From  this  excess  the  amounts  of  allotments  and  reserves  are
deducted  to  arrive  at  the  excess  of  revenues  over  all  charges
to  "income"  during  the  year,  which  excess  is  applicable  to  the
surplus  balance.  The  transactions  affecting  surplus  are  pre-
sented at  the  bottom  of  the  statement  showing  the  increasing
and  decreasing  adjustments  of  the  surplus  balance  at  the  be-
ginning of  the  period,  arriving  at  the  adjusted  surplus,  to
which  is  added  the  excess  of  revenues  over  current  expenses,
fixed  charges,  and  allotments  and  reserves  for  the  period,  to
arrive  at  the  surplus  balance  at  the  end  of  the  period,  which
supports  the  surplus  shown  in  the  balance  sheet.
This  form  of  statement,  when  applied  to  the  affairs  of  a
private  enterprise,  has  been  found  to  be  highly  effective;
when  applied  to  the  affairs  of  government  it  is  believed  to  be
inadequate  in  certain  important  respects.  The  methods  of
financing  a  city  or  a  state  necessitate  the  production  of  state-
ments of  operations  that  are  quite  different  from  those  that
have  been  found  to  be  satisfactory  in  commercial  business.
