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 IMTilRSTATc COIVll\A£RCc 
 COMMISSION 
 
 UNIFORM SYSTtM OF 
 ACCOUNTS FOR TELE- 
 PHONE COMPANIES
 
 5#- 
 
 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 

 
 ^^2 f^-o-C-*— 
 
 UNIFORM SYSTEM OF ACCOUNTS 
 
 FOR 
 
 TELEPHONE COMPANIES 
 
 AS PRESCRIBED BY THE 
 
 INTERSTATE COMMERCE COMMISSION 
 
 IN ACCORDANCE WITH SECTION 20 OF THK 
 ACT TO REGULATE COMMERCE 
 
 FIRST ISSUE 
 
 Effective on January 1, 1913 
 
 L. 
 
 ■^p.ri < 
 
 WASHINGTON 
 1915
 
 . . • • • • 
 
 • • !.♦ 
 
 
 The Interstate Commerce Commission. 
 
 Charles A. Prouty, 0/ Vermont. 
 JuDSON C. Clements, 0/ Georgia. 
 Franklin K. Lane, 0/ California. 
 Edgar E. Clark, of Iowa. 
 James S. Harlan, of Illinois. 
 Charles C. McChord, of Kentucky. 
 Balthasar H. Meyer, of Wisconsin. 
 
 John H. Marble, Secretary. 
 
 \.'>'..,>.sV n(» 
 ADDITIONAL COPIES 
 
 OF THIS PUBLICATION MAY BE PROCURED FROM 
 
 THE SUPERINTENDEXT OF DOCUMENTS 
 
 GOVERN-MENT PRINTING OFFICE 
 
 "WASHINGTON, D. C. 
 
 AT 
 
 10 CENTS PER COPY 
 
 (2)
 
 HE 
 
 TZVS 
 
 ^ CONTENTS. 
 
 SJ 
 
 ^ 
 
 Page. 
 
 Order of the Commieeion 5 
 
 Introductx)ry letter 7 
 
 General instructions 9 
 
 Telephone companies divided into two classes 9 
 
 ^ Accounts should show fixed capital, operating revenues, and 
 
 vj\ operating exjienses pertaining solely to any exchange or 
 
 "^ toll system or common to two or more systems 9 
 
 Yj ."^ Balance-sheet statement 11 
 
 Instnictions pertaining to balance sheet 13 
 
 Balajice-sheet accounts 13 
 
 Cost or book value of securities owned 13 
 
 . Reacquired securities 13 
 
 < Discount and premium on capital stock 13 
 
 ^ Discount, expense, and premium on funded debt 14 
 
 Contingent assets and liabilities 15 
 
 Text explanatory of balance-sheet accounts 16 
 
 Fixed capitiil accounts 31 
 
 Instructions pertaining to fixed capital accounts 32 
 
 Fixed capital defined 32 
 
 Costs to be actual money costs 33 
 
 ^ Interest accruing during construction period 33 
 
 * Cost of labor, materials, and supplies 33 
 
 Plant and equipment and other property purchased 33 
 
 ■:S Fixed capital withdrawn or retired 34 
 
 Texts explanatory of fixed capital accounts 36 
 
 Income statement 45 
 
 Instructions pertaining to the income statement 47 
 
 Income account defined 47 
 
 Taxes 47 
 
 Text exnlanator\- of accounts in income statement 48 
 
 Corporate surplus or deficit account 56 
 
 Instructions pertaining to corporate surplus or deficit account. . 56 
 
 Corporate surplus or deficit account defined.'. 56 
 
 Text explanatory of corporate surplus or deficit account 57 
 
 Operating revenue accounts 60 
 
 Instructions pertaining to operating revenue accounts 60 
 
 . Operating revenues defined 60 
 
 Deductions from revenues 60 
 
 Commissions 60 
 
 (3)
 
 Page. 
 
 Text explanatory of operating revenue accounts 61 
 
 Operating expense accounts 64 
 
 Instructions pertaining to operating expense accounts 66 
 
 Repairs defined 66 
 
 Cost of repairs 67 
 
 Depreciation of plant and equipment 67 
 
 Extraordinary casualties and unantici{)ated reconstruction. 68 
 
 Joint operating expenses 68 
 
 Text explanatory of operating expense accounts 69 
 
 Clearing accounts 77
 
 At a General Session of the INTERSTATE COMMERCE 
 COMMISSION, held at its office in Washington, D. C, 
 on the 10th day of December, 1912. 
 
 The subject of a I^niform System of Accounts to be 
 prescribed for and kept by telephone companies being 
 under consideration, the follo\vLng order was entered: 
 
 It is ordered, That the Uniform System of Accounts for 
 Telephone Companies with the text pertaining thereto, 
 embodied in printed form to be hereafter known as First 
 Issue, a copy of which is now before this Commission, be, 
 and the same is hereby, appro v^ed; that a copy thereof 
 duly authenticated by the Secretary of the Commission 
 be filed in its archives, and a second copy thereof, in like 
 manner authenticated, in the office of the Division of 
 Carriers' Accounts; and that each of said copies so au- 
 thenticated and filed shall be deemed an original record 
 thereof. 
 
 It is further ordered, That the said I'niform System of 
 Accounts for Telephone Companies with the text per- 
 taining thereto, be, and the same is hereby, prescribed 
 for the use of telephone companies having annual 
 operating revenues exceeding S50,000, subject to the pro- 
 visions of the act to regulate commerce as amended, in 
 the keeping and recording of their accounts; that each 
 and er\"ery such carrier and each and every receiver or 
 operating trustee of any such carrier be required to keep 
 all accounts in conformity therewith; and that a copy of 
 the said First Issue be sent to each and every such carrier 
 and to each and every receiver or operating trustee of any 
 such carrier. 
 
 It is further ordered, That any such carrier or any 
 receiver or operating trustee of any such carrier may sub- 
 divide any primary account in the said Fii-st Issue estab- 
 lished (as permitted in the general instructions contained 
 
 ^5)
 
 in the said First Issue) ; or may make assignment of the 
 amount charged to any such primary account to operat- 
 ing divisions, to its individual lines, or to States: Pro- 
 vided, however, That such subprimary accounts set up 
 or such assignments made by any such carrier or by any 
 receiver or operating trustee of any such earner do not 
 impair the integrity of the accounts hereby prescribed. 
 
 It is further ordered, That in order that the basis of 
 comparison with previous years be not destroyed, any 
 such carrier or any receiver or operating trustee of any 
 such carrier may, during the twelve months from the 
 time that the said First Issue becomes effective, keep and 
 maintain, in addition to the accounts hereby prescribed, 
 such portion or portions of its present accounts as may be 
 deemed desu'able by any such carrier, or by any receiver 
 or operating trustee thereof, for the purpose of such com- 
 parison; or, during the same period, may maintain such 
 groupings of the primary accounts hereby prescribed as 
 may be desired for that pui-pose. 
 
 It is further ordered. That any such carrier or any 
 receiver or operating trustee ot any such carrier, in 
 addition to the accounts hereby prescribed, may unless 
 otherwise ordered, keep any temporary or experimental 
 accounts the purpose of which is to develop the efficiency 
 of operation : Provided, however. That sucb temporary or 
 experimental accounts shall not impair the integrity of 
 any primary account hereby prescribed. 
 
 It is further ordered, That January 1, 1913, be, and is 
 hereby, fixed as the date on which the said I'lrst issue 
 of the Uniform System ot Accounts for Telephone Com- 
 panies shall become effective. 
 
 By the Commission: 
 
 John H. Marble, 
 
 Secretary.
 
 IXTRODUC'TORY LETTER. 
 
 Interstate Commerce Commission, 
 
 Division of Carriers' Accounts, 
 
 Washington, Decemher 10, 1912. 
 To Telephone Companies: 
 
 This Uniform System of Accounts for Tcl(»phonc Com- 
 panies is issued in accordance with an order of the Inter- 
 state Commerce Commission, the text of whicli immedi- 
 ately precedes this letter. The act to regulate commerce, 
 as amended, invests the Commission with authority to 
 prescribe the forms of accounts to be kept by telephone 
 companies subject to the act, and prohibits the use of 
 any accounts other than those prescribed by the Commis- 
 sion. The obsen-ance of the rules and regulations stated 
 in this system of accounts therefore becomes obligatory 
 upon persons having direct charge of the accounts of the 
 companies concerned, and such persons will be held re- 
 sponsible for their proper application. 
 
 In formulating this system of accounts it has been the 
 endeavor of the Division of Carriers' Accomits to enlist 
 the cooperation of the various telephone companies 
 throughout the United States. For that purpose Ac- 
 counting Series Circular Xo. 30, containing a tentative 
 system of accounts, was submitted to all telephone com- 
 panies of which there was record for criticisms and sug- 
 gestions, and due consideration was given to all criticisms 
 and suggestions received. 
 
 Attention is directed to the fact that this system of 
 accounts applies only to companies having annual operat- 
 ing revenues exceeding 850,000; that such c(Hnpanies are 
 divided into two classes, according to their earning ca- 
 pacity (see par. 1, p. 9), and that it has been sought 
 
 (7)
 
 to provide classifications of accounts for each class^ 
 adjusted to their respective needs. No system of ac- 
 counts has yet been prescribed for companies having 
 annual operating revenues of $50,000 or less. 
 
 Accounting officers are invited to correspond with this 
 office should question arise with regard to the correct 
 interpretation of any account or rule herein prescribed, 
 in order th^t uniformity may be secured in the applica- 
 tion of the provisions of the classifications. 
 
 Charles A. Lutz, 
 Chief Examiner of Accounts.
 
 GENERAL INSTRUCTIONS. 
 
 1. Telephone companies divided into two classes. — For the pur- 
 pose of this system of accounts, the telephone companies affected by 
 the preceding order are divided into two classes, as follows: 
 
 Class A. — Comi)anies having average annual operating revenues ' 
 exceeding $250,000. 
 
 Class B. — Companies having average annual operating revenues * 
 exceeding $50,000, but not more than $2.50,000. 
 
 Two schemes of accounts, designed to meet the respective needs 
 of companies of classes A and B, indicated above, are pro\'ided. The 
 clas.sifications for the two classes of companies are published jointly, 
 with the titles of the accounts printed in CAPITALS and small 
 CAPITALS, and in italics. 
 
 Class A companies shall keep all the accounts (so far as they may be 
 applicable to their affairs) the titles of which are printed in CAPITALS 
 and SMALL CAPITALS and also the accounts the titles of which are 
 printed in italics, except that where an account shown in CAPITALS 
 and SMALL CAPITALS is subdi\'ided into accounts the titles of which are 
 printed in italics, it is not required that the former be kept* Class A 
 companies may further subdivide any of the accounts prescribed 
 herein, provided that such subdivisions do not impair the integrity of 
 any of the accounts prescribed. 
 
 Class B companies shall keep all the account.s (so far as they may 
 be applicable to their affairs) the titles of which are printed in 
 CAPITALS and small capitals. "Where such accounts are subdi- 
 vided into accounts the titles of which are printed in italics, it is not 
 required that claims B companies shall keep separate accounts for the 
 latter, (."lass B companies may, if they so desire, keep the more 
 extended accounts prescribed for class A companies, or may further 
 subdivide such accounts, provided that such subdi\'isions do not 
 impair the intogi-ity of any of the acco\ints pro?<Tibed. 
 
 2. Accounts should sliov/ fixed capital, operating revenues, and oper- 
 ating expenses pertaining solely to any exchange or toll system or com- 
 mon to two or more systems. — [a) Telephone companies should keep 
 their fixed capital accounts in such manner as will enable them to show, 
 
 1 In order thut frequent changes raaj' be avoided, compunie.'; operating established 
 telephcno plants may adopt the scheme of accounts in<licatod by the average of their 
 annual revenues for three years preceding the date cf this order. If at the close of any 
 fiscal year the averaTe of tlie annual revenues for the three preceding years is greater 
 than the amount given for the class in which the company has been put, the higher 
 sciierr.e of accounts should be adopted. New companies should estimate the amount of 
 their annual revenues and adopt tl:e scheme of accounts provided for companies with 
 average annual revenues equal to th.e amount of the estimate. 
 
 (9) 
 
 ;2o28*— Ij— 2
 
 10 
 
 when 60 required by the Commission, (1) the cost of fixed capital 
 devoted solely to any exchange system, (2) the cost of fixed capital 
 devoted solely to any toll system, and (3) the cost of fixed capital used 
 in common by two or more exchange or toll systems. 
 
 (b) The Classification of Operating Revenues provides separate ac- 
 counts for exchange revenue and for toll revenue. Where it is neces- 
 sary to apportion the revenue between these accounts telephone com- 
 panies should be prepared, when so required by the Commission, to 
 furnish the basis used in making such apportionment. 
 
 (c) Telephone companies should keep their operating expense ac- 
 counts in such manner as will permit them to show, when so required 
 by the Commission, (1) the operating expenses pertaining solely to 
 any exchange system, (2) the operating expenses pertaining solely 
 to any toll system, and (3) the operating expenses which are common 
 to two or more exchange or toll systems.
 
 11 
 
 BALANCE-SHEET STATEMENT. 
 
 ASSET ACCOUNTS. 
 
 Permanent and Long Term Investments — page. 
 
 100. Fixed Capital Installed Prior to January 1, 1913... 16 
 
 101. Fixed Capital Installed Since' December 31, 1912 16 
 
 102. Reserve for Accrued Depreciation — Cr 16 
 
 103. Reserve FOR Amortization OF Intangible Capital — Cr. 17 
 
 104. Construction Work in Progress 17 
 
 105. Investment Securities 17 
 
 106. Stocks of System Corporations 18 
 
 107. Funded Debt of System Corporations 18 
 
 108. Miscellaneous Stocks 18 
 
 109. Miscellaneous Funded Debt 18 
 
 110. Advances to System Cori'Orations for Construction, 
 
 Equipment, and Betterments 18 
 
 111. Miscellaneous Investments 18 
 
 Working Assets — 
 
 112. Cash and Deposits 18 
 
 113. Cash 19 
 
 114 . Special Deposits 19 
 
 115. Employees' Working F"unds 19 
 
 116. Marketable Securities 19 
 
 117. Bills Receivable 19 
 
 118. Due from Subscribers and Agents 20 
 
 119. Accounts Receivable from System Corporations.... 20 
 
 120. Miscellaneous Accounts Receivable 20 
 
 121. Matured Interest and Dividends Receivable 20 
 
 122. Materlals and Supplies 20 
 
 123. Other Current Assets 21 
 
 Accrued Income not Due — 
 
 124. Unmatured Interest, Dividends, and Rents Receiv- 
 
 able 21 
 
 Deferred Debit Items — 
 
 125. Sinking Fund Assets '. 21 
 
 ■126. Insurance and Other Reserve Fund Assets 22 
 
 127. Provident Fund Assets 22 
 
 128. Prepayments t 22 
 
 129. Prepaid Rents 22 
 
 130. Prepaid Taxes 22 
 
 131 . Prepaid Insurance 23 
 
 132. Prepaid Directory Expense 23 
 
 133. Other Prepayments 23 
 
 134. Unextinguished Discount on Capital Stock 23 
 
 135. Unamortized Debt Discount and Expense 23 
 
 136. Other Suspense - 23 
 
 Corporate Deficit — 
 
 137. Corporate Deficit 23
 
 12 
 
 UABILITY AOOOimTS. 
 
 Stock — Page. 
 
 150. Capital Stock 24 
 
 151. Stock Liability for Conversion of Securities 24 
 
 152. Premiums on Capital Stock 25 
 
 Long Term Debt — 
 
 153. Funded Debt 25 
 
 154. Receivers' Certificates 26 
 
 155. Advances from System Corporations for Construc- 
 
 tion, Equipment, and Betterments 26 
 
 Working Liabilities — 
 
 156. Judgments Unpaid - 26 
 
 157. Bills Payable 27 
 
 158. Audited Vouchers and Wages L^npaid 27 
 
 159. Subscribers' Deposits 27 
 
 160. Accounts Payable to System Corporations 27 
 
 161 . Miscellaneous Accounts Payable 27 
 
 162. Matured Interest, Dividends, and Rents L^npaid 27 
 
 163. Matured Funded Debt Unpaid 27 
 
 164. Service Billed in Advance 27 
 
 165. Other Current Liabilities 28 
 
 Accrued Liabllities not Due — 
 
 166. Taxes Accrued 28 
 
 167. Other Accrued Liabilities not Due 28 
 
 Deferred Credit Items — 
 
 168. LTnextinguished Premium on Debt 28 
 
 169. Insurance and Casualty Reserves 28 
 
 170. Liability on Account of Provident Funds 29 
 
 Appropriated Surplus — 
 
 171. Surplus Invested Since December 31, 1912, in Fixed 
 
 Capital 29 
 
 172. Surplus Invested in Sinking Funds 29 
 
 173. Other Surplus Reserved 30 
 
 Corporate Surplus — 
 
 174. Corporate Surplus Unappropriated 30
 
 13 
 
 INSTRUCTIONS PfeRTAINlNG TO BALANCE SHEET. 
 
 o. Balance-sheet accounts. — By balance-pheot arrounts are meant 
 those titles under which the ledger accounts are combined and sum- 
 marized to show the assets, liabilities, and profit or loss of the bu-siness 
 at a given time. WTiere the title and definition of a balance-sheet 
 account clearly indicate that it is a summary of other accounts, it is 
 not required that a special ledger account shall be raised under such a 
 title to include the balance from the accounts usually carried on the 
 ledger. 
 
 4. Cost or book value of securities owned. — The term cost or book 
 value, as applied to various accounts representing securities owned, is 
 intended to recognize the option of the company of carrying its invest- 
 ments in securities either at cost or at a reasonable valuation other than 
 cost. WTienever securities are acquired they are to be entered on the 
 books at cost. If, subsequently, the company desires to adjust their 
 value on account of substantial appreciation or depreciation, the 
 entries in its books, with respect to such securities, as well as its annual 
 reports to the Commission, should clearly show the reasons for 
 making the adjustments. 
 
 5. Eeacquired securities. — The capital stock and funded debt lia- 
 bility accounts in the balance sheet are intended to include only the 
 par value of such capital stock or funded debt securities as have been 
 actually issued to bona-fide holders for value or such securities as have 
 been issued by other companies and have been assumed by the account- 
 ing company and are actually outstanding at the date of the balance- 
 sheet statement. 
 
 TMien capital stock or funded-debt securities have been actually 
 issued to bona-fide holders for value (or after such issue by another 
 company have been assumed by the accounting company") and after 
 such issue (or assumption) have been reacquired by the company 
 under circumstances which require that they shall not be treated as 
 paid or retired, they may be charged at par value to the appropriate 
 asset account, but on the balance-sheet statement they should be shown 
 separately as a deduction from both the asset and liability accounts in 
 order that the asset accounts for securities owned will include only- 
 securities of other companies and that the liability accounts for securi- 
 ties issued or assumed will include only those in the hands of the public. 
 
 If any such securities are reacquired for more or less than their par 
 value, the difference between the par value and the cost of reacquire- 
 ment, after adjusting any amounts carried in the discount-and-premium 
 accounts or other accounts with respect to such securities, should be 
 debited or credited to Corporate Surplus or Deficit account, unless 
 reacquired for a sinking or other fund, which is required to be repre- 
 sented by a reserve, in which case the difference should be debited or 
 credited to the appropriate reserve account. 
 
 6. Discount and Premium on Capital Stock. — Ledger accounts 
 sliould be provided to cover the discounts and premiums on each class
 
 14 
 
 of capital stock issued or assumed by the company. By discount is 
 meant the excess of the par value of stocks issued or assumed over the 
 actual money value of the consideration received for such stock (except 
 stock that has been sold and reacquired); by premium is meant the 
 excess of the actual money value of the consideration received for 
 stock issued or assumed over the par value of such stock (except stock 
 that has been sold and reacquired). Entries in these accounts repre- 
 senting discounts sliould be carried therein until offset, (1) by premiums 
 realized on subsequent sales of the same class of stock, (2) by assess- 
 ments levied on the stockholders, (3) by appropriations of surplus for 
 that purpose, or (4) by charges to Corporate Surplus or Deficit account 
 upon reacquiremeut or retirement of the stock. Entries in these 
 accounts representing premiums realized should be carried perma- 
 nently, unless offset (1) by discounts suffered on sales of the same class 
 of stock or (2) by credits to Corporate Surplus or Deficit account upon 
 reacquirement or retirement of the stock. 
 
