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 instru- 
ment 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 ex- 
penses is absorbed in paying dividends. A railway com- 
pany, for instance, has an income account as follows: — 
IncoME AccoUNT OF RAILROAD CORPORATION FOR YEAR 
Income Outgo 
By passenger and To operating ex- 
freight service . $1,246,147 penses . . . . . $800,000 
To interest to bond- 
holders neve 300000 
To dividends to stock- 
holders. <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