432. Checks for interest on bonds registered in the name of the Secretary of the Interior as trustee will, of course, be drawn to the order of the Secretary. Any such checks may be indorsed in the following form:

The Secretary of the Interior, Trustee

by Chas. Thomas

Supt. and S. D. A.
Authorized attorney.

433. Official receipts for such checks must be issued to the Treasury Department (Division of Loans and Currency) and the proceeds taken into account as individual Indian money to the credit of owners.

434. Interest on bonds registered in the names of superintendents in trust for individual Indians will be paid to superintendents by checks drawn to their order. Such interest must be receipted for as required in the preceding paragraph, taken into account and distributed in the same manner as interest derived from bank deposits.

GENERAL ACCOUNTING

435. "General accounting" as the term is here used, means the systematic recording of transactions that result in the acquisition, disposition, or change in form or ownership of Government property, as distinguished from cash which does not enter into the general accounts except as its movements liquidate assets or liabilities. When appropriations are used for the purchase of property, a change occurs only in the form of the assets and it is equally important for disbursing agents to account for the property in their custody as for the money from which it was purchased (I. O. Order 346).

436. General accounts will be kept for each agency, school, irrigation project, etc., regardless of appropriations. They will record the movements of six classes of assets (recapitulation accounts 1 to 6, inclusive) and accounts payable (recapitulation account 7). Such movements will be explained by 10 nominal accounts (recapitulation accounts 8 to 17, inclusive). The excess of the assets over the liabilities of a unit will be shown at the end of each fiscal year by a surplus account (recapitulation account 18). There are 18 general ledger or recapitulation accounts, classified as follows:

(a) Fixed assets

1. Land and improvements.

2. Buildings and plant.

3. Equipment.

4. Livestock.

(b) Current assets—

5. Stores.

6. Accounts receivable, installment sales.

(c) Current liabilities

7. Accounts payable.

(d) Voucher accounts

8. Collection vouchers.

9. Disbursement vouchers.

10. Transfer vouchers issued.

11. Transfer vouchers received.

(e) Expense and income accounts12. Operating expense.

13. Operating income.

14. Other income.

(f) Extraordinary charges—

15. Contingencies and losses.

16. Statutory and treaty benefits to Indians.
17. Inventory and other surplus adjustments.

(g) Closing account

18. Surplus.

437. "Land and improvements" is a property, asset, or real account, which represents the purchase price, or if that is not known, at least the estimated purchase price of all tracts of land acquired by purchase and permanent improvements thereon (except buildings), including in addition to the first cost of the land all permanent improvements made after purchase, such as grading, filling in, sodding, terracing, planting trees and shrubs, ditching, digging canals, laying riprap, fencing, surveying and monumenting. A fixed property card will be prepared for each of these tracts, showing its location, cost, and character in sufficient detail to identify it. As improvements are made on land their cost will appear first in a cost account. When the project is completed, or at the end of each fiscal year in any event, "Land and improvements" will be debited and the cost account credited with the cost of improvements. This amount should be entered on the fixed property cards for "Land and improvements." If the tract on which the improvements have been made is not included in the card inventory a new card should be prepared; otherwise the cost of the construction or improvement work may be added to the card prepared for the tract of land improved.

438. "Buildings and plant" is a property, asset, or real account which indicates the cost, or the estimated cost, of all buildings and inclosed permanent or stationary machinery in the possession of the unit. Equipment should not be included as part of the plant. Plant should consist only of heavy and stationary machinery that may properly be considered a part of the inclosing buildings, such as elevators, electric wirings, dumb-waiters, furnaces, chandeliers, or fireplaces. From time to time, as permanent improvements are completed, or at the end of each fiscal year in any event, this account will be debited and the construction cost accounts credited. 439. "Equipment" is a property, asset, or real account which indicates the cost, or the estimated cost, of all fixed or lasting property not included in "Land and improvements" or in "Buildings and plant." Equipment and other real or fixed assets may be distinguished from expendable property, such as supplies and materials, by the fact that fixed assets do not materially change form in the course of their use, whereas supplies and materials disappear, as such, when used. "Equipment" includes furniture, tools, implements, wagons, automobiles, motor cycles, and other movable articles that are not materially changed by use. This account will receive debits by reason of purchase, manufacture, and transfers and credits through losses, breakages, transfers, and sales. It will also be charged with the estimated railroad freight, the actual wagon freight, and the 5 per cent handling charge on equipment acquired for sale under reimbursable agreement contract.