 If the net of the balances in the discount-and-premium accounts for 
 all classes of capital stock sold or exchanged is a debit balance, the 
 amount should be included in the balance-sheet statement in account 
 No. 134, "Unextinguished Discount on Capital Stock"; if a credit 
 balance, the amount should be shown in account No. 152, ' 'Premiums 
 on Capital Stock." 
 
 In no case should discount on capital stock be charged to or included 
 in any account as a part of the cost of acquiring any property, tangible 
 or intangible, or as a part of the cost of operation. 
 
 7. Discount, Expense, and Premium on Funded Debt. — Ledger 
 accounts should be provided to cover the discount, expense, and 
 premiums on each class of funded debt issued or assumed by the com- 
 pany. By discount is meant the excess of the par value of funded-debt 
 securities issued or assumed, and the accrued interest thereon, over 
 the actual cash value of the consideration received for such securities 
 (except securities that have been sold and reacquired); by premium 
 is meant the excess of the actual cash value of the consideration received 
 for funded-debt securities issued or assumed over the par value of such 
 securities and the accrued interest thereon (except securities that have 
 been sold and reacquired). 
 
 By expense is meant all expenses in connection with the issue and 
 sale of evidences of debt, such as fees for drafting mortgages and trust 
 deeds, fees and taxes for recording mortgages and trust deeds, cost of 
 engi'aving and printing bonds, certificates of indebtedness, and other 
 commercial paper having a life of more than one year; fees paid trus- 
 tees provided for in mortgages and trust deeds; fees and commissions 
 paid underwriters and brokers for marketing such evidences of debt 
 and other like expense. 
 
 If the net balance in any of these accounts is a debit, there should 
 be charged to income account No. 338, "Amortization of Debt Dis- 
 count and Expense," during each fiscal period (and credited to
 
 15 
 
 the discount and premium accounts in which the discount and ex- 
 pon.se i.s carried) .such proportion of the discount and expense on 
 the outstanding funded debt obligations as may be applicable to that 
 period. This proportion should be determined according to a rule, 
 the uniform application of which throughout the inten'al between 
 the date of .sale and the date; of maturity, will extinguish the dis- 
 coimt and expense on the funded debt. The charge to income for any 
 period shall not exceed the proportion applicable to that period, and 
 a charge should be made for each period so long as any portion of the 
 discount and expense remains unextinguished. In order that the 
 discount and expense may be extinguished sooner, the company may, 
 at its option, charge to Corporate Surplus or Deficit account all or any 
 portion of the discount and expense on funded debt remaining at any 
 time unextinguished. 
 
 If the net balance in any of these accounts is a credit there should be 
 credited to income account No. 339, "Release of Premiums on Debt— 
 Cr.," during each fiscal period (and debited to the discount and pre- 
 mium accounts in which the premium is carried) surh proportion of the 
 premium on outstanding funded debt obligations as may be applicable 
 to that period. This proportion should be determined according to 
 a rule, the imiform application of which throughout the inter\-al 
 between the date of sale and the date of maturity of the debt, will 
 extinguish the premium at which such debt was sold. 
 
 If the net of the balances in the discount and premium accounts for 
 all classes of funded debt sold or exchanged is a debit balance, the 
 amomit should be included in account No. 135, "Unamortized Debt 
 Discount and Expense;" if a credit balance, the amount should be 
 included in account No. 168, "Unextinguished Premium on Debt." 
 
 Except as provided in section 11, page 33, no discoimt and expense 
 on fxmded debt should be charged to or included in any account as a 
 part of the cost of acquiring any property, tangible or intangible, or as 
 a part of the cost of operation . 
 
 8. Contingent assets and liabilities. — Contingent assets and liabili- 
 ties should not be included in the body of the balance-sheet statement, 
 but should be shown in detail in a supplementary statement accom- 
 panying the balance-sheet statement. Contingent assets represent 
 possible sources of value contingent upon the fulfillment of conditions 
 regarded as uncertain. Contingent liabilities include items which mav, 
 under certain conditions, become obligations of the company, but are 
 neither direct nor assumed obligations on the date of the balance sheet.
 
 TEXT EXPLANATORY OF BALANCE-SHEET ACCOUNTS. 
 
 ASSET ACCOUNTS. 
 
 PERMANENT AND LONG TERM INVESTMENTS. 
 
 100. Fixed Capital Installed Prioe to January 1, 1913.' 
 
 In this account (on the balance-sheet statement) should be 
 shown the total of the balances in the ledger accounts repre- 
 senting the company's fixed capital, which was installed prior 
 to January 1, 1913, and which is still in ser^dce at the date of 
 the balance sheet. (See text of this account on p. 36.) 
 
 101. Fixed Capital Installed Since December 31, 1912.^ 
 
 In this account (on the balance-sheet statement) should be 
 shown the total of the balances in the ledger accounts represent- 
 ing the company's fixed capital which has been installed since 
 December 31, 1912, and which is still in service at the date of 
 the balance sheet. (See text of this account on p. 36.) 
 
 102. Reserve for Accrued Depreciation — Cr.^ 
 
 Credit to this account such amounts as are concurrently 
 charged to account No. 608, "Depreciation of Plant and Equip- 
 ment," No. 701, "Shop Expense," No. 702, "Stable and Garage 
 Expense," and No. 703, "Tool Expense," to cover the expense 
 of depreciation of plant, equipment, furniture, tools and imple- 
 ments, as specified in the text of these accounts. This account 
 should also be credited with any amount carried in reserve on 
 January 1, 1913, to cover the expense of depreciation on plant, 
 equipment, furniture, tools and implements installed prior to 
 that date. 
 
 Charge to this account the realized depreciation of tangible 
 fixed capital installed since December 31, 1912, when such cap- 
 ital is relinquished, retired, or destroyed, also the amount of 
 depreciation carried herein in respect to tangible fixed capital 
 installed prior to January 1, 1913, when relinquished, retired, 
 or destroyed. (See sees. 14, p. 34, and 23, p. 67.) 
 
 Charge also to this account such part of the expenditures for 
 extraordinary repairs as is concurrently credited to accoimt 
 No. 611, "Repairs Charged to Reserves — Cr." 
 
 1 The total of accounts Nos. 100 and 101 should be drawn down on the balance-sheet 
 statement, and the total of accounts No.s. 102 and 103 deducted therefrom, the 
 difference being shown as the net total. 
 
 (16)
 
 17 
 
 103. Reserve tor Amortization of Intangiule Capitai. — Cr.' 
 
 Credit to this account such amounts as are concurrently 
 charged to account No. 340, "Amortization of landed Capital,"' 
 and to account No. 674, "Amortization of Franchises and Pat- 
 ents." Charge to this account when any franchise, patent, or 
 landed capital expires or is relinquished, the amount at which 
 it stood charged in the company's fixed capital accoiuits or such 
 portion thereof as has been previously credited to this reserve. 
 WTieii any intangible capital acquired prior to the raising of this 
 reserve expires or is relinquished, that portion of its cost which 
 has not been covered by credits to this account or previou.sly 
 written off should be charged to account No. 414, "Amortization 
 Unprovided for Elsewhere." 
 
 104. Construction Work in Progress. 
 
 This account should include the amounts expended upon 
 plant that is in process of construction under estimates or work 
 orders, but is not ready for service at the date of the balance 
 sheet. It includes interest charged to construction, also such 
 proportion of plant supervision expenses, engineering expenses, 
 tool expenses, sui)ply 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, this account should be credited 
 with the amount at which it stands charged, and the appropriate 
 fixed capital or other accounts should be concurrently charged, 
 but expenditures should not be carried in this account beyond 
 the close of the fiscal year next succeeding that in which the 
 expenditures were made. 
 
 105. Investment Securities. 
 
 This account should include the cost or book value of stocks, 
 bonds, and other evidences of indebtedness (including notes 
 having dateaof maturity of more than one year from date of issue) 
 held by the accounting company, and pledged as collateral for 
 other securities issued or assumed, or held as a means of obtain- 
 ing or exercising control over other corporations, for devotion to 
 future operations, or for securing other business advantages. 
 
 In stating this account or the subaccounts provided hereunder 
 on the balance-slicet statement the par value of securities issued 
 or assumed by the accounting company and carried in this 
 account should be deducted in order that this account will 
 show oidy the cost or book value of securities of other companies. 
 (See sec. 5, p. 13.) 
 
 1 The total of accounts Nos. 100 and 101 should be drawn down on the balanc»-sheet 
 statement, and the total of accounts Nos. 102 and 103 deducted therefrom, the 
 difference being shown as the net total. 
 
 72528°— Ic 3
 
 18 
 
 The following subaccounts should be kept by class A com- 
 panies: 
 
 106. Stoclcs of System Corporations.^ 
 
 107. Funded Debt of System Corporations.^ 
 
 108. Miscellaneous Stocks. 
 
 109. Miscellaneous Funded Debt. 
 
 Note A .—Short-term notes payable upon demand or having dates of matu- 
 rity of one year or less from the date of issue should not be included herein 
 but in account No. 110, "Advances to System Corporations for Cortstruction, 
 Equipment, and Betterments," or No. 117, "BiUs Receivable," as may be 
 appropriate. 
 
 Note B. — In the annual reports of class \ and class B telephone companies- 
 to the Commission 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. 
 
 110. Advances to System Corporations for Construction, 
 
 Equipment, and Betterments. 
 
 This account should include advances to controlling, affili- 
 ated, controlled, and subsidiary corporations to enable such cor- 
 porations to pay for construction, equipment, or additions and 
 betterments, if such advances are of a permanent nature (i. e., 
 if there is not an understanding that the advances are to be 
 repaid within one year) or if it is understood and intended that 
 reimbursement shall be made by the issue of the securities of the 
 debtor corporation. 
 
 Note A.— Gifts to system corporations made without expectation of reim- 
 bursement should be included in account No. 353, "Miscellaneous Appropri- 
 ations from Income," or No. 416, "Miscellaneous Appropriations of Sur- 
 plus" and not in this account. 
 
 Note B. — Temporary advances on open accounts to system corporations 
 and such advances for purposes other than construction, equipment, and 
 betterments should be included in account No. 119, "Accounts Receivable 
 from System Corporations." 
 
 111. Miscellaneous Investments. 
 
 This account should include investments of a permanent 
 nature in property (tangible or intangible) other than that held 
 for the operation of the company's plant as a telephone system. 
 It should include such items as investments in lighting, water, 
 and power plants, manufacturing plants, lands, and buildings 
 and other property not a part of the company's plant for tele- 
 phone operations or of facilities incident thereto. 
 WORKING ASSETS. 
 
 112. Cash and Deposits. 
 
 This account includes the various items respecting cash and 
 special deposits as provided in the following subaccounts: 
 
 1 By a system corporationis meant any controlling, affiliated, controEed, or subsidiary 
 corporation.
 
 19 
 
 113. Cash. 
 
 This account should include the amount of current fundo 
 available for use on demand in the hands of financial officers 
 and agents, or de])osited in hankf^ or ^vith trust companies, and 
 cash in transit for which agents receive current credit. 
 
 114. Special Deposits. 
 
 This account should include deposits to pay declared divi- 
 dends and matured interest; cash realized from the sale of securi- 
 ties and deposited with trustees for disbursement when the pur- 
 poses for which the securities are sold are accomplished ; amounts 
 realized from the sale of property and deposited with trustees other 
 than in sinking funds until the property is replaced; special de- 
 posits (in other than sinking funds) for the payment of debts 
 and interest not matured ; money and securities deposited to se- 
 cure the performance of contracts; and other deposits of a special 
 nature not proA-ided for elsewhere. 
 
 In stating this account on the balance-sheet statement the 
 amount of any securities issued or assumied by the accounting 
 company and included herein should be deducted in order that 
 this account will show only the assets herein other than the 
 company 's own securities. (See sec. 5, p. 13.) . 
 
 115. Employees' Working Funds. 
 
 This account should include amounts advanced to general and 
 special agents, and other officers and employees as working 
 funds from which certain expenditures are to be made and 
 accounted for. 
 
 116. Marketable Securities. 
 
 Tliis account should include the cost or book value of securities 
 held in the company "s treasury unpledged and free for sale and 
 not necessary or desirable for the telephone company to hold 
 for the purpose of maintaining the integrity of its telephone 
 system. 
 
 In stating this account on the balance-sheet statement the 
 par value of securities issued or assumed by the company and 
 carried in tliis account should be deducted in order that this 
 account may show only the cost or book value of securities of 
 other companies. (See sec. 5, p. 13.) 
 
 117. Bills Receivable. 
 
 This account should include the cost of ail collectible obliga- 
 tions in the form of bills receivable or other similar e\-idences of 
 money receivable on demand or witliin a time not exceeding 
 one year (excluding interest coupons). 
 
 Note A.-Xotes having dates of maturity of more than one vear after date 
 of issue should notbeinduded in thisai-count but inaccount No. 105, ■• Invest- 
 ment Securities" or No. 116, "Marketable Securities." 
 
 Note B .—When loans to system corporal ions i for construct ion puri.oses are 
 evidenced by demand or short-term notes intended later to be exchanged 
 for other securities, the amount of such loans should be imluded in account 
 No. 110, "Advances to System Corporations for Construction, Kiiuipment 
 and Betterments."
 
 20 
 
 118. Due from Subscribers and Agents. 
 
 This account should inchule amounts due from subscribers for 
 services rendered or billed and from agents and collectors author- 
 ized to make collections from subscribers. 
 
 This account should be kept in such manner as will enable the 
 companies to make the following analysis, viz: 
 
 (a) Amounts due from subscribers who are still receiving tele- 
 phone service. 
 
 (6) Amounts due from subscribers whose telephone service 
 has been discontinued and whose accounts are in process of col- 
 lection in the usual way. 
 
 (c) Amounts due from subscribers whose telephone ser\'ice 
 has been discontinued and whose accounts are in litigation or 
 otherwise suspended. 
 
 Credit to a subaccount hereunder such amounts as may be con- 
 currently charged to account No. 304, "Uncollectible Operating 
 Revenues," to provide a reserve for uncollectible accounts due 
 from subscribers and agents. If such reserve is provided, when 
 any bill for services has proved impracticable of collection, this 
 subaccount should be charged and the account in which the 
 bill is carried should be credited. 
 
 119. Accounts Receivable from System Corporations. 
 
 •This account should include amounts due from controlling, 
 affiliated, controlled, or subsidiary corporations on open accounts 
 other than those provided for in account No. 110, "Advances to 
 System Corporations for Construction, Equipment, and Better- 
 ments." 
 
 120. Miscellaneous Accounts Receivable. 
 
 This account should include all amounts owed to the com- 
 pany upon accounts with solvent concerns (other than system cor- 
 porations and subscribers and agents), also the cost of all accounts 
 and claims (except notes or negotiable bills) upon which respon- 
 sibility is acknowledged by solvent concerns or which are suffi- 
 ciently secured to Vje considered good, and of all judgments 
 against solvent concerns where the judgment is not appealable 
 or suspended through appeal . 
 
 Note. — Cash on deposit in banks or with trust companies should not be 
 included in this account but in account No. 113, "Cash," or No. 114, "Special 
 Deposits." 
 
 121. Matured Interest and Dh'idends Receivable. 
 
 This account should include all interest accrued and due but not 
 yet collected upon bonds, notes, or other commercial paper held 
 by or for the benefit of the company, and all dividends declared 
 and due by solvent concerns but not yet collected, the right to* 
 which is in the company. 
 
 122. Materials and Supplies. 
 
 This account should include the cost of unapplied material, 
 including the value of material temporarily in use and not charged
 
 21 
 
 out in the company's accounts; articles in process of manufacture 
 by the company; tools, fuel, stationery, and other supplies. 
 Freight and express charges paid on material included in this 
 accoimt slifiuld be included in the value of such material. 
 
 Where discounts reco\ered through prompt payment can not 
 be credited to the particular bills, the cost at which such mate- 
 rials and supplies should V)e charged should be the invoice cost, 
 and any discounts recovered through prompt payment of bills for 
 such materials and supplies should be credited to clearing ac- 
 count No. 704, "Supply Expense." 
 
 WTien any tangible fixed capital is discontinued, ■withdrawn, 
 or retired, and when any equipment, materials, and supplies 
 are returned to store, the salvage value thereof .'should be charged 
 to this account, regardless of whether such equipment, materials, 
 and supplies are to be consumed in operation or in construction, 
 or to be sold. If such value is not known and cannot readily be 
 determined, it should be estimated, and errors in such estimates, 
 when determined, involved during the year in which the esti- 
 mates were made, should be adjusted through the accounts 
 involved; if later, then through the Corporate Surplus or Deficit 
 account. 
 
 Inventories of materials and supplies on hand and unapplied 
 should be taken at least annuallj', and any shortages or overages 
 disclosed by such inventories should be credited or debited to 
 this account and debited or credited to clearing account No. 704, 
 ' ' Supply Expense, ' ' in case such shortages or overages can not be 
 assigned to specific accounts. 
 
 123. Other Currext Assets. 
 
 This account should include the cost of all current assets which, 
 are not includible under any of the foregoing accounts. By cur- 
 rent assets are meant only those things that are readily con- 
 vertible into money and which are held not as inA'cstments but 
 with the intent of being presently converted into money. 
 ACCRUED INCOME NOT DUE. 
 
 124. Unmatured Ivtere.st. Dividends, and Rents Receivable. 
 
 This account should include the amount of interest on loans 
 made and rents under leases accrued to the date of the balance 
 sheet, but not due or collectible until after that date, and divi- 
 dends declared on stocks owned, and dividends accrued on such 
 stocks when contracts require that the dividends be paid at 
 stated times. 
 DEFERRED DEBIT ITEMS. 
 
 125. Sinking Fund Assets. 
 
 This account should include the amount of cash, the cost or 
 book value of live securities of other companies, the par value of 
 live securities issued or assumed by the accounting comjiany, 
 and other assets which are in the hands of trustees of sinking
 
 22 
 
 and other funds for the purpose ot redeeming outstanding obli- 
 gations; also amoujits deposited with such trustees on account 
 of mortgaged property sold. A separate account should be 
 raised for each sinking fund. 
 
 In stating this account on the balance-sheet statement the 
 par value of any securities issued or assumed by the company and 
 carried in this accoimt should be deducted from the total in 
 order to show only the net assets in sinking funds other than 
 the company's own securities. (See sec. 5, p. 13.) 
 
 126. Insurance and Other Reserve Fund Assets. 
 
 This account should include the amount of cash, the cost or 
 book value of securities of other companies, the par value of secu- 
 rities issued or assumed by the accounting company, and other 
 assets in the hands of trustees or managers of insurance, and 
 other funds that have been raised and specifically set aside or 
 invested by the company for specific purposes (except special 
 deposits, provident funds, and sinking funds for the retirement 
 of obligations). A separate account should be raised for each 
 fund. 
 
 In stating this account on the balance-sheet statement the 
 par value of any securities issued or assumed by the company 
 and carried in this account should be deducted from the total in 
 order to show only the net assets in the funds other than the 
 company's own securities. (See sec. 5, p. 13.) 
 
 127. Provident Fund Assets. 
 
 This account should include the amoiint of cash, and the cost 
 or book value of securities and other assets in the hands of trustees 
 or managers of employees' pension funds, savings funds, relief, 
 hospital, and other association fimds (whether contributed by 
 the company, by employees, or by others), when such trustees 
 or managers are acting for the company in the administration 
 of such funds. (See account No. 170. ) 
 
 128. Prepayment.s. 
 
 This account should include the balances arising from the pay- 
 ment of rents, taxes, insurance, and like disbursements, in 
 advance of the period to which they pertain, as defined in the 
 following subaccoimts: 
 
 129. Prepaid Rents. 
 
 This account should include the amount of rents paid in ad- 
 vance 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. 
 
 130. Prepaid Taxes. 
 
 This account should include the excess ot taxes paid over 
 the amount properly chargeable to Income or other accounts as 
 shown by the debit balance in the Tax Liability account. (See 
 sec. 16, p. 47.)
 
 23 
 
 131. Prepaid Insurance 
 
 ^^^l('n premiums on insurance policies are paid in advance of 
 their accrual, the amount prepaid shall be charged to this ac- 
 count. As such premiums accrue, they ahoul I be credited at 
 monthly intervals to this account and charged to account No. 
 668, "Insurance." 
 
 132. Prepaid Directory Expense. 
 
 Charge to this account the cost of preparing, printing, binding, 
 and delivering directories; also the cost of soliciting advertise- 
 ments for directories. When directories are issued, this account 
 should be credited each month and operating expense account 
 No. G49, "Directory Expenses," should be charged with the 
 proportion of the cost based on the number of months the direc- 
 tory will be in n.se. 
 
