138 NATURE OF CAPITAL AND INCOME [Car VIII

will not be registered by the meter at all. On the other
hand, some passes through it not toward direct satisfactions
but toward some “business” expenditure likely later on to
repour cash through the money meter and hence to cause
it to register too much. Thus it happens that the money
meter sometimes fails to register and sometimes registers
twice. It is therefore only a rough and imperfect instrument
 for measuring net income.

§9

When we turn from real to fictitious persons, we find, for
income accounts, as for capital accounts, that the two sides
necessarily balance exactly. A corporation, as an entity
distinet from its stockholders, cannot enjoy income or
suffer outgo. All the income not devoted to other expenses
 is absorbed in paying dividends. A railway company,
 for instance, has an income account as follows: —

IncoME AccoUNT OF RAILROAD CORPORATION FOR YEAR

Income Outgo
By passenger and To operating exfreight
 service . $1,246,147 penses . . . . . $800,000
To interest to bondholders
 neve 300000
To dividends to stockholders.
 <5, 000000 5 200,008

To surplus applied to
(1) purchase of
land ee 140,000
(2) cash in treasury 6,147

 

$1,246,147 $1,246,147

In these accounts we see that the gross income from all
sources was $1,246,147, of which $800,000 disappeared for
running expenses, $100,000 for paying bondholders, and
$200,000 for paying stockholders, leaving a balancing item
of $146,147. But this balance is likewise expended, $140,-000
 of it being outgo for new land, and the small odd sum