use in connection with the construction and equipment of the property from the time of such acquisition until t h e construction is ready for use. Interest receivable accrued upon such moneys and credits shall be credited t o this account. Credit t o this account also discount realized through prompt payment of bills for materials and supplies used in construction unless such discounts are credited t o the bills to which they apply. If any property with respect to which an interest charge is included in this account is withdrawn or retired from service, the amount of such interest (estimated if not known) shall be credited to this account and charged off as p a r t of the original cost of the property so retired. No interest upon expenditures for replacements, renewals, or reconstruction shall be included in this or any other fixed capital account unless proper credits are made t o the appropriate fixed capital accounts for any interest included in such accounts in respect of property retired or withdrawn. 270. UNDISTRIBUTED CONSTRUCTION EXPENDITURES: This account includes the expenditures provided for in the following subaccounts, when such expenditures can not be satisfactorily allocated to t h e fixed capital accounts t o which they relate. Upon the retirement or withdrawal of any property with respect t o which any charge is included in this account or any sub-account hereunder, there shall be credited to this account or the appropriate sub-account such part of the undistributed expenditures during construction (estimated if not known) as m a y be applicable to the property withdrawn or retired. 271. ENGINEERING AND SUPERINTENDENCE: Charge to this account all expenditures for services of engineers, draughtsmen, and superintendents employed on preliminary and construction work, and expenses incident to the work of such employees when the expenditures can not be assigned t o specific construction accounts. 272. L A W EXPENDITURES DURING CONSTRUCTION: Charge to this account general law expenditures incurred in the construction of the telephone plant, such as the pay and expenses of counsel, solicitors, and attorneys, their clerks and attendants, and expenses of their offices; the cost of printing briefs, legal forms, testimony, reports, etc.; payments to arbitrators for the settlement of disputed questions; cost of suits and payments of special fees, notarial fees, and witness fees; and court expenses. When any of the expenditures enumerated herein can be charged directly to the account for which incurred, they shall be so charged and not to this account. Expenditures incurred in connection with the acquisition of right of way shall be charged to account No. 207, " Right of Way," and in the acquisition of other 38 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T land to account No. 210, " Other Telephone Real Estate." Law expenditure* in connection with the organization of the corporation shall be charged to account No. 201, " Organization." 273. TAXES DURING CONSTRUCTION: Charge to this account all taxes and assessments levied and paid on property belonging to the corporation while under construction and before the plant is opened for operation, except special taxes assessed for street and other improvements, such as grading, sewering, curbing, guttering, paving, sidewalks, etc., which shall be charged to the account to which the property benefited is charged. 274. MISCELLANEOUS CONSTRUCTION EXPENDITURES : Charge to this account salaries and expenses of executive and general officers of the corporation before it is ready to begin operations; clerks in general offices engaged on construction accounts or work; rent and repair of general offices when rented, with the office expenses; insurance during construction; also construction and equipment items of a special and incidental nature which can not properly be charged to any other fixed capital account. 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 shall not include any costs of organization, or any costs or discounts connected with the issue and disposal of stocks, bonds, or other securities, or commercial paper. 280. FIXED CAPITAL IN OTHER DEPARTMENTS: Charge to this account the cost of all property of the corporation, both tangible and intangible, devoted to its operations other than telephone, hot including investments as defined in account No. 110, " Investments." INCOME ACCOUNT. DEFINITIONS AND INSTRUCTIONS. 15. Income Account Defined. The income account brings together those accounts that show the total amount of money that the corporation haa received or become entitled to receive for services rendered during a given period, the return accruing during the period upon investments, and the disbursements and obligations incurred that affect the disposition of the amounts so received or accrued. The following accounts make up the income account statement and should be closed into the Income account at the close of the year or other fiscal period. 500. OPERATING REVENUES: Include in this account the total operating revenues of the corporation for the period covered by the income account statement. (For the primary Operating Revenue accounts, see pages 47 to 49.) 510. OPERATING EXPENSES: Include in this account the total operating expenses of the corporation for the period covered by the income account statement. (For the primary Operating Expense accounts, see pages 50 to 59.) 511. UNCOLLECTIBLE TELEPHONE BILLS: Charge to this account (and credit the account receivable in which theretofore carried) the amount of any account for telephone services which, after a reasonably diligent effort to collect, has proved impracticable of collection. This account includes only uncollectible bills for amounts which have been treated as operating revenues; other uncollectible bills should be charged to account No. 537, "Uncollectible Non-operating Revenues," or to Corporate Surplus or Deficit account, as may be appropriate. 16. Taxes. Separate accounts shall be kept of the taxes applicable to telephone operations and to non-operating revenues, and, if the corporation engages in business other than telephone operations, taxes applicable to such other business shall also be kept separate. The tax accounts shall be charged each month and the " Tax Liability Account" (see note under account No. 175, "Taxes Accrued") concurrently credited with the month'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 estimated and one-twelfth of the estimated amounts be charged each month. From time to time during the year, as the actual tax levies become known, the monthly charges shall be adjusted so as to include as nearly as may be possible the total amount of the taxes in the period to which they apply. When any such tax bill is actually paid, the " Tax Liability Account" shall be debited with the amount of the payment. If the balance in the " Tax Liability Account" is a debit balance, due to the prepayment of taxes applicable to a period subsequent to that for which the Income account is stated, the amount of the debit balance shall be shown [391 40 P U B L I C SERVICE COMMISSION, SECOND DISTRICT in account No. 142, " P r e p a i d T a x e s ; " and if t h e balance is a credit balance the amount shall be shown in account No. 175, " T a x e s Accrued." Taxes on property leased should be charged t o t h e appropriate t a x account by the p a r t y which, under t h e terms of the lease contract, actually pays such taxes. If by the provisions of the lease t h e party actually paying the taxes is reimbursed by t h e other p a r t y to t h e lease, t h e amount of such reimbursement shall, when t h e taxes a r e paid in t h e first instance by t h e lessor, be credited to the appropriate rent revenue account of the lessor a n d charged by t h e lessee to t h e appropriate rent deduction account; when t h e taxes a r e paid in t h e first instance by t h e lessee, t h e amount of t h e reimbursement shall be credited to t h e appropriate rent deduction account of t h e lessee and charged by the lessor to the appropriate rent revenue account. The t a x accounts must not include any fees or charges sometimes called taxes, such as water taxes, drainage taxes, fire taxes, etc., which a r e payments for some specified service rendered by the government. 517. TAXES ASSIGNABLE TO TELEPHONE OPERATIONS: Include i n this account t h e amount of taxes applicable t o t h e telephone operations of the corporation during the period for which t h e Income account is stated, as provided in the instructions in section 16, " Taxes." 520. NON-OPERATING R E V E N U E S : Credit t o this account all revenues accruing t o t h e corporation a s provided for in t h e following sub-accounts: 521. R E N T ACCRUED FROM L E A S E OF TELEPHONE P L A N T : Credit t o this account monthly, as they accrue, all revenues from the corporation's interests in telephone plant or equipment held by others under some form of lease whereby i t surrenders possession of such property. This account is intended to cover only rents receivable for t h e use of telephone exchanges or operating units held as a whole under some form of lease. 