Balance Sheet
9. Introduction
Final Accounts have two basic objectives viz. (a) ascertainment of profit or loss, and
(b) measurement of the true financial position of a business concern, at a given date.
The first objective is fulfilled by preparing trading A/c and profit and loss A/c and the
second, by preparing the balance sheet.
The determinants of the profit or loss of a business concern are its incomes, gains and
expenses and losses of revenue nature, which are entered either in trading A/c or in profit
and loss A/c. Similarly, the determinants of the financial position of a concern are the
owners’ capital, liabilities and assets. A balance sheet is a statement of assets, capital and
liabilities of a business enterprise at a given date. It depicts the true financial position of
a concern at the close of each accounting year. Thus, a balance sheet may be defined as a
statement of assets, capital and liabilities of a concern, prepared at a particular given date
in order to measure the true financial position of the concern on that date.
A balance sheet is prepared in the form of statement by mentioning all capital and
liabilities on one side and all the assets on the other. Thus, it does not have debit and
credit sides like other books of accounts but instead it has two sides; left hand side and
right hand side. Capital and liabilities are mentioned in the left hand side and assets, in
the right hand side. The totals of left-hand side and right-hand side should be equal if
the accounting information is numerically accurate. That means ‘Capital + Liabilities
=Assets’ is the fundamental of balance sheet. Every business transaction is entered in the
original entry and concluded in the balance sheet. A balance sheet is prepared at the last
step after preparing trading A/c and profit and loss A/c and then it is the final step of
final accounts.
According to Palmer, “Balance sheet is a statement at a particular date showing on one side the
trader’s property and on the other side, the liabilities.”
According to O.P. Gupta, “Balance sheet is a mirror, which reflects the true position of assets
and liabilities of a business on a particular date.”
From the above definition, it may be concluded that balance sheet is a statement which is
prepared to know about the financial position of an organization at the end of accounting
period. It is not an account rather a financial statement. It presents the liabilities and the
assets either in order of performance or in order of liquidity.
Key Point A balance sheet is a statement of assets, capital and liabilities prepared
at the last step of final account to ascertain the financial position of the
concerned.
10. Objectives of Balance Sheet
There are many objectives of a balance sheet. The important objectives are mentioned
below:
i. To measure the true financial position of a firm by presenting the true value of assets,
capital and liabilities at a certain given date.
150 Aakar’s Office Practice and Accountancy - 10 Final Accounts 151
ii. To see the details of the structure of capital i.e. the equity capital, preference capital
and loan capital and assets so that, necessary improvements, to make an optimal
structure, can be made.
iii. To satisfy the legal obligation. It is legally a must for the joint stock companies to
prepare a balance sheet and other financial statements and should get them audited
in time at the close of each accounting year. It can also be produced as a proof when
disputes take place regarding its items i.e. capital, liabilities and assets.
iv. To measure the short term liquidity of a firm by comparing the current assets and
current liabilities. Similarly, to see the long term solvency of a firm.
v. To make an easy valuation of a firm when it is sold or liquidated. A balance sheet
provides a base for such a valuation.
vi. To support for planning, policy making, decision making, etc. by supplying reliable
information.
vii. To provide interpretation of various ratios and comparative study.
viii. To serve as an evidence for settling disputes.
ix. To help to evaluate the strengths and weaknesses of the business.
x. To know the amount of trade debtors and creditors.
11. Importance/Advantages of Balance Sheet
A balance sheet is a very important financial document of a business concern. The
importance of a balance sheet may be studied in term of the following advantages:
i. It depicts the true financial position of a business firm by presenting true value of
assets, capital and liabilities at a certain period.
ii. It shows the structure of assets, capital and liabilities. Thus, necessary ratios, for
short term liquidity and long term solvency can be calculated and efforts can be
made for improvement, if required.
iii. It satisfies the legal formalities in the case of joint stock companies and can also be
produced as a proof when required.
iv. It gives knowledge about the debtors and creditors and thus efforts can be made for
timely collection from the debtors and making payment to the creditors. It increases
reliability and confidence.
v. It helps in the valuation of a firm or company, specially at the time of selling or
liquidation.
vi. It also gives knowledge about the profit/loss of the entire organization as the profit/
loss is transferred to capital A/c in the balance sheet.
vii. It helps for settling disputes.
Since, it provides the real information about the financial position of a firm, it creates
confidence to the creditors (loan creditors) and banks, and thus, becomes easy for
obtaining loan and other credit facility.
12. Terms that Appear in Assets Side in Balance Sheet (Assets
and Their Classification)
Assets are those physical or non-physical i.e. tangible or intangible properties, which
are acquired by a business firm at a measurable monetary value. Assets are acquired to
increase the efficiency of a firm. There may be various types of assets. They are:
152 Aakar’s Office Practice and Accountancy - 10 Final Accounts 153
i. Fixed/Permanent or Long Term Assets
The assets, which have more than one year’s life and used in the business permanently
up to their economic life are known as fixed or permanent assets. The following are the
examples of this sort of assets:
Land and building Plant and machinery Furniture and fitting
Motor vehicles Business premises Factory shed
Lease holds Tools and equipments Livestock
Carts and horses Lorries
ii. Intangible Assets
The assets, which do not have physical existence but are purchased by a firm at a
monetary price for using special rights or reputations of others, are intangible assets.
These are taken as assets in legal grounds. The examples of such assets are:
Goodwill Patent right Copyright Trade marks
iii. Fictitious Assets
The assets, which do not have real existence but taken as assets in technical grounds
are known as fictitious assets. The large amount of expenditure on some revenue headings
for more than one year’s period and the capital losses are the examples of fictitious assets.
Generally, deferred revenue expenditures like advertisement, development expenses
preliminary expenses, research and development expenses survey expenses etc. are
fictitious assets. A certain portion of such an expenditure is charged in profit and loss
A/c of the current year and the remaining balance is regarded as asset at that date and
this process goes onward until it is totally charged in the profit and loss A/c.
Besides, capital losses like discount on issue of shares, discount on issue of debentures
etc. are also, treated as fictitious assets.
iv. Investment Assets
Investment assets refer to the investment in other companies by purchasing their
shares or debentures and also loan given to others on condition of getting dividend or
interest there from.
v. Current Assets/ Floating Assets
Current assets, also, termed as circulating assets, are those assets, which are either
in hard cash form or supposed to be converted into cash within an accounting year, are
known as current assets. These are not of permanent nature. Such assets are frequently
changed from one form to another in course of business dealing. The examples of such
assets are:
Cash Bank Debtors
Trade debtors Stock Bills receivables (B/R)
Notes receivables (N/R) Accrued income Pre-paid expenses
Accounts receivable (A/R) Marketable securities
Stores and spare parts Loose tools
152 Aakar’s Office Practice and Accountancy - 10 Final Accounts 153
13. Terms that Appear in Capital and Liabilities Side of Balance
Sheet (Liabilities and Their Classification)
Liabilities are the claims of the outsiders against the firm, which are payable by the
firm during a short term or long term period. In other words, liabilities are the debts owed
by the firm to the outsiders during a specified time period or to the proprietor at the time
of liquidation. There are various types of liabilities, which maybe categorised as below:
i. Capital/ Permanent Liability
It is the investment of the owner or owners in the business in the form of cash or
kind. This is also, termed as permanent liability in the sense that it is the owners’ claim
against the firm and which is repayable only at the time of liquidation or otherwise at
retirement of a co-owner. The headings that fall under this category are:
Capital Share premium Retained earning Net profit Reserve fund
ii. Long Term Debts
All the liabilities, which are repayable after a series of years. i.e. after more than
a year are termed as long term liabilities. The maturity period of this sort of liabilities
is more than one year. These are also, termed as long term debts. Since such debts are
borrowed for a long time to invest in the business, these are also, termed as borrowed
capital. The following are the examples of long term liabilities:
Loan Secured loan Unsecured loan
Long term loan Mortgages Debentures
Bonds Borrowed capital etc.