 133. Other Prepayments. 
 
 ^^^^en prepayments are made for anything other than as pro- 
 vided for in the four next preceding accounts, the amount of 
 such prepayments should be included in this account. 
 
 134. Unextinguished Discount on Capital Stock. 
 
 If the net of the balances in the discount and premium 
 accounts for all classes of capital stock sold or exchanged is a 
 debit balance, the amount should be stated in this account. 
 (See sec. 6, p. 13.) 
 
 135. Unamortized" Debt Discount and Expense. 
 
 If the net of the balances in the discount and premium 
 accoimts for all classes of funded debt sold or exchanged is a 
 debit balance, the amount should be stated in this account. 
 (See sec. 7, p. 14.) 
 
 136. Other Suspense. 
 
 This account should include all debits not provided for else- 
 where and tlie proper final disposition of which is uncertain. 
 It will include all such items as expense of preliminary surveys, 
 plans, investigations, etc., made for determining the feasibility of 
 projects imder contemplation. Should any such project later 
 be carried to completion, such amounts should be credited to 
 this account and charged to the proper fixed capital accoujit or 
 accounts; should it be abandoned, such amounts should be 
 charged to Corporate Surplus or Deficit account. 
 
 This account should also include the amounts carried in 
 suspense due to extraordinary casualties and imanticipated re- 
 constniction. (See sec. 24, p. 68.) 
 
 When the proper disposition of any item charged to this 
 accoimt is determined, it should be credited to this account and 
 charged to the appropriate account or accounts. 
 CORPORATE DEFICIT. 
 
 137. Corporate Deficit. 
 
 Under this head should be shown the debit balance, if any, 
 in the Corporate Surplus or Deficit account. (See sec. 17, p. 56.)
 
 24 
 
 LIABILITY ACCOUNTS. 
 STOCK. 
 
 150. Capital Stock. 
 
 This account should include the par value of stock actually 
 issued. In case of the issue of two or more classes of stock a 
 separate account should be provided for each class. Credit to a 
 subaccount entitled "Installments on Stock Subscriptions," the 
 amount of installments paid on subscriptions for capital stocks; 
 when certificates of stock are issued for installments paid, this 
 subaccount should be cleared and the par value of the stock so 
 issued should be credited to the account appropriate for such 
 stock. 
 
 The amounts included in this account, or in the subaccounts, 
 should be subdiv-ided so as to show (1) the par value of certifi- 
 cates issued and outstanding and not held by the company, its 
 agents or trustees, and (2) the par value of certificates (pledged 
 or unpledged) issued by the company and held by or for it. 
 In stating the accounts on the balance-sheet statement, the latter 
 amount should be deducted from the total in order to show only 
 the par value of the certificates actually outstanding in the hands 
 of the public at the date of the balance-sheet statement. (See 
 sec. 5, p. 13.) 
 
 Note A. — By capital stock, as the term is here used, Is meant those securities 
 which represent permanent interests in the corporation, or interests which, 
 if terminable, are so only at the option of the corporation. Stocks are classi- 
 fied as — 
 
 Common stocks, those whose claims in the distribution of dividends are sub- 
 ordinate 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 at 
 specified intervals. 
 
 No two stocks should be considered of the same class unless they are equal 
 in thair dividend or interest rights, their voting rights, and the conditions 
 under which they may be retired. 
 
 Note B. — If any issue of stock is for monej', that fact should be stated; and 
 if for any consideration other than money, the person to whom issued should 
 be designated, and the consideration for which issued should be described 
 with sufficient part icularity to identify it. If such issue is to the treasurer or 
 other agent of the company, to be by him disposed of fpr the benefit of the 
 company, that fact and the name of such agent should be shown; and such 
 agent should, in his account of the disposition thereof, .show the like details 
 concerning the consideration realized thereon. 
 
 Note C. — If the fair cash value of the consideration realized upon the issue 
 of any amount of stock is greater or less than the par value of such stock the 
 difference should be credited or charged to an appropriate discount and 
 premium account, and corresponding reference thereto should be contained in 
 the entry relating to such stock in the stock account. (See sec. C, p. 13.) 
 
 lol, §TocK Liability for Conversion op Securities. 
 
 This account should include the par value of stock that the com- 
 pany has agreed to issue in exchange for securities of constituent 
 companies whose physical property has been acquired under
 
 25 
 
 Buch agreement*, but whose securities have not yet been surren- 
 dered for exchange. 
 
 152. Premiums on Capital Stock. 
 
 If the net of the balances in the discounts and premiums 
 accounts for all classes of capital stock sold or exchanged is a 
 credit balance, the amount should be stated in this account. 
 (See sec. 6, p. 13.) 
 LONG TERM DEBT. 
 
 153. Funded Debt. 
 
 This account should include the par value of fimded debt 
 actually i.s.sued or assumed by the company. In case of two or 
 more classes of funded debt a separate account should be provided 
 for each class. Credit to a subaccount, entitled "Installments 
 on Funded Debt Subscriptions," the amount of installments paid 
 on subscriptions to funded debt issues. Wlien bonds, notes, or 
 other evidences of indebtedness are delivered, this subaccount 
 should be cleared and the par value of the funded debt so issued 
 should be credited to the account appropriate for such funded 
 debt. The entry in any account should show also the purpose 
 for which funde^ debt is issued . 
 
 The amounts included in this account, or in the subaccounts, 
 should be subdivided so as to show (1) the par value of funded 
 debt seciu"ities issued or assumed and outstanding and not held 
 by the company, its agents or trustees, and (2) the par value of 
 funded debt securities (pledged or unpledged) issued or assumed 
 by the accounting company and held by or for it. In stating 
 the accounts on the balance-sheet statement the latter amount 
 should be deducted from the total in order to show only the par 
 value of funded debt securities actually outstanding in the hands 
 of the public at the date of the balance-sheet statement. (See 
 sec. 5, p. 13.) 
 
 Note A. — By funded debt, as the term is here used, is meant the par value of 
 all bonds, notes, and other evidences of indebtedness (except open accounts for 
 advances) which, by the termsof the creation of the debt, do not mature until 
 more than 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 (I) date of 
 maturity. No two amounts of fimded debt should be considered of the same 
 class imless agreeing in all four of the above characteristics, except that any 
 issue of securities agreeing in the first three characteristics but maturing 
 serially may be treated as of the same clas.s. 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 should, for the purpose of these 
 accounts, be known as a debenture. Debentures include promissory notes 
 unsecured by mortgage or other lien, and securities commonly known as plain 
 bonds. 
 
 Note B.— If the consideration received for any issue of funded debt is any- 
 thing else tlian money, the entry should .show the principal to whom issued and 
 should describe with sullicient 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 should bo shown in the entry. 
 
 72528°— 15 i
 
 26 
 
 Note C— If the fair cash value of the consideration realized upon the issue 
 of any amount of funded debt securities is greater or less tlian the par value of 
 such securities plus the accrued interest, the difference should be credited or 
 charged to an appropriate discount-and-premium account, and corresponding 
 reference thereto should be made in the entry relating to such debt in the 
 
 funded debt account. (See sec. 7, p. 14.) 
 
 * 
 
 154. Receivers' Certificates. 
 
 ^^llen any receiver acting under the orders of a court of com- 
 petent jurisdiction is in possessicfri of the property of the com- 
 pany and under the orders of such court issues certificates of 
 indebtedness chargeable upon such property, the par vahie of 
 such certificates should be credited to this account. Interest 
 accruing upon such certificates should also be credited monthly 
 to this account, and when paid should be charged to this account. 
 
 155. Advances from System Corporations for Construction, 
 
 Equipment, and Betterments. 
 
 This account should include advances from controlling, affili- 
 ated, controlled, and subsidiary corporations to enable the ac- 
 counting company to pay for construction, equipment, or addi- 
 tions and betterments if such advances are of a permanent nature 
 (i. e., if there is not an understanding that the advances are to 
 be repaid within one year), or if it is understood and intended 
 that a reimbursement shall be made by the issue of the securi- 
 ties of the debtor corporation. 
 
 Note A. — Gifts from system corporations without expectation of reim- 
 bursement should not be credited to this account but to account No. 401, 
 "Miscellaneous Additions to Surplus." 
 
 Note B.— Temporary advances on open accounts from system corporations 
 and such advances for purposes other than construction, equipment, or 
 additions and betterments should be included in account No. 160, "Accounts 
 Payable to System Corporations." 
 
 WORKING LIABILITIES. 
 
 156. Judgments Unpaid. 
 
 AMien any judgment of indebtedness is rendered against the 
 company by a court of competent jurisdiction, or any fine or 
 penalty requiring the payment of money is assessed against the 
 company by such a court, and no appeal accompanied by stay 
 of execution has been taken therefrom within the time allowed 
 by law for such appeal, the amount of such judgment, fine, or 
 penalty should be credited to this account, and the entry should 
 designate the action or suit as a consequence of which such judg- 
 ment is pronounced or such fine or penalty assessed. The designa- 
 tion of the action or suit should show what court, the term thereof, 
 the parties, and the character of the action or suit. Interest accru- 
 ing upon any such judgment should be credited monthly to this 
 account. \\Tien payment is made this account should be 
 charged. 
 
 Note. — In 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.
 
 27 
 
 157. Bills Payable. 
 
 This account ehoiild include the par value of all notes, drafts, 
 and other evidences of indeVjtednese, issued or assumed by the 
 company, and which are payable on demand or within a time 
 not exceeding one year. 
 
 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. 155, "Advances from System Corporations for Construction, Equipment, 
 and Betterments." 
 
 158. Audited Vouchers and Wages Unpaid. 
 
 This account should include the amount of audited vouchers or 
 accounts and audited pay rolls unpaid on the date of the balance 
 sheet. Include also the amount of unclaimed wages and out- 
 standing pay and time checks issued in payment of wages. 
 
 159. Subscribers' Deposits. 
 
 Credit to this account, as such deposits are made, all cash 
 deposited with the company 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 
 applied to uncollectible telephone bills should be credited 
 to the account of the subscriber and charged to this account. 
 
 160. Accounts Payable to System Corporations. 
 
 This account shpuld include tjie amounts owed to controlling, 
 affiliated, controlled, or subsidiary corporations on open accounts 
 other than those provided for in account No. 155, "Advances 
 from System Corporations for Construction, Equipment, and 
 Betterments." 
 
 161. Miscellaneous Accounts Payable. 
 
 This account should include all amounts owed to miscellaneous 
 creditors on open accounts and not provided for elsewhere. 
 
 162. Matured Interest, Dividends, and Rents Unpaid. 
 
 This account should include interest matured and unpaid on 
 loans and funded debt of the accounting company, and of other 
 companies, when payment has been assumed by the company; 
 rents due and unpaid on property held under leases; and di\'i- 
 dends due and payable on capital stock but unpaid, uncalled 
 for, or unclaimed at the date of the balance sheet. 
 
 163. Matured Funded Debt Unpaid. 
 
 This account should include the amount of matured mort- 
 gage, bonded, and other funded debt payable, but not yet paid, 
 including bonds drawn for redemption through the operation of 
 sinking and redemption fund agreements. 
 
 164. Service Billed in Advance. 
 
 WTien bills are made for service to be rendered in future 
 months, and the amount of the bills is included in account Xo. 
 118, "Due from Subscribers and Agents," or other asset account 
 but not in the revenue accounts, the proportion of the bills
 
 28 
 
 applicable to future months should be credited to this account. 
 As the term expires for which the bill is made, 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 (less the discount, in case coupons or tickets 
 were sold at a discount) redeemed during that month. 
 
 165. Other Current Liabilities. 
 
 This account should include the amounts of all current liabili- 
 ties which are not included in any of the foregoing accounts. 
 ACCRUED LIABILITIES NOT DUE. 
 
 166. Taxes Accrued. 
 
 This account should include the amount of taxes accrued and 
 properly charged against income or other accounts in excess of 
 the amount of taxes paid. (See sec. 16, p. 47.) 
 
 167. Other Accrued Liabilities not Due. 
 
 This account should include the amount of interest on loans 
 and funded debt, including interest on funded debt assumed, 
 and rents under leases accrued to the date for which the bal- 
 ance sheet is made but not due until after that date; divi- 
 dends on stock declared ^rior to the date of the balance sheet 
 but not payable until after that date, and other liabilities (ex- 
 cept taxes) that have accrued to the date of the balance sheet 
 but not due until after that date. 
 
 NoTK. — The interest accruing on any judgment against the company or 
 upon any receivers' certificate should be credited to the account to which 
 such judgment or receivers' certificate stands credited. 
 
 DEFERRED CREDIT ITEMS. 
 
 168. Unextinguished Premium on Debt. 
 
 If the net of the balances in the discount-and-premium 
 accounts for all classes of funded debt sold or exchanged is a 
 credit balance, the amount should be stated in this account. 
 (See sec. 7,-p. 14.) 
 
 169. Insurance and Casualty Reserves. 
 
 This account should include any specific appropriation of 
 income or surplus and such amounts as are concurrently charged 
 to account No. 668, "Insurance," to cover self-carried risks on 
 fire, fidelity, boiler, casualty, burglar, and other self-carried 
 insurance. Charge to this account the proportion of losses 
 realized on items protected by such self-carried insurance. 
 
 When any admitted liability arises because of loss or damage 
 to the property of others or of injuries to employees or other per- 
 sons, the amount of the liability may (if not previously provided 
 for by insurance or self-insurance) be charged to the appropriate
 
 29 
 
 operating expense or other accounts and credited to this account, 
 against which (in such case) the actual cost of satisfaction of the 
 liability should bo charged when the matter is determined. If 
 the extent of the liability can not l»o ascertained promptly after 
 the liability arises, it may he estimated as accurately as prac- 
 ticable for the purpose of determining the immediate charge to 
 the expense or other appropriate account, in which case the 
 matter should be adjusted when the extent of the liability is 
 definitely ascertained. If the los.s is of such character that it is 
 in whole or in part indemnifiable under any contract of insurance 
 carried by the company, the indemnifiable portion of the loss 
 should be charged to the insurer and credited to this account. 
 
 170. Liability on Account of Provident Funds. 
 
 This account should include any specific appropriations of 
 income or surplus and such amounts as are charged to account 
 No. 672, "Relief Department and Pensions" to provide for pen- 
 sion, benefit and other provident pajonents. 
 
 This account should also include the ledger balances covering 
 the amount of cash and the cost or book value of securities and 
 other assets in the hands of trustees or managers of employees' 
 pension funds, savings funds, relief, hospital, and other associa- 
 tion funds (whether contributed by the company, by employees, 
 or by others), when such trustees or managers are acting for the 
 company in the administration of such funds; also the amount 
 of such funds held in the company's treasury. 
 APPROPRIATED SURPLUS. 
 
 171. Surplus Invested Since December 31, 1912, in Fixed Capital. 
 
 This account should include such amounts of surplus as are def- 
 initely set aside to cover expenditures for extensions or improve- 
 ments of the fixed capital of the accounting company; such ap- 
 propriations include those made for the purpose of discharging the 
 principal (less the discount, if any, suffered at 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 should be concurrently charged to 
 account No. 352, "Appropriations of Income for Construction, 
 Equipment, and Betterments," or No. 415, "Appropriations of 
 Surplus for Construction, Equipment, and Betterments." 
 
 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 pay- 
 ment of obligations which are intended to be replaced by new 
 issues. 
 
 172. Surplus Invested in Sinking Funds. 
 
 This account should include appropriations of income or 
 surplus specifically invested or set aside in the hands of trustees 
 for sinking and redemption funds, including accretions to such 
 funds.
 
 30 
 
 The amounts credited to this account should be concurrently 
 charged to account No. 350, "Appropriations of Income to Sink- 
 ing and Other Resen-e Funds," or No. 411, '"Appropriations of 
 Surplus to Sinking and Other Reserve Funds." 
 
 173. Other Surplus Reserved. 
 
 This account should include all appropriations of income or sur- 
 plus held in reserve except as covered by accounts Nos. 169, 170, 
 171, and 172. A separate subaccount should be raised for each 
 reserve, and the entries in such subaccounts will be required 
 to be shown separately in the annual report to the Commission. 
 
 This account should also include 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. 
 
 CORPORATE SURPLUS. 
 
 174. Corporate Surplus Unappropriated. 
 
 Under this head should be shown the credit balance, if any, in 
 the Corporate Surplus or Deficit account. (See sec. 17, p. 56.)
 
 31 
 
 FIXED CAPITAL ACCOUNTS. 
 
 Page. 
 
 100. Fixed Capital Installed Prior to January 1, 1913 3G 
 
 101. Fixed Capital Installed Since December 31, 1912 3G 
 
 200. Intangible Capital 36 
 
 201. Organization 36 
 
 202. Franchises 37 
 
 203. Patent Rights 37 
 
 204. Other Intangible Capital 37 
 
 207. Right of Way ' 37 
 
 210. Land and Buildings 38 
 
 211. Land 38 
 
 212. Buildings 38 
 
 220. Central Office Equipment 39 
 
 221. Central Office Telephone Equipment 39 
 
 222. Other Equipment of Central Offices 39 
 
 230. Station Equipment , 39 
 
 231. Station Apparatus 39 
 
 232. Station Installations 40 
 
 233. Interior Bloch Wires 40 
 
 234. Private Branch Exchanges 40 
 
 235. Booths and Special Fittings 40 
 
 241. Exchange Pole Lines 40 
 
 242. Exchange Aerial Cable 40 
 
 243. Exchange Aerial Wire 40 
 
 244. Exchange Underground Conduits 40 
 
 245. Exchange Underground Cable 41 
 
 246. Exchange Submarine Cable 41 
 
 251. Toll Pole Lines 41 
 
 252. Toll Aerial Cable 41 
 
 253. Toll Aerial Wire 41 
 
 254. Toll Underground Conduit 41 
 
 255. Toll Underground Cable 42 
 
 256. Toll Submarine Cable 42 
 
 2G0. General Equipment 42 
 
 261. Office F}irniture and Fixtures 42 
 
 262. General Shop Equipment 42 
 
 263. General Store Equ ipment 42 
 
 264. General Stable and Garage Equipment 43 
 
 265. General Tools and Implements 43 
 
 2C8. Interest During Construction 43 
 
 270. Undistributed Construction Expenditures 43 
 
 271. Engineering and Superintend^ce 43 
 
 272. Laic Expenditures During Construction 43 
 
 273. Taxes During Construction 44 
 
 274. Miscella7ieous Construction Expenditures 44
 
 32 
 
 INSTRUCTIONS PERTAINING TO FIXED CAPITAL 
 
 ACCOUNTS. 
 
 9. Fixed capital defined. — By the fixed capital of a company (fre- 
 quently termed the construction account) is meant the property, both 
 tangible and intangible, which is devoted to the accomplishment of 
 the principal purposes of its business, and which has an expectation of 
 life in service of more than one year from date of installation in service 
 (exception being made in the case of hand tools and other small porta- 
 ble tools that may be lost or stolen). 
 
 Fixed capital consists of original capital, additions, hett^rvxents , and 
 replacements, and the cost thereof should be charged as directed below. 
 
 Original capital is the fixed capital installed or acquired prior to the 
 beginning of regular operations by the company. As applied to a tele- 
 phone company it includes the acquisition or construction of the plant 
 necessary to begin the regular operation of an exchange or toll system. 
 The cost of original capital should be charged to the appropriate sub- 
 accounts under account No. 100, "Fixed Capital Installed Prior to 
 January 1, 1913," or under account No. 101, "Fixed Capital Installed 
 Since December 31, 1912." 
 
 Additions are structtires, facilities, equipment, and other properties 
 added to those in service at the beginning of operations, and not taking 
 the place of any property of like purpose pre\'iously held by the com- 
 pany. The cost of additions should be charged to the appropriate sub- 
 accounts under account No. 101, "Fixed Capital Installed Since De- 
 cember 31, 1912." 
 
 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 than they 
 were at the time of their installation or acquisition. The cost of such 
 portion only 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 should be charged to the appropriate subaccounts under 
 account No. 101, "Fixed Capital Installed Since December 31, 1912." 
 The remainder of the cost of the change should be classed as a repair 
 and be charged to the appropriate operating expense accounts. 
 
 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 sub.stitute ha\-ing substantially no greater capacity than 
 the property replaced; also the extension of life period of frandiises, 
 patents, and other intangible fixed capital. 
 
 The cost of the fixed capital retired should be credited to the fixed 
 capital accounts in which it is carried and the cost of the fixed capital 
 installed in place of fixed capital so retired should be charged to the 
 appropriate subaccounts under account No. 101, "Fixed Capital 
 Installed Since December 31, 1912."
 