522. MISCELLANEOUS RENT REVENUES: Credit t o this account monthly t h e revenues accruing t o the corporation as a return upon rented property other than telephone plant and equipment held by others under lease, a s provided for in t h e preceding account. 523. INTEREST AND DIVIDEND REVENUES: Credit t o this account monthly all revenues accruing t o t h e corporation, not retained in specific sinking or other reserve funds, from interest upon all i t s bank balances, special deposite, and other assets, when such interest is a liability of solvent concerns or individuals, and from dividends declared or guaranteed by solvent concerns upon stocks held by the corporation. No interest or dividends upon securities issued or assumed by the accounting corporation shall be credited t o this account nor to any other revenue account. Class A corporations will subdivide t h e revenues included herein and keep separate accounts for: a. Interest Revenues on Funded Debt Owned. b. Miscellaneous Interest Revenues. c. Dividend Revenues, ACCOUNTS FOR TELEPHONE CORPORATIONS 41 525. S I N K I N G AND OTHER RESERVE F U N D ACCRETIONS : Credit t o t h i s account and charge t h e appropriate fund or its trustee monthly the revenues accruing from securities and other assets in the hands of trustees or specifically set aside for sinking and other special funds, when the revenues a r e retained as a p a r t of the funds. Such revenues may include appropriations equal to interest upon securities issued or assumed by the accounting corporation where such securities are acquired through the operation of a sinking or other reserve fund. NOTE.— If the assets of a fund are to be represented by a reserve from surplus, concurrent entries should be made charging account No. 605, " Sinking Fund Appropriations," or account No. 615, "Appropriations to Reserves," crediting account No. 193, " Reserves Invested in Sinking Funds," or No. 194, " Other Reserves from Income or Surplus," as may be appropriate. 526. PROFITS FROM OPERATIONS OF O T H E R S : Whenever in accordance with the terms of any contract t h e corporation is entitled t o participate in the profits from operations of others, all revenues accruing to the corporation from such source shall be credited to this account. NOTE.— This account does not include any dividends on stocks nor any remuneration for services or the use of property as provided for in account No. 726, " Licensee Revenue — Cr." 527. MISCELLANEOUS NON-OPERATING REVENUES: Credit t o this account all non-operating revenues not provided for in t h e foregoing accounts. 530. NON-OPERATING REVENUE DEDUCTIONS: This account includes all matters provided for in t h e following subaccounts : 531. RENT E X P E N S E : Charge to this account all expenses arising in connection with t h e procuring of revenues from rented property, such as t h e cost of negotiating contracts, advertising for tenants, fees paid conveyancers, collector's commissions, cost of enforcing payment of rent, cost of ousting tenants, etc. This includes t h e expense accruing while t h e property is idle and awaiting an occupant; also the cost of maintenance of the property when such cost is borne by t h e corporation. Such maintenance includes depreciation as well as reparable wear and tear. I t does not include taxes. 532. INTEREST E X P E N S E : Charge to this account all expense arising in connection with procuring interest upon investments, such as expense of collection, expense of investigating delay in payment, expense of enforcing payment, and t h e like. I t does not include taxes on such investments. 533. DIVIDEND E X P E N S E : Charge to this account all expense arising m connection with t h e collection of dividends on stocks of other corporations, including expenses incurred in t h e investigation of t h e affairs of t h e corporations whose stocks are held, whether for t h e purpose of detecting mismanagement or for the purpose of inducing t h e declaration of dividends, and all expense connected with enforcing payment of dividends when declared. I t does not include taxes on such investments. 534. OTHERS' OPERATIONS E X P E N S E : Charge to this account t h e cost of negotiating contracts whereunder t h e corporation is to participate in t h e profits resulting from the operations of others; also all expense of collecting the corporation's proportion of such profits, and all expense connected with procuring the modification or the dissolution of any such contract. 535. MISCELLANEOUS NON-OPERATING E X P E N S E : Charge to this account all non-operating expense not provided for in the foregoing sub-accounts. 42 P U B L I C SERVICE COMMISSION, SECOND DISTRICT 536. NON-OPERATING TAXES: Charge to this account all taxes payable by the corporation accrued upon non-operating property and all taxes assignable to non-operating revenues. 537. UNCOLLECTIBLE NON-OPERATING REVENUES: When any non-operating revenues are judged by the corporation to be uncollectible, the amount thereof shall be credited to the account in which theretofore charged and charged to this account. 17. Income Deductions. The sum total of the credit balances in the revenue accounts for any particular operation at the close of a fiscal period gives the gross revenue from that operation for that period. This gross revenue diminished by the operating expenses, the taxes, and the uncollectible bills assignable to such operation for the period, gives the income from that operation for the period; similarly for the non-operating revenues, the non-operating expenses, and the non-operating taxes. The aggregate of the incomes from the several operations and the nonoperating income is the gross income. The gross income is, in the usual case, subject to various compulsory deductions, and these are called Income Deductions. 541. INTEREST ACCRUED ON FUNDED DEBT: Charge to this account monthly all interest accrued on outstanding funded debt issued or assumed by the corporation. This account does not include interest on securities held by the corporation in its treasury, in sinking or other reserve funds, or pledged as collateral. NOTE A.— The amount charged to this account shall be concurrently credited to account No. 176, "Interest Accrued," to which account shall be debited payments made on account of interest. NOTE B.— If any of the funded debt securities issued or assumed by the corporation are held in its sinking or other reserve funds and the interest on such funded debt is an accretion to the fund, the interest on such securities shall not he charged to this account but an amount equal to the interest on the funded debt so held shall be charged to account No. 605, " Sinking Fund Appropriations." This does not apply to securities in funds held in trust by the corporation such as employees' pension funds and savings funds. 542. OTHER INTEREST DEDUCTIONS: Charge to this account monthly all interest accrued on receivers' certificates and on interest-bearing unfunded obligations of the corporation. NOTE A.— The amount charged to this account shall be concurrently credited to account No. 176, " Interest Accrued," No. 166, " Receivers' Certificates," or No. 168, " Judgments Unpaid," as may be appropriate; to which accounts shall be debited payments made on account of such interest. 550. RENT DEDUCTIONS: Charge to this account monthly all amounts accrued against the corporation for rents, other than minor rents provided for elsewhere as chargeable to operating expenses. I t includes the matters provided for in the following sub-accounts: 551. RENT FOB LEASE OF OTHER TELEPHONE P L A N T : Charge to this account monthly all amounts accrued against the corporation for rent of telephone plant and equipment which it holds under some form of lease from another, and of which it has the exclusive possession. ACCOUNTS FOR TELEPHONE CORPORATIONS 43 This account is intended to cover only rents payable for t h e use of telephone exchanges or operating units held as a whole under some form of lease. 552. K E N T FOB TELEPHONE O F F I C E S : Charge t o t h i s account t h e rents payable accruing for use of general offices and central or exchange and branch telephone offices owned by others, excepting rents which a r e included in t h e clearing accounts hereinafter provided for. NOTE.—Where rent payments cover services, light, heat, etc., and maintenance, in addition to a return upon investment, an apportionment shall be made of the rent payment, and the amount representing interest and maintenance (estimated if not known) shall be charged to this account, the balance of the payment being charged to the appropriate expense accounts. Where repairs of rented buildings are made by the corporation, the cost of such repairs shall be charged to the appropriate operating expense or other accounts. 