440. "Livestock" is a property, asset, or real account which indicates the cost, or estimated value, of all livestock at the unit, whether to be used as work animals, for breeding, or for subsistence. This classification will include horses, mules, sheep, goats, cattle, pigs, and other animals. Debits to this account will be made as a result of purchase, natural increases, and transfers. The account will also be charged with estimated railroad freight, the actual wagon freight, and the 5 per cent handling charge on livestock acquired for sale under reimbursable

agreement contract. Credits will be made as animals die, or are sold, lost, stolen, slaughtered, or transferred.

441. "Stores" is a property, asset, or real account which will be charged with the invoice or production cost of expendable property placed in stock pending issue. It will also be charged with the estimated railroad freight, the actual wagon freight, and the 5 per cent handling charge on expendable property acquired for sale under reimbursable agreement contract.

442. "Accounts receivable, installment sales" is an asset or real account which indicates the amount due the unit for property sold under "Reimbursable agreement" or other installment contract.

443. "Accounts payable" is a liability or real account designed to indicate at the end of each fiscal year the then existing indebtedness of the unit for services.

(a) For all memorandum invoices held awaiting notices of settlement from the central office, and for all similar invoices received from the warehouses, the following entries will be made in Register No. 4 by debiting operating expenses, stores, or other accounts affected, and crediting accounts payable. At the same time the stores or property should be taken up on the card records.

(b) The memorandum invoices should be marked to give a record of the register entry and the invoices held segregated, as before, to await notice of settlement from the central office. When such notice is received entry will be made in Register No. 2 debiting accounts payable and crediting disbursement vouchers. The invoices should then be marked paid and placed in the file of paid vouchers.

(c) Field offices may handle in like manner any property received, in case prompt payment can not be made for unforeseen reasons, such as lack of funds under the proper appropriation, or extended delay in obtaining the necessary advance of funds.

444. "Collection vouchers" is a nominal account which indicates the extent to which resources have been diminished by conversion into cash, which is not regarded as an asset of the unit. "Collection vouchers" measures a reduction of "Surplus." This account will be debited with all collections made. It will be closed into "Surplus" at the end of the fiscal year.

445. "Disbursement vouchers" is a nominal account which indicates the extent to which resources have been increased by the expenditure of cash, not regarded as an asset of the unit. This account will be credited with all voucher disbursements. It is the opposite of "Collection vouchers," discussed in paragraph 437, and measures an increase in "Surplus." At the close of the fiscal year "Disbursement vouchers" will be debited and "Surplus" credited with the amount of the credit balance in the former account. This entry closes the account into "Surplus."

446. "Transfer vouchers issued" is a nominal account which indicates the charges for property furnished to another unit of the service. Consequently this account reduces the surplus of the unit.

447. "Transfer vouchers received" is a nominal account which represents the charges for property received from another unit. It also represents an increase in assets and therefore a credit to "Surplus."

448. "Operating expense" is a nominal account which represents the total of all current expenses, of the unit, whether for operation of the service; for maintenance, repair, or betterment of property, or for construction or other work. The details of this account will be kept on cost-ledger sheets.

449. "Operating income" is a nominal account which represents the total of all current income derived from operating activities of the unit. The details of this account will be kept on cost-ledger sheets.

450. "Other income" is income derived from other sources than operation.

451. "Contingencies and losses" is a nominal account which indicates the extent to which assets have been reduced on account of unusual or extraordinary causes not resulting from current operation. For convenience this account will also receive debits representing losses resulting from depreciation. By the term "Depreciation" is meant the lessening of the asset value of property (equipment, plant, etc.) used in the operation of the service. Depreciation may be caused by use (wear and tear), by the action of the elements during a period of nonuse (as by rusting, drying out, and warping), or by inadequacy and obsolescence (as when business outgrows the equipment or new inventions or new processes that require new machinery are introduced).