iii. Short Term/Current Liabilities
All the liabilities or obligations, which are payable during a short period of time,
usually within one year’s period are known as short term or current liabilities. The
examples are:
Bank overdrafts S/creditors Trade creditors
Bills payables Accounts payables Outstanding expenses
Advance income (receipt) etc.
iv. Provisional Liabilities
There are some liabilities, which are not certain to occur in the future but some sorts
of incidents may create such liabilities. Therefore, some provisions are made to discharge
such liabilities in the future. Provisions for bad debts, provision for tax, provisions for
depreciation, etc. are some examples of provisional liabilities.
14. Important Terms used in a Balance Sheet
i. Drawing
Drawing is the withdrawal of the owner or owners out of their capital from the
business in the form of cash or any kinds of assets. It is either deducted from capital in the
balance sheet or mentioned in the assets side.
154 Aakar’s Office Practice and Accountancy - 10 Final Accounts 155
ii. Bank Overdraft
It is a kind of facility provided by the banks to their clients to withdraw money from
the banks in excess than their deposit against some security deposit or as the faith and
confidence. This facility is not allowed to every client but only to some prestigious and
regular clients for a short period (mostly of 90 days term) Since, it is to be repaid to the bank
within the specified period, it is regarded as a current or short-term liability for the firm.
iii. Reserve Fund
Future is uncertain; thus, any contingent event may take place in the future. In order
to cover up the financial loss in the future caused by the uncertain incidents, a fund is
created from out of profit each year. Such a fund is known as reserve fund. If it is created
for general purpose, it is called general reserve. But if it is created for a particular purpose,
it is known as specific fund. A specific fund cannot be used in other situation rather than
for the specific incident. Since reserves are created from profit, it is associated with capital.
iv. Bills Receivables and Payable
The person or firm, who is entitled to receive money, draws a bill and gets it accepted
from the person who is liable to pay the bill. As such, a bill is created between two parties
and the same bill is bills receivables (B/R) to the former and bills payables (B/P) to the
latter. Thus, from the drawer’s point of view, it is bills receivable, an asset to him and
from the acceptor’s point of view, it is bills payable, a liability to him.
14. Specimen and Preparation of Balance Sheet
Balance Sheet of .................. Co.
As on ...............
Capital & Liabilities Amount Assets Amount
Capital .......... Fixtures and Fittings ..........
Add: Interest on Capital .......... Freehold Land ..........
Add: Net profit .......... Land and Building ..........
(Less Net loss) .......... Plant and Machinery ..........
(Less: Drawing) .......... .......... Furniture and Fitting ..........
Development fund .......... Motor Vehicles ..........
Pension fund .......... Business/ Office Premises ..........
Sinking fund .......... Factory shed ..........
Reserve fund .......... Lease holds ..........
General reserve .......... Livestock ..........
Specific reserve .......... Tools and equipments ..........
Mortgage loan .......... Cart and horses ..........
Retained earning .......... Lorries ..........
Loan .......... Railway sidings ..........
Secured loan .......... Goodwill ..........
Unsecured loan .......... Patents right ..........
Debenture .......... Copyright ..........
Bond .......... Trade mark ..........
Long term loan .......... Investment ..........
154 Aakar’s Office Practice and Accountancy - 10 Final Accounts 155
Bank overdraft Investment in securities ..........
Sundry creditors .......... Investment in shares/bonds ..........
Bills payables .......... Investment in debentures ..........
Notes payables .......... Preliminary expenses ..........
Outstanding expenses/rent/wages/etc. .......... Research & development expenses ..........
Advance income .......... Survey expenses ..........
Loan and advances from .... .......... Advertisement ..........
Accrued expenses .......... Loan and advance to (staff/...........) ..........
Accumulated depreciation .......... Development expenses ..........
Commission due .......... Cash in hand ..........
Customers’ deposits .......... Bank/Bank deposit ..........
Interest due .......... Debtors ..........
Interest payable .......... Stock (closing stock) ..........
Suppliers .......... Bills receivables ..........
Trade creditors .......... Notes receivables ..........
Unexpired incomes .......... Marketable securities ..........
Provision for depreciation .......... Loose tools ..........
Provision for tax .......... Accrued income/receivable ..........
Other provisions .......... Prepaid expenses ..........
.......... Spare parts ..........
Advance payment / expenses ..........
Book debts ..........
Customers ..........
Outstanding incomes ..........
Petty cash in hand ..........
Store supplies ..........
Trade debtors ..........
Unexpired expenses ..........
Total: .......... Total: ..........
Note: Finally, total amount of capital and liabilities should be equal to total amount of assets.
Illustration - 6
From the following information, prepare a Balance Sheet of ABC Co., Kathmandu as
on 30 Chaitra, 2075:
th
Particulars Amount Particulars Amount
Machinery 2,000 Furniture 955
Building 2,400 Goodwill 3,100
Debtors 7,800 Loan from bank 1,000
Creditors 5,015 Capital 8,500
Closing stock 1,700 Net profit 4,285
Bills payable 900 Bills receivables 1,245
Vehicles 1,035 Reserve 1,300
Cash at bank 755 Cash in hand 10
156 Aakar’s Office Practice and Accountancy - 10 Final Accounts 157
Solution:
Balance Sheet of ABC Co., Kathmandu
As on 30 Chaitra, 2075
th
Capital and Liabilities Amount Assets Amount
Capital 8,500 Goodwill 3,100
Add: Net profit 4,285 12,785 Machinery 2,000
Reserve 1,300 Furniture 955
Loan from bank 1,000 Building 2,400
Creditors 5,015 Vehicles 1,035
Bills payables 900 Debtors 7,800
Closing stock 1,700
Bills receivables 1,245
Cash at bank 755
Cash in hand 10
Total: 21,000 Total: 21,000
15. Similarities between Trial Balance and Balance Sheet
Trial Balance and Balance Sheet have some similarities, even though these two
headings are different. These are mentioned below:
i. Both the trial balance and balance sheet are statements and not accounts.
ii. Both of them are prepared on the basis of the balances of ledger headings. They
record only the accounts, which have got a balance to each.
iii. Both of them help in checking the arithmetic accuracy by showing the agreement
in totals. Again, when there’s a difference in trial balance, the same difference takes
place in the balance sheet. But remember that the totals of trial balance and balance
sheet do not equal.
iv. There’s no use of the words ‘To’ and ‘By’ in both the statements.
v. Both statements are prepared on a particular date.