553. K E N T FOB CONDUITS, POLES AND OTHEB SUPPOBTS: Charge to this account the rents payable accruing for the use of ducts, conduits, or subway* owned by others, and rents for t h e use of poles, fences, or buildings a s supports for the telephone lines of t h e accounting corporation. 554. R E N T FOB INSTBUMENTS AND E Q U I P M E N T : Charge to t h i s account t h e rents payable accruing for telephone instruments and equipment owned by others. This does n o t include amounts paid licensor telephone corporations under an agreement t o pay a certain percentage of revenues for use of instruments, privilege of connection, etc. 555. MISCELLANEOUS K E N T DEDUCTIONS : Charge t o t h i s account r e n t s pay- able accrued not provided for elsewhere. 562. AMORTIZATION OF DEBT DISCOUNT AND EXPENSE: Charge t o this account a t or before t h e close of any fiscal period t h a t proportion of t h e unamortized discount and expense on outstanding debt which is applicable t o t h e period. This proportion shall be determined according t o a rule, t h e uniform application of which during t h e interval between t h e issue and t h e m a t u r i t y of any debt will completely amortize or wipe out t h e discount a t which such debt was issued and t h e debt expense connected therewith. Such amortization may a t the option of the corporation be earlier effected by charging all or any portion of such discount and debt expense t o account No. 617, "Other Deductions from Surplus," immediately upon issue of the debt or thereafter. 563. AMORTIZATION OF PREMIUM ON DEBT —CR.: Credit to this account a t or after t h e close of any fiscal period t h e proportion of t h e premium a t which outstanding debt was issued which i s applicable t o t h e period. This proportion shall be determined according t o a rule, t h e uniform application of which during t h e interval between t h e issue and the m a t u r i t y of any debt will completely amortize or wipe out t h e premium a t which such debt was issued. 570. MISCELLANEOUS DEDUCTIONS FROM INCOME: Charge t o this account t h e matters provided for in t h e following subaccounts : 44 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T 571. Loss ON OPEEATIONS OF OTHERS: Whenever, in accordance with tho terms of any contract, t h e corporation is bound to contribute toward reimbursement of t h e losses resulting from t h e operations of others, all liabilities accruing to the corporation from such source shall be charged to this account. 572. AMORTIZATION OF LANDED C A P I T A L : Charge to t h i s account a t the close of any fiscal period such portion of the original money cost (estimated if not known) of landed capital as is necessary to cover the proportion of the life thereof expired during such period. NOTE A.— The amounts charged to this account shall be concurrently credited to account No. 182, " Reserve for Amortization of Intangible Capital." NOTE B.— When any landed capital expires or is otherwise retired from service (as e. g. through sale) the capital account or investment account (if any) originally charged therewith shall be credited with the amount originally charged, account No. 182, " Reserve for Amortization of Intangible Capital," shall be debited with all amounts theretofore credited to such account in respect of such landed capital so going out of service, the appropriate account shall be debited with the proceeds of sale (if any), and any necessary adjustment shall be made through, the " Corporate Surplus or Deficit" account. 573. OTHER CONTRACTUAL DEDUCTIONS FROM INCOME: Charge to this account all deductions from gross income which a r e in the nature of fixed charges and not provided for otherwise, such as those required by the terms of some contract, agreement, charter provision, law, or ordinance. Such deductions should not include any appropriations or dispositions of income t h a t rest solely in the discretion of t h e accounting corporation. NOTE.— Payments to sinking funds shall not be charged to this account but shall be included in account No. 605, "Sinking Fund Appropriations." CORPORATE SURPLUS OR DEFICIT ACCOUNT. 18. Corporate Surplus or Deficit Account Defined. This account or summary is the connecting link between the Income account and the balance sheet. I t summarizes the changes in the corporate surplus or deficit during a given fiscal period resulting from the business transactions during t h a t period as well as those effected by any disposition of net profits made solely a t t h e option of t h e corporation, by accounting adjustments not properly attributable to t h e period, or by miscellaneous losses or gains not provided for elsewhere. To this account should be carried t h e net balance of t h e accounts forming the Income account, and in i t should be summarized all optional appropriations (including dividends) ; miscellaneous adjustments due to errors in accounting in prior fiscal periods; profits from the sale of securities or other property; losses upon property sold or otherwise retired and not covered by reserves, and unusual losses and gains of like nature. For these matters t h e following accounts are provided; their net balance added t o the net balance from the Income account should show the net surplus or deficit on t h e date of the balance sheet. ACCOUNTS FOR TELEPHONE CORPORATIONS 45 600. DIVIDENDS ON OUTSTANDING STOCKS: When any dividend is declared upon any outstanding stocks of t h e corporation, t h e amount of such dividend shall thereupon be charged t o this account. All entries t o this account shall show t h e amount of stock upon which t h e dividend is declared, t h e class of such stock, and t h e rate of the dividend as well as the amount thereof. If the dividend is payable in anything other t h a n money, such thing shall be described in t h e entry with sufficient particularity t o identify it, and t h e actual money value thereof shall be stated as the amount of the dividend. When any dividend is declared upon the slocks of the corporation owned by or held in behalf of the corporation, the amount of such dividend thereon shall be credited to this account. Entries of credits t o this account shall be made with the same degree of particularity as is prescribed in the preceding paragraph. 605. SINKING FUND APPROPRIATIONS: Charge t o this account all appropriations to sinking funds and accretions to such funds on account of income from previous investments. Such appropriations should include: (1) direct payments; (2) sums equal to the interest or dividends on securities issued or assumed by the corporation and held in sinking funds; (3) income from investments of sinking funds other than securities issued or assumed; (4) income from cash or special deposits held by trustees of sinking funds. All earnings of sinking funds and contributions to such funds shall be included in this account whether such contributions are made a t the option of the corporation or are required by the provisions of mortgages, deeds of trust, or other contracts. 6io. MISCELLANEOUS DEDUCTIONS FROM SURPLUS: 611. E X P E N S E S UNPROVIDED FOR ELSEWHERE: Charge t o t h i s account all expenses not chargeable a s a p a r t of operating expenses or of non-operating expenses, such as fines levied on t h e corporation for violation of law, for misfeasance, for nonfeasance, etc., fines levied on directors, officers, and other employees of the corporation and assumed by it, donations t o funds, t o churches and other associations, and other like expenses and outgoes. 612. KEALIZED DEPRECIATION N O T COVERED BY RESERVES: Charge to t h i s account the realized depreciation (that is, the difference between the original cost and the salvage, if any) on tangible capital retired, when such depreciation has not been provided for through a depreciation reserve. This includes such portion of the realized depreciation on any physical property which was installed prior t o the creation of the reserve for accrued depreciation as i s due to life in service before t h a t date; this portion may be estimated on t h e basis of the proportion which the life in service of t h e property in question prior to the establishment of the reserve bears to i t s entire life in service. 613. AMORTIZATION UNPROVIDED FOR E L S E W H E R E : Charge to this account when any intangible property expires or is relinquished, such portion of i t s cost as h a s not been previously written off or is n o t covered by account No. 182, " Reserve for Amortization of Intangible Capital*" Charge also to this account all optional amortization, such as t h a t of organization expenses, and assets carried in account No. 204, "Other Intangible Capital." 46 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T 614. GIFTS TO CONTROLLED CORPORATIONS : Charge t o this account all gifts made by the corporation to its controlled corporations, also such portions of all advances thereto as are not carried as assets. 