(a) Under existing laws funds accumulated during a period of years to cover depreciation could not be used unless appropriated by Congress. Furthermore, as funds are now provided by appropriation for replacing and repairing property, no necessity exists for accumulating a reserve therefor; also, as the Indian Service sells few of its products, there is no need to consider depreciation in order to fix prices. For these reasons no provision is made herein for recording the accrual of depreciation, but the book value of property lost or discarded and the difference between the book value and the sale price of property sold at a loss will be charged to "Contingencies and losses."

(b) "Contingencies and losses" will be charged with losses on account of reimbursable agreement transactions. It will, therefore, be credited with the amount of the 5 per cent handling charge applied upon reimbursable property sold to offset such losses.

452. "Statutory and treaty benefits to Indians" is a nominal account which includes all per capita and pro rata payments to Indians and all pro rata issues of benefits in the form of livestock, equipment, etc. Such payments and issues are usually, but not necessarily, made from tribal funds. This account has no reference to payments of individual Indian moneys or to gratuitous issues to indigent Indians.

453. "Inventory and other surplus adjustments" is a nominal account which may receive either charges or credits on account of transactions or conditions arising in prior fiscal periods. Small items of prior years' expense or income will be charged or credited to the current expense or income accounts, but adjustments of surplus occasioned by a physical inventory of property or large collections received or disbursements made currently as a result of prior years' business should be given expression through this account. This will not apply, of course, to collections made on account of reimbursable agreements or other installment sales contracts, or to disbursements on account of items carried to "Accounts payable" at the close of the fiscal year. 454. "Surplus" measures the excess of assets over liabilities. It is a "closing" account, to which postings are made only at the end of the fiscal year.

DESIGNATION OF ACCOUNTS

455. For convenience in classifying, registering, and posting, the following system of designation of accounts will be used:

(a) Recapitulation or general ledger accounts will be designated by number. The numbers will be those appearing in column "Recapitulation No." on the recapitulation of registers.

(b) Feature or cost accounts will be designated by letter as A, B, C, etc., the symbol to be inserted in the blank space at the top of each cost ledger sheet.

(c) To designate the particular subclassification of operating expense or income a numerical symbol will be used immediately after the cost-account symbol, as follows:

Operating expense—

1. Salaries and wages.

2.

3.

4.

5. Materials and supplies.

6. Repairs and preservation of property.
7. Traveling expenses, including per diem.

8. Expenses not otherwise classified.

9. Transfers (credit).

Operating income

10. Rental of buildings.

11. Water rentals.

12. Heirship fees.

13. Tuition fees.

14. School products.
15. Advertising fees.

16. Farm products.
17. Miscellaneous.

(d) To designate the subclassification of "Other income," the decimals .18 to .22 will be used as follows:

.18 Leases, grazing and pasturage.

.19 Royalties.

.20 Sale of unappraised lands.

.21 Sale of unappraised timber.

.22 Miscellaneous.

(e) No subsidiary record will be maintained for "Other income," but the account will be analyzed from the registers for the purpose of preparing the detail statements required.

(f) The symbols described above will be used on all registers and other field records, but the full names of accounts will be used in statements prepared for the central office.

DETAILED PROPERTY RECORDS

456. All property acquired, whether by purchase, transfer, or production at the unit, will be taken up on property cards, unless designed for immediate consumption. Three classes of these records will be maintained: Stores cards, for expendable property (except reimbursable stores); fixed property cards for nonexpendable property (except reimbursable property); and reimbursable property records for reimbursable property of all sorts.

457. Expendable property records (Form 5-702).—Items purchased for immediate consumption will be expended from the disbursement voucher and the usual "Certificate of expenditure" appended. The rule should be to take no expendable property into "Stores" account except that which is to be actually stored for future issue. Conversely, all expendable property actually placed in the storehouse should be brought into account as "Stores." Expendable property purchased for the exclusive use of the physician, such as drugs, medicines, etc., and placed in the dispensary for such use, will be expended immediately upon purchase, and an appropriate certificate as to the disposition of the supplies made on the disbursement voucher. No further accounting will be required of the physician for the expenditure of property of this class. (a) Stores purchased or otherwise acquired for future issue will invariably be taken up on store cards from

1. Disbursement vouchers, in the case of purchases.

2. Transfer vouchers received, in the case of transfers.

3. Production reports, in the case of local manufacture or production.