A revised classification of operating expenses was accordingly discussed at the American Street and Interurban Railway Accountants' Association's convention at Atlantic City, N. J., in October, 1907, but its official adoption was postponed, principally owing to the uncertainty regarding the action that would eventually be taken by the Interstate Commerce Commission.

In addition to classifying the operating expenses, electric railways group their other accounts in some uniform manner. The construction and equipment group is mentioned in another chapter.

The accounts representing assets are classified as property accounts and current accounts; liabilities are shown as capital liabilities, current liabilities, and accrued liabilities. The sinking funds, reserves and miscellaneous accounts sometimes form other, smaller groups.

The earnings from operation are generally shown separately under the following headings:

Passengers.

Chartered Cars.

Freight.
Mail.

Express.

Other earnings such as advertising and sale of power are also shown, and the list of accounts usually includes some miscellaneous earnings, which are shown more or less in detail, as their importance warrants.

The freight business is a feature of electric railway transportation that is comparatively new, having developed with the construction of interurban lines. Consequently, railway operators are very much interested in securing statements showing the results derived from this business.

It is a comparatively simple matter to ascertain the earnings derived from freight and express, but when the task of segregating the items of expense incurred thereby, is undertaken, many difficulties are encountered. There are some classes of expense that separate themselves quite readily. It is not a hard matter to determine how much of trainmen's wages should be charged to the operation of exclusively freight cars. The salaries of exclusively freight agents and certain other expenses may be cal

culated with exactness, but these constitute only a small part of the whole.

It is of prime importance to decide upon a definite plan of calculating this expense, and then to adhere to it closely, in order to get accurate results when making comparisons.

The following method has been utilized by companies interested in ascertaining the cost of handling freight and express traffic. Exact costs are not secured thereby, but as it is impossible to state with accuracy the proportion of each item of expense of the railway as a whole that has been incurred in handling freight, this plan is one of the most satisfactory that can be used.

Separate accounts are opened for expense of handling freight and express, these accounts being subdivisions of the ordinary expense accounts. The expense that is incurred directly by this traffic, and which may be ascertained with exactness, is charged to the proper sub-account, from the voucher, pay-roll or other source.

An estimated amount is then charged to each sub-account for those charges that cannot be made with exactness. The estimate is based upon the proportion that freight and express mileage and revenue bear to the total.

The charges to the accounts comprised in the Maintenance and Operating groups, for the freight and express proportion of total operating expenses, are made by taking the percentage that the mileage made by cars in this service bears to the total car mileage. The problem will be complicated if the freight and express are carried in cars with passengers; the plan then used will depend upon local conditions.

The charges to the General Expense group of accounts, for freight and express traffic, are made by using as a basis the relation between the revenue derived from freight and express and the total operating revenue of the railway.

This method has the advantage of including a part of each operating expense account; the percentage secured will be an equitable one in many cases, and if used in lieu of an arbitrary charge per car or train mile, it will be found in many respects more satisfactory.

INDEX.