 33 
 
 10. Costs to be actual money costs. — All charge::* made to fixed capjiial 
 or other property accounts witli respect to any property acquired on or 
 after January 1, 1913, should be the actual money costs of the property. 
 When the consideration actually given for anything with respect to 
 which a charge is mado' to any fixed capital or other property account 
 is anything other than money, the actual consideration should be 
 described in the entry with sufficient fullness and particularity to 
 identify it, and the amount charged should be the actual money value 
 of such consideration at the time of the transaction. 
 
 11. Interest accruing during construction period. — Account Xo. 
 268, "Interest During Construction,"' should inchide only such pro- 
 portion of the interest on funds used for construction purposes and 
 of the discount and expense on funded debt as is equitably assign- 
 able to the period between the date of the issuance of securities and 
 the time when the property acquired or the improvement made through 
 such issuance becomes available for the service for which it is intended. 
 The proportion of interest, discount, and expense thus chargeable 
 should be that which the period prior to the completion or coming into 
 service of the facilities or improvements constructed bears to the 
 entire life of the securities issued. 
 
 12. Costs of labor, materials, and supplies. — The term cost as used 
 in the fixed capital tor construction ) accounts 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 con- 
 sideration at the time of the purchase. Cost of labor includes not only 
 wages, salaries, and fees paid employees, but also the personal expenses 
 of such employees when borne by the company. Cost of material and 
 supplies consumed in construction is the cost at the places where they 
 enter into construction, including cost of transportation and inspec- 
 tion when specifically assignable. If such materials and supplies are 
 passed through storehouses, their cost entered in the account may in- 
 clude a suitable proportion of store expense. 
 
 13. Plant and equipment and other property purchased. — \\heQ 
 any properly in the form of a going or completed plant is purchased, an 
 appraisal of the property so acquired should be made, and the different 
 constituent elements of the plant (and equipment, if any) or other 
 property acquired should be appraised at their structural value; that 
 is to say. at the estimated cost of replacement or re])roduction less 
 deterioration to the then existing conditions through wear and tear, 
 obsolescence, and inadequacy. If the actual money ^•alue of the con- 
 sideration given for the plant or other property was at the time of the 
 acquisition in excess of such appraised value, the excess should be 
 charged to account No. 204, "Other Intangible Capital," and the 
 appraised values of the constituent elements should 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 
 
 72528°— 15 5
 
 34 
 
 <uch appraised value, such actual money value should be distributed 
 through the said accounts in proportion to the said appraised value of 
 the constituent elements appropriate to the respective accounts. 
 
 Companies should be prepared to furnish the Commission, upon de- 
 mand, a full report of the contract of acquisition, the consideration 
 given therefor, the determination of the actual money value of such 
 consideration if other than money, the appraisal, and the amounts 
 charged to the respective accounts for each plant or other such fixed 
 capital purchased. The purchaser is required to procure in connection 
 with the acquisition of any such plant or other fixed capital all exist- 
 ing 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. 
 
 14. Fixed capital withdrawn or retired. — (a) When any tangible 
 fixed capital acquired prior to January 1, 1913, is withdrawn or 
 retired from service for any cause, the amount at which it stands 
 charged should be credited to the subaccount under account No. 100, 
 "Fixed Capital Installed Prior to January 1, 1913," in which it is 
 charged, and such amount, plus the expenses incident to the retire- 
 ment, less the value of salvage, should be charged (1) to account 
 No. 102, "Reserve for Accrued Depreciation — Cr." for the proportion 
 applicable to the period covered by the reserve, and (2) to account 
 No. 413, "Realized Depreciation not Covered by Reserves" for the 
 remainder. Such portion only of the realized depreciation shall be 
 charged to account No. 102, as is due to life in ser\'ire during the period 
 for which the reserve was established; this portion may be estimated 
 on the basis of the proportion which the life in service of the property 
 in question after that date bears to its entire life in 8er-\ace. ' 
 
 The entry of the credit to the fixed capital account should cite by 
 name and page of book or other record the original entry of cost of the 
 tiling withdrawn. If there is no such original entry, that fact should 
 be stated in connection with the credit entry, and the actual amount 
 originally charged should be credited. If such amount is not known, it 
 should be estimated, the facts upon which the estimate is based and the 
 name of the person by whom estimated should be shown, and the 
 amount thus estimated to be equivalent to the original charge in 
 respect of such thing withdrawn should be credited to the fixed capital 
 accounts involved. 
 
 (6) \Vhen any tangible fixed capital acquired subsequent to Decem- 
 ber 31, 1912, is withdrawn or retired from service for any cause the 
 amount at which it stands charged should be credited to the fixed 
 capital account in which it is charged, and such aniount, plus the 
 expenses incident to the retirement, less the value of salvage, should 
 be charged to account No. 102, "Reserve for Accrued Deprecia- 
 tion— Cr."
 
 35 
 
 Tlie entry oi the credil lu llic fixed capital account should cite by 
 name and page of Ijook or other record the original entry of cost of the 
 thing withdrawn. 
 
 (c) If the age of tangible fixed cai)iUil withdrawn or retired from 
 service can not be d-terrained for classification between account Xo. 
 100, "Fixed Capital Installed Prior to January 1, 1913," and account 
 No. 101, "Fixed Capital Installed Since December 31, 1912," the 
 property so retired should be treated as having been charged to the 
 former account, and the necessary credits should be made to the 
 subaccounts thereunder. 
 
 (d) When any fixed capital is withdrawn or retired whose book value 
 as carried in the fixed capital accounts has been reduced by writing 
 off estimated depreciation, only that part of the realized depreciation 
 which has not already been written off should be charged to account 
 No. 102, "Reserve for Accrued Depreciation — Cr.," or to account No. 
 413, "Realized Depreciation not Covered by Reserves." 
 
 (e) \Mien any fixed capital is withdrawn or retired whose book value 
 is greater than the known or estimated cost, such excess ghould be 
 charged to account No. 417, "Other Deductions from Surplus," and the 
 realized depreciation should be charged as elsewhere directed. 
 
 (/) If any fixed capital is sold for more than its original cost, the 
 amount of depreciation, if any, accrued and credited to a reserve in 
 respect thereof, should 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 should be 
 credited to account No. 401, "Miscellaneous Additions to Surplus."
 
 36 
 
 TEXT EXPLANATORY OF FIXED CAPITAL ACCOUNTS. 
 
 100. Fixed Capital Installed Prior to January 1, 1913. 
 
 This account is a summary of those accounts which include 
 the fixed capital of the company installed prior to January 1, 
 1913, and which is still in ser\'ice at the date of the balance sheet. 
 
 The accounts representing the fixed capital of the company 
 as carried onits books at the close of December 31,1912, should be 
 so designated upon the books of the company as to show clearly 
 that they relate only to fixed capital installed prior to the close 
 of that date. No debits should be made to such accounts with 
 respect to any property subsequently acquired, but the cost of 
 such property should be charged to the accounts hereinafter 
 provided. (See sec. 9, p. 32, and note under account No. 101.) 
 
 Note. — In the reports to the Commission a statement will be required show- 
 ing the names of the accounts for fixed capital actually carried by the company 
 on December 31, 1912, and the balances therein at the date of the report. 
 
 101. Fixed Capital Installed Since December 31, 1912. 
 
 This account is a summary of accounts Nos. 200 to 274, inclu- 
 sive, which include the cost of fixed capital installed since 
 December 31, 1912. The sum of the balances in accounts Nos. 
 200 to 274, inclusive, as provided hereinafter, should be shown 
 on the balance-sheet statement under this account. (See sec. 9, 
 p. 32.) 
 
 Note. — If the accounts of a telephone company have been kept as pre- 
 scribed by a State commission and it is possible to close the fixed capital 
 accounts substantially into the primary fixed capital accounts prescribed 
 hereinafter, it will not be necessary to separate the fixed capital accounts as 
 of January 1, 1913, but the primary accounts under account No. 101 may 
 include the fixed capital accounts since the effective date of supervision by 
 the State commission, and the dates in the titles of accounts Nos. 100 and 101 
 may be changed accordingly. 
 
 200. Intangible Capital. 
 
 This account should include the cost of intangible capital, as 
 provided for in the following subaccounts: 
 201. Organization. 
 
 This account should include all fees paid to governments for 
 the privilege of incorporation, and all office and other expendi- 
 tures incident to organizing the company 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 pro- 
 moters, and the actual cash value at the time of organization of 
 securities paid to promoters for their services in organizing the 
 enterprise; counsel fees; cost of preparing and issuing certifi- 
 cates of stock, and cost of procuring certificates of necessity from 
 State authorities, and other like costs.
 
 37 
 
 202. Franchises. 
 
 This account should include the amount (exclusive of any tax 
 or annual chaise) actually paid to governments as the considera- 
 tion for the grant of such franchise or right as is necessary to the 
 conduct of the company's telephone operations. If any such 
 franchise is acquired by assignment, the charge to this ac- 
 count in respect thereof should not exceed the amount actually 
 paid therefor by the company to its assignor, nor should it 
 exceed the amount actually paid the government. Any excess 
 of the amount actually paid by the company over the amount 
 paid by the original grantee to the grantor of tne franchise should 
 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 company, it should 
 not be charged to this account, but to the appropriate accounts 
 in operating expenses, or in account No. 128, " Prepayments, "- 
 if extending beyond the fiscal year. 
 
 Note.— 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 Rights. 
 
 This account should include the cost of all rights (ha\-lng a 
 life of more than one year from the date when placed in ser\dce) 
 acquired by the company in or under valid patents granted by 
 the United States to inventors for inventions and discoveries 
 in connection with the conduct of the company's telephone 
 operations. 
 
 204. Other Intangible Capital. 
 
 This account should include the cost of all other property com- 
 ing within the definition of intangible cai)ital and de\oted to 
 telephone operations. Entries of charges to this account should 
 describe the acquired property with suflicient particularity 
 clearly to identify it, and should also show specifically the prin- 
 cipal from whom acquired and all agents representing such 
 principal in the transaction; also the term of life of such prop- 
 erty, estimated if not known, and, if estimated, the facts upon 
 which the estimate is based. (See sec. 13, p. 33.) 
 207. Right op Way. 
 
 This account should include the cost of all land and interests 
 in land acquired for the location of telephone wires, cables, pole 
 lines, and conduits; salaries and expenses of right-of-way agents; 
 expenses of appraisals and of juries, commissioners, or arbitra- 
 tors in condemnation cases; real-estate brokers' commissions; 
 cost of plats, abstracts, notarial fees, examination of title, re- 
 cording deeds, etc. 
 
 This account should also include the first cost of acquiring 
 leaseholds of land for right of way, the terms of which are more 
 
 74016
 
 38 
 
 than one year each, whether acquired through direct lease, 
 assignment, or otherwise (biit not including the rents paid 
 periodically in consideration of rights obtained under such 
 leases). If any such leasehold is acquired by assignment, the 
 charge to this account must not exceed the amount actually 
 paid therefor by the accounting company to the assignor. 
 210. Land and Buildings. 
 
 This account should include the cost of land and buildings 
 as provided for in the following subaccounts: 
 
 211. Land. 
 
 This accoimt should include the cost of all land and interests 
 in land, other than right of way, acquired for use in the opera- 
 tion of the telephone plant, such as land occupied by general 
 and central offices, shops, stables, garages, storehouses, etc. It 
 includes the cost of examination and registration of title, con- 
 veyancer'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 his own behalf; cost 
 of assessments for public improvements which add to the value 
 of the lands but which are not the property of the accounting 
 company; cost of grading land when not done in connection 
 with buildings; and costs of obtaining consents and payments 
 for abutting damages and expenses of condemnation jDroceedings. 
 
 This account should also include the first cost of acquiring 
 leaseholds of land, other than for right of way, the terms of 
 which are more than one year each, whether acquired through 
 direct lease, assignment, or otherwise (but not including the 
 rents paid periodically in consideration of rights obtained under 
 such leases). If any such leasehold is acquired by assignment, 
 the charge to this account must not exceed the amount actually 
 paid therefor by the accounting company to the assignor. 
 
 Note. — Cost of buildings and other improvements (except as specified 
 above) should not be included in this subaccount. If at the time of acquisi- 
 tion of an interest in land such interest extends to buildings or other im- 
 provements thereon, which improvements are devoted by the company to 
 telephone operations, and if the price of such improvements is not deter- 
 mined by the contract, the buildings or improvements should be 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) should be charged to accoimt No. Ill, "Miscellaneous 
 Investments." If the improvements are removed or wrecked, the salvage 
 (less the cost of removal or wreckage) should be credited to this account. 
 
 212. Buildings. 
 
 This account should include the cost of all buildings, such as 
 general and central offices, shops, stables, garages, storehouses, 
 etc., devoted to the general purposes of the company; also of all
 
 39 
 
 permanent fixture?!, sueh as water, steam, and pas pipes and fix- 
 tures; electric wiring and fixtures for liphtiuf,', signaling, etc.; 
 elevators and the engines and motors specially provided for oper- 
 ating them; furnaces, boilers, and other apparatus provided f(jr 
 producing steam for such engines and for heating; electric genera- 
 tors specially provided for ])roducing current for lighting such 
 buildings, etc. This account includes such piers and other foun- 
 dations for machinery and apparatus as are designed to be as per- 
 manent as the buildings in (or in connection with) which they 
 are constructed, and to outlast the first machinery or apparatus 
 mounted thereon. It also includes the cost of real-estate brokers' 
 commissions, exaTuinations and registrations of titles, and other 
 expenses, such as architects' fees, supervision, etc., incident to 
 the construction or purchase of buildings; and the cost of grad- 
 ing and of sidewalks, fences, hedges, etc., on grounds used in 
 connection with such buildings. It does not include any tele- 
 phone ecjui])nient, wiring, or apparatus for generating or con- 
 trolling electricity for operation of the telephone system. 
 220. Central Office Equipment. 
 
 This account should include the cost of all central office 
 equipment, as follows: 
 
 221. Central Office Telephone Equipment. 
 
 This account should include the cost of local and toll switch- 
 boards, chief operators', monitors', and supervisors' desks and 
 tables, wire chiefs' testing outfits, main and intermediate frames, 
 cables, and jumper wires, call registers or meters, relay racks 
 and coil racks, and power plants, including rectifiers, generators, 
 engines, motors, batteries, power switchboards, meters, and 
 fuse boards; telephone and telegraph instruments, and other 
 electrical instruments and apparatus in the central office de- 
 voted to the operation of the telephone plant. 
 
 222. Other Equipment of Central Offices. 
 
 This account should include the cost of furniture and equip- 
 ment (other than telephone equipment) in central offices for the 
 operating forces. This account includes the furniture and 
 equipment in operators' rest and lunch rooms, and in operator^ 
 schools. 
 230. Station Equipment. 
 
 This account should include the cost of all telephone ternanal 
 equipment installed in service, either for subscribers or toi 
 company use, including the cost of installation, as follows: 
 231. Station Apparatus. 
 
 This account should include the cost of station apparal us, such 
 as telephone sets, intercommunicating sets, bells, backboards, 
 desk stands, coin boxes, protectors, battery boxes, initial butteries 
 and cords, special station switching devices not othenvise classi- 
 fied, and telephone and telegraph instruments or parts thereof 
 when owned by the company and installed for service.
 
 40 
 
 232. Station Installations. 
 
 This account should include the cost of installing station appa- 
 ratus 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 junc- 
 tion boxes, where the house cable or other cable terminates, 
 including wires on the same premises to connect main and ex- 
 tension stations, or to connect the private branch exchange 
 distributing frames with their terminal stations. 
 
 233. Interior Block Wires. 
 
 This account should include the cost of interior block wires (or 
 cables) from the point of entrance to the building, where con- 
 nection is made with the inside wires, to the point of connec- 
 tion with the permanent circuits at the terminals (block cable 
 boxes) of the subsidiary underground cable or subsidiary aerial 
 cable. 
 
 234. Private Branch Exchanges. 
 
 This account should include the cost of private branch ex- 
 change switchboards, their distributing frames, the cables 
 connecting such switchboards and distributing frames, and the 
 cost of installation. 
 
 235. Booths and Special Fittings. 
 
 This account should include the cost of booths and special 
 fittings, such as desks, chairs, fans, and cash registers, and 
 the cost of installation. 
 
 241. Exchange Pole Lines.' 
 
 This account should include the cost of poles, towers, cross 
 arms, pins, brackets, braces, guy wire, guy stubs, and other 
 materials used in the construction of exchange service pole lines; 
 also the cost of first clearing right of way. 
 
 242. Exchange Aerial Cable.' 
 
 This account .should include the cost of cables devoted to ex- 
 change service including the 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 Wire.' 
 
 This account should include the cost of exchange ser\dce 
 wires, including insulators, sleeves, and other materials used in 
 attaching such wires to the insulators. The exchange wire in- 
 cludes the drop wire leading from the overhead plant to the 
 point of entrance to the building. 
 
 244. Exchange Underground roNDUiT.s.' 
 
 This account should include the cost of exchange service 
 conduits, including the cost of pipe, cement, manholes, man- 
 
 » If plant is used both for exchange and toll service, the principal ase of such plant 
 should determine its classification.
 
 41 
 
 hole furnii^hings, and otlior materials used, the cost of ronnee- 
 tiona to poles and buildings, repaying, and other costs incident 
 to the fnstallation of such conduits. 
 
 245. Exchange Uxderground ("able. * 
 
 This account should include the cost of exchange service 
 underground cable.s, including cable boxes and fittings, loading 
 coils, and other materials used in the work of installing such 
 cables, and other cost incident thereto. 
 
 This account should include, in addition to the main exchange 
 underground cable, the subsidiary cables through laterals to pole 
 or building terminals; the subsidiary cables to the interior of 
 city blocks for connection with interior block wires; and the 
 subsidiary cables entering vertically (as house cables) into build- 
 ings for connection there with inside wires. 
 
 Note. — Hoase cables are considered to be vertical extensions of under- 
 ground cables or plant similar thereto. They do not Inelude the inside wires 
 extending from terminal bo.xes of house cables to subscribers' stations, nor 
 the cables for subscribers' private branch exchange switchboards which are 
 included in accoimt No. 232, "Station Installations." 
 
 246. Exchange Submarine Cable. ^ 
 
 This account should include the cost of exchange submarine 
 cable, cable towers, loading coils, cable boxes and fittings, and 
 other materials used in the installation of such cables, and other 
 costs incident thereto. 
 
 251. Toll Pole Lines.' 
 
 This account should include the cost of poles, towers, cross 
 arm.'^, pins, brackets, braces, guy wire, guy stubs, and other 
 materials used in the construction of toll-service pole lines; also 
 the cost of first clearing right of way. 
 
 252. Toll Aerial Cable.' 
 
 This account shotdd include the cost of cables devoted to toll 
 service, including the 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. 
 
 253. Toll Aerial Wire.' 
 
 This account should include the cost of toll-service wires, 
 including insidators, sleeves, and other materials used in at- 
 liuliing such wires to the insulators. 
 
 254. Toll Undergrou.nd Conduit.' 
 
 This account should include the cost of toll-service conduit^?, 
 including the cost of pipe, cement, manholes, manhole furnish- 
 ings, and other materials used, the cost of connections to poles 
 anil buildings, fe2)aving, and other costs incident to the installa- 
 tion of such conduits. 
 
 I If plant is used both for exchange and toll service, the principal use of such plant 
 should determine its classification.
 
 42 
 
 255. Toll Underground Cable. ^ 
 
 This account should include the cost of toll-service under- 
 ground cables, including cable boxes and fittings, loading coils, 
 and other materials used in the work of installing such cables, 
 and other costs incident thereto. 
 
 256. Toll Submarine Cable.' 
 
 This account should include the cost of toll submarine cable, 
 cable towers, loading coils, cable boxes and fittings, and other 
 materials used in the installation of such cables, and other costs 
 incident thereto. 
 260. General Equipment. 
 
 This account should include the cost of the equipment classi- 
 fied in the subaccounts hereunder. Items of small value or short 
 life, such as portable tools liable to be lost or stolen, temporary 
 shelving^ waste baskets, gloves, whips, and the like, should not 
 be included in this account or the subaccounts hereunder but 
 should be charged direct to the operating expense accounts or 
 to the clearing accoimts. 
 