615. APPROPRIATIONS TO RESERVES : Charge t o this account all optional appropriations to reserves. 616. OTHER APPROPRIATIONS FROM S U R P L U S : Charge t o t h i s account all optional appropriations made by the corporation and not provided for elsewhere. NOTE.— A complete analysis of this account will he required in annual reports of corporations to the Public Service Commission, Second District. 617. OTHER DEDUCTIONS FROM S U R P L U S : Charge t o this account all deduc- tions from surplus made to extinguish discount on stocks outstanding, optional amortization of debt discount and expense, deductions because of erroneous accounting in prior fiscal periods, and all other deductions from surplus n o t provided for elsewhere. NOTE.— A complete analysis of this account will be required in annual reports of corporations to the Public Service Commission, Second District. 620. MISCELLANEOUS ADDITIONS TO SURPLUS: Credit to this account all additions to surplus due to erroneous accounting in previous fiscal periods, bad debts collected after being written off, profits arising from the sale of securities or other property, etc. OPERATING REVENUE ACCOUNTS. 19. Operating Revenues Denned. By operating revenues are meant all amounts of money which the corporation receives or becomes lawfully entitled to recover for services rendered and as a return upon property used by the corporation in its own operations. Credit to the various revenue aocounts shall be based upon the gross charges made for services rendered by the corporation. Commissions paid to attendants a t pay stations and to employees or others in lieu of salaries shall be charged to appropriate expense accounts and not to the revenue accounts. Discounts allowed subscribers for prompt payment, corrections of overcharges, overcollections theretofore credited and afterward corrected, authorized refunds on account of failures in transmission, and other corrections shall be charged to the revenue account to which they relate. 700. EXCHANGE SERVICE REVENUES: Credit to this account all revenues derived from the transmission of local messages between points within the same exchange service area as provided for in the following sub-accounts: 701. SUBSCRIBERS' STATIONS: Credit t o this account all revenues from subscribers for exchange service, extension stations, private branch exchanges, and other exchange service stations, whether the charge is based upon a flat rate or measured rate. Include in this account also charges made for t h e insertion of extra names in directory and for use of extra mileage in circuits to subscribers' stations, installation and cancellation charges, and commissions on telegraph tolls received in lieu of rental for exchange lines. 702. PUBLIC P A Y STATIONS: Credit to this account all revenues from exchange service a t public pay stations. This account does not include revenues from regular subscribers' stations having measured service or coin box service a t standard rates. The amount credited to this account shall be the gross amount collected or due a t tariff r a t e s ; commissions allowed attendants or others for pay station tolls should be debited to account No. 863c, " P a y Station Commissions," and not to this account. 703. MISCELLANEOUS EXCHANGE SERVICE REVENUES : Credit t o this account all revenues derived from exchange service other than subscribers' stations or pay stations, as provided for in the following sub-accounts: a. Service Stations {Switching Charges) : All revenues, both rentals and switching charges, from stations, the lines and equipment for which are owned wholly or in p a r t by others, to which the corporation furnishes exchange service. b. Private Exchange Lines: All revenues derived from telephone lines, equipment, and instruments forming p a r t of the corporation's exchange plant and leased to others for use as private lines without exchange connections with other subscribers. c. Minor Rents of Exchange Plant: All revenues derived from attachments to exchange poles, the use of conduits, and other minor rents from exchange plant where such property is maintained by the accounting corporation, and the cost of such maintenance can not be separated from the expense of main[47] 48 P U B L I C SERVICE COMMISSION", SECOND D I S T R I C T taining the rented property. This account does not include rents for equipment leased to sub-licensees under an arrangement for a division of revenues as provided for in account No. 726, "Licensee Revenue — Cr." d. Other Exchange Revenues: All exchange service revenues not provided for elsewhere. 710. TOLL SERVICE REVENUES: Credit to this account all revenues derived from the transmission of messages by telephone between stations in different exchange service areas and from the use of plant and equipment classified as toll lines, as provided for in the following sub-accounts: 711. COMPANY L I N E TOLLS: Credit to this account all revenues derived from messages transmitted wholly over the company's lines and for which a charge is made t h a t is not included in contracts with subscribers for station service. 712. PROPORTION OF FOREIGN L I N E T O L L S : Credit to t h i s account the accounting corporation's proportion of tolls on messages transmitted by t h e use of its own and other lines. 713. MISCEILANEOUS TOLL L I N E R E V E N U E S : Credit t o t h i s account all revenues other than tolls on messages from toll lines maintained by the corporation and forming p a r t of its operated plant, as provided for in the following sub-accounts: a. Leased Toll Lines: All revenues derived from lines leased by others under contracts giving exclusive use of toll circuits for telephone use during stated periods. NOTE.— Revenues from private branch exchanges or private lines, the contracts for which provide for the use of toll circuits, must he divided (by estimate, if necessary) between Exchange revenues and Toll revenues. b. Telegraph Prorates: All amounts received as the telephone company's proportion of telegraph tolls on telegrams transmitted over toll lines. c. Telegraph Service on Toll Lines: All revenues derived from the use oX toll lines for telegraph circuits whether such lines are used by telegraph companies, brokers, or others. d. Minor Rents of Toll Plant: All revenues derived from attachments to toll poles, the use of conduits, and other minor rents from toll plant where such property is maintained by the accounting corporation and the cost of such maintenance can not be separated from expense of maintaining the rented property. The account does not include rents from equipment leased to sub-licensees under an arrangement for a division of revenues as provided for in account "No. 726, "Licensee Revenue — Cr." e. Other Toll Line Revenues: All toll line revenues not provided for elsewhere. 720. MISCELLANEOUS OPERATING REVENUES: This account includes: 721. MESSENGER SERVICE: Credit to this account all revenues derived from messenger service. 722. TELEGRAPH COMMISSIONS: Credit to this account all commissions receivable for t h e collection of telegraph tolls on messages transmitted between ACCOUNTS FOR TELEPHONE CORPORATIONS 49 telegraph offices and their patrons and upon which the accounting corporation undertakes t o make collection. 723. ADVERTISING AND DIRECTORY: Credit t o this account the revenue derived from advertising in telephone directories and elsewhere. 724. K E N T S FROM OTHER OPERATING PROPERTY: Credit t o t h i s account all revenues accruing from the rent of buildings and other property, except leased wires, poles, conduits, and equipment covered by accounts under Exchange revenues and Toll revenues, when such property is used also by the corporation and the expense of maintaining and operating the rented portion can not be separated from the total expense. 725. OTHER MISCELLANEOUS REVENUES: Credit t o this account all miscellaneous operating revenues n o t provided for elsewhere. This account does not include non-operating revenues as provided for on page 40. 726. LICENSEE REVENUE —CR.: When a telephone corporation grants t o another telephone corporation t h e use of i t s patents or furnishes instruments and equipment and general supervision under a n agreement for apportioning t h e revenues of t h e licensee, t h e proportion accruing t o t h e licensor shall be credited by t h e licensor t o thi9 account. 727. LICENSEE REVENUE —DR.: When a telephone corporation is granted by another telephone corporation the use of i t s patents, or is furnished instruments and equipment and general supervision under a n agreement for apportioning the revenues of the licensee, the proportion accruing to the licensor shall be charged by t h e licensee t o this account. 4 OPERATING EXPENSE ACCOUNTS. I. MAINTENANCE EXPENSES. 