Cascio, Theia A.

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eGrove (Univ. of Mississippi)

Woman C.P.A. Volume 12 Issue 3 Article 5 4-1950 Accounting for a Moving and Storage Company Theia A. Cascio Follow this and additional works at: https://egrove.olemiss.edu/wcpa  Part of the Accounting Commons, and the Women's Studies Commons Recommended Citation Cascio, Theia A. (1950) "Accounting for a Moving and Storage Company," Woman C.P.A.: Vol. 12 : Iss. 3 , Article 5. Available at: https://egrove.olemiss.edu/wcpa/vol12/iss3/5 This Article is brought to you for free and open access by the Archival Digital Accounting Collection at eGrove. It has been accepted for inclusion in Woman C.P.A. by an authorized editor of eGrove. For more information, please contact egrove@olemiss.edu. Theia A. Cascio is General Accountant for the Beverly Hills Transfer and Storage Company, Beverly Hills, California, agent for Allied Van Lines, Inc.She is past president of Los Angeles Chapter of ASWA, was chairman for the Joint Annual Meeting of AWSCPA and ASWA at Los Angeles in October 1949, and at present, she is editor of the “Scratch Pad,” the monthly bulletin of the Los Angeles Chapter, and that chapter's Publicity Chairman. Originally, she was a member of Cleveland Chapter and served there as Recording Secretary and 1st Vice President.She has had articles printed on machine account­ing installations in “The Furniture Warehouseman” and in “Storage & Distribution Magazine.”She is a member of the Soroptimist Club of Beverly Hills.ACCOUNTING FOR A MOVING AND STORAGE COMPANYTHEIA A. CASCIOGeneral accounting is basically the same for all industries. The variations from the “norm” enter with the specific demands or problems most pertinent to a given busi­ness, and all practical accountants know that no two companies, even of like en­deavor, will handle similar problems in exactly the same manner. In many in­stances, management’s interests and de­mands color accounting records that other­wise might tend to recordings for tax pur­poses only.But management must play a dual role with the Interstate Commerce Commission in bookkeeping for a transfer company of any sizable proportion. Under present rul­ing, any Class I Common and Contract Motor Carrier is subject to audit by the I.C.C. and must present reports and state­ments in accordance with published rulings and regulations put out by this government agency. Class I Carriers are those with an average gross operating revenue (including inter-state and intra-state) of $100,000 or over annually from property motor carrier operations.The chart of accounts for each company’s General Ledger and certain subsidiary led­gers must coincide with those specified by the Interstate Commerce Commission. This is understandable when we realize that rates for the entire industry are set through the accumulated information gleaned from the numerous operators within that indus­try. Hence, for the best interest of both the operators and the public which it serves, facts must be comparative.Section 222(g) of the Interstate Com­merce Act sets forth the penalty for not complying with the provision, as follows:Any motor carrier, broker, or other per­son, or any officer, agent, employee, or representative thereof, who shall willfully fail or refuse to make a report to the Commission as required by this part, or to make specific and full, true, and cor­rect answer to any question within 30 days from the time it is lawfully required by the Commission so to do, or to keep accounts, records, and memoranda in the form and manner prescribed by the Com­mission, or shall knowingly and willfully falsify, destroy, mutilate, or alter any such report, account, record, or memoran­dum, or shall knowingly and willfully file with the Commission any false report, ac­count, record, or memorandum, or shall knowingly and willfully neglect or fail to make full, true, and correct entries in such accounts, records, or memoranda of all facts and transactions appertaining to the business of the carrier, or person re­quired under this part to keep the same, (Continued on page 14)9ACCOUNTING FOR A MOVING AND STORAGE COMPANY(Continued from page 9)or shall knowingly and willfully keep any accounts, records, or memoranda contrary to the rules, regulations, or orders of the Commission with respect thereto, shall be deemed guilty of a misdemeanor and upon conviction thereof be subject for each offense to a fine of not more than $5,000.While is would be informative to list the complete outline of accounts, space here does not permit. Anyone who is interested can purchase the “Uniform System of Ac­counts for Class I Common and Contract Motor Carriers of Property” by writing the U.S. Government Printing Office, Wash­ington 25, D.C., and enclosing 25c. For the student in accounting, there is a world of facts about the transportation industry in­cluded in this 84 page booklet.While we cannot include the entire out­line of accounts, the condensed form of the Income Statement gives an idea of what is expected generally:FORM OF INCOME STATEMENTI. CARRIER OPERATING INCOME:Revenues:3000. Operating Revenues ..................................................Expenses:4000. Operation and Maintenance Expenses...............5000. Depreciation Expense .............................................5100. Depreciation Adjustment ........................................5150. Amortization Chargeable to Operations..........5200. Operating Taxes and Licenses .............................5300. Operating Rents—Net .............................................Total expenses ..................................................................Net Operating Revenue ..................................................5400. Lease of Distinct Operating Unit—Debit....................  5500. Lease of Distinct Operating Unit—Credit......................Net Carrier Operating Income...........................II. OTHER ORDINARY INCOME:6100. Income from Noncarrier Operations—net..................... 6300. Interest Income ....................................................................6400. Dividend Income ...................................................................6500. Other Nonoperating Income...........................................Total Other Ordinary Income......................................Gross Ordinary Income......................................................III. DEDUCTIONS FROM ORDINARY INCOME:7100. Interest .....................................................................................7300. Amortization of Debt Discount & Expense ...........7400. Amortization of Premium on Debt-Credit ...........  7500. Other Deductions ..................................................................Total Deductions from Ordinary Income .............Net Ordinary Income ......................................................IV. EXTRAORDINARY INCOME:8100. Extraordinary Income Credits ...............................8200. Extraordinary Income Charges ..........................8400. Delayed Income Credits ...........................................8600. Delayed Income Charges ......................................Total Extraordinary Income .................................. Net Income Before Income Taxes..................8800. Income Taxes ....Net Income (or loss) ........................................................