 261. Office Furniture and Fixtures. 
 
 This account should include the cost of desks, tables, chairs, 
 carpets, cases, movable partitions, railings, shelves, typewriters, 
 addressing machines, adding machines, and other ofiice devices; 
 stoves, portable gas and electric fixtures, and other office fittings 
 (except fittings considered a part of the building as provided for 
 in account No. 212, " Buildings, " and telephone equipment pro- 
 vided for under account No. 220, " Central Office Equipment. ") 
 
 262. General Shop Equipment. 
 
 This account should include the cost of all equipment spe- 
 cially jjrovided for general shops, such as engines, gas pro- 
 ducers, electric generators, and other power apparatus used in 
 operating machinery in such shops; machine tools, shafting, 
 belts, and Hke shop equipment; also such smithing equip- 
 ment in general shops as is used principally for general pur- 
 poses other than shoeing horses and repairing vehicles. 
 
 Note. — Hand and other small portable tools liable to be lost or stolen 
 should not be included herein, but portable tools and apparatus of special 
 value may be charged to this account and remain herein so long as record 
 is kept of such tools and apparatus. 
 
 263. General Store Equipment. 
 
 This account should include 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 apparatus and appliances used in han- 
 dling, storing, or packing materials and supplies. 
 
 Note.— Counters, shelving, and the like which are permanently attached 
 to the structure should be charged to account No. 212, "Buildings." and 
 not to this account. 
 
 » If plant is ased both for exchange and toll service, the principal use of such plant 
 should determine its classification.
 
 43 
 
 264. General Stable and Garage Equipment. 
 
 This account should inchide the cost of all equipment of gen- 
 eral stables, including horses, harness, drays, wagons, automobiles 
 and other vehicles; eciuipment of shoeing shops, harness-repair 
 shops, vehicle-repair slKjpH, etc. 
 
 265. General Tools and Implements. 
 
 This account should include the cost of portable testing ap- 
 paratus and valuable tools and implements devoted to the main- 
 tenance or construction of the telephone })lant and not provided 
 for in the equipment accounts. This does not include tools not 
 yet in use carried as supplies unissued. 
 268. Intekest Duiung Co.vstkuction. 
 
 This account should include the interest upon all moneys (and 
 credits available upon demand) devoted to the construction and 
 equipment of the property from the time of such devotion until 
 the construction is ready for use. Interest receivable accrued 
 upon such moneys (and upon such credits) should be credited 
 to this account. 
 
 If any property with respect to which an interest charge is 
 included in this account is withdrawn or retired from serv'ice, 
 the amount of such interest (estimated, if not known) should be 
 csedited to this account and charged off as a part of the original 
 cost of the property so retired. No interest upon expenditures 
 for replacements or reconstruction should be included in 
 this account or any other fixed capital account unless proper 
 credits are made to the appropriate fixed capital accounts for 
 any interest included in such accounts in respect of the property 
 retired or withdrawn. (See sec. 11, p. 33.) 
 270. Undistributed Construction Expenditures. 
 
 This account should include the expenditures provided for in 
 the following subaccounts when such expenditures can not be 
 satisfactoril}- allocated to the fixed capital accounts to which they 
 relate. Upon the retirement or withdrawal of any property with 
 respect to which any charge is included in this account or any 
 subaccount hereunder, there should be credited to this account 
 or the appropriate subaccount such part of the undistributed ex- 
 penditures during construction (estimated, if not known) as may 
 be apj)licable to the property withdrawn or retired. 
 
 271. Engineering and Siiperintendenee. 
 
 This account should include all expenditures for services and 
 expenses of engineers, draftsmen, and superintendents employed 
 on preliminary and construction work when the expenditures can 
 not be assigned to specific construction accounts. 
 
 272. Law Expenditures During Construction. 
 
 This account should include 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 expensesof their offices; the cost of printing briefs,
 
 44 
 
 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 other court ex- 
 penses. When any of the expenditures enumerated herein can 
 be chai-ged du-ectly to the account for which incun-ed, they 
 should be so charged and not to this account. Expenditures 
 incurred in connection with the acquisition of right of way 
 should be charged to account No. 207, "Right of Way," and in 
 the acquisition of other land to account No. 211, "Land." 
 Law expenditures in connection with the organization of the cor- 
 poration should be charged to account No. 201, "Organization." 
 
 273. Taxes During Construction. 
 
 This account should include all taxes and assessments levied 
 and paid on property belonging to the company while under con- 
 struction and before ths plant is opened for operation, except 
 special taxes assessed for street and other improvements, such 
 as grading, sewering, curbing, guttering, paving, sidewalks, etc., 
 which should be charged to the account to which the property 
 benefited is charged. 
 
 274. Miscellaneous Construction Expenditures. 
 
 This account should include salaries and expenses of executive 
 and general officers of the- telephone company before it is ready 
 to begin operations; clerks in general offices engaged on construc- 
 tion 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 asuitable proportion of supply expenses 
 when such expenses are not assignable to specific materials. 
 
 Note B.—Thisaceount should 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.
 
 45 
 
 INCOME STATEMENT. 
 
 I. OPEEATING INCOME. 
 
 Page. 
 
 300. Telephoxe Opeu.^tixg Reve.nues 48 
 
 301. Telephone Operating Expense.s 48 
 
 Net Telephone Operating Revenues (or Deficit). 
 
 302. Other Operating Revenue.s 48 
 
 303. Other Operating Expenses 48 
 
 304. Uncollectible Operating Revenues 48 
 
 305. Taxes Assignable to Operations 49 
 
 Operating Income (or Loss). 
 
 II. nonoperati/g EEVENUES. 
 
 310. Rent Revenues from Lease of Telephone Plant — 49 
 
 311. Miscellaneous Rent Revenues 49 
 
 312. Dividend Revenues 49 
 
 313. Interest Revenues 49 
 
 314. Sinking and Other Reserve Fund Accretions 50 
 
 315. Profits from Operations of Others 50 
 
 316. Miscellaneous Nonoperating Revenues 50 
 
 in. NONOPERATING REVENUE DEDUCTIONS. 
 
 320. Rent Expense 51 
 
 321. Miscellaneous Nonoperating Expense 51 
 
 322. Nonoperating Taxes 51 
 
 323. Uncollectible Nonoperating Revenues 51 
 
 IV. DEDUCTIONS PROM GROSS INCOME. 
 
 330. Rent Deductions for Lease of Telephone Plant 51 
 
 331. Rent Deductions for Telephone Offices 51 
 
 332. Rent Deductions for Conduits, Poles, and Other 
 
 Supports 52 
 
 333. Rent Deductions for Instruments and Equipment. . . 52 
 
 334. Miscellaneous Rent Deductions 52 
 
 335. Interest Deductions for Funded Debt 52 
 
 336. Other Interest Deductions 52 
 
 337. Loss on Operations of Others : 53 
 
 338. Amortization of Debt Discount and Expense 53 
 
 339. Release of Premiums on Debt — Cr 53 
 
 340. Amortization of Landed Capital 53 
 
 341. Miscellaneous Deductions from Income 53 
 
 Net Income (or Loss). '
 
 46 
 Y. DISPOSITION OF NET INCOME. 
 
 Page. 
 
 350. Appropriations of Income to Sinking and Other 
 
 Reserve Funds 53 
 
 351. Dividend Appropriations of Income 54 
 
 352. Appropriations op Income for Construction, Equip- 
 
 ment, and Betterments 54 
 
 353. Miscellaneous Appropriations of Income 55 
 
 Income Balance Transferred to Credit (or Debit) 
 
 of Corporate Surplus or Deficit Account.
 
 47 
 
 INSTRUCTIONS PERTAINING TO INCOME STATEMENT. 
 
 15. Income account defined. — The Income Account brings together 
 those accounts that show the total amtnint of money that the company 
 has received or become enlitled Id receive for services rendered during 
 a given period, the return accruing upon investments during tlie period 
 and the disbursements and obligations (fixed charges) incurred that 
 affect the disposition of the amounts so received or accrued. 
 
 The sura total of the credit l)alances in the operating revenue acccmnts 
 at tlio close of a fiscal period duniiiii^hed by the ojMjrating expenses, 
 the taxes, and the uncollectible bills assignable to such operation gives 
 the operating income (or loss) for the period. 
 
 To the net revenue (or deficit) are added the nonoperating revenues, 
 less the nonoperating revenue deductions, which gives the gross income 
 for the period. 
 
 From the gross income are deducted various compulsory deductions 
 grouped herein as "Deductions from Gross Income;" tliis gives the 
 Net Income (or Loss) fi>r the particular period. From the Net Income 
 are deducted such appropriations as are made from Income ; this gives 
 the amount that should be carried to the Corporate Surplus or Deficit 
 account. 
 
 Hi. Taxes. — Separate accounts should be kept of the taxes applicable 
 to operating and to nonoperating revenues, and, if the company engages 
 in business other than telephone operations, taxes applicable to such 
 other business should also be kept separate. 
 
 The tax accounts should be charged each month and an open 
 account termed "Tax Liability Account" should be 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 should be estimated and one-twelfth 
 of the estimated amounts be charged each month. From time to 
 time during the j'ear, as the actual tax levies become known, the 
 monthly charges should be adjusted so as to include as nearly as 
 may be possible the total amount of the taxes in the period to wliich 
 they apply. When any such tax bill is actually paid, the "Tax Lia- 
 bility Account" .sliould be del)ited 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 wliich the Income Account is stated, the amount of the debit balance 
 should be shown in account No. 130, "Prepaid Taxes"; and if the bal- 
 ance is a credit bahince the amount should be shown in account No. 
 166, "Taxes Accrued." 
 
 Taxes on property leased shoidd be charged to the appropriate tax 
 account by the party wliich, under the terms of the lease contract, 
 is obligated for such taxes. If the other party to the lea^e, as a mat- 
 ter of convenience, pays the taxes to the government authorities, 
 such taxes i^hould not enter it.s tax accounts but should be charged 
 directly to the party obligated for the taxes. 
 
 The tax accounts must not include any fees or charges sometimes 
 called taxes, such as water taxes, drainage taxes, fire taxes, etc., wliich 
 are payments for s<-)me specified service rendered by the government.
 
 48 
 
 TEXT EXPLANATORY OF ACCOUNTS APPEARING IN THE 
 
 INCOME STATEMENT. 
 
 I. OPEKATING INCOME. 
 
 300. Telephone Operating Revenues. 
 
 This a(*ount should include the total operating revenues de- 
 rived from the telephone operations of the company for the period 
 covered by the income account statement. (For the primary 
 operating revenue accounts, see pp. 61 to 63.) 
 
 301. Telephone Operating Expenses. 
 
 This account should include the total operating expenses of the 
 telephone operations of the company for the period covered by 
 the income account statement. (For the primary operating 
 expense accounts, see pp. 69 to 77.) 
 
 302. Other Operating Revenues. 
 
 This account should include the total revenues of the company 
 derived from operations, other than telephone operations, for the 
 period covered by the income account statement. This account 
 includes the revenue derived from the operation of property 
 carried in balance-sheet account No. Ill, "Miscellaneous Invest- 
 ments," when such property is operated by the accounting 
 company. 
 
 303. Other Operating Expenses. 
 
 This account should include the total expenses of operations 
 other than telephone operations for the period covered by the 
 income account statement. This account includes the expenses 
 of the operation of property carried in balance-sheet account 
 No. Ill, "Miscellaneous Investments," when such property is 
 operated by the accounting company. 
 
 304. Uncollectible Operating Revenues. 
 
 This account should include the amount of any account for 
 telephone and other services which, after a reasonably diligent 
 effort to collect, has proved impracticable of collection. This 
 account inclucfes only uncollectible bills for amounts which have 
 been treated as operating revenues; other uncollectible bills 
 should be charged to account No. 323, "Uncollectible Nonoperat- 
 ing Revenues," or to Corporate Surplus or Deficit account, as 
 may be appropriate. 
 
 This account may include monthly charges, based upon esti- 
 mates, to create a reserve for uncollectible bills, provided such 
 reserve is adjusted annually in accordance with the experience 
 of the accounting company. Such amounts should be credited 
 to a subaccount under account No. 118, "Due from Subscribers 
 and Agents," to which should be charged bills that have proved 
 impracticable of collection.
 
 49 
 
 305. Taxes Assignable to Operations. 
 
 This account should inchide Federal, State, county, mu- 
 nicipal, and other taxinj^-district taxes relating to telephone 
 property, operations, and prix'ileges for the period for which the 
 Income Account is stated . This account should also include the 
 taxes on other property and operations, the revenues and expenses 
 of which are included in accounts 302 and 303, respectively. 
 (See sec. 16, p. 47.) 
 
 II. NONOPEKATING EEVENUES. 
 
 310. Rent Revenues from Lease of Telephone Plant. 
 
 This account should include all revenues from the company's 
 interests in telephone plant or equipment held by others under 
 some form of lease whereby it surrenders possession of such 
 property for operating purposes. 
 
 This account is intended to cover only rents receivable for the 
 use of telephone exchanges or operating units held as a whole 
 by others under some form of lease. 
 
 311. Miscellaneous Rent Revenues. 
 
 This account should include the revenues accruing to the 
 company as a return upon rented property other than telephone 
 plant and equipment, held by others under lease, as pro\'ided 
 for in the preceding account. 
 
 Note.— If the property rented is so intimately connected with property 
 used in the company's telephone operations that the expenses on the former 
 can not be ascertained, the revenues should be credited to account No. 505, 
 "Minor Rents of Exchange Plant," No. 515, "Minor Rents of Toll Plant," or 
 No. 524, "Rents from Other Operating Property," as may be appropriate, 
 and the expenses in coimection with the rented property should be included 
 in the operating expenses. 
 
 312. Dividend Revenues. 
 
 This account should include dividends declared on stocks 
 owned by the accounting company (and held in its treasury or 
 deposited in trust), or controlled through lease or otherwise, the 
 income from which is the property of the accotinting company. 
 Accruals of guaranteed dividends may be included in this 
 account if their payment is reasonably assured. 
 
 Note A.— This accotmt should not include credits for dividends on stocks 
 issued or assumed by the accounting company and owned by it, whether held 
 in its treasury, in sp>ecial deposits, or in sinking or other reserve funds, or 
 pledged as collateral. 
 
 Note B. — Dividends on stocks of other companies held in sinkinL, or othei 
 reserve ftmds should not be included in this accoimt, but should be credited 
 to accoimt No. 314, "Sinking and Other Reserve Fund Accretions." 
 
 313. Interest Revenues. 
 
 This account should include interest on funded securities of 
 other companies owned by the accounting company (and held
 
 50 
 
 in its treasury or deposited in trust), or controlled through lease 
 or otherwise, the income from which is the property of the 
 accounting company; interest on notes, bank balances, and 
 open accounts; and other analogous items including discount 
 on short-term notes. Interest accrued should not be credited 
 unless its payment is reasonably assured by past experience, 
 guaranty, anticipated provision or otherwise. In other cases 
 the credit to this account should be based upon the interest 
 actually collected. 
 
 Note A.— This account should not include interest on fimded securities 
 issued or assumed by the accounting company and o\vned by it, whether held 
 in its treasury, in special deposits, or in sinking or other reserve funds, or 
 pledged as collateral. 
 
 Note B.— Interest on funded securities of other companies held ia sinking 
 or other reserve funds should not be included in this account, but in account 
 No. 314, "Sinking and Other Reserve Fund Accretions." 
 
 Note C— At the option of the company there may be included in this 
 account the portion applicable to the fiscal period of the amount requisite to 
 extinguish (during the interval between the date of acquisition and the date 
 of matiirity) the discount or premium on fimded securities of other companies 
 owned. 
 
 314. Sinking and Other Reserve Fund Accretions. 
 
 This account should include the revenues accruing on cash, 
 securities, and other assets (other than securities issued or assumed 
 by the accounting company) in the hands of the trustees or 
 specifically set aside for sinking and other special funds. 
 
 Note A.— At the option of the company there may be included in this 
 account the portion applicable to the fiscal period of the amount requisite to 
 extinguish (during the interval between the date of acquisition and the date 
 of maturity) the discount or premium on funded securities of other companies 
 held in sinking or other reserve fimds. 
 
 Note B. — If the income on any special fund is retained in the fund 
 and if the fund is required to be represented by a reserve, the amounts 
 credited to this account in respect to such income should be concurrently 
 charged to account No. 350, "Appropriations of Income to Sinking and Other 
 Reserve Funds," and credited to account No. 172, "Surplus Invested in 
 Sinking Funds," or other appropriate reserve account. 
 
 315. Profits from Operations of Others. 
 
 WTienever in accordance with the terms of any contract the 
 company is entitled to participate in the profits from operations 
 of others, all revenues accruing to the company from such ssource 
 should be credited to this account. 
 
 Note. — This account does not include any dividends or other returns upon 
 securities issued by such separately operating companies, nor any remunera- 
 tion for services or the use of property as provided for in account No. 526, 
 "Licensee Revenue— Cr." 
 
 316. Miscellaneous Nonoperating Revenues. 
 
 This account should include all nonopei-atiug revenues not 
 provided for in the foregoing accounts.
 
 51 
 
 III. NONOPERATING EEVENUE DEDUCTIONS. 
 
 320. Rent Expen.se. 
 
 Thi.s arrount should inrludo all expen-ses in ronnec-tion with 
 rented property, the rents of which are included in account 
 No. 310 or No. 311, such as the cost of maintenance when borne 
 by the company, the 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 the expense accruing while the property is idle 
 and awaiting an occupant. It does not include taxes. 
 
 Note.— If the property rented is so intimately connected with property 
 used in the company'.s telephone operations that the expenses on the former 
 can not be ascertained, they should be included in the operating expenses and 
 the revenue should be credited to account No. 505, "Minor Rents of Exchange 
 Plant," No. 515, "Minor Rents of Toll Plant," or No. 524, "Rents from 
 Other Operating Property," as may be appropriate. ■ 
 
 381. MiSCELLAXEOVS NOXOPERATING EXPENSE. 
 
 Tills account should include all expenses in connection with 
 nonoperating revenue other than the expense provided for in 
 account No. 320, "Rent Expense." This account should 
 * include all expenses in connection with procuring interest 
 revenue, dividend revenue, profits from operations of others, 
 and analogous items. It does not include the taxes on such 
 investments. 
 
 322. Nonoperating Taxes. 
 
 This account should include all taxes payable by the com- 
 pany accrued upon nonoperating property and all taxes assign- 
 able to nonoperating revenues. (See sec. 16, p. 47.) 
 
 323. Uncollectible Nonoperating Revenues. 
 
 When any nonoperating revenues are judged by the company 
 to be uncollectible, the amount thereof should be credited to 
 the account in which theretofore charged and charged to this 
 account. 
 
 IV. DEDUCTIONS FEOM GEOSS INCOME. 
 
 330. Rent Deductions for Lease of Telephone Plant. 
 
 This account should include all amounts accrued against 
 the company for rent of telephone plant and equipment which 
 it holds under some form of lease from another, and of wliich 
 for operating purposes it has the exclusive possession. 
 
 This account is intended to cover only rents payable for the 
 use of telephone exi^hanges or operating units held as a whole 
 under some form of lease. 
 
 331. Rent Deductions for Telephone Offices. 
 
 This account should include the rents payable accruing for 
 use of general oftices and central and branch telephone offices
 
 52 
 
 owned by others, excepting rents for which provisions are here- 
 inafter made under "Clearing accounts." (See p. 77.) 
 
 Note. — "Where rent payments cover services, light, heat, etc., and mainte- 
 nance, in addition to a return upon investment, an apportionment should be 
 made of the rent payment and the amount representing interest and main- 
 tenance (estimated, if not known) should 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 company, the cost of such 
 repairs should be charged to the appropriate operating expense or other 
 accounts. 
 
 332. Rent Deductions for Condl'its, Poles, and Other Supports. 
 
 This account should include the rents payable accruing for the 
 use of ducts, conduits, or subways owned by others and rents for 
 the use of poles, fences, or buildings as supports for the 
 telephone lines of the accounting company. 
 
 333. Rent Deductions for Instruments and Equipment. 
 
 This account should include the rents payable accruing for 
 telephone instruments and equipment owned by others. 
 
 This account does not include amounts paid licensor telephone 
 companies under an agreement to pay a certain percentage of 
 revenues for use of instruments, privilege of connection, etc. 
 
 334. Miscellaneous Rent Deductions. 
 
 This account should include rents payable accrued not pro- 
 vided for elsewhere. 
 
 Note. — Rent of tools, equipment, or other facilities used for construction 
 should not be included in this account, but in the appropriate fixed capital 
 account. 
 
 335. Interest Deductions for Funded Debt. 
 
 This account should include all interest accrued on out- 
 standing funded debt and debenture stock issued or assumed 
 by the company. This account does not include interest on 
 securities held by the company in its treasury, in sinking or 
 other reserve funds, or pledged as collateral. 
 
