While the census classification is largely for mechanical purposes, American students should be interested in the method of listing and handling the funds.
There are two primary classifications, those known as 4 governmental cost payments, and the nongovernmental cost payments. The former includes all the costs of any political unit, accrued, paid, or payable, for services, for property, whether bought, rented, or constructed, and all expenditures for public improvements. It also includes all costs of materials used for whatever purposes, interest on funds borrowed for running the government, and the costs of the different kinds of protection. All expenditures for social activities are included, as well as the costs of caring for delinquent, defective, and dependent classes. The costs of other services performed by governments which cannot be easily classified are also put under this head. As a matter of convenience governmental costs are divided into expenses, interest, and outlays.
Expenses include all payments other than interest from which no permanent or subsequently realizable value is received. Such are salaries, rents, costs of materials used in government activities, and the management of funds. It would also include losses from fraud, failures, or similar circumstances. Expenses are divided into two large classes - those for the general departments, and those for public service enterprises. The former are subclassified into the costs of the principal divisions under which the work of the general departments is carried on.
Interest, of course, is the amount paid for borrowed funds. Outlays designate the payments for land, buildings, public improvements, and other similar payments, and are used in carrying on some government function or business which possesses some degree of permanency. Any revenue which may be secured from these enterprises is deducted from the outlay expenditure.
Nongovernmental cost payments are all the expenditures not included in the above classification. They are items usually of minor importance as compared to the above, which do not enter into the general activities. Examples are cost of goods to be resold, paying of debts, and the balancing of accounts between different departments. While this classification is more or less obscure as to the exact nature of the expenditures, yet, should all our political units adopt it, comparative figures of expenditure would be more easily available.