20. Repairs Defined. Repairs, as used herein, include ordinary and extraordinary repairs. Ordinary repairs include: (a) The pay of labor engaged in and expenses of testing for, locating, and clearing crosses, breaks, grounds, and other line troubles, including routine work intended to prevent such troubles, as, for example, pulling up slack, tightening guys and resetting guy stubs, trimming trees, straightening poles and cross-arms, and cleaning and adjusting a p p a r a t u s ; (b) the replacement of minor or short-lived p a r t s of structures, equipment, or facilities; (c) the replacements of minor p a r t s of wire plant or equipment made necessary by reason of faulty adjustments, excessive strains, mechanical injuries, or other minor casualties not provided against in the charge for depreciation of plant and equipment; (d) the cost of recovering salvage and removing retired or abandoned property, except subscribers' station equipment, when such costs are not provided for in the depreciation reserves; (e) rearrangements and changes in location of plant, except subscribers' station equipment (for which a special account is provided). This includes rearrangement of circuits, reassociation of party lines, rearranging grouping of trunks and calling circuits, recross-connecting on distributing frames, rerunning jumper wires, underlining switchboard jacks, etc., together with materials used for such purposes which do not add to the tangible value of such plant. Extraordinary repairs include: (a) The cost of restoring to an efficient or proper condition buildings, structures, or other units of property which have deteriorated; (b) the cost of substituting, in order to maintain normal efficiency, new p a r t s for old p a r t s of continuous structures, such as pole lines, cables, wires, conduits, etc., where such substitutions do not amount to a practical replacement of any considerable length of such continuous structures; (c) the cost of restoring the condition of property damaged by storms, floods, fire, or other casualties. Extraordinary repairs should be provided against by adequate current charges to the depreciation account, thereby creating a reserve for such expenses when actually incurred. Ordinary repairs are not required to be taken into account in fixing a rate of depreciation. NOTE.— When it is necessary substantially to reconstruct or to replace a major portion of any unit of property or any important section of a continuous structure, the cost should be handled through the capital accounts: that is, the cost of the property removed or replaced should be credited to the appropriate Fixed Capital accounts and the cost of the new property charged thereto. The cost of repairs shall be understood to include the wages, salaries, and fees paid employees directly engaged in the work of repairs, such personal expenses of employees as are borne by the corporation, and the cost of materials and supplies consumed in making the repairs. I t includes also the cost of direct supervision, such as of foremen or superintendents of repair gangs, [50] ACCOUNTS FOB TELEPHONE CORPORATIONS 51 but does not include the cost of general supervision as provided for in account No. 801, " Supervision of Maintenance." 21. Depreciation and Amortization. Every telephone corporation shall include in its expenses depreciation charges for the purpose of creating proper and adequate reserves to cover the expenses of depreciation currently accruing in its fixed capital. By "expense of depreciation" is meant the loss suffered through the current lessening in value of tangible property from wear and tear, decay, obsolescence, or inadequacy resulting from use, age, physical change, or supersession by reason of new inventions and discoveries, changes in popular demand, or public requirements; also losses suffered through destruction of property by extraordinary casualties and decreases in the value of intangible property through lapse of time. Three accounts are provided for the expense of depreciation: viz., No. 831, " Depreciation of P l a n t and Equipment," No. 832, " Extraordinary Depreciation," and No. 883, "Amortization of Franchises and P a t e n t s . " The amount charged as expense of depreciation (including extraordinary depreciation and amortization of franchises and patents) shall be based upon rules determined by the accounting corporation. Such rules may be derived from a consideration of the corporation's history and experience. Whatever may be the basis, the rules and a sworn statement of the facts and expert opinions and estimates upon which they are based shall be filed with the Public Service Commission, Second District. Each amendment of any such rules and a sworn statement of the facts and expert opinions and estimates upon which such amendments are based, shall be filed with the Public Service Commission, Second District, before they are used by the accounting corporation and shall show the date when they are to become effective. Such rules and statements shall be entitled " Kules of (here naming the accounting corporation) Concerning Depreciation." The estimate for depreciation of physical property should take into account (1) the gradual deterioration and ultimate retirement of units of property which may be satisfactorily individualized, such as buildings, machines, valuable instruments, etc., to the end t h a t by the time such units of property go out of service there shall have been accumulated a reserve equal to the original money cost of such property less the value of any salvage; (2) the depreciation accruing in property which can not be readily individualized, such as poles, wires, cables, or other continuous structures, where expenditures for repairs or replacements of individual p a r t s ordinarily are not actually made until the later years of the life in service of such property, and when made may, therefore, be classed as extraordinary repairs. The rate of depreciation should be fixed so as to distribute, as nearly as may be, evenly throughout the life of the depreciating property the burden of repairs and the cost of capital consumed in operations during a given month or year and should be based upon the average life of the units comprised in any class of property. When any unit of property (not including minor p a r t s or portions of continuous structures the replacement of which is customarily classed with 52 PUBLIC SERVICE COMMISSION, SECOND DISTRICT repairs) t h a t was in service prior to the establishment of a depreciation reserve is retired from service for any cause, the loss suffered, i. e. the difference between the original cost and the salvage and insurance (or loss chargeable to the insurance reserve, if a n y ) , shall be apportioned and the loss estimated to be due to life in service after the creation of the reserve shall be charged to account Xo. 181, "Reserve for Accrued Depreciation," while the loss estimated to be due to life in service before t h a t date shall be charged to account No. 612, " Realized Depreciation Not Covered by Reserves," unless the corporation had prior to t h a t date a reserve for such losses, in which case the loss shall be charged to such reserve. (See section 6, page 9; account No. 100; and notes under account No. 181.) The cost of any property installed in place of property so retired shall be charged to the appropriate accounts under " Fixed Capital Installed Since December 31, 1911." The cost of all repairs (as defined in section 20) upon telephone plant or equipment shall be charged to the appropriate repair accounts in operating expenses. But in so far as the corporation has made provision for extraordinary repairs in its charges for depreciation, and to the extent to which such provision has increased its depreciation reserve, an amount equal to the cost of such repairs or such p a r t of the cost as may be applicable should be debited to account No. 181, "Reserve for Accrued Depreciation," and credited to account No. 836, " R e p a i r s Charged t o Reserves—Cr." 8oz. SUPERVISION OF MAINTENANCE: Charge to this account the pay and office and traveling expenses of superintendents and their assistants when directly in charge of maintenance of telephone plant, including general, division, and district plant superintendents, engineers, architects, and their office and field forces; the cost of repairing drafting and engineering instruments and the original cost of such instruments as are not properly chargeable to Fixed Capital accounts; the cost of office and other supplies used by officers and employees whose salaries are charged to this account; the rent and cost of repairing rented offices and miscellaneous office expenses where separate offices are maintained for employees whose pay is charged to this account; also t h a t portion of the salaries and expenses of the general engineering staff of the company which is assignable to maintenance, and the pay of wire chiefs, testers, and their clerks having general supervision of repairs and maintenance of the plant. 