 Note A. — Interest accruing on funded securities after maturity should not 
 be included in this account, but in account No. 336, "Other Interest Deduc- 
 tions." 
 
 Note B . — If any of the funded debt securities issued or assumed by the 
 company are held in its sinking or other resene funds and the interest on 
 such funded debt is an accretion to the fund, the interest on such securities 
 should not be charged to this account, but an amount equal to the interest on 
 the funded debt so held should be charged to account No. 350, "Appropria- 
 tions of Income to Sinking and Other Reserve Funds." This does not apply 
 to securities carried in account No. 127, "Provident Fund .\ssets." 
 
 336. Other Intere.st Deductions. 
 
 This account should include all interest accrued on unfunded 
 debt, such as short-term notes payable on demand or having 
 dates of maturity one year or less from date of issue, and open 
 accounts and other analogous items, including discount on short- 
 term notes; also interest accruing on funded debt securities 
 after maturity of debt.
 
 53 
 
 337. Loss ON Operations of Otheks. 
 
 \\'henever, in accordance with the terms of any contract, the 
 company is bound to contribute toward reimbursement of the 
 losses resulting from the operations of others, all liabilities against 
 the company accruing from such source should be charged to 
 this account. 
 
 338. Amortizatio.n of Debt Discount and Expense. 
 
 Charge to this account during each fi.scal period the propor- 
 tion of the unamortized discount and expense on outstanding 
 funded debt which is applicable to the period. (See sec. 7, 
 p. 14.) 
 
 339. Release of Premiums on Debt — Cr. 
 
 Credit to this account during each fiscal period the propor- 
 tion of the premium at which outstanding funded debt waa 
 issued which is applicable to the period. (See sec'. 7, p. 14.) 
 
 340. Amortization of Landed Capital. 
 
 Charge to this account during each fiscal period such portion 
 of the original money cost (estimated, if not known) of landed 
 capital as carried in account No. 207, "Right of Way," and 
 No. 211, "Land, " as is necessary to cover the proportion of life 
 thereof expired during such period. 
 
 Note A.— The amounts charged to this account should be concurrently 
 credited to account No. 103, " Reserve for Amortization of Intangible Capital— 
 Cr." 
 
 Note B. — When any landed capital expires or is otherwise retired 
 from ser%ice (as e. g., through sale) the fixed capital arcount or invest- 
 ment account, if any, originally charged therewith should be credited 
 with the amount originally charged, account No. 10.3, "Reserve for Amor- 
 tization of Intangible Capital — Cr.," should be debited with all amounts 
 theretofore credited to such account in respect of such capital so going out of 
 service; the appropriate account should be debited with the proceeds of sale, 
 if any, and any necessary adjustment should be made through the Corporate 
 Surplus or Deficit accoimt. 
 
 341. Miscellaneous Deductions from Income. 
 
 This account should include all deductions from gross income 
 which are in the nature of fixed charges but not otherwise pro- 
 vided for, such as those required by the terms of some contract, 
 agreement, charter provL*<ion, law, or ordinance. Such deductions 
 should not include any appropriations or dispositions of income 
 that rest solely in the discretion of the accounting company. 
 
 V. DISPOSITION or NET INCOME. 
 
 350. Appropriations of Income to Sinking and Other Reserve 
 
 Funds. 
 
 This account should include amounts of appropriations of 
 
 income for sinking and other reserve funds. The terms of 
 
 mortgages, deeds of trust, or other contracts providing for the 
 
 allocation of income or for the payment of definite sums into
 
 54 
 
 sinking and other reserve funds, and for accretions to such 
 funds on account of income from preAious investments, may be 
 made the basis of such appropriations. 
 
 The appropriations for payments or accretions to the funds 
 may include amounts equal to (1) direct payments; (2) the 
 interest or di\ddends on securities issued or assumed by the 
 accounting company and held in such funds; (3) the income 
 from investments in securities (other than those issued or 
 assumed by the accounting company) held in such funds; and 
 (4) the income from cash and other property held in such funds. 
 
 Note A. — The amounts charged to this account should be concurrently 
 credited to account No. 172, "Surplus Invested in Sinking Funds," or other 
 appropriate reserve. 
 
 Note B. — If appropriations for direct payments are made from surplus, 
 they should be charged to account No. 411, "Appropriations of Surplus to 
 Sinking and Other Reserve Funds. " 
 
 351. Dividend Appropriations op Income. 
 
 This account should include dividends on outstanding capital 
 stock issued or assumed by the accounting company (other than 
 that held by it), if declared from income. 
 
 This account should be subdivided so as to show separately 
 the dividends on the various classes of capital stock. 
 
 If a dividend is payable in any thing other than money, such 
 thing should be described in the entry with sufficient particu- 
 larity to identify it. 
 
 Note A. — This account should include the dividends declared out of 
 income on all classes of capital stock, except debenture stock. The payments 
 on debenture stock should be charged to account No. 335, "Interest Deduc- 
 tions for Funded Debt. " 
 
 Note B.— This account should not include charges for dividends on capital 
 stock issued or assumed by the accoimting company and owned by it, whether 
 held in its treasury, in special deposits, or in sinking or other reserve funds, 
 or pledged as collateral. (See account No. .350, "Appropriations of Income 
 to Sinking and Other Reserve Funds. ") 
 
 Note C— This account should be used if the appropriations are definitely 
 made as chargeable to income. If similar appropriations are made from 
 surplus, they should be charged to account No. 412, "Dividend Appropria- 
 tions of Surplus. " 
 
 352. Appropriations of Income for Construction, Equipment, 
 
 AND Betterments. 
 
 This account should include amounts appropriated from 
 income for construction and equipment and for betterments of 
 property carried in fixed capital accounts. 
 
 These amounts should be subdivided so as to show — (a) amounts 
 expended during preceding fiscal periods, (h) amounts expended 
 during the current fiscal period, and (c) amounts held in reserve. 
 
 Note.— This account should be used if the appropriations are definitely 
 made as chargeable to income. If similar appropriations are made from 
 surplus, they should be charged to account No. 415, "Appropriations of Sur- 
 plus for Construction, Equipment, and Betterments."
 
 55 
 
 353. Miscellaneous AppitoruiATios's of Income. 
 
 This account should include appropriations of income not 
 provided for elsewhere. 
 
 Note.— This account should bo used if the appropriations are definiu-ly 
 made as chargeable to income. If similar appropriations are made from 
 surplus, they should be charged to account No. 416, "Miscellaneous Appro- 
 priations of Surplus. "
 
 56 
 
 CORPORATE SURPLUS OR DEFICIT ACCOUNT. 
 
 I. OEEDITS. 
 
 Balance (at beginning of fiscal period). Page. 
 
 400. Credit Balance Transferred FROM Income Account.. . 57 
 
 401. mlscell.^neous additions to surplus 57 
 
 Balance Debit (.\t end op fiscal period) Carried to 
 
 Balance Sheet. 
 
 II. DEBITS. 
 
 Balance (at beginning of fiscal period). 
 
 410. Debit Balance Transferred From Income Account.. . 57 
 
 411. Appropriations of Surplus to Sinking and Other 
 
 Reserve Funds 57 
 
 412. Dividend Appropriations of Surplus 58 
 
 413. Realized Depreciation not Covered by Reserves... 58 
 
 414. Amortiz.\tion Unprovided for Elsewhere 58 
 
 415. Appropriations of Surplus for Construction, Equip- 
 
 ment, AND Bettermen'js 58 
 
 416. Miscellaneous Appropri-'^tions of Surplus 59 
 
 417. Other Deductions from Surplus 59 
 
 Balance Credit (at end op fiscal period) Carried to 
 
 Balance Sheet. 
 
 INSTRUCTIONS PERTAINING TO CORPORATE SURPLUS 
 OR DEFICIT ACCOUNT. 
 
 17. Corporate surplus or deficit account defined. — This account or 
 summary is th*e connecting link between the Income Account and the 
 Balance Sheet. It summarizes the changes in the corporate surplus 
 or deficit during a given fiscal period resulting from the operations and 
 the business transactions during that period, as well as those effected by 
 any disposition of net profits made solely at the option of the company 
 by accounting adjustments not properly attributable to the period, or 
 by miscellaneous losses or gains not provided for elsewhere. The cor- 
 porate surplus or deficit should be shown on the balance-sheet state- 
 ment under account No. 137, "Corporate Deficit," or No. 174, "Corpo- 
 rate Surplus Unappropriated."
 
 57 
 
 TEXT EXPLANATORY OF CORPORATE SURPLUS OR 
 
 DEFICIT ACCOUNT. 
 
 I. CREDITS. 
 
 400. Credit B.\l.\nce Tkaxskeukku from Income Account. 
 
 Under tliis title should be shown the amount of net income 
 brought forward from the Income Account. 
 
 401. Miscellaneous Additions to Surplus. 
 
 This account sliould include amounts (not pro\'ided for else- 
 where) transferred to Surplus from other accounts and amounts 
 representing increases in resources not properly assignable to 
 the income of the fiscal period for which the accounts are stated. 
 Among the items which should be credited to this account are, 
 for e.xainple — 
 
 Adjustment or cancellation of old balance-sheet accounts 
 (other than fixed capital). 
 
 P*rofits derived from the sale of property carried in account 
 No. Ill, "Miscellaneous Investments." 
 
 'Credits resulting from adjustments required to bring to par 
 securities issued or assumed by the accounting company and 
 reacquired at a cost less than the par value. 
 
 Premium on capital stock at the time of its retirement. 
 
 Unextinguished premiums on funded debt retired before 
 maturity. 
 
 II. DEBITS. 
 
 410. Debit Balance Transferred from Income Account. 
 
 Under tliis title should bo shown the amount of net loss 
 brought forward from the Income Account. 
 
 411. Appropriations of Surplus to Sinking and Other Reserve 
 
 Funds. 
 This account should include amounts of appropriations of 
 surplus for sinking and other reserve funds. The terms of 
 mortgages, deeds of trust, or other contracts pro\'iding for the 
 allocation of suqilus or for the payment of definite amounts 
 into sinking and other reserve funds may be made the basis of 
 such appropriations. 
 
 Note A. — This account should be used if the appropriations are definitely 
 made as chargeable to surplus. If similar appropriations are made from 
 income, they should be charged to account No. 350, ".\ppropriations of Income 
 to Sinking and Other Reserve Funds." 
 
 Note B.— If appropriations are made to cover the income accruing on 
 sinking-fund assets and to cover amounts equivalent to interest on securities 
 issued or assumed bj' the accounting company and held in such funds, the 
 amounts of such appropriations should not be included in this account, but 
 should be included in account No. 350, "Appropriations of Income to Sinking 
 and Other ReservfvFunds." If appropriations are made to cover sums 
 equivalent to dividends on stock issued or assumed by the accounting com- 
 pany and held in such funds the amounts of such appropriations may be 
 Included in this account or in account No. 350, according as the dividend is 
 declared from surplus or from income.
 
 58 
 
 Note C— The amounts charged to this account should be concurrently 
 credited to balance-sheet account No. 172, "Surplus Invested in Sinking 
 Funds," or other appropriate reserve accounts. 
 
 412. Dividend Appropriations of Surplus. 
 
 This accoimt should include dividends on outstanding capi- 
 tal stock issued or assumed by the accounting company (other 
 than that held by it), if declared from surplus. 
 
 This accoimt should be subdi\-id8d so as to show separately 
 the di\ddends on the various classes of capital stock. 
 
 If a diAddend is payable in any thing other than money, 
 such thing should be described in the entry with sufficient 
 particularity to identifj' it. 
 
 Note A. — This account includes the dividends declared from surplus 
 on all classes of capital stock except debenture stock. The payments on 
 debenture stock should be charged to account No. 335, "Interest Deductions 
 for Funded Debt." 
 
 Note B. — This account should not include charges for dividends on capital 
 stock issued or assumed by the accounting company and owned by it, whether 
 held in its treasury, in»speeial deposits, or sinking or other reserve funds, or 
 pledged as collateral. (See account No. 411, "Appropriations of Surplus to 
 Sinking and Other Reserve Funds.") 
 
 Note. — This account should be used if appropriations are definitely made 
 as chargeable to surplus. If similar appropriations are made from income, 
 they should be charged to account No. 351, "Dividend Appropriations of 
 Income." 
 
 413. Realized Depreciation not Covered by Reserves. 
 
 Charge to this account the realized depreciation (i. e., the 
 difference between the original cost and the salvage, if any) on 
 tangible fixed capital retired, if 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 to the period for which the reserve 
 was established as is due to life in service before that period. 
 This portion may be estimated on the basis of the proportion 
 which the life in service of the property in question prior to 
 the period for which the reserve was established bears to its 
 entire life in service. (See sec. 23, p. 67.) 
 
 414. Amortization Unprovided for Elsewhere. 
 
 Charge to this account, when any intangible property expires 
 or is relinquished, such portion of its cost as has not been pre- 
 viously vvTitten off or is not covered by account No. 103, "Reserve 
 for Amortization of Intangible Capital — Cr." Charge also to 
 this account all optional amortization, such as that of assets car- 
 ried in accounts No. 201, "Organization" and No. 204, "Other 
 Intangible Capital." 
 
 415. Appropriations of Surplus for Construction, Equipment, 
 
 and Betterments. 
 
 This account should include amounts appropriated from 
 surplus for construction and equipment and for betterments 
 of property carried in the fixed capital accounts.
 
 59 
 
 These amounts should be subdivided so as to show (a) amounts 
 expended during preceding fiscal periods, (b) amounts expended 
 during the current fiscal period, and (c) amounts held in reserve. 
 
 Note. — This account shouki 1)C iLscd if appropriations arc dcfinilrly madoas 
 chargeable to siirplu.s. If similar appropriations are ma<le from income, they 
 should be charged to account No. 352, "Appropriations of Income for Construc- 
 tion. Equipment, and Betterments." 
 
 416. MiSCKLLAXEOUS Al'l'KOI'RIATIOX.S OF SURPLUS. 
 
 This account should include appropriations of surplus not 
 
 provided for elsewhere. 
 
 Note. — This account should 1)0 used when the appropriations are definitely 
 made as chargeable to surplus. If similar appropriations are made from 
 income, they should be charged to account No. 3.53, " Miscellaneous Appropria. 
 tions of Income." 
 
 417. Othkr Deductions from Surplus. 
 
 Thif! account should include amounts (not provided for else- 
 where) transferred from Surplus to other accounts, amounts 
 written off in consequence of adjustments, and payments not 
 properly chargeable to Income for the fiscal period for which 
 the accounts are stated. Among the items which shotild be 
 charged to this account are, ior example: 
 
 Adjustment or cancellation of old balance-sheet accounts 
 (other than fixed capital). 
 
 Losses resulting from the sale, destruction, or retirement of 
 property carried in account No. Ill, "Miscellaneous Invest- 
 ments." 
 
 Losses resulting from adjustments required to bring to par 
 securities issued or assumed by the accounting company and 
 reacquired at a cost exceeding the par value. 
 
 Deductions made to extinguish discount on capital stock. 
 
 Deductions made to amortize debt discount and expense when 
 
 not properly chargeable to income. 
 
 Note. — A complete analysis of this account will be required in annual 
 reports of the company to the Commission.
 
 60 
 
 OPERATING REVENUE ACCOUNTS. 
 I. EXCHANGE SEEVIOE REVENUES. 
 
 Page. 
 
 500. Subscribers' Station Revenues 61 
 
 501 . Public Pay Station Revenues 61 
 
 502. Miscellaneous Exchange Service Revenues 61 
 
 503. Service Stations 61 
 
 504. Private Exchange Lines 61 
 
 505. Minor Rents of Exchange Plant 61 
 
 506. Other Exchange Revenues 61 
 
 II. TOLL SERVICE REVENUES. 
 
 510. Message Tolls 62 
 
 511. Miscellaneous Toll Line Revenues 62 
 
 512. Leased Toll Lines 62 
 
 513. Telegraph Tolls 62 
 
 514. Telegraph Service on Toll Lines 62 
 
 515. Minor Rents of Toll Plant 62 
 
 516. Other Toll Line Revenues 62 
 
 III. MISCELLANEOUS OPERATING REVENUES. 
 
 520. Messenger Service 63 
 
 521. Telegraph Commissions 63 
 
 522. Other Telegraph Service Charges 63 
 
 523. Advertising and Directory 63 
 
 524. Rents from Other Operating Property : 63 
 
 525. Other Miscellaneous Revenue 63 
 
 526. Licensee Revenue — Cr 63 
 
 527. Licensee Revenue — Dr 63 
 
 INSTRUCTIONS PERTAINING TO OPERATING REVENUE 
 
 ACCOUNTS. 
 
 18. Operating revenues defined. — By operating revenues are meant 
 all amounts of money which the company receives or becomes law- 
 fully entitled to recover for services rendered and as a return upon 
 property used by the company in its own operations. Credits to the 
 various revenue accounts should be based upon the gross charges made 
 for services rendered by the company. 
 
 19. Deductions from revenues. — Discounts allowed subscribers for 
 prompt payment, corrections of overcharges, overcoUections thereto- 
 fore credited and afterwards corrected, authorized refunds on account 
 of failures in transmission, and other corrections should be charged to 
 the revenue account to which they relate. 
 
 20. Commissions. — Commissions paid to attendants at pay stations 
 and to employees or others in lieu of salaries should be charged to appro- 
 priate expense accounts and not to the revenue accounts.
 
 61 
 
 TEXT EXPLANATORY OF OPERATING REVENUE ACCOUNTS. 
 I. EXCHANGE SERVICE REVENUES. 
 
 500. SuBSCRiBKR.s Station Revenues. 
 
 This account should inchide all revenues from subscribers for 
 exchanjjo service, extension stations, private branch exchanges, 
 and other exchange service .stations, whether tlie charge is ba.sed 
 upon a flat rate or measured rate. Include in this account, also, 
 charges made for the insertion of extra names in directory and 
 for use of extra exchange mileage in circuits to subscribers' sta- 
 tions, installation and cancellation charges, and any commissions 
 on telegraph tolls received in lieu of rent for exchange lines. 
 
 501. Public Pay Station Revenues. 
 
 This account should include all revenues from exchange service 
 at public pay stations. This account should not include revenues 
 from regular subscribers' stations having measured service or coin 
 box service at standard rates. The amount credited to this 
 account should be the gross amount collected or due at tariff rates; 
 commissions allowed attendants or others for pay station tolls 
 should be debited to account No. 648, "Pay Station Commis- 
 sions," and not to this account. 
 
 502. Miscellaneous Exchange Service Revenues. 
 
 This account should include all revenues derived from ex- 
 change service other than from subscribers' stations or public 
 pay stations, as provided for in the following subaccounts: 
 
 503. Service Statioiis. 
 
 This account should include switching charges and other 
 revenues derived from stations, the lines and equipments for 
 which are owned wholly or in part by others, but to which the 
 accounting company furnishes exchange service. 
 
 504. Private Exchange Lines. 
 
 This account should include all revenues derived from tele- 
 phone lines, equipment, and instruments fonning part of the 
 company's exchange plant and leased to others for use sls private 
 lines but without exchange connections with other subscribers. 
 
 505. Minor Rents of Exchange Plant. ' 
 
 This account .should include all revenues derived from attach- 
 ment.s to exc-hange poles, the use of exchange conduits, and other 
 minor rents from exchange plant where such property is main- 
 tained by the accounting company, and the cost of such mainte- 
 nance can not be separated from the expense of maintaining 
 the rented property. This account should not Include rents 
 for equipment leased to licensees under an arrangement for a 
 division of revenues as provided for in account No. 526, "Li- 
 censee Revenue — Cr." 
 
 506. Other Exchange Revenues. 
 
 This account should include all exchange service revenues 
 not provided for elsewhere.
 
 62 
 
 II. TOLL SEEVIOE REVENUES. 
 
 510. Message Tolls. 
 
 This account should inchide all revenues derived from messages 
 transmitted wholly over the company 's lines between stations in 
 different exchange areas and for which a charge is made that is 
 not included in contracts with subscribers for station service; 
 also the accounting company's proportion of tolls on messages 
 transmitted by the joint use of its own and other lines. 
 
 511. Miscellaneous Toll Line Revenues. 
 
 Tills account should include all toll service revenues (other 
 than message tolls), as provided for in the following subaccounts: 
 
 512. Leased Toll Lines. 
 
 This accoimt should include all revenues derived from toll 
 lines (including the terminal exchange circuits) leased by others 
 under contracts giving exclusive telephone use either con- 
 tinuously or during stated periods. Such plant may be leased 
 in connection with private branch exchange or private exchange 
 line installations. 
 