16. Differences between Trial Balance and Balance Sheet
Trial balance and balance sheet are exactly different headings in spite of their minor
similarities. The main differences between them are mentioned below:
Trial Balance Balance Sheet
i. Meaning A trial balance is a statement of A balance sheet is a statement of only the
all the ledger balances of a certain assets capital and liabilities on a certain
point of time to see the arithmetical date to see the financial position of a firm.
accuracy of the books of account of
a firm.
ii. Time interval A trial balance may be prepared A balance sheet is prepared at the close of
periodically, specially at the end of each accounting year.
each month.
156 Aakar’s Office Practice and Accountancy - 10 Final Accounts 157
iii. Disclosing A trial balance does not show A balance sheet shows the net profit or loss
profit /loss the profit or loss, even though it during a certain period as it is transferred
contains all the relevant information from the profit and loss account to capital
like expenses and losses and A/c.
incomes and gains.
iv. Stock A trial balance contains opening A balance sheet does not contain the
stock but generally does not include opening stock but includes the closing
closing stock in it. stock as asset.
v. Format A trial balance has debit and credit A balance sheet does not have debit
sides in which assets expenses and and credit sides but it has left hand side
losses are mentioned on debit side, and right hand side in which capital and
and capital, liabilities incomes and liabilities are mentioned in the left hand
gains are mentioned on the credit side, and assets are mentioned in the right
side. hand side.
vi. Legal It is not legally obliged to prepare a It is legally a must, specially in the case of
obligation trial balance. It is prepared only for joint stock companies as it is one of the
the confidence about the arithmetic components of the financial statement of
accuracy of the ledger postings and a company.
to facilitate the preparation of final
accounts.
vii. Proof A trial balance is not accepted by A balance sheet is accepted by courts as a
courts as a documentary evidence documentary evidence in settling disputes
in settling disputes and thus, can regarding its assets, capital and liabilities
not be produced as a proof. and thus, it can be produced as a proof.
viii. Time A trial balance is prepared before A balance sheet is prepared at the last
final account. step of final account.
18. Final Account with Adjustments or Additional Information
Those transactions, which are related with the current accounting year but not
included in the trial balance are called adjustments. These transactions are not included in
the trial balance because they have not yet been recorded in the books of account. Besides,
the transactions, which have been recorded in the books of account but are not related
with the current accounting period, are also called adjustments. All the transactions of the
current accounting year should be included in the final accounts whether they are cleared
or not. Similarly, the transactions related with the previous or coming accounting year
should be excluded from the final accounts of the current accounting year. Thus, there
should be an appropriate accounting treatment of the adjustments.
Note: All the adjustments are shown twice in the final accounts to complete the double
entry principle because they are not entered in the books of account earlier.
158 Aakar’s Office Practice and Accountancy - 10 Final Accounts 159
Some of the Common Adjustments
i. Closing Stock
It is the unused materials or unsold goods remained at the close of an accounting
year. It is determined after the books of accounts are closed and thus, it appears outside
the trial balance. According to the double entry principle, it is shown in two places, on
credit side of trading A/c and then in the assets side of balance sheet.
i. If closing stock is given in T/B Assets side of balance sheet only.
ii. If closing stock is given in i. Cr. side in trading account
adjustment ii. Assets side of balance sheet
ii. Outstanding/Accrued/Payable/Unpaid/Due Expenses
Some expenses of business become due during the current accounting period but
remained unpaid. Such expenses are known as outstanding expenses, expenses due but
not paid or accrued expenses. These expenses are generally paid in the coming accounting
period. Such expenses are once debited in trading or profit and loss A/c by adding to the
concerned expense heading and then in the liabilities side of the balance sheet as a short
term liability. For example, if salary is unpaid to the extent of Rs. 1000 and the salary
given in the trial balance is 6000; then the entry is :
Salary A/c Dr. 1000
To O/c Salary A/c 1000
Profit and Loss A/c
Particulars Amount Particulars Amount
To Salary 6,000
Add: Outstanding +1.000 7,000
Balance Sheet
Liability Amount Assets Amount
Outstanding salary 1,000
If due expenses are given in T/B Liabilities side of balance sheet only
If due expenses are given in i. Liabilities side in B/S
adjustments ii. Dr. Side in Trading or Profit and Loss
account add on respective head
iii. Prepaid Expenses or Unexpired Expenses
Sometimes, the expenses related with the coming accounting period may be paid
during the current accounting year. It takes place when an excess amount is paid on
158 Aakar’s Office Practice and Accountancy - 10 Final Accounts 159
any head of expense. Mostly, it happens because of the difference in the fiscal year. The
expense in extent to the pre-paid amount should be deducted from the concerned head in
trading or profit and loss A/c and shown the same in the assets side of the balance sheet.
If T/B Assets side of B/S
If in adjustments i. Assets side of B/S
ii. Dr. side of T/P/L account less from
respective expenses
iv. Accrued Income
Accrued income refers to the income, which is related with the current accounting
year but not yet received. It is also, termed as outstanding income or income earned but
not received or income receivables etc. It should be credited in profit and loss A/c and
shown in the assets side of balance sheet.
If T/B Assets side of B/S
If in adjustments i. Assets side of B/S
ii. Cr. side of P & L a/c and on related income head
v. Unearned Income/Advance income
When an income of the coming accounting year is received during the current
accounting year, it is known as unearned income. It should be deducted from the
concerned income head in the credit side of profit and loss A/c and should be shown in
liabilities side of the balance sheet.
If a advance income Liability side of B/S
is given in T/B
If advance income is i. Liability side of B/S only
given in adjustment ii. Cr. side of profit and loss account, less from
related income head
vi. Depreciation
Depreciation is a gradual loss or reduction in the value of a fixed asset due to its
constant use, wear and tear, obsolescence, etc. It is an expense but of non-cash nature. It
is charged in the profit and loss A/c on debit side in each year and the same is deducted
from the concerned asset in the balance sheet.
If in T/B Profit and loss account Dr. side
If in adjustment i. Dr. Side of P and L account
ii. Assets side of B/S less from respective assets
160 Aakar’s Office Practice and Accountancy - 10 Final Accounts 161
vii. Bad Debt (Loss)
Bad debt is an irrecoverable debt from the customers or from a customer during the
period of an accounting year. It results in the reduction of the customers’ debit balance
and addition to the loss. Thus, it is once charged on debit side of profit and loss A/c as a
loss and then deducted from the debtors in the balance sheet.
If bad debts in T/B Dr. Side of profit and loss A/c only.
If bad debt in adjustment i. Dr. Side of profit and loss A/c.
ii. Assets side of B/S, less from debtor.
viii. Provision for Bad and Doubtful Debts
At the end of an accounting year, after writing off the bad debt about whom it
is declared irrecoverable, there may still be some customer balances from whom it is
doubtful to collect the total amount. However, it can’t be written off as bad debt because
non recovery of such amount is not certain. Thus, a provision or reserve to such loss is
created to cover any possible loss likely to occur in the near future. Such a provision is
known as the provision for bad and doubtful debts. Such a provision is created at a fixed
percentage on the customers or debtors each year. It is debited in the profit and loss A/c
as a provisional expenditure and deducted from the debtors in the balance sheet.
If a reserve is also created at 5% in addition to the bad debt of 10% on debtors, it is shown
as:
Dr. P & L A/c Cr.
