OFFICE ORGANIZATION AND MANAGEMENT 615 



revenue and expense. A statement of receipts and disbursements lists all 

 moneys received as receipts and checks written as disbursements. A state- 

 ment of this sort has little practical value as far as the operation of a park 

 system is concerned. As has been previously stated in this chapter, it is 

 an indication of the honesty of the disbursing official and provides means 

 for financial check-up on his transactions, but so far as assisting in the 

 management of a park system it is of very little help. 



A statement of revenue and expense shows the sources of income (either 

 received or to be received) and expenditures which mean obligations incurred, 

 whether cash disbursements or orders encumbering cash, and will result in 

 cash disbursements later on. Expense indicates amount of money which 

 the department is under obligation to pay. Disbursements is money already 

 paid. The two may or may not be the same. 



A statement of revenue and expense gives the true status of the park 

 transaction as it ultimately will be. It is the final result and, as a matter 

 of fact, is the thing the park executive is interested in. This does not mean 

 that statements of receipts and disbursements are to be dispensed with. 

 Such statements show the status of the cash and must be available in order 

 to account for it, but for management purposes the statement of revenue 

 and expense tells the real story. 



Method of obtaining monthly expenditures on revenue-producing activities. 

 It is rather confusing in analyzing monthly statements of a business enter- 

 prise, such as refectories and golf links, to segregate the actual cost of doing 

 business for any one month. The following explanation will clarify this 

 difficulty. 



Assume that we want to know the cost of goods sold in May in order 

 to compare it with the income to obtain the net income. Obviously the 

 goods sold in May is equal to what we had on hand May I, plus what we 

 purchased during May, less what is on hand May 31. This gives us equation 

 (A] as follows: 



(A) Cost of goods sold in May = May I inventory +May purchases 

 -May 31 inventory. 



But we do not conduct a "cash and carry" business, so our purchases 

 in May do not equal our May payments. In May we pay for goods often 

 delivered in April, and usually much of the goods delivered in May is not 

 paid for until June. Our May purchases must equal our May payments 

 less goods delivered in April, but not paid for, plus goods delivered in May, 

 but not paid for until June. This gives us equation (B) as follows: 



(B} May purchases = May payments -May I encumbrance +May 31 



encumbrance. 

 Now substituting in equation (A] we have: 



