Sec. 4] INCOME ACCOUNTS 127 
§ 4 
Such irregularity of income may be avoided, not only 
by a depreciation fund, but by other devices, for instance, 
by paying for the house in installments, by borrowing 
money to defray cost and mortgaging the house, or by sell- 
ing other property. Another method of steadying income 
and one which ought to set at rest any remaining qualms 
which the reader may feel at the procedure, which has been 
adopted, of entering cost of new construction under “outgo” 
— applies when the same owner possesses so many of the 
articles in question that the reconstruction of one or another 
of them must occur at short intervals. Consider, for in- 
stance, the case of a building and loan association which 
has fifty houses, each built in a different year and each of 
which lasts fifty years, so that the houses have to be 
rebuilt at the rate of one every year. In the accounts of 
such an association the expense side should include the 
cost of new construction as a regular annual item, thus: — 
  
BuiLpinG AND LOAN ASSOCIATION 
Fifty houses (with land) 1900 
Income Outgo 
Rents of 49 houses at Construction of one new 
$1000 a year . . . $49,000 house: '.: .-. ni. 810.000 
Rent of one house for Repairs on 49 houses . 4,900 
part of the year in Taxes vil drs wil 5,000 
which it is constructed 500 
$49,500 $19,900 
Netincome . . . . $29,600 
We have here a net annual income of $29,600, which con- 
tinues year after year without interruption. The irregu- 
larity of income which we found in the case of a single house 
ceases when the larger number is taken. But if it is proper 
to regard the cost of reconstructing the houses as outgo 
in the case of a large number of houses, it must be equally