Particulars Amount Particulars Amount
To Salary 2,000
Add: Outstanding +900 2,900
Balance Sheet
Particulars Amount Particulars Amount
Debtors 20,000
Less: New bad debts 2000
18,000
Less: New reserve 900 17,100
Note: The bad debt and provisions/reserve for bad or doubtful debt in the trial balance
are old ones, and the ones given in the adjustments are new. When only old bad debt and
provisions for bad debts are given, then it is better to debit the bad debt and credit the
provision for bad debt in the profit and loss A/c. But when old and new information is given,
then the old bad debt, new bad debt and the new provisions are totalled in the debit side of P
& L A/c in inner column and the old provision is deducted and the net value should be shown
in the outer column. In the above example, debtors, 20,000, bad debt 1,000, provision for bad
debt 1500 are given in the trial balance and adjustment is given as declare further bad debt
at 10% and provision for doubtful debt at 5 % on debtors, the accounting treatment is:
160 Aakar’s Office Practice and Accountancy - 10 Final Accounts 161
Dr. P & L A/c Cr.
Particulars Amount Particulars Amount
To Old bad debt 1,000
Add: New bad debt 2,000
Add: New provision 900
3,900
Less : Old provision 1.500 2,400
Balance Sheet
Capital/Liabilities Amount Assets Amount
Debtors 20,000
Less: New b/d 2.000
18,000
Less: New provision 900 17,100
Effects of Adjustments
S.N. Transactions Effect on final accounts Treatment in final accounts
1. Closing stock Trading account Credit
Balance sheet Assets
2. Outstanding expenses Trading or P/L account Debit (Add to the concerned item)
Balance sheet Liabilities
3. Prepaid expenses Trading or P/L account Debit (Deduct from concerned item)
Balance sheet Assets
4. Accrued incomes P/L account Credit (Add to the concerned item)
Balance sheet Assets
5. Advance incomes P/L account Credit (Deduct from concerned item)
Balance sheet Liabilities
6. Depreciation P/L account Debit
Balance sheet Assets
7. Bad debts/Provision for P/L account Debit
bad debts Balance sheet Assets (Deduct from debtors)
8. Interest on capital P/L account Debit
Balance sheet Liabilities (Add to the capital)
9. Interest on loan P/L account Debit
Balance sheet Liabilities
162 Aakar’s Office Practice and Accountancy - 10 Final Accounts 163
Illustration - 7
From the following Trial Balance, prepare Trading A/c, Profit and Loss A/c and Balance
Sheet as on 30 Chaitra, 2075 of ABC Co. Palpa.
th
Trial Balance of ABC Co., Palpa
As on 30-12-2075
Particulars Dr. Balance (Rs) Cr. Balance (Rs)
Capital - 8,000
Purchase 7,200 -
Discount 100 -
Salaries 1,740 -
Wages 460 -
Sales - 12,000
Carriage inward 55 -
Rent, rates and taxes 240 -
Plant and machinery 3,065 -
Stock on 1-1-2075 3,100 -
S/debtors 4,040 -
S/creditors - 2,400
Return inward 220 -
Cash in hand 20 -
Cash at bank 2,020 -
Commission 140 -
22,400 22,400
Stock on 30-12-2075 was Rs. 4,035.
Solution:
Trading A/c and Profit and Loss A/c of ABC Co. Palpa
Dr. For the year ended 2075-12-30 Cr.
Particulars Amount Particulars Amount
To Opening stock 3,100 By sales 12,000
To Purchase 7,200 Less: Returns 220
To Wages 460 11,780
To Carriage inward 55 By Closing stock 4,035
To Gross profit c/d 5,000
15,815 15,815
To Discount 100 By Gross profit b/d 5,000
To Salaries 1,740
To Rent, rates & taxes 240
To Commission 140
To Net profit c/d 2,780
5,000 5,000
162 Aakar’s Office Practice and Accountancy - 10 Final Accounts 163
Balance Sheet
As on 30-12-2075
Capital & Liabilities Amount Assets Amount
Capital 8,000 Cash in hand 20
Add: Net profit 2 780 Cash at bank 2,020
10,780 Plant and machinery 3,065
S/creditors 2,400 S/debtors 4,040
Closing stock 4,035
13,180 13,180
Illustration - 8
From the following Trail Balance of Harihar & Sons, prepare Trading and Profit and
Loss A/c for the year ended 32 Ashadh, 2075 and Balance Sheet as on that date:
nd
Debit Balance Amount Credit Balance Amount
Drawing 100 Capital 8,800
Plant and machinery 5,000 Sales 23,400
Fixtures and fittings 600 Purchase returns 200
300
Loose tools 1,000 Discount received 2,100
1,000 S/ creditors
Cash at bank 200 Provision for bad debts 100
Cash in hand 600
Stock (1-4-2075) 11,000
Purchase 400
Sales returns 4,000
Wages 1,600
Carriage inward 2,080
3,500
Salaries 720
Office & general expenses 300
Rent and taxes 400
Postage and telegrams 2,400
Packing and distribution
Sundry debtors
Total 34,900 Total 34,900
The following adjustment should be taken into account.
a. Stock on 32-3-2075 was valued at Rs. 1,540
b. Depreciate plant and machinery at 10% and furniture and fitting at 5%
164 Aakar’s Office Practice and Accountancy - 10 Final Accounts 165
Trading and Profit and Loss A/c of Harihar & Sons
Dr. For the year ended 32-3-2075 Cr.
Particulars Amount Particulars Amount
To Opening stock 600 By Sales 23400
To Purchase 11,000 Less: Returns 400
Less: return 200 23,000
10,800 By Closing stock 1,540
To Wages 4,000
To Carriage inward 1,600
To Gross profit c/d 7,540
24,540 24,540
To Salaries 2,080 By Gross profit b/d 7,540
To Office & general expenses 3,500 By Discount received 300
To Rent & taxes 720
To Postage & telegram 300
To Packing & distribution 400
To Depreciation on :
Plant & machinery 500
Fixtures fittings 30 530
To Net profit c/d 310
7,840 7,840
Balance Sheet of Harihar & Sons
As on 32-3-2075
Capital and Liabilities Amount Assets Amount
Capital 8,800 Cash in hand 200
Add: Net profit 310 Cash at bank 1,000
9,110 Plant machinery 5000
Less: Drawings 100 Less: Depreciation 500
9,010 4,500
S/creditors 2,100 Fixtures & fittings 600
Provision for bad debt 100 Less: Depreciation 30
570
Loose tools 1,000
S/debtors 2,400
Closing stock 1,540
11,210 11,210
164 Aakar’s Office Practice and Accountancy - 10 Final Accounts 165
Illustration - 9
From the following Trial Balance of Ramesh & Bros., prepare Trading A/c, Profit &
Loss A/c for the year ending 30 Chaitra, 2075 and Balance Sheet as on that date:
th
Debit Balance Amount Credit Balance Amount
Opening stock 5,200 Capital 16,000
Purchase 15,500 Creditors 2,000
Sales returns 300 Sales 20,000
Debtors 4,000 Commission 3,200
5,000 Rent 2,000
Building
4,000
Machinery
1,600
Furniture
2,000
Bills receivables 1,600
Salaries 200
Tax 300
Insurance 900
Carriage on purchase 300
Trade expenses 500
Travelling expenses 1,000
800
Wages
Cash
Total 43,200 Total 43,200
Adjustments:
Rent due but not received Rs. 500.