 Note. — Revenues from private branch exchanges or private lines, the 
 contracts for which provide for the use of toll circuits, should be divided 
 (by estimate, if necessary) between Exchange Revenue and 'Toll Revenue. 
 
 513. Telegraph Tolls. 
 
 This account should include all revenues received from tele- 
 graph companies for the use of toll lines for telephoning tele- 
 grams and cablegrams. 
 
 514. Telegraph Service on Toll Lines. 
 
 This account should include all revenues derived from the 
 use of toll lines for telegraph circuits whether such lines are 
 ■ used by telegraph companies, brokers, or others. 
 
 515. Minor Rents of Toll Plant. 
 
 This account should include all revenues derived from attach- 
 ments to toll poles, the use of toll conduits, and other minor rents 
 from toll plant where such property is maintained by the ac- 
 counting company, and the cost of such maintenance can not 
 be separated from expense of maintaining the rented property. 
 This account should not include rents from equipment leased 
 to licensees under an arrangement for a division of revenues 
 as provided for in account No. 526, "Licensee Revenue— Cr. " 
 
 516. Other Toll Line Revenues. 
 
 This account should include all toll line revenues not pro- 
 vided for elsewhere.
 
 63 
 
 IIL MISCELLANEOUS OPERATING EEVENTJES. 
 
 520. Messenger Service. 
 
 Tliis account should include all revenues derived from mes- 
 senger service. 
 
 521. Telegraph Commissions. 
 
 This account should include all commissions receivable for 
 the collection of telegraph and cable tolls on messages trans- 
 mitted between telegraph offices and their patrons and upon 
 which the accounting company undertakes to make collection. 
 
 622. Other Telegraph Service Charges. 
 
 This account should include all revenues (not classed as tele- 
 graph commissions or telegraph tolls) received from telegraph 
 companies for services rendered by the telephone company's 
 employees in joint telephone offices in connection with telegraph 
 and cable messages, such, for example, as receiving messages 
 from the public and quoting rates. 
 
 623. Advertising and Directory. 
 
 This account should include all revenues derived from adver- 
 tising in directories and elsewhere. 
 
 524. Rents from Other Operating Property. 
 
 This account should include all revenaes accruing from the 
 rent of buildings and other property (except leased wires, poles, 
 conduits, and equipment covered by accounts No. 505, "Minor 
 Rents of Exchange Plant," and No. 515, "Minor Rents of Toll 
 Plant, ' '), when such property is used also by the company and the 
 expense of maintaining and operating the rented portion can 
 not be separated from the total expense. 
 
 525. Other Miscellaneous Revenue. 
 
 This account should include all miscellaneous operating reve- 
 nues not provided for elsewhere. This account does not include 
 nonoperating revenue as provided for in accounts Nos. 310 to 
 316, inclusive. 
 
 526. Licensee Revenue — Cr. 
 
 AMien a telephone company grants to another telephone 
 company the use<^f its patents or furnishes instruments and 
 equipment and general supervision under an agreement for 
 apportioning the revenues of the licensee, the proportion accru- 
 ing to the licensor should be included by the licensor in this 
 account. 
 
 527. Licensee Revenue — Dr. 
 
 When a telephone company is granted by another telephone 
 company the use of its jiatents, or is furnished instruments and 
 equii>mout and general supervision under an agreement for 
 apportioning the revenues of the licensee, the proportion accru- 
 ing to the licensor should be included by the licensee in tliis 
 account.
 
 64 
 
 OPERATING EXPENSE ACCOUNTS. 
 I. MAINTENANCE EXPENSES. 
 
 Page. 
 
 601. Supervision op Maintenance 69 
 
 602. Repairs of Aerial Plant 69 
 
 603. Repairs of Underground Plant 69 
 
 604. Repairs of Central Office Equipment 69 
 
 605. Repairs of Station Equipment 70 
 
 606. Repairs of Buildings and Grounds 70 
 
 607. Station Removals and Changes 70 
 
 608. Depreciation of Plant and Equipment 71 
 
 609. Extraordinary Depreciation 71 
 
 610. Other Maintenance Expenses , . 71 
 
 611. Repairs Charged to Reserves — Cr 71 
 
 II. TEArriO EXPENSES. 
 
 620. Central Office Superintendence 71 
 
 621 . Traffic Superintendence 71 
 
 622. Service Inspection 72 
 
 623. Clerical Operating Wages 72 
 
 624. Operators' Wages 72 
 
 625. Central Office Supplies and Expenses 72 
 
 626. Rest and Lunch Rooms .' . 72 
 
 627. Operators' Schooling 72 
 
 628. Transmission Power 72 
 
 629. Central Office Stationery and Printing 72 
 
 630. Messenger Service 72 
 
 631. Miscellaneous Central Office Expenses 73 
 
 632. Pay Station Expenses 73 
 
 633. Other Traffic Expenses 73 
 
 III. commekcial expenses. 
 
 640. Commercial Administration 73 
 
 641. Promotion Expenses ^ 73 
 
 642. Advertising 73 
 
 643. Canvassing 73 
 
 644. Sublicensee Relations 74 
 
 645. Collection Expenses 74 
 
 646. Revenue Accounting 74 
 
 647. Revenue Collecting 74 
 
 648. Pay Station Commissions 74 
 
 649. Directory P^xpenses 74 
 
 650. Other Commerclal Expenses 74
 
 65 
 
 IV. GENERAL AND MISCELLANEOUS EXPENSES, 
 
 Papp. 
 
 660. General Office Salaries 74 
 
 661 . Salaries of General Officers 74 
 
 662. Salaries 0/ General Office Clerks 74 
 
 663. General Office Supplies and Expenses 7.") 
 
 664. Expenses 0/ General Officers and Clerks 75 
 
 665. General Office Stationery and Printing 75 
 
 666. Other General Office Supplies and Expenses 75 
 
 667. General Law Expenses 75 
 
 668. Insurance 75 
 
 669. Accidents and Damages 76 
 
 670. Law Expenses Connected with Damages 76 
 
 67L Miscella.veous General Expenses 76 
 
 672. Relief Department and Pensions 76 
 
 673. Telephone Franchise Requirements 76 
 
 674. Amortization of Franchises and Patents 77 
 
 675. Other General Expenses 77 
 
 676. Telephone Franchise Requirements — Cr 77
 
 66 
 
 INSTRUCTIONS PERTAINING TO OPERATING EXPENSE 
 
 ACCOUNTS. 
 
 21. Repairs defined. — Repairs, as used in the text of the various 
 operating expense accounts, includes ordinary and extraordinary 
 repairs. 
 
 Ordinary repairs inckide: 
 
 (a) 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 reset- 
 ting guy stubs, trimming trees, straightening poles and cross arms, and 
 cleaning and adjusting apparatus; 
 
 (6) Replacements of minor or short-lived parts of structures, equip- 
 ment, or facilities; 
 
 (c) Replacements of minor parts 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 fur 
 depreciation of plant and equipment; 
 
 (d) Rearrangements and changes in location of plant, except sub- 
 scribers' station equipment (for which a special account is provided). 
 This includes rearrangements of circuits, reassociation of party lines, 
 rearranging grouping of trunks and calling circuits, recross connecting 
 on distributing frames, rerunning jumper wires, underlining switch- 
 board jacks, etc., together with materials used for such piuposes which 
 do not add to the tangible value of such plant; 
 
 (e) Recovering salvage and removing retired or abandoned property; 
 (except subscribers' station equipment) when such costs are not pro- 
 vided for by the depreciation reserve. 
 
 Ordinary repairs are not required to be taken into account in fixing a 
 rate of depreciation. 
 
 Extraordinary repairs include: 
 
 (a) Restoring to an efficient or proper condition buildings, structures, 
 o^ other units of property which have deteriorated; 
 
 (6) Substituting, in order to maintain normal efficiency, new parts 
 for old parts of continuous structures, such as pole lines, cables, wires, 
 conduite, etc., where such substitutions do not amount to a prac- 
 tical replacement of any considerable length of such continuous struc- 
 tures; 
 
 (c) Restoring the condition of property damaged by storms, floods, 
 fire, or other casualties; 
 
 (d) Recovering salvage and removing retired or abandoned property 
 in connection with above work. 
 
 Extraordinary repairs should be provided for by adequate charges to 
 depreciation. 
 
 WTien 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 new property should be 
 charged thereto. 
 
 All repairs, whether ordinary or extraordinary, should be charged to 
 the appropriate primary operating expense accounts. Extraordinary 
 repairs for which a reserve has been provided should then be concur-
 
 G7 
 
 rently charged to account No. 102, "Reserve for Accrued Deprecia- 
 tion — Cr.," and credited to account No. 611, "Repairs Charged to Re- 
 serves — Cr." 
 
 22. Cost of repairs.— The cost of repairs, as used in the text of the 
 various operating expense accounts, should be understood to incUide 
 the wages, salaries, and fees paid employees directly engaged in the 
 work of repairs, personal expenses of such employees when borne by 
 the company, and the cost of materials and supplies consumed and the 
 expenses of facilities employed in making the repairs less the value of 
 any salvage recovered. It includes also the cost of direct supervision, 
 such as of foremen or superintendents of repair gangs, but does not 
 include the cost of general supervision as provided for in account 
 No. 601, "SupervL4oii of Maintenance." 
 
 23. Depreciation of plant and equipment. — Telephone companies 
 should include in operating expenses depreciation charges for the pur- 
 pose of creating proper and adequate reserves to cover the expenseg 
 of depreciation currently accruing in the tangible fixed capital. By 
 expense of depreciation is meant — ■ 
 
 (a) The losses suffered tlirough the current lessening in value of 
 tangible property from wear and tear (not covered by current repairs). 
 
 (6) Obsolescence or inade(iuacy resulting from age, physical change, 
 or supersession by reason of new inventicms and discoveries, changes 
 in popular demand, or public requirements, and 
 
 ([•) Losses suffered thnjugh destruction of property by extraordinary 
 casualties. 
 
 The amount charged as expense of depreciation should be based upon 
 .rules determined by the accounting company. Such rules may be 
 derived from a consideration of the company's history and experience. 
 Companies should be prepared to furnish the Commission, upon de- 
 mand, the rules and a sworn statement of the facts, expert opinions, 
 and estimates upon which tkey are based. 
 
 Tlie estimate for depreciation of physical property should take into 
 account — 
 
 (a) The gradual deterioration and ultimate retirement of units of 
 property which may be satisfactcjrily individualized, such as build- 
 ings, machines, valuable instruments, etc., to the end that by the 
 time such units of property go out of service there shall have been 
 accumulated a reserve e<iuai to the original money cost of such property 
 plus expenses incident to retirement less the value of any salvage. 
 
 (h) The depreciation accruing in property which can not be readily 
 indi\idualized, such as pole lines, wires, cables, or other continuous 
 structures, where exjienditures for repairs or replacements of indi- 
 viilual parts ordinarily are not actually made until the later years of 
 the life in service of such ppjperty, 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 consimiod in operations 
 during a given month or year, and should be ba^ed ujxm the average 
 life of the units comprised in the respective classes of projx^rty.
 
 68 
 
 Tho amount estimated to cover the expense of depreciation of fixed 
 capital should be charged monthly to account No. 608, "Deprecia- 
 tion of Plant and Equipment " (or to the appropriate clearing account 
 or accounts), and concurrently credited to account No. 102, "Reserve 
 for Accrued Depreciation — Cr." 
 
 Account No. 413, "Realized Depreciation not Covered by Reserves," 
 is provided in the Corporate Surplus or Deficit account for charges 
 for realized depreciation on tangible fixed capital retired when such 
 depreciation occurred prior to the establishment of account No. 102, 
 "Reserve for Accrued Depreciation — Cr.," or has not been provided 
 for by credits to that account. 
 
 24. Extraordinary casualties and unanticipated reconstruction. — If so 
 authorized, upon application to the Commission, the company granted 
 such authority may charge the amount named in the authorization to a 
 suspense account for the purpose of distributing over a limited period 
 an extraordinary loss of such a natiu-e that 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 
 should be credited to the fixed capital accounts in which it was carried, 
 and such portion of the cost as may be authorized by the Commission 
 may be charged to the suspense account, the remainder of the cost, 
 less any salvage, being charged out as elsewhere provided in case of 
 retirements of property. The suspense account so raised should be* 
 credited and account No. 609, "Extraordinary Depreciation," debited 
 monthly with such an amount as will, through its regular application, 
 amortize the amount of the loss at the end of the period designated. 
 
 All ordinary casualties (those which occur with such frequency 
 that the principles of insurance are applicable thereto) should be 
 provided for through an insiu^ance reserve maintained for such losses 
 or be included in the provision for depreciation of plant and equipment. 
 
 25. Joint operating expenses. — When any operating expense is in- 
 curred by the accounting company for the joint benefit of itself and 
 others under an agreement for apportioning such expenses the company 
 charging such expenses to others should credit such amounts to its 
 primary expense accoimts to which the expenses were charged when 
 incurred. The debtor company should charge the amounts so billed 
 to its priniary expense accounts. Bills rendered by the operating 
 company for joint expenses should show the expenses in detail. 
 
 The amounts so handled through the expense accounts should not 
 include any allowance for profit or return upon the value of the 
 property used; such allowance, if any, should be credited by the 
 payee to the appropriate rent revenue account and charged by the 
 payor to the appropriate rent deduction account.
 
 G9 
 
 TEXT EXPLANATORY OF OPERATING EXPENSE ACCOUNTS. 
 
 I. MAINTENANCE EXPENSES. 
 
 601. Supervision of Maintenance. 
 
 This account should include ths 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, archi- 
 tects, 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; jani- 
 tor service, light, heat, and miscellaneous office expenses where 
 separate offices are maintained for such employees; also that 
 portion of the salaries and expenses of the general engineering 
 staff of the company which is assignable to maintenance. 
 
 602. Repairs ok Aeriai, Plant. 
 
 This account should include the cost of repairs of all plant clas- 
 sified as aerial plant, such as poles, towers, cross arms, pins, brack- 
 ets, and other pole fixtures; braces, guy wires, guy stubs, and other 
 pole support.s; aerial cables, and the su.^ponsion wires, bolts, 
 clamps, rings, hangers, etc., used to attach cables to poles, towers, 
 or other su])ports; aerial cable loading coils, cable boxes, and 
 their appurtenances; and aerial telephone wires, drop wires, tie 
 wires, insulators, and sleeves. It includes also the cost of trim- 
 ming trees and clearing and removing obstructions from right 
 of way for aerial plant, other than the cost of first clearing right 
 of way. 
 
 603. Repairs of Uxdercrouxd Pi.axt. 
 
 This account .should include the cost of repairs of all plant clas- 
 sified as underground plant, such as underground conduits and 
 their ap])urtenances; miderground cables, submarine cables, and 
 the loading coils, towers, boxes, and fittings belonging to such 
 cables. It also includes the cost of repairing right of way for 
 underground and submarine cables, and the cost of repaving 
 after repairs of miderground conduits. 
 
 604. Repairs of Central Office Ecjuip.ment. 
 
 This account should include the cost of repairing telephone 
 equipment in central telephone offices, such as switchboards, 
 monitors' and supervisors' desks, testing outfits, main and in- 
 termediate frames, cables, and jumper wires, call registers and 
 meters, relay racks and coil racks; equipment for generating and 
 regulating power for telephone purposes, such as batteries, en- 
 gines, motors, generators, rectifiers, transformers, meters, fuses, 
 and ])rotectors; telephone and telegraph instruments and other
 
 70 
 
 electrical instruments and apparatus in the central office; equip- 
 ment for operators' schools and rest rooms, and furniture and 
 fixtures required for the uses or convenience of the operating 
 forces. 
 
 605. Repairs of Station Equipment. 
 
 This account should include the cost of repairing station appa- 
 ratus, such as telephone seta, intercommunicating sets, bells, 
 backboards, desk stands, coin boxes, protectors, battery boxes, 
 batteries, cords, and telephone and telegraph instruments or 
 parts thereof; interior block wires; private branch exchange 
 switchboards, distributing frames, and switchboard cables, and 
 booths and special fittings for same, such as desks, chairs, fans, 
 and cash registers. 
 
 Note. — The cost of renewals of batteries at stations is not chargeable to this 
 account, but to account No. 628, "Transmission Power." 
 
 606. Repairs of Buildings and Grounds. 
 
 This account should include the cost of repairing general offices, 
 central offices, test stations, or other telephone offices and the fix- 
 tures (except telephone apparatus) therein, such as elevators, 
 plumbing, apparatus for heating, lighting, ventilating, and 
 power; and the cost of maintaining yards and grounds, wdth 
 their fences, sidewalks, sewers, etc., appurtenant to such build- 
 ings. Charge also to this account the cost of repairing shops, 
 stores, stables, and garages, and permanent fixtures therein. 
 
 607. Station Removals and Changes. 
 
 This account should include the cost of disconnecting and 
 removing and of changing the location of all plant classified as 
 subscribers' station equipment (as defined in account No. 230, 
 "Station Equipment"), including freight and cartage on such 
 equipment and material as is sent to storehouse. 
 
 (1) WTien stations are removed (not merely changed in loca- 
 tion) from subscribers' premises, the original cost (estimated, if 
 not known) of the station should be credited to the appropriate 
 fixed capital accounts, and the cost of the instruments, private 
 branch exchange apparatus, booths, and fittings should be 
 charged to account No. 122, "Materials and Supplies," while the 
 cost of installation, including inside wires, or interior block wires, 
 and that portion of aerial wire which could be used only at the 
 subscribers' premises from which the station is removed, less 
 the value of any salvage, should be charged to this account. 
 
 Note. — When extensive replacements are made of subscribers' station equip- 
 ment, or of drop or block wiring taken out of service because of inadequacy, or 
 obsolescence, as when a magneto system is changed to a common battery or 
 when open wire distribution is replaced by interior block construction, the cost 
 of making such replacements should be handled tlirough the regu^^r construc- 
 tion and depreciation accounts, and should not be included in the above 
 account.
 
 71 
 
 (2) If wiring left from previous installations is reused either 
 on same or other premises, the gain should be credited to this 
 account. This includes the gain on inside wires and interior 
 block wires and on that portion of aerial wire which could be 
 used only at subscribers' premises. 
 
 (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. 
 
 608. Depreciation of Plant and Equipment. 
 
 Charge to this account monthly the amount estimated to be 
 necessary to cover the depreciation accruing during the month 
 in the company's tangible fixed capital (except depreciation 
 provided in "Clearing Accounts," Nos. 701, 702, and 703). 
 Amounts charged to this account should be concurrently credited 
 to account No. 102, "Reserve for Accrued Depreciation— Cr." 
 (See sec. 23, p. 67.) 
 
 609. Extraordinary Depreciation. 
 
 This account should be charged monthly with such an amount 
 as will, through its regular application, amortize any amount 
 that may be carried in suspense on account of extraordinary 
 casualties and unanticipated reconstruction. (See sec. 24, p. 68.) 
 
 610. Other Maintenance Expenses. 
 
 This account should include cost of repairing telephone plant 
 and equipment not provided for elsewhere. 
 
 611. Repairs Charged to Reserves — Cr. 
 
 Credit to this account and charge concurrently to account 
 No. 102, "Reserve for Accrued Depreciation— Cr.," an amount 
 equal to the cost of extraordinary repairs made for which provision 
 had been made in that reserve; also, credit to this account and 
 charge concurrently to the insurers or to the insurance reserve an 
 amount equal to the cost of repairs made necessary by casualties, 
 when such cost is covered by insurance or an insurance reserve. 
 (See sec. 21, p. 66.) 
 
 II. TRAFFIC EXPENSES. 
 
 620. Central Office Superintendence. 
 
 This account should include the cost of all central office 
 superintendence as provided in the following subaccounts: 
 621. Traffic Superintendence. 
 
 This account should include 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;
 
 72 
 
 also cost of office supplies, stationery, and printing; janitor 
 service, light, heat, and miscellaneous office expenses if separate 
 offices are maintained for such employees. 
 
 622. Service Inspection. 
 
 This account should include the pay and expenses of service 
 inspection forces, including all employees on this work not 
 engaged in the regular handling of the traffic. 
 
 623. Clerical Operating Wacres. 
 
 This account should include the pay of clerks, stenographers, 
 and office boys engaged in traffic work in central office operating 
 rooms. 
 
 624. Operators' Wages. 
 
 This account should include the pay of chief operators, assist- 
 ant 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. 
 