* Listed on page 83 of the Uniform System of Accounts.Each of the above categories have lengthy descriptions and explanations, and each is again divided into further classifi­cations. As a matter of illustration, we will elaborate on one phase of the operations and show some of the additional break­downs kept in the General Ledger for the Operating Revenue account. In the detailed chart of Revenue Accounts appears the fol­lowing breakdown:3000 Operating RevenuesThis account shall include the total oper­ating revenues, as provided in the primary operating revenue accounts, derived by the carrier from its motor carrier operations. 3100—Freight Revenue — Intercity — Com­mon Carrier.3110—Freight Revenue — Intercity — Con­tract Carrier.3120—Freight Revenue—Local Cartage.3130—Intercity Transportation for other Class 1 Motor Carriers.3900—Other Operating Revenue.The Commission is specific in what it wants in the several classifications, and fur­ther details each account with instructions like the following:3120—Freight Revenue—Local Cartage(a) This account shall include revenue earned by common or contract carriers from the transportation of property in local cart­age service, such as:(1) Revenue from pickup and delivery and local transfer services performed for carriers by motor vehicle, rail­road, air, water and express, and for freight forwarders.(2) Revenue from other local transfer service.(3) Fees for handling C.O.D.’s.(b) This account shall be debited with overcharges resulting from the use of erro­neous local rates, weights, classifications or computations and uncollected earnings on freight damaged or destroyed in transit, or short and lost freight.It further defines local service for the pur­pose of accounting and of compiling statis­tical data as transportation performed with­in a city or town including the suburban area contiguous thereto. This area in miles varies throughout the country; in such large cities as New York, Chicago or Los Angeles, the suburban area permitted to be included as local cartage will be farther reaching than such area in smaller localities, where the population is concentrated within a lesser space.14In instances where there may be confu­sion as to just what is expected in a given account, the Commission has made clarify­ing explanations, such as one that follows the No. 3120 account detailed above. Note B reads:When a carrier employs vehicles and serv­ices of others on a commission or other basis for hauling loads in its local cartage service, and the expenses incurred in their operation are borne by the owners of the vehicles, the carrier shall record the freight revenue from such hauls in this account in the same manner as if it owned the vehicles. Amounts paid to the owners of the vehicles as compensation for the hauls shall be charged to account 4275— Purchased Pickup and Delivery.As can be seen from the illustrations given, the wordage is simple and readily understandable. Many of the classifica­tions lifted will not be used by one com­pany. It must be borne in mind that motor carriers again are divided into sev­eral categories, including those who trans­port household goods, heavy freight, per­ishable foods, fuel oils, etc. The chart of accounts for any one particular company, therefore, is only as selected from the prescribed Uniform System of Accounts as pertinent to that company’s operations. But it is advisable to use the numeral desig­nation for a particular heading as given in the System of Accounts, so reporting to the I.C.C. is simplified.If company management has a somewhat different reporting form, it is suggested that a chart of accounts be set up for their pur­pose with a different numerical code. Both numbers can be placed at the top of the ledger sheet for easy selection in audit and/or reporting. Some very large van line companies use this method with success. However, for distribution purposes as to the general ledger accounts, the chart to take precedence must be prescribed, just as the General Ledger itself must needs follow one prescribed outline.For the most part, the average sized op­erator would be better served by following only one system of accounts—and that the one set forth by the Interstate Commerce Commission. Outside accountants or tax accountants for growing transfer and stor­age companies would do well to start their accounts on the prescribed I.C.C. system be­fore the actual need arises. Thus, the book­keeping department is familiar with the set-up and equipped to ride along in harness when the $100,000 mark arrives.In the Form of Income Statement shown above, the segregation between I. Carrier Operating Income and II. Other Ordinary Income calls for comment. First, it is noticed that Carrier Operating Income is carefully segregated between income and expense, whereas Other Ordinary Income requires only the net difference be stated. Again, the I.C.C.’s interest in those opera­tions covered by freight tariffs is apparent. The Commission is concerned with the re­lation of expenses to income in the Motor Carrier operations only.Naturally, if undue losses appeared in Section I as compared to huge income in Section II or III, investigation would be instigated to verify the figures presented; but in the main, the I.C.C. is concerned with carrier operations only, and carrier operations are local and inter-city cartage.It is necessary, therefore, to deviate somewhat from the prescribed chart for those accounts starting at No. 6100 if a more accurate accounting of warehouse and other non-carrier operations is required. A note following the No. 6100 account reads:Each carrier may adopt its own classifica­tion of revenues and expenses for this account. The classification shall be such, however, as to permit ready analysis.An important phase in accounting for the transfer and storage industry arises in distribution of expenses between carrier and non-carrier operations. Although many companies have grown through the expan­sion of a warehousing program; in most instances, the warehousing (or non-carrier operation) started because someone had some household goods to be delivered some­where and needed a temporary set-off space. Van terminals kept enlarging to take care of increasing quantities of goods to be stored for indefinite periods of time. But always this storage operation is incidental to the ever-pressing need to keep the rolling equipment busy and “on the move,” so cur­rent expenses can be met. Traffic Depart­ments are set up to sell moving jobs and management is concerned principally with the problem of the motor vehicle operations. Thus, original intent sways allocations to expense accounts where there might other­wise be question.All in all, the same problems loom in ac­counting for a moving and storage company as arise in other businesses plus the added interest of the Interstate Commerce Com­mission.15

Accounting for a Moving and Storage Company

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Accounting for a Moving and Storage Company

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