Commission to the extent of Rs. 200 received in advance.
Charge depreciation @ 10% on building and machinery
Bad debt declared @ 10% on debtors.
Closing stock was valued at Rs. 12,000.
Insurance pre-paid in extent to Rs. 50.
166 Aakar’s Office Practice and Accountancy - 10 Final Accounts 167
Solution:
Trading and Profit and Loss A/c of Ramesh & Bros.
Dr. For the Year ended 30-12-2075 Cr.
Particulars Amount Particulars Amount
To Opening stock 5,200 By Sales 20,000
To Purchase 15,500 Less: Returns 300 19700
To Carriage on purchase 900 By Closing stock 12000
To Wages 1,000 31700
To Gross profit c/d 9,100
31,700 By Gross profit b/d 9100
To Salaries 1,600 By Commission 3,200
To Tax 200 Less: Advance received 200 3,000
To Insurance 300
Less: Prepaid 50 250 By Rent 2,000
To Trade expenses 300 Add: accrued 500 2500
To Travelling expenses 500
To Depreciation on:
Building @ 10% 500
Machinery @ 10% 400 900
To New bad debt. @ 10% 400
To Net profit c/d 10,450
14,600 14,600
Balance Sheet of Ramesh & Bros.
As on 30-12-075
Capital and Liabilities Amount Assets Amount
Capital 16000 Cash 800
Add: Net profit 10450 26,450 Debtors 4,000
Creditors 2,000 Less. Bad debt 400 3,600
Unearned commission 200 Building 5,000
Less: Depreciation 500 4,500
Machinery 4,000
Less: Depreciation 400 3,600
Furniture 1,600
Bills receivables 2,000
Accrued rent 500
Insurance prepaid 50
Closing stock 12,000
28,650 28,650
166 Aakar’s Office Practice and Accountancy - 10 Final Accounts 167
Exercise
A. Answer the following questions in one sentence.
1. What are prepaid expenses?
2. What are bad debts recovered?
3. What is Reserve Fund?
4. What is bank overdraft?
5. What is adjustment?
6. What is accrued income?
7. What is drawing?
8. Write any two examples of intangible asset.
9. What is liabilities? 2068 (R)
B. Give short answers to the following questions.
10. Define a balance sheet. Mention its any four objectives.
11. Describe any five points of importance of balance sheet.
12. Briefly describe the advantages of balance sheet.
13. Draw-up a specimen of a balance sheet along with its left hand side and right-
hand side items.
14. Distinguish between a trial balance and a balance sheet.
15. Write short notes on the following
Capital & drawing Bank overdraft
Fictitious assets Revenue income and expenses
Outstanding expenses Depreciation
Capital income and expenditure Fixed assets
NUMERICAL PROBLEMS
16. Prepare Balance Sheet in the book of Kaji Lal & Co. as on 30-12-2075, with the
help of the following balances:
Capital 60,000 Drawing 5,000
Leasehold land 25,000 Freehold premises 20,000
Goodwill 13,000 Trade mark 7,000
Plant and machinery 15,000 Fixtures and fitting 2,000
Bills payable 6,000 Bills receivables 4,000
Sundry debtors 16,000 Sundry creditors 24,000
Cash in hand 700 Cash at bank 1,000
Reserve fund 20,000 Net profit 18,700
Stock 20,000
Ans: B/S. Total: 1,23,700
168 Aakar’s Office Practice and Accountancy - 10 Final Accounts 169
17. The following are the balances of assets, capital and liabilities of Shakya
Enterprises as on 30-12-075.
Plant and machinery 12000 Freehold premises 14,000
Livestock 10,000 Cash in hand 500
Capital 30,000 Mortgage loan 7,000
Loan from bank 2,500 Drawing 3,200
Book debt (sundry debtors) 2,800 Bills receivables 1,900
S/creditors 3,000 Bills payables 2,500
Stock 15,000 Net profit 14,400
You are required to prepare Balance Sheet as on that date.
Ans: Balance Sheet Total: 56200
18. Prepare a Balance Sheet of M/S. Ganesh & Co. for the year ended 32 Asadh
nd
2075, from the following particulars.
Description Amount Description Amount
Cash in hand 1,000 Capital 1,00,000
Bank balance 12,000 Reserves 6,000
Bills receivables 7,000 Debtors 5,000
Bank overdraft 24,000 Bills payables 5,000
Land and building 65,000 Creditors 2,000
Machinery 22,000 Closing stock 25,000
Ans: B/S. Total: 1,37,000
st
19. Prepare a Balance Sheet of Kamal & Co. for the year ended Ashadh 31 , 2075,
from the following particulars:
Description Amount Description Amount
Capital 20,000 Reserve fund 1,000
Cash in hand 1,500 Debtors 8,000
Bank balance 5,000 Furniture 500
Bills receivables 3,000 Building 9,000
Bank overdraft 5,000 Machinery 4,000
Creditors 3,000 Closing stock 12,000
Net profit 5,000 Loan 9,000
Ans: B/S. Total: Rs. 43,000
20. Prepare Balance Sheet of B & D Distributors on the basis of following
particulars as on 31 Ashadh 2075.
st
Description Amount Description Amount
Capital 1,75,000 Land 1,25,000
Investment 80,000 Accrued income 10,000
Bank overdraft 30,000 Debtor 35,000
Net profit 40,000 Wages payable 5,000
Ans: B/S. Total: Rs. 2,50,000
168 Aakar’s Office Practice and Accountancy - 10 Final Accounts 169
21. Prepare the Balance Sheet of Mero & Tero Distributors on the basis of the
following particulars as on 31 Ashadh, 2075.
st
Particulars Amount Particulars Amount
Capital 300,000 Building 190,000
Investment 70,000 Reserves 40,000
Net Loss 40,000 Rent due 5,000
Accrued Income 20,000 Closing stock 25,000
Ans: B/S. Total: Rs. 3,05,000
22. Prepare the Balance Sheet of C & V Distributors on the basis of the following
particulars as on 31 Ashadh, 2075.
st
Particulars Amount Particulars Amount
Capital 1,50,000 Short term Loan 30,000
Stock (31 Ashad) 45,000 Prepaid Expenses 20,000
Vehicles 1,00,000 Sundry Debtors 40,000
Advance Rent received 15,000 Net Profit 10,000
Ans: B/S. Total: Rs. 2,05,000
23. Prepare the Balance Sheet of C & U Distributors on the basis of the following
particulars as on 31 Ashadh, 2075.
st
Particulars Amount Particulars Amount
Capital 155,000 Copy Right 55,000
Investment 70,000 Preliminary Expenses 40,000
Long Term Loan 50,000 Advance Expenses 40,000
Net Loss 25,000 Reserve for Provident Fund 25,000
Ans: B/S. Total: Rs. 2,05,000
24. Prepare Trading and P/L account on the basis of the following transactions of
ABC Company at the end of fiscal year 2075 Ashadh.
