Funds  Whose  Increasing  and  Decreasing  Elements  are
Borrowings  and  Capital  Outlays.  Funds  of  this  kind  are
the  most  common  of  all  those  established  to  meet  the  cost  of
capital  outlays.  Various  terms  have  been  used  to  describe
these  funds.  For  example,  in  the  city  of  New  York,  they  are
known  as  "corporate  stock  funds";  in  the  city  of  Philadel-
phia as  "loan  funds";  in  other  cities  as  "bond  funds,"  etc.  In
most  instances  states  and  cities  borrow  money  for  certain
designated  purposes,  the  authorizing  law  requiring  that  the
proceeds  of  the  loan  shall  be  set  aside  as  a  fund  to  be  used
only  for  the  purposes  stated  in  the  authorizing  act.  Such  a
provision  necessitates  the  establishment  of  a  separate  and  dis-
tinct bond  fund  for  each  issue  of  bonds.  This  practice,  how-
ever, is  not  universal.  In  New  York  City,  for  example,  the
practice  was  recently  adopted  of  borrowing  "for  various
municipal  purposes"  without  specifically  designating  the  par-
ticular public  improvements  to  be  financed  out  of  the  proceeds
of  the  loan.  When  this  method  is  followed  there  is  in  effect
one  loan  fund  which  cannot  be  spent  until  authorizations  or
appropriations  have  been  made  by  the  legislative  body.
When  the  former  method  of  borrowing  is  followed,  that  is,
when  a  condition  is  attached  to  each  issue  of  bonds  that  the
proceeds  shall  be  used  only  for  a  certain  specified  purpose,
there  is  a  separate  and  distinct  fund  for  each  issue  of  bonds.
Whatever  method  is  followed,  that  is,  whether  there  is  one
l>ond  fund  or  a  dozen,  the  principles  that  should  govern  the


STATEMENTS  OF  THE  OPERATIONS  OF  FUNDS    113

preparation  of  an  operating  statement  for  them  are  the  same.
