22 EIGHTEENTH REPORT. 



SOME ASPECTS OF MUNICIPAL ACCOl^NTING. 



BY FRANK F. KOLBE. 



A few years ago there was no city in the country whose tiuaucial 

 records had been so systematized as to furnish the information 

 necessary for the exercise of administrative judgment and proper 

 control. Private business was lieeping its accounts in such a man- 

 ner that at regular intervals it was able to furnish its owniers and 

 managers with two statements — one, showing the assets and lia- 

 bilities of the business ; the other, the revenues for the period and 

 the expense or cost of getting those revenues. The first statement, 

 that of assets and liabilities, shows the stockholder whether his 

 investment in the business is being maintained and whether his 

 net assets are increasing or decreasing, and the forms which that 

 investment is taking — whether in quick assets like cash, accounts 

 receivable, or finished goods or in fixed assets like plant and ma- 

 chinery. 



While the same importance does not attach to a balance sheet 

 for a public corporation as for a private one, such in the case of a 

 city would show several things of importance. Thus, it would indi- 

 cate clearh' whether the city is making proper provision for the 

 payment of its debts. It is a common thing for a city to borrow 

 money to build pavements. At the beginning it will have the pave- 

 ment in its property accounts and the debt owned in its liability 

 accounts. At the end of the life of the pavement it will be taken 

 out of the property accounts and if the debt is not extinguished 

 but refunded, such improper financing will show itself in the in- 

 creasing x>ercentage of debts to property. Debts incurred to pay 

 current deficits will show up in the same manner. In Dayton 

 in 1907, the city ran behind some |]50,000 which it paid by a bond 

 issue running for fifteen years. The years previous to IU'22 in which 

 the sinking fund is accumulated to pay these bonds will have to 

 bear the expenses of cleaning the streets and furnishing fire and 

 water ])rotection to the citizens of 1907 and also the interest there- 

 on. Furthermore, a statement of property owned is the first step 

 in fixing responsibility for that i)roperty. It is impossible to hold 

 anyone responsible for anything unless 3'ou know what has been 

 intrusted to him. Such a statement contains also the amount of 

 the sinking fund assets accumulated to retire the bonded debt. 