8io. REPAIRS OF WIRE PLANT: This account includes the cost of repairs (as defined on page 50) of poles, cables, wires, conduits, and right of way, as follows: 811. REPAIRS OF AERIAL P L A N T : Charge to this account the cost of repairs of all plant classified as aerial plant, such as towers, poles, crossarms, pins, brackets, and other pole fixtures; braces, guy wires, guy stubs, and other pole supports; aerial cables and the wires, strands, bolts, clamps, rings, hangers, etc., used to attach cables to poles, towers, or other supports; aerial cable loading coils, cable boxes and their appurtenances; and aerial telephone wires, tie wires, insulators, and sleeves. I t includes also the cost of t r i m - ACCOUNTS FOE TELEPHONE CORPORATIONS 53 ming trees, and clearing and removing obstructions from right of way of aerial plant. 812. KEPAIRS OF UNDERGROUND P L A N T : Charge t o this account the cost of repairs of all plant classified as underground plant, such as underground conduits and their appurtenances; underground cables in subways and connecting cables leading from main conduits to central offices or subscribers' premises; submarine cables, and the loading coils, towers, boxes, and fittings belonging to such cables. I t includes also the cost of repairing right of way for underground and submarine cables, and the cost of repaving after repairs of underground conduits. 820. REPAIRS OF EQUIPMENT: This account includes the cost of repairs of all telephone equipment (except wire plant) as follows: 821. KEPAIRS OF CENTRAL OFFICE E Q U I P M E N T : Charge to t h i s account the cost of repairing telephone equipment in central telephone offices*, such as switchboards, monitors' and supervisors' desks, testing outfits, main and intermediate frames, jumper wires and cables, call registers and meters, relay racks and coil racks; equipment for generating and regulating power for telephone purposes, such as batteries, engines, motors, generators, rectifiers, transformers, meters, fuses, and protectors; equipment for operators' schools and rest rooms, and furniture and fixtures required for the uses or convenience of the operating force. 822. REPAIRS OF STATION EQUIPMENT: Charge to this account the cost of repairing station apparatus, such as telephone sets, intercommunicating seta, bells, backboards, desk stands, coin boxes, protectors, battery boxes, batteries, cords, and telephone instruments or p a r t s thereof; drop wires and interior block wires; private branch exchange switchboards, distributing frames, and switchboard cables; and booths and special fittings for same, such as desks, chairs, fans, cash registers, etc. 825. REPAIRS OF BUILDINGS AND GROUNDS: Charge to this account the cost of repairing general offices, central offices, test stations, or other telephone offices, and the fixtures (except telephone apparatus) therein, such as elevators, plumbing, apparatus for heating, lighting, ventilating, and power; and t h e cost of maintaining yards and grounds, with their fences, sidewalks, sewers, etc., appurtenant t o such buildings. Charge also t o this account the cost of repairing shops, stables and garages, and permanent fixtures therein. 827. STATION REMOVALS AND CHANGES: Charge to this account the cost of disconnecting and removing and of changing the location of all plant classified as subscribers' station equipment, including freight and cartage on such property as may be sent to storehouse. (1) When stations are removed (not merely changed in location) from subscribers' premises, t h e original cost (estimated if not known) of the station should be credited to t h e appropriate Fixed Capital accounts, and the cost of the instruments, private branch exchange apparatus, booths and 54 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T fittings should be charged to " M a t e r i a l s and Supplies," while the cost of installation, including inside wires, interior block wires, and t h a t portion of aerial wire which could be used only at the subscriber's premises from which the station is removed, less the value of any salvage, should be charged to t h i s account. (2) If stations actually removed are reinstalled, the gain on any inside wires or interior block wires left from previous installation should be credited to this account. (3) When stations are disconnected but left on premises, charge to this account the cost of disconnecting; and when reconnected, the cost of reconnecting. (4) When station location or service is changed, charge to this account the cost of such changes, less the amount, if any, properly chargeable to Fixed Capital accounts for actual additions to plant. (5) Credit to this account amounts charged subscribers for moves and changes. 831. DEPRECIATION OF PLANT AND EQUIPMENT: Charge to this account monthly the amount estimated to be necessary t o cover the depreciation accruing during the month in the corporation's tangible capital. The amounts charged to this account' shall be concurrently credited to account No. 181, "Keserve for Accrued Depreciation." (See section 21, page 51.) NOTE.— Corporations may subdivide this account so as to keep separate the amounts charged for the different elements of depreciation accruing in the several classes of property affected. 832. EXTRAORDINARY DEPRECIATION: To this account may be charged monthly such an amount as the Public Service Commission, Second District, may, upon application, authorize for the purpose of distributing over a limited period an extraordinary loss of such a nature t h a t it can not be anticipated by the exercise of reasonable prudence. Losses of this sort may be due to the requirement by lawful authority or public necessity of improvements involving the abandonment of a considerable portion of plant and equipment before it has attained its normal life in service, or to an extraordinary casualty entirely unforeseen and unprovided for. The original cost of the property so abandoned or destroyed shall be credited to the Fixed Capital accounts in which it was carried, and such portion of the cost as may be authorized, upon application, by the Public Service Commission, Second District, may be charged to an appropriate suspense account; the remainder of the cost, less any salvage, being charged out as elsewhere provided in the case of retirements of property. The suspense account so raised shall be credited and this account debited monthly with such an amount as will, through its regular application, amortize the amount of the loss a t the end of the period designated. NOTE.— All ordinary casualties, that is, those which occur with such frequency that the principles of insurance are applicable thereto, must be provided for through an insurance reserve maintained for such losses or be included in the provision for depreciation of plant and equipment. ACCOUNTS FOB TELEPHONE CORPORATIONS 55 834. OTHER MAINTENANCE EXPENSES: Charge to this account the cost of repairing telephone plant and equipment not provided for elsewhere. 836. REPAIRS CHARGED TO RESERVES — CR.: Credit to this account and charge concurrently to the account "Reserve for Accrued Depreciation," an amount equal to the cost of extraordinary repairs for which provision has been made in that reserve; also credit to this account and charge concurrently to the insurers or to the insurance reserve a-n amount equal to the cost of repairs made necessary by casualties when such cost is covered by insurance or an insurance reserve. All such repairs should be charged in the first instance to the proper repair accounts. 838. JOINT MAINTENANCE EXPENSES —CR.: When any telephone plant or equipment is maintained by the accounting corporation for the joint benefit of itself and others under an agreement for apportioning the cost of such maintenance, the portion of such expenses chargeable to others shall be credited to this account. The portion so credited must not include any allowance for profit or return upon the value of such property. NOTE.— Bills rendered for joint expenses should show the expenses in detail, and the debtor corporation should distribute the total amount to its primary expense accounts. II. TRAFFIC E X P E N S E S . 840. CENTRAL OFFICE SUPERINTENDENCE: This account includes: 841. TRAFFIC SUPERINTENDENCE : Charge to this account the pay and traveling expenses of officers and their assistants when directly in charge of traffic, either for the company as a whole or a territorial subdivision, also cost of office supplies, stationery, and printing, and attendance when separate offices are maintained for such employees. 842. SERVICE INSPECTION: Charge to this account the pay and expenses of service inspection forces, including all employees on this work who do not report to the chief operator. 843. OPERATING CLERICAL WAGES: Charge to this account the pay of clerks, stenographers, and office boys engaged in traffic work in central office operating rooms. 