Description Amount Description Amount
Purchase 1,50,000 Wages 7,500
Opening stock 2,15,000 Rent and fee 1,500
Purchase return 11,000 Printing and Stationery 2,500
Sales 4,02,500 Trading Expenses 32,150
Sales return 7,500 Advertisement 2,500
Salary 87,000 Legal fees 1,500
Carriage inwards 1,000 Closing stock 1,00,000
Gross profit Rs.1,32,500 Net Profit Rs. 5,350
25. From the following, prepare a Profit and Loss A/c.
Description Amount Description Amount
Salaries 42,000 Gross Profit 1,32,000
Postage & Telegram 2,400 Insurance 1,800
Travelling & Conveyance 5,200 Advertisement 8,000
Law Charges 1,400 Bad Debts 5,000
Discount Received 3,000 Discount Allowed 1,000
Net Profit Rs. 68,200
170 Aakar’s Office Practice and Accountancy - 10 Final Accounts 171
26. Prepare the Profit and Loss A/c of B & B Traders, Kathmandu for the fiscal
year 075/076 from the following particulars.
Gross Loss 35,000 Office Expenses 45,000
Profit on Sale of Fixed Assets 85,000 Bad Debts Recovered 30,000
Interest Received 12,000 Entertainment Expenses 8,000
Bank Charge 15,000 Bonus Received 20,000
Net Profit Rs. 44,000
27. Prepare the Profit and Loss A/c of Bhoj & Company, Kathmandu on the basis
of the following particulars as on 31 Ashadh, 2075.
st
Bad debts recovered 40,000 Loss by theft 15,000
Gross Loss 55,000 Miscellaneous income 24000
Depreciation 5,000 Commission received 5,000
Bonus received 19,000 Printing & Stationery 15,000
Net less Rs. 2,000
28. Prepare the Profit and Loss A/c of Uchit & Ujjwal Company, Chitwan on the
basis of the following particulars as on 31 Ashadh, 2075.
st
Gross Profit 15,000 Interest received on development Bond 9,000
Carriage on sale 5,000 Share transfer fees 10,000
Packing charge 10,000 Bank charge 9,000
Renewal Charge 15,000
Discount Received 8,000
Net loss Rs. 17,000
29. Prepare the Profit and Loss A/c of Suman & Bhuwan Brothers, Itahari on the
basis of the following particulars as on 31 Ashadh, 2075.
st
Loss by Fire 15,000 Dividend received 30,000
Salary & wages 15,000 Freight outward 10,000
Discount received 15,000 Travelling Expenses 15,000
Insurance Charge 5,000 Discount on Purchase 20,000
Net Profit Rs. 5,000
30. Prepare the Profit and Loss A/c of Usha & Nirmala Pvt. Ltd., Pokhara on the
basis of the following particulars as on 31 Ashadh, 2075.
st
Gross profit 40,000 Commission received 3,000
Selling expenses 20,000 Discount allowed 7,000
Carriage out 20,000 Bad debts 18,000
Interest received 9,000 Apprenticeship Premium 8,000
Net Profit Rs. 5,000
31. Prepare the Balance Sheet of Khanal & Dhungana Distributors on the basis
of the following particulars as on 31 Ashadh, 2075.
st
Capital 1,50,000 Motor 1,25,000
Advance Expenses 20,000 Closing Stock 10,000
Proprietor’s Drawing 20,000 Loan on Mortgage 60,000
Net Profit 15,000 Commercial Building 50,000
Total B.S. Rs. 2,05,000
170 Aakar’s Office Practice and Accountancy - 10 Final Accounts 171
32. Prepare the Balance Sheet of Dhakal & Pokhral Distributors on the basis of
the following particulars as on 31 Ashadh, 2075.
st
Capital 2,60,000 Patents 80,000
Prepaid Expenses 30,000 Closing Stock 80,000
Interest on capital 10,000 Contingency reserve 40,000
Net Loss 20,000 Land 1,00,000
Total B.S. Rs. 2,90,000
33. Prepare the Balance Sheet of Gurujee Stores on the basis of the following
particulars as on 30 Ashadh, 2075.
th
Additional Capital 1,40,000 Loan to Hari 30,000
Short term investment 40,000 Leaseholds assets 40,000
Interest on capital 20,000 Drawing 20,000
Net Profit 30,000 Furniture 60,000
Total B.S. Rs. 1,70,000
34. Prepare the Balance Sheet of Uchchata & Soniya Company, Narayangard, on
the basis of the following particulars as on 31 Ashadh, 2075/076 fiscal year.
st
Capital 90,000 Preliminary Expenses 10,000
Fixed assets 75,000 Accured Income 30,000
Loan on Mortgage 20,000 Dividend Equalization Fund 15,000
Debenture 30,000 Goodwill 40,000
Total B.S. Rs. 1,55,000
35. Prepare Trading A/c and Profit and Loss A/c for the year ended 30 Chaitra
th
2075 and a Balance Sheet as on that date.
Dr. Balance Amount Cr. Balance Amount
Drawing 4,500 Capital 16,000
Goodwill 8,000 Bills payable 3,380
Land and building 6,000 Creditors 7,000
Plant and machinery 4.000 Purchase returns 265
Loose tools 400 Sales 41,400
Bills receivables 300
Stock (1-1-2075) 4,000
Purchase 25,100
Wages 2,000
Carriage outward, 50
Carriage inward 100
Coal 580
Salaries 3,500
Rent, rates & taxes 280
Discount 150
Cash at bank 2,500
Cash in hand 40
Sundry debtors 4,500
Repairs 180
Bad debt 120
Sales returns 100
Furniture 1,120
General expenses 525
68,045 68,045
Stock on 30-12-2075 was Rs. 3500
Ans: Gross profit Rs. 13,285, Net profit Rs. 8,480, B/S. Total: 30,360
172 Aakar’s Office Practice and Accountancy - 10 Final Accounts 173
36. From the following Trial Balance of Shyamjee & Sons, prepare Trading and
Profit and Loss Account for the year ended 31 Ashadh, 2075 and Balance
st
Sheet as on that date.
Dr. Balance Amount Cr. Balance Amount
Plant and machinery 5,000 Capital 8,800
Drawings 100 Sales 23,400
Fixtures and fittings 2,600 Purchase returns 200
Loose tools 1,000 Discount received 300
Cash at bank 1,100 Sundry creditors 2,100
Cash in hand 100 Provisions for bad debts 100
Stock (1-4-2074) 600
Purchases 9,000
Sales return 400
Wages 4,000
Carriage inward 1,600
Salaries 2,080
Office and general expenses 3,500
Rent and taxes 720
Postage and telegrams 250
Packing and distribution 450
Sundry debtors 2,400
34,900 34,900
The following adjustments should be taken into account.
Stock on 31-3-2075 was valued at Rs. 1,540.
Depreciate plant and machinery at 10% and furniture and fittings at 5%.
Ans: Gross profit Rs. 9540,
Net profit Rs. 2210,
Balance Sheet (total) Rs. 13110.
37. From the following Trial Balance, prepare Trading Account, Profit and Loss
A/c. for the year ended 30 Chaitra, 2075 and Balance Sheet as on that date.
th
Particulars Dr. (Rs.) Cr. (Rs.)
Capital 8,000
Purchases 7,200
Discount 100
Salaries 1,740
Wages 460
Sales 12,000
Carriage inwards 55
Rent, rates and taxes 240
Plant and machineries 3,065
172 Aakar’s Office Practice and Accountancy - 10 Final Accounts 173
Stock (1-1-2075) 3,100
Sundry debtors and creditors 4,040 2,400
Return inwards 220
Cash in hand 420
Cash at bank 2,020
Commission 140 400
Total 22,800 22,800
Stock on 30-12-2075 was Rs. 4035.
