MICHIGAN ACADEMY OF SCIENCE. 23 



A comparison of these amounts with the amount that sliould be 

 in the sinking' fund as determined by accurate computation will 

 show whether the administration is i)uttiug the proper amount of 

 money received from taxation into the sinking fund or whether 

 it is spending- it on current operation. An administration may 

 thus shift the cost of the services which it furnislies to future tax- 

 payers by funding its operating exjjense or not making the proi)er 

 provision for the retirement of its bonded debt. If a pavement 

 is exi)ected to last fifteen years, one- fifteenth of the cost (approxi- 

 mately) should be placed in a sinking fund each year — not leaving 

 it for the last year of the fifteen or for years after that to provide 

 the money with which to retire the bonds and thereby pay for the 

 pavement used by previous taxpayers. Any statement which will 

 show the shifting of burdens to periods other than those in which 

 the service is received is a valuable one. 



Nor is the usefulness of the property and liability accounts con- 

 fined to giving general information concerning the collective re- 

 sults of the period. Such accounts are supported by detailed 

 schedules so that if anyone wants to know, for instance, to whom 

 the city owes a certain bill and how long it has owed it, the record 

 is immediately accessible. Any good system of accounting is so 

 arranged that all debts not paid within a reasonable time after 

 delivery of the goods or services are automatically brought to the 

 attention of the proper official. This will assure that the city 

 will always get the two per cent discount oft'ered for prompt pay- 

 ment. This assures also that there shall be no discrimination be- 

 tween sellers to the city by holding up payments to some for 

 months and paying others immediately. It is not claimed that 

 a good accounting system will prevent discrimination or assure 

 a business-like administration but it will assure that the same in- 

 formation and statistical aid Avill be at hand for the management of 

 public business as are at present available for private business. It 

 will also provide for holding someone definitely responsible for 

 everything that is done. A statement of property and liabilities 

 shows the newcomer his heritage of property as well as his herit- 

 age of debt. Ordinarily only the second is furnished him and some- 

 times not even that.' 



The second statement used by private business is the revenue and 

 expense statement. It is often assumed that its principal func- 

 tion is to furnish a statement of profits earned. If this were its 

 only function, it would be superfluous, for profits can be deter- 

 mined from the first statement by finding the increase in net prop- 