848. OPERATORS' WAGES: Charge to this account the pay of chief operators, assistant chief operators, monitors, supervisors, information operators, directory operators, operators employed in the distribution of tickets to other operators, operators engaged in quoting toll rates and charges, switchboard operators, telegraph operators, and all other operators employed in the operation of the central office equipment. 850. CENTRAL OFFICE SUPPLIES AND EXPENSES: This account includes miscellaneous expenses of central offices as follows: 851. REST AND LTJNCH ROOMS: Charge to this account the cost of operating retiring and rest and lunch rooms for central office employees, including 56 P U B L I C SERVICE COMMISSION, SECOND D I S T R I C T the cost of lunches provided for such employees. Credit to this account amounts received for lunches served. 852. OPERATORS' SCHOOLING: Charge to this account the expenses of training new operators (whether a school is maintained or not), including wages* paid them for which no service is rendered, the salaries and expenses of teachers, and supplies furnished to schools for operators. 853. TRANSMISSION POWER: Charge to this account the cost of power purchased for transmitting traffic and operating signals, the cost of renewing local or central office batteries, and the cost of labor employed and supplies consumed in operating generating plant and storage batteries for transmitting current or operating signals. 854. CENTRAL OFFICE STATIONERY AND PRINTING: Charge to this account the cost of all postage, stationery, stationery supplies, and printing for use of central offices. 855. MESSENGER SERVICE: Charge to this account pay and expenses of messengers employed in delivering messages and notifying persons of calls a t telephone stations. 856. MISCELLANEOUS CENTRAL OFFICE EXPENSES: Charge to this account the cost of water, ice, fuel, lights, towels, toilet supplies, and of janitor service and other care of central offices. 858. PAY STATION EXPENSES: Charge to this account all traffic expenses, except commissions and central office operating expenses incurred in connection with the operation of pay stations. 859. OTHER TRAFFIC EXPENSES: Charge to this account all traffic expenses not provided for elsewhere. NOTE.— Rent for central offices is chargeable to account No. 552, " Rent for Telephone Offices," and not to this account. III. COMMERCIAL EXPENSES. 860. COMMERCIAL EXPENSES: This account includes: 861. COMMERCIAL ADMINISTRATION: Charge to this account the pay and expenses of officers and their office forces when directly in charge of the commercial departments, either for the company as a whole or for territorial subdivisions; also the cost of postage, stationery, printing, office and other supplies, and the cost of repairing rented offices (not part of general offices) specially provided for such employees. 862. PROMOTION EXPENSES: Charge to this account the pay and expenses of employees and the cost of demonstrations, advertising, and canvassing designed to promote the extension of the company's business, as provided for in the following sub-accounts: a. Advertising: The salaries and expenses of the advertising manager, his assistants, and clerks; the cost of commercial advertisements in newspapers or magazines, posters, bulletins, advertising sundries, booklets, and all related ACCOUNTS FOR TELEPHONE CORPORATIONS 57 items; also minor rents and the cost of installing and operating telephones in public places wholly for demonstration purposes. b. Canvassing: Expenses incurred in soliciting new business, including wages and personal expenses of canvassers. c. Sui-licensee Relations: Expenses incurred in developing the exchange of business with sub-licensees and independent connecting telephone companies. 863. COLLECTION E X P E N S E S : Charge to this account the cost of accounting for and collecting the revenues of the company, as provided for in the following sub-accounts: a. Revenue Accounting: The cost of keeping accounts with subscribers and rendering bills for revenue service, including the cost of postage, stationery, and printing, and pay and expenses of bookkeepers and all clerks in accounting department having to do with subscribers' accounts. b. Revenue Collecting: The expense of the collection bureau, including postage, stationery, and printing, collectors' salaries or commissions, cost of badges, carfares, and delivering bills. c. Pay Station Commissions: Commissions allowed for handling exchange and toll service messages from pay stations. 864. DIRECTORY E X P E N S E S : Charge t o this account the cost of preparing, printing, and distributing directories. (See account No. 144, " P r e p a i d Directory Expenses.") IV. GENERAL A N D MISCELLANEOUS E X P E N S E S . 870. GENERAL ADMINISTRATION: This account includes: 871. GENERAL OFFICE SALARIES: Charge to this account the matters provided for in the following sub-accounts: a. Salaries of General Officers: The salaries of the chairman of t h e board, president, vice-president, secretary, comptroller, general auditor, general manager, general superintendent, and all other officers whose jurisdiction extends t o the operations of the corporation as a whole. b. Salaries of General Office Clerks: The salaries and wages of general office auditors, bookkeepers, paymasters, cashiers, stenographers, and ail other clerks employed in general office, except clerks engaged in revenue accounting and collecting. 873. GENERAL OFFICE SUPPLIES AND E X P E N S E S : Charge to t h i s account the matters provided for in the following sub-accounts: a. Expenses of General Officers and Clerks: The traveling and incidental expenses of general officers and other general office employees. b. General Stationery and Printing: The cost of all postage, stationery, stationery supplies, and printing for use in general offices, except t h a t used in revenue accounting and collecting. c. Other General Office Supplies and Expenses: The cost of office supplies (other than postage, stationery, and p r i n t i n g ) , repairs of office furniture and renewals of such furniture as has not been capitalized; cost of telegrams and of any special telephone service; wages of janitors, porters, and mes- 58 P U B L I C SERVICE COMMISSION, SECOND DISTRICT sengers; repairs of rented rooms, and other miscellaneous expenses of general offices. NOTE.— Rent for general offices which are not furnished and heated and lighted by the lessor should be charged to account No. 552, " Rent for Telephone Offices." 874. GENERAL L A W EXPENSES: Charge t o this account all law expenses except those incurred in t h e defense and settlement of damage claims, including pay and expenses of all counsel, solicitors and attorneys, their clerks and attendants, and expenses of their offices; cost of law books, printing briefs, 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 connected with taking depositions and a l l law and court expenses n o t provided for elsewhere. NOTE.— The compensation of the general solicitor or counsel or other attorneys engaged partly in the defense or settlement of damage suits and partly in other legal work should be properly apportioned between this account and account No. 877, " Law Expenses Connected with Damages." 875. INSURANCE: Charge t o this account premiums paid t o insurance companies for fire, fidelity, boiler, casualty, burglar, and all other insurance; also amounts set aside as an insurance reserve. This account should be credited and t h e proper Fixed Capital accounts debited with the cost of insurance applicable t o construction work. NOTE.— In their reports to the Public Service Commission, Second District, corporations will be required to report the charges made to this account for the various kinds of insurance, and for self-insurance. 876. ACCIDENTS AND DAMAGES: Charge t o this account all expenses (other t h a n law expenses) incurred on account of persons killed or injured and on account of property of others damaged. I t includes the pay and expenses of claim agents, investigators, and adjusters; fees and expenses of surgeons and doctors; nursing, hospital attendance, medical and surgical supplies, fees a n d expenses of coroners and undertakers, a n d contributions t o hospitals; also amounts paid i n settlement of personal injury or damage claims. This account should be credited and the proper Fixed Capital accounts debited with expenses incurred on account of accidents and damages incidental t o construction work. 877. LAW EXPENSES CONNECTED WITH DAMAGES: Charge t o this account all law expenses connected with t h e defense o r settlement of damage claims, including a proper proportion of t h e salaries and expenses of t h e general solicitor or counsel, and salaries, fees, and expenses of attorneys engaged in this work; fees of court stenographers and other court expenses; t h e cost of law books, printing briefs, court records, and similar papers in connection with such cases. This account should be credited and t h e proper Fixed Capital accounts debited with expenses incurred on account of accidents and damages incidental t o construction work. 880. MISCELLANEOUS GENERAL EXPENSES: This account includes: 881. R E L I E F DEPAETMENT AND P E N S I O N S : Charge t o t h i s account pensions paid t o retired employees or representatives of former employees and expenses ACCOUNTS FOR TELEPHONE CORPORATIONS 59 in connection therewith, salaries and expenses incurred in conducting a relief department, and contributions made t o such department. 