Outstanding wages Rs. 40
Bad debts written off @ 10%
Prepaid rent Rs. 100
Advance commission received Rs. 200
[Ans: GP Rs. 4960, NP Rs. 2636, Balance Sheet (total) Rs. 13276.]
S.L.C/SEE Examination Questions.
Theoretical
1. In which side of the balance sheet is net profit adjusted? 2067(S)
2. What is gross profit ? 2067 (R)
3. Write any two examples of intangible assets. 2073(S)
4. What type of asset is goodwill ? 2066(R)
5. Which account is prepared before balance sheet? 2065(S)
6. How is the net profit or net loss adjusted in Balance Sheet ? 2071(R)/2072(S)
7. Write any three types of indirect expenses. 2074
8. In which part of balance sheet does bank overdraft recorded. 2073(R)
9. How is drawing adjustment in balance sheet? 2072(R)
10. Write any two manufacturing expenses. 2071(S)
11. What are the assets which are known as intangible? Write any two examples.
2070(S)
12. What is cash in hand? 2070(R)
13. What is meant by outstanding expenses? 2069(R)
Practical
14. Prepare a Balance Sheet of National Trading Limited for the last day Ashad,
2059 from the following particulars. 2060(S)
Capital 3,20,000 Bank balance 70,000
Cash in hand 20,000 Net profit 80,000
Bills receivable 10,000 Creditors 15,000
Building 2,00,000 Reserve fund 35,000
Drawing 50,000 Debtors 1,00,000
(Ans: B/S Total Rs 4,00,000)
174 Aakar’s Office Practice and Accountancy - 10 Final Accounts 175
15. Prepare a Balance Sheet of Kusum and Company for the end of fiscal year
2062/063 from the following particulars. 2063(R)
Capital 6,00,000 Goodwill 50,000
Loan 65,000 Land 3,20,000
Advance income 45,000 Trademark 95,000
Machinery 35,000 Net loss 1,70,000
Reserve fund 80,000 Closing 1,20,000
(Ans: B/S Total Rs 6,20,000)
16. From the following particulars, prepare a profit and loss account of Nepal
Gudpak Bhandar for the fiscal year 2066/067. 2067(S)
Gross profit Rs. 11,00,000/-
Depreciation Rs. 75,000/-
Advertisement Rs. 63,000/-
Interest received Rs. 25,000/-
Insurance Rs. 10,000/-
Bonus received Rs. 50,000/-
Salary Rs. 1,40,000/-
Legal expenses Rs. 27,000/-
Ans: Gross profit 4,05,000
17. On the basis of following information prepare profit & loss account of Shah
Furniture House for the fiscal year end of Ashadh 2075/067 and find out Net
Profit or Net Loss. 2067(R)
Stationary Rs. 11,000/- Salary Rs. 69,000/-
Dividend Rs. 14,000/- Gross profit Rs. 1,26,000/-
Bad debts Rs. 17,000/- Discount received Rs. 7,000/-
Carriage out Rs. 3,000/- Insurance premium Rs. 9,000/-
Ans: Net profit Rs. 38,000
18. From the following particulars prepare a profit and loss account of Morang
Sugar Industry Pvt. Ltd. as on 31 Asar, 2065: 2066(S)
st
Gross profit Rs. ,75,000/- House rent Rs. 40,000/-
Salary Rs. ,60,000/- Discount received Rs. 18,000/-
Advertisement Rs. 8,000/- Interest received Rs. 12,000/-
Stationery Rs. 25,000/- Bonus received Rs. 10,000/-
Ans: Rs. 18000
19. Prepare a profit and loss account of Khanal and Company for the fiscal year
2064/65 from the transactions : 2066(R)
Gross profit Rs. 4,50,000/- Salary Rs. 90,000/-
Advertisement Rs. 5,000/- Interest Rs. 15,000/-
Stationery Rs. 7,000/- Discount received Rs. 9,000/-
Depreciation Rs. 2,000/- Legal charge Rs. 3,000/-
Ans: Net Profit = Rs. 3,37,000
174 Aakar’s Office Practice and Accountancy - 10 Final Accounts 175
20. From the following particulars prepare a profit and loss account of Ilam Tea
Industries Pvt. Ltd. as on 31st Asar, 2065. 2065(S)
Gross profit Rs. 5,00,000/- Advertisement Rs. 20,000/-
Discount received Rs. 7,000/- Salary Rs. 1,25,000/-
Bonus received Rs. 31,000/- House rent Rs. 1,00,000/-
Audit fee Rs. 14,000/-
Ans: Net Profit Rs. 279000
21. From the following particulars, prepare P/LA/C ‘Deaurali Dhaka Udyog’ for
the fiscal year 2064/65 : 2065(R)
Description Amount Description Amount
Gross profit Rs. 2,80,000 Repair expenses Rs. 14,500
Discount received Rs. 3,000 Legal charge Rs. 2,500
Bad debt Rs. 1,700 Depreciation Rs. 16,200
Advertisement Rs. 16,000 Bad debt recovered Rs. 700
Ans: Net profit = Rs. 2,32,800
22. Prepare profit and loss A/c of Kusum Cosmetics Shop, Kathmandu on the
basis of the following particulars as on 31st Ashad, 2073. 2074
Particulars Amount Particulars Amount
Gross Profit 50,000 Audit Fees 20,000
Income of Investment 70,000 Rent Received 45,000
Interest on Loan 15,000 Bad Debt 30,000
Sale of Scrap 10,000 Repairs 15,000
(Ans: Net Profit, Rs 95,000)
23. Prepare profit and loss A/c of Karnali Ghee Industry, on the end of Ashad,
2073 from the given transactions: 2073(R)
Particulars Amount Particulars Amount
Gross Loss 3,50,000 Interest Received 90,000
Purchase Discount 50,000 Salaries 70,000
Commission Received 60,000 Stationery 25,000
Carriage Outward 55,000
(Ans: Net Loss, Rs 3,00,000)
24. Prepare profit and loss A/c of Karnali Wood House, on the end of Ashad, 2073
from the given transactions: 2072(R)
Particulars Amount Particulars Amount
Gross Loss 1,75,000 Salaries 70,000
Received House Rent 30,000 Commission Received 10,000
Stationery 19,000 Purchase Discount 12,000
Advertisement 15,000 Carriage Outward 20,000
(Ans: Net Loss, Rs 2,47,000)
176 Aakar’s Office Practice and Accountancy - 10 Final Accounts 177
25. Prepare a balance sheet of Kumari Cenema Industries private limited for the
fiscal year 2075/067 from the following particulars. 2068(R)
Capital 5,00,000/- Bank Balance 7,00,000/-
Cash in Hand 50,000/- Prepaid Expenses 40,000/-
Creditors 3,70,000/- Debtor 4,10,000/-
Loan 1,00,000/- Net Profit 2,30,000/-
Ans: Balance sheet total = Rs. 1200000
26. Prepare balance sheet of ‘D.B Agrovet’ on the basis of the following particular
as on 32 Asar, 2068. 2067 (S)
nd
Description Amount Description Amount
Capital Rs. 1,00,000/- Debtor Rs. 1,00,000/-
Drawing Rs. 50,000/- Land Rs. 1,25,000/-
Creditor Rs. 1,00,000/- Net profit Rs. 1,00,000/-
Investment Rs. 1,50,000/- Bill receivable Rs. 7,500/-
Ans: 6,00,000
27. Prepare balance sheet of City Super Market Pvt. Ltd. as on 32 Ashadh, 2067
nd
on the basis of following particulars. 2067(R)
Capital Rs. 2,50,000/- Goodwill Rs. 55,000/-
Outstanding wages Rs. 10,000/- Furnitures Rs. 25,000/-
Reserve fund Rs. 60,000/- Closing stock Rs. 1,50,000/-
Bank and cash Rs. 1,20,000/- Net profit Rs. 30,000/-
Ans: Balance sheet total Rs. 3,50,000
28. Prepare Balance Sheet of Mahalaxmi Gas Company Pokhara for the fiscal
year 2064/2065 upto the end of Asar from the following particulars : 2066(S)
Capital Rs. 10,00,000/- Creditors Rs. 45,000/-
Prepaid expenses Rs. 32,000/- Bankers Rs. 42,000/-
Acquired income Rs. 13,000/- Land and building Rs. ,00,000/-
Bills receivable Rs. 1,70,000/- Net profit Rs. 28,000/-