 625. Central Office Supplies and Expenses. 
 
 This account should include the cost of all central office sup- 
 plies and expenses as provided in the following subaccounts: 
 
 626. Rest and Lunch Rooms. 
 
 This account should include the cost of operating the retiring, 
 rest, and lunch rooms for central office employees, including the 
 cost of lunches ^provided for such employees. Credit to this 
 account amounts received for lunches served. 
 
 627. Operators' Schooling. 
 
 This account should include the expenses of training new 
 operators (whether a school is maintained or not), including 
 wages paid them for wliich no service is rendered, the salaries 
 and expenses of instructors, and supplies furnished to schools 
 for operators. 
 
 628. Transmission Power. 
 
 This account should include the cost of power purchased for 
 transmitting traffic and for operating signals; the cost of renewing 
 local and central office batteries; and the cost of labor employed 
 and supplies consumed in operating the generating plant and 
 storage batteries for transmitting current or for operating signals. 
 
 629. Central Office Stationery and Printing. 
 
 This account should include the cost of all postage, stationery, 
 stationery supplies, anri printing for use of central offices. 
 
 630. Messenger Service. 
 
 This account should include pay and expenses of messengers 
 employed in delivering messages and notifying persons of calls 
 at telephone stations.
 
 73 
 
 (j31. Miscellaneous Central Office Expenses. 
 
 This account should include the cost of water, ice, fuel, liphts, 
 towels, toilet supplies, and of janitor service and other care of 
 central offices. 
 
 632. P.\Y Rt.\tion Expenses. 
 
 This account should include all traffic expenses, except com- 
 missions and central office operating expenses, incurred in con- 
 nection with the operation of public pay stations. 
 
 633. Other Traffic Expenses. 
 
 This account should include all traffic expenses not elsewhere 
 provided for. 
 
 Note.— Rent paid for central oflices is chargeable to account No. 331, "Rent 
 Deductions for Telephone Oflices," and not to this account. 
 
 III. GOMMEEOIAL EXPENSES. 
 
 640. Commercial Administration. 
 
 This account should include the pay and expenses of officers 
 and their office forces directly in charge of the commercial depart- 
 ment, either for the company as a whole or for a territorial subdi- 
 vision; the pay and expenses of employees when engaged in pre- 
 paring contract orders, handling unsolicited contracts or contract 
 changes including miscellaneous relations with subscribers and 
 patrons not specifically assignable to promotion, collection, or 
 directory expenses. Charge also to this account the cost of 
 postage, printing, and stationery; janitor service, light, heat, 
 and miscellaneous office expenses if separate offices are main- 
 tained for such employees. 
 
 Note.— This account may include the entire pay and expenses of employees 
 of the commercial department who are only incidentally engaged in duties in 
 connection with promotion, collection, and directories; if such employees are 
 assigned all or part of their lime to such duties their pay and expenses should 
 be charged proportionately to the accounts provided for such expenses. 
 
 641. Promotion Expenses. 
 
 This account should include the pay and expenses of em- 
 ployees and the cost of demonstrations, advertising, and can- 
 vassing designed to promote the extension of the company's 
 business, as provided for in the following subaccounts: 
 
 642. Adr(rtmng. 
 
 This account should include salaries and expenses of the 
 advertising manager, his assistants and clerks; cost of commer- 
 cial advertisement.s in newspapers or magazines; posters, bulle- 
 tins, advertising sundries, booklets, and all related items; also 
 minor rents and cost of installing and operating telephones in 
 public places wholly for demonstration purposes. 
 
 643. Canvassing. 
 
 This account should include expenses incurred in soliciting 
 new business or for changing or rene^ving existing service, 
 including the pay and expen.ses of canvassers.
 
 74 
 
 644. Sublicensee Relations. 
 
 This account should include expenses incurred in developing 
 the exchange of business with sublicensee companies and inde- 
 pendent connecting telephone companies. 
 645. Collection Expenses. 
 
 This account should include the cost of accounting for and 
 collecting the revenues of the company, as provided for in the 
 following subaccounts: 
 
 646. Revenue Accounting. 
 
 This account should include the cost of keeping accounts with 
 subscribers and rendering bills for revenue ser\dce, 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. 
 
 647. Revenue Collecting. 
 
 This account should include the expenses of the collection 
 bureau, including postage, stationery, and printing, collectors' 
 salaries or commissions, car fares, cost of badges, and of deliver- 
 ing bills. 
 
 648. Pay Station Commissions. 
 
 This account should include commissions allowed for handling 
 exchange and toll service messages from public pay stations. 
 
 649. ©iRECTORY Expenses. 
 
 This account should include the cost of preparing, printing, 
 and distributing directories, including the cost of soliciting 
 advertisements for directories. (See account No. 132, "Prepaid 
 Directory Expense.") 
 
 650. Other Commercial Expenses. 
 
 This account should include all commercial expenses not pro- 
 vided for elsewhere. 
 
 IV. GENEEAL AND MISCELLANEOUS EXPENSES. 
 
 660. General Office Salaries. 
 
 This account should include the matters provided for in the 
 following subaccounts: 
 
 661. Salaries of General Officers. 
 
 Tliis account should include the salaries of the chairman of 
 the board, president, vice president, secretary, treasurer, comp- 
 troller, general auditor, general manager, general superintend- 
 ent, and all other officers whose jurisdiction extends to the 
 operations of the company as a whole. 
 
 662. Salaries of General Office Clerks. 
 
 This account should include the salaries and wages of book- 
 keepers, paymasters, cashiers, stenographers, and all other 
 clerks employed in the general office, except those engaged in 
 revenue accounting and collecting.
 
 663. Ge.veral Office Supplies and Expexses. 
 
 This af, count Hhould infliulo the matters provided for in the 
 following subaccounts: 
 
 664. Expenses of General Officers and Clerks. 
 
 This account .should include the traveling and incidental ex- 
 penses of general officers and other general office employees. 
 
 665. General Office Stationery and Printing. 
 
 This account should include the cost of all postage, station- 
 ery, stationery supplies, and printing for use in general offices, 
 except that used in revenue accounting and collecting. 
 66G. Other General Office Supplies and Expenses. 
 
 This account should include the cost of office supplies (other 
 than postage, stationery, and printing), repairs of office furni- 
 ture and replacements of such furniture as has not been capi- 
 talized; cost of telegrams and of any special telephone service; 
 wages of janitors, porters, and messengers; and other miscel- 
 laneous expenses of general offices. 
 
 Note. — Rents of general offices (less such estimated cost, if any, as Ls included 
 to cover the expease of furnishing, heating, and lighting them by the lessor) 
 should be charged to account No. 331, "Rent Deductions for Telephone 
 Offlces." 
 
 C67-. General Law Expense.?. 
 
 This account should include all law expenses (except those in- 
 curred in the defense and settlement of damage claims), including 
 pay and expenses of all counsel, solicitors, and attorneys, their 
 clerks and attendants, janitor service, light, heat, and other ex- 
 penses 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 depo.sitions; and all law and 
 court expenses not provided for elsewhere. 
 
 Note.— The compensation of the general solicitor or counsel or other attor- 
 neys engaged partly in the defense or settlement of damage .suits and partly 
 in other legal work should be properly apportioned between this account and 
 accoimt No. 070, "Law Expenses Coimected with Damages.'' 
 
 668. I.VSURAXCE. 
 
 This account should include premiums paid to insurance 
 companies for fire, fidelity, boiler, casualty, burglar, and all 
 other insurance. Charge also to this account and credit account 
 No. 169, ''Insurance and Casualty Reserves," amounts set aside 
 as an insurance reserve. 
 
 This account should be credited and the proper fixed capital 
 account or accounts concurrently charged with the cost of insur- 
 ance applicable to construction work. 
 
 Note.— In annual reports to the Commission the company will be required 
 to report the charges made to this account for the various kinds of insur- 
 ance, and for self-iusumuce.
 
 76 
 
 669. Accidents axd Damages. 
 
 This account should include all expenses (other than law 
 expenses) incurred on account of persons killed or injured and 
 on account of property of others damaged when such expenses 
 have not been provided for by insurance or by a reserve. It 
 includes the pay and expenses of claim agents, investigators, 
 and adjusters; wages paid employees if absent on account of 
 injury; fees and expenses of surgeons and doctors; nursing, 
 hospital attendance, medical and surgical supplies, fees and 
 expenses of coroners and undertakers, and contributions to 
 hospitals; also amounts paid in settlement of personal injury or 
 damage claims. 
 
 This account should be credited and the proper subdivisions 
 of fixed capital accounts concurrently charged ^vith the expenses 
 of accidents and damages incident to construction work. 
 
 670. Law Expenses Connected with Damages. 
 
 This account should include all law expenses connected with 
 the defense or settlement of damage claims, including a proper 
 proportion of the salaries and expenses of the general solicitor or 
 counsel, and salaries, fees, and expenses of attorneys engaged 
 in this work; fees of court stenographers and other court expenses; 
 the cost of law books, printing briefs, court records, and similar 
 papers in connection with such cases. 
 
 This account should be credited and the proper subdi^•isions 
 of fixed capital accounts concurrently charged with law expenses 
 incident to damage claims arising out of construction work. 
 
 671. Miscellaneous General Expenses. 
 
 This account should include the matters provided for in the 
 following subaccounts: 
 
 672. Relief Department and Pensions. 
 
 This account should include pensions or other benefits paid 
 to employees or representatives of former employees and ex- 
 penses in connection therewith; salaries and expenses incurred 
 in conducting a relief department, and contributions made to 
 such department. 
 
 673. Telephone Franchise Bequirements. 
 
 This account should include the cost of all service and materi- 
 als and supplies furnished to municipal corporations in compli- 
 ance with franchise requirements and for which no payment is re- 
 ceived by the company: also of all direct expense, such as paving 
 and other like matters, incurred in compliance with such require- 
 ments and for which no reimbursement is received by the com- 
 pany. This does not include such expense incurred in con- 
 nection with construction or repairs, which should be charged 
 to fixed capital or maintenance accounts. Amounts charged to 
 this account for which there is no direct money outlay should be 
 credited to account No. 676, "Telephone Franchise Require- 
 ments — Cr."
 
 77 
 
 674. Amortization of Franchises and Patents. 
 
 This account should include each month the amount necea- 
 8ar>' to cover such pf)rtionH of the life of limited fraiu-hiBes and 
 patents as has expired or been consumed during the month. 
 The amount so charged should be concurrently credited to 
 account No. 103, "Reserve for Amortization of Intangible Cap- 
 ital— Or. " 
 
 Note.— The amount charged to this account should be based upon a rule 
 determined by the accounting company, the purpose and efTect of such rule 
 being to accumulate by charges equitably distributed throughout the life 
 of any franchise or patent, a resen-e that will, at the expiration of its life, equal 
 the original cost. 
 
 675. Other General Expenses. 
 
 This account should include such incidental general expenses 
 as are not provided for in the foregoing accounts, such as cost 
 of publishing notices of stockholders' meetings, of election of 
 directors, annual reports in newspapers, and of dividends de- 
 clared, and fees and expenses paid to directors, expenses of 
 transfer agents, and listing of stocks on exchange. 
 
 676. Telephone Franchise Requirements — Cr. 
 
 This account should include the amounts included in account 
 No. 673, 'Telephone Franchise Requirements." for which there 
 is no actual money outlay. 
 
 OLEAEING ACCOUNTS. 
 
 [Required of Class A and Class B Companies.] 
 
 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 that the total of the expenses may 
 be known and properly distributed. 
 
 701. Shop Expense. 
 
 This account or appropriate subaccounts .should be arranged 
 so as to record separately the expenses of the general shops aa 
 follows: (I) 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 shop tools and 
 machinery; (5) rent paid for shop buildings; (6) depreciation 
 of shop 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 equi- 
 table basis. 
 
 702. Stable and Garage P^xpknse. 
 
 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, stable- 
 men, garagemen, and other employees in stables and garages;
 
 78 
 
 (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 veliicles and harness; (5) rent paid for 
 buildings, horses and veliicles; (6) depreciation on vehicles, 
 horses, harness, etc., including losses unprovided for by reserves 
 or insurance. 
 
 Credit to tliis account any charges for service performed for 
 others. 
 
 A record should be kept of the use of teams and automobiles, 
 and the total expense should be apportioned to the proper 
 accounts according to use, or the debits to the expense ac- 
 counts may be made at rates per hour of service which have 
 been found to be fair and to distribute the total expense 
 equitably. 
 
 703. Tool Expense. 
 
 Charge to this account all expense for tools (except shop tools 
 and tools carried as supplies unissued). It includes (1) the cost 
 of small hand tools of which no account is kept after issue; (2) the 
 cost of repairing tools; (3) the cost of tools lost or stolen; (4) de- 
 preciation on tools taken out of service because of breakage or 
 other deterioration. 
 
 Tliis account should be cleared by adding to the expense of 
 repairs and cost of plant installed such amounts as wall equitably 
 distribute the total expense for tools. 
 
 704. Supply Expense. 
 
 Charge to this account or to appropriate subaccounts all ex- 
 penses (except insurance and taxes) incurred directly in con- 
 nection with the purchase, storage, handling, and distribution 
 of materials and supplies and stationery. It includes (1) the 
 pay and expenses of purchasing agents, managers of stores, clerks, 
 and laborers; (2) rents paid for stores; (3) cost of lighting and 
 heating; (4) undistributed transportation charges; (5) discounts 
 recovered through prompt payment of bills for materials and 
 supplies when such discounts can not be assigned to the particu- 
 lar bills; (6) overages or shortages in the materials and supplies 
 account disclosed by inventories which c^an not be assigned to 
 specific accounts; and (7) the estimated depreciation on mate- 
 rials and supplies due to breakage, leakage, shortage, and wear 
 and tear. 
 
 This account should be cleared by adding to the cost of ma- 
 terials and supplies passing through stores a suitable loading 
 charge which will equitably distribute the total cost of conduct- 
 ing the stores and by adding to the cost of such supplies as are 
 bought by the purchasing department a pro rata share of the total 
 expense for the purchasing department.
 
 79 
 
 705. Enoineering Expense. 
 
 Charge to this account or to appropriate subaccountfi all ex- 
 peiises for engineering so as to show 8?i)arately the following: 
 (1) Salaries and wages; (2) personal and incidental expenses of 
 engineering dei)artment employees; (3) rent paid for office and 
 (4) office expenses. 
 
 This account should be cleared by apportioning the total 
 expenses to operating expenses and fixed capital accounts on 
 the basis of service rendered, as determined by the actual time 
 devoted to particular jobs or on an equitable basis fixed by the 
 officers of the company. 
 
 706. Plant Supervi.sion Expense. 
 
 Charge to tliis account the cost of general supervision of the 
 maintenance and construction of the plant where a separate 
 department of the company's organization is charged with such 
 supervision. It includes the pay and expenses of the plant 
 supervising ofiicers, 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 ])lant construction. 
 
 This account or appropriate subaccounts should be so arranged 
 as to show in detail the expenses of the plant super^'ision depart- 
 ment as follows: (1) Salaries and wages; (2) personal and inci- 
 dental expenses of employees; (3) rent paid for offices; and (4) 
 office expenses. 
 
 Tlus account should be cleared by charging directly to the 
 appropriate accounts such expenses as can be allocated to par- 
 ticular pieces of work and by charging out the balance on the 
 basis of labor employed in all construction or maintenance 
 work in progress. 
 
 Note.— The pay of general foremen and foremen in direet charge of jobs 
 should be included in the cost of the job and not charged to this accoiuit. 
 
 707. House Service Expense. 
 
 Tliis account should include the expenses pertaining to the 
 operation of offices and buildings, whether owned or rented by 
 the company, when such expenses can not be allocated as they 
 accrue to the operating expense accounts and^other accounts. 
 Tliis account includes fuel, heat, light, power, elevator 8er\-ice, 
 janitor service, and like expenses, but does not include rents, 
 insurance, taxes, and maintenance expenses. 
 
 Tliis account should be cleared by apportioning the entire 
 expense tc the operating expenses and oth?r accounts on ba^is 
 of the use made of such jiroperty. 
 
 o
 
 SUPPLEMENT TO FIRST ISSUE 
 
 OF TUE 
 
 UNIFORM SYSTEM OF ACCOUNTS 
 
 FOR 
 
 TELEPHONE COMPANIES 
 
 CLASS A AND CLASS B 
 
 AS PRESCRIBED BY THE 
 
 INTERSTATE COMMERCE COMMISSION 
 
 IN ACCORDANCE WITH SECTION 20 OF THE 
 ACT TO REGULATE COMMERCE 
 
 EfiFective on January 1, 1915 
 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 
 1914
 
 THE INTERSTATE COMMERCE COMMISSION. 
 
 James S. Harlan, of Illinois. 
 JuDSON C. Clements, of Georgia. 
 Edgar E, Clark, of Iowa. 
 Charles C. McChord, of Kentucky. 
 Balthasar H. Meyer, of Wisconsin. 
 Henry C. Hall, of Colorado. 
 WiNTHROP M. Daniels, of New Jersey. 
 
 George B. McGinty, Secretary, 
 
 (2)
 
 ORDER. 
 
 At a General Session of the INTERSTATE COMMERCE 
 COMMISSION, held at its office in Washington, D. C, 
 on the 22d day of December, 1914. 
 
 The subject of a Uniform System of Accounts to be 
 prescribed for and kept by t-elephonc companies being 
 under consideration, the followhig order was entered: 
 
 It is ordered, That the Supplement to the First Issue 
 of the Uniform System of Accounts for Telephone Com- 
 panies, Class A and Class B, with the text pertaining 
 thereto, a copy of which is now before this Commission, 
 be, and the same is hereby, approved ; that a copy thereof, 
 duly authenticated by the Secretary of the Commission 
 be filed in its archives, and a second copy thereof, in like 
 manner authenticated, in the office of the Division of 
 Carriers' Accounts; and that each of said copies so 
 authenticated and filed shall be deemed an original 
 record thereof. 
 
 It is further ordered, That the said Supplement, with 
 the text pertaming thereto, be, and the same is hereby, 
 prescribed for the use of Glass A and Class B telephone 
 companies (those having annual operating revejmes 
 exceeding $50,000), subject to the provisions of the Act 
 to Regulate Commerce as amended; and that a copy of 
 the said Supplement be sent to each and every such 
 carrier and to each and every receiver or operating 
 trustee of any such carrier. 
 
 It is further ordered, That January 1, 1915, be, and is 
 hereby, fLxed as the date on which the said Supplement 
 shall become effective. 
 
 By the Commission : 
 
 [seal.] George B. McGintt, 
 
 Secretary. 
 
 73555''-14 ^3)
 
 INTRODUCTORY LETTER. 
 
 Interstate Commerce Commission, 
 
 Division of Carriers' Accounts, 
 
 Washington, December 22, 1914- 
 
 To Class A and Class B Telephone Companies: 
 
 The Uniform System of Accounts for Telephone Com- 
 panies, Class A and Class B, became effective on January 
 1, 1913. 
 
 It is found advisable to add an additional balance- 
 sheet account to take care of deferred credit items not 
 covered by accounts Nos. 168, 169, and 170. Account No. 
 170a, "Other deferred credit items," is added to cover 
 suspense account credit balances that are not provided 
 for elsewhere. 
 
 With this exception, no changes have been made in 
 the Uniform System of Accounts for Telephone Compa- 
 nies, Class A and Class B. 
 
 Fred W. Sweney, 
 Chief Examiner of Accounts. 
 
 (5)
 
 SUPPLEMENT TO THE FIRST ISSUE OF THE UNIFORM 
 SYSTEM OF ACCOUNTS P^OR TELEPHONE COMPANIES, 
 CLASS A AND CLASS B. 
 
 BALANCE-SHEET ACCOUNTS. 
 
 Add the following to the text explanatory of balance-sheet accounts 
 on page 29: 
 
 170a. Other Deferred Credit Items. 
 
 This account shall include su.'^pense account credit balances 
 that can not be entirely cleared and dis])osed of until additional 
 information i.-* rcfcived, and other items of the nature of deferred 
 creditti not provided for elsewhere. It should include such mat- 
 ters as credit balances in clearing accounts, items awaiting 
 adjustment between accounts, amounts to be .<]tread over a 
 stated i)ericHl not provided for elsewhere, and similar items. 
 
 (7) 
 
 o
 
 UNIVERSITY OF CALIFORNIA LIBRARY 
 
 Los Angeles 
 This book is DUE on the last date stamped below. 
 
 SEP 2 <> mi 
 
 Form L9-Serie8 4939
 
 r 
 
 AA 000 642 885 8