882. TELEPHONE F E A N C H I S E R E Q U I R E M E N T S : Charge t o t h i s account the cost of all service and materials and supplies furnished t o municipal corporations in compliance with franchise requirements and for which no payment is received by t h e corporation; also of all direct expense, such as paving and other like matters incurred in compliance with such requirements and for which no reimbursement is received by t h e corporation. Amounts charged to this account for which there is no direct money outlay shall be credited to account No. 885, " Undistributed Adjustments — Balance." 883. AMORTIZATION OF FRANCHISES AND P A T E N T S : Charge t o t h i s account each month t h e amount necessary t o cover such portions of t h e life of franchises and patents as h a s expired or been consumed during t h e month. The amount so charged shall be concurrently credited to an appropriate sub-account under account No. 182, " Reserve for Amortization of Intangible Capital." NOTE.— The amount charged to this account shall be based upon a rule determined by the accounting corporation and filed with the Public Service Commission, Second District (as provided on page 51). The purpose and effect of such rule should be to accumulate by charges equitably distributed throughout the life of any franchise or patent, a reserve that will, a t the expiration of its life, equal the original cost. 884. OTHER GENERAL E X P E N S E S : Charge t o this account such incidental general expenses as are n o t provided for in t h e foregoing accounts, such a s cost of publishing notices of stockholders' meetings, of election of directors, annual reports in newspapers, and of dividends declared; and fees and expenses paid t o directors. 885. UNDISTRIBUTED A D J U S T M E N T S — BALANCE: A t least once a year a,n inventory of materials a n d supplies a n d of tools shall be taken, and t h e difference between t h e inventories and t h e ledger balances shall be debited or credited to this account in case i t can not be assigned to specific accounts as provided under account No. 137, " Materials and Supplies." Credit t o this account all discounts recovered through the prompt payment of bills for materials and supplies consumed in operation unless such discounts a r e applied t o the particular bills; also amounts included in expenses, as provided in account No. 882, " Telephone Franchise Kequirememts." 889. JOINT GENERAL E X P E N S E S — CR.: When any general or miscellaneous operating expenses a r e assumed by t h e accounting corporation for t h e joint benefit of itself and other telephone corporations under a n arrangement for apportioning such expenses, t h e portion chargeable t o others should be credited t o this account. The portion so credited must not include any allowance for profit or return upon t h e value of t h e property. NOTE.—Bills rendered for joint expenses should show the expenses in detail, and the debtor corporation should distribute the total amount to its primary expense accounts. 60 P U B L I C SERVICE COMMISSION", SECOND DISTRICT C L E A R I N G ACCOUNTS. (Not required of Class C Corporations.) The following accounts are provided for certain expenses which usually affect several classes of operations but need to be brought together in one account in order t h a t the total of the expenses may be known and properly distributed: An inventory of tools, harness, vehicles, and other materials and supplies in shops, stores, stables, and garages shall be taken at least once a year, and any loss disclosed by such inventory in excess of the amount taken into account through the depreciation currently charged out should be apportioned to the appropriate expense accounts on the basis of charges made since last inventory. 901. SHOP EXPENSE: This account or appropriate sub-accounts should be arranged so as to record separately the expenses of the general shops as follows: (1) Salaries and wages of shop employees; (2) personal and incidental expenses of such employees; (3) materials and supplies for general shop use; (4) repairs of tools, machinery, and appliances; (5) rent of shop buildings; (6) depreciation of tools, machinery, and appliances. The Shop Expense account should be cleared by apportioning the total amount of the expenses to the various jobs on an equitable basis. 902. STABLE AND GARAGE E X P E N S E : This account or appropriate subaccounts should be arranged so as to record separately the expenses of stables and garages as follows: (1) Salaries and wages of drivers, chauffeurs, stablemen, garagemen, and other employees in stables and garages; (2) personal and incidental expenses of such employees; (3) materials and supplies, including fuel and gasoline, harness, tires, and other supplies for stables and garages; (4) repairs of automobiles and other vehicles and harness; (5) rent of buildings or vehicles; (6) depreciation on vehicles, horses, harness, etc. Credit to this account any charges for service performed for others. A record should be kept of the use of teams and automobiles, and each month the total expense should be apportioned to the proper accounts according to use, or the debits to the expense accounts may be made a t rates per hour of service which have been found to be fair and to distribute the total expense equitably. 903. TOOL E X P E N S E : Charge to this account all expense for tools (except shop tools and tools carried as supplies unissued). I t includes the cost of small hand tools of which no account is kept after issue; the cost of repairing tools; the cost of tools lost or stolen, and depreciation on tools taken out of service because of breakage or other deterioration. This account should be cleared by adding to the expense of repairs and cost of plant installed each month such amounts as will equitably distribute the total monthly expense for tools. 904. SUPPLY E X P E N S E : Charge to t h i s account or to appropriate subaccounts all expenses (except insurance and taxes) incurred directly in connection with the purchase, storage, handling, and distribution of materials and supplies and stationery. I t includes the pay and expenses of purchasing ACCOUNTS FOR TELEPHONE CORPORATIONS 61 agents, managers of stores, clerks, and laborers; rents of stores, cost of lighting, heating, and undistributed freight and express charges, and the estimated depreciation on supplies due to breakage, leakage, shortage, and wear and tear. This account should be cleared by adding to the cost of materials and supplies passing through stores a suitable loading charge which will equitably distribute the total cost of conducting the stores, and by adding to the cost of such supplies as are bought by the purchasing department a pro r a t a share of the total expenses of the purchasing department. 905. ENGINEERING E X P E N S E : Charge to this account or appropriate subaccounts all expenses for engineering so as to show separately the following: (1) Salaries and wages; (2) personal and incidental expenses of engineering department employees; (3) rent of office and office expenses. This account should be cleared by apportioning the total expenses to Operating Expense and Fixed Capital accounts on the basis of service rendered, as determined by the actual time devoted to particular jobs or an equitable basis fixed by the officers of the corporation. 906. PLANT SUPERVISION E X P E N S E : Charge to this account the cost of general supervision of the maintenance and construction of the plant where a separate department of the corporation's organization is charged with such supervision. I t includes the pay and expenses of the plant supervising officers, such as the general plant superintendent, district plant superintendent, plant engineers and their office and field forces, charged with planning for and superintending the work of maintenance and plant construction. The account or appropriate sub-accounts should be so arranged as to show in detail the expenses of the plant supervision department as follows: (1) Salaries and wages; (2) personal and incidental expenses of employees; (3) rent of offices and office expenses. This account should be cleared each month by charging directly to the appropriate accounts such expenses as can be allocated to particular pieces of work and by charging out the balance on the basis of labor employed in all construction or maintenance work in progress during the month. NOTE.— The pay of general foremen and foremen in direct charge of jobs should be included in the cost of the job and not charged to this account.