Ans: Rs. 11,15,000
29. Prepare Balance Sheet of Pashupati Rubber Industry on the basis of following
particular as on 31 Ashad, 2063 : 2065(R)
st
Description Amount Description Amount
Capital Rs. 1,50,000 Prepaid expenses Rs. 75,000
Reserve fund Rs. 60,000 Debtors Rs. 45,000
Building Rs. 2,00,000 Bank overdraft Rs. 90,000
Machine Rs. 60,000 Net profit Rs. 80,000
Ans: Balance sheet total = Rs. 3,80,000
176 Aakar’s Office Practice and Accountancy - 10 Final Accounts 177
30. Prepare a balance sheet of Kali Gandaki Furniture Industry, Murmi as
Asdhad and of 2069 from following particulars. (SLC 2069)
Description Amount Description Amount
Capital 10,40,000 Goodwill 37,000
Outstanding wages 72,000 Furniture 3,25,000
Reserve Fund 68,000 Prepaid expenses 58,000
Machine 6,80,000 Net loss 80,000
Ans: B/S Rs. 11,00,000/-
31. Prepare a balance sheet of Laxmi Medical Hall, Janakpur, for the fiscal year
2069/70 from the given particulars. (SLC 2070)
Description Amount Description Amount
Capital 5,00,000 Furniture 2,25,000
Machinery 1,82,000 Net profit 1,75,000
Accrued income 3,00,000 Debtor 1,93,000
Bank loan 80,000 Reserve fund 1,45,000
Ans: B/S: Rs. 9,00,000
32. Prepare a balance sheet of XYZ Enterprises as an last of Asar, 2071 from the
following particulars. 2071
Description Amount Description Amount
Capital 10,00,000 Advance income 30,000
Goodwill 2,00,000 Building 80,000
Furniture 2,20,000 Net profit 1,20,000
General Revenue 2,30,000 Closing stock 1,60,000
Ans: B/S Total Rs. 13,80,000/-
33. Prepare a balance sheet of Karnali Wood House for the fiscal year 2073/074 on
the basis of the following particulars. (SLC 2074)
Particulars Amount Particulars Amount
Capital 11,58,000 Reserved Fund 70,000
Bill Payable 72,000 Pre-paid Expenses 60,000
Goodwill 37,000 Net Loss 80,000
Furniture 3,25,000 Land 7,98,000
Ans: Rs. 12,20,000/-
34. Prepare a balance sheet of Sharma Guest House, Saptari on the last of Asar
for the fiscal year 2072/073 according to the following particulars. 2073(R)
Description Amount Description Amount
Capital 5,83,000 Machinery 26,000
Debtor 17,000 Reserve fund 65,000
Net profit 1,98,000 Cash balance 22,000
Bills payable 54,000 Business premises 8,35,000
Ans: Rs. 9,00,000
Final Accounts
Aakar’s Office Practice and Accountancy - 10
179
178
178 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 179
7 Government
Unit
Accounting System
CDC Syllabus 10 Periods
7.1 Introduction, objectives and features
of New Accounting System Learning
7.2 Office of Auditor General Objectives
Introduction After studying this unit, students will
7.3 Office of Comptroller be able to :
General-introduction know the origin and growth of
7.4 Treasury and Comptrollers Office: government accounting in Nepal,
introduction know the concept, features, importance
7.5 Introduction of auditing, difference and objectives of present accounting
between internal and final audit and system,
importance write the differences between central
7.6 Classification of budget heads and operating level accounting,
explain the introduction and right,
duties and functions of Office of Auditor
General, Office of Finance Comptroller
General and Office of the Treasuring
and Comptroller,
describe concept, importance, types
and development of auditing in Nepal,
write the differences between
government accounting and business
accounting,
elucidate the classification of budget
expenditure and their budget head
numbers.
Aakar’s Office Practice and Accountancy - 10
Final Accounts
179
178
178 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 179
1. Introduction
The accounting system maintained in government office is known as Government
Accounting. Ministries, Departments and operating level offices of different districts
are government offices. Government Accounting is concerned with keeping records
of government revenues and their proper utilisation in different developmental and
administrative works. It provides all the necessary financial information for decision
making, formulation of future plans, budgets and policies.
Financial administration is an essence of an organization, whether it is government or
non-government. Accounting provides the entire financial information to the financial
management by identifying, recording, classifying and summarizing the financial
transactions, and interpreting their results. Then the general management takes decisions
on the basis of such information, specially in financial matters. Thus, accounting is an
important portion of every organizational entity, which identifies records, classifies and
summarizes the financial transactions and interprets the results thereof.
It is the compulsory duty of the government of every country to maintain rule and order
and peace and security to develop every sector on the equitable basis and establish and
develop the sound defense system and maintain due stability in all the sectors of the
national economy in the country. For this, the government establishes various ministries,
departments, constitutional bodies and a number of sub-ordinating offices under them.
It also conducts various government activities through these offices and sometimes some
special projects are also conducted in different sectors of social life. A number of financial
resources are used in the conduct of such regular activities and the special projects. The
government should make a number of systematic records of the financial activities in
order to see the performance efficiency, control fraud and leakage of resources, see the
application of the budgetary rules in controlling expenditures and so forth. It is the
government accounting, which helps the government to satisfy all such objectives. Thus,
a government accounting refers to the accounting used in government offices to satisfy
the objectives of controlling the government expenses and financial resources, measuring
the efficiency of the government offices and projects, and to determine the accountability
of the concerned authority in the conduct of such activities.
In this regard, Oshisami & Dean have defined government accounting as: “The process
of recording, analysing, classifying, summarising, communicating and interpreting financial
information about government in aggregate and in detail, reflecting all transactions involving the
receipt, transfer and disposition of government funds and property.”
In conclusion, we can say that government accounting is the branch of accounting of
the systematic process of recording, classifying, summarizing, analysing, presenting,
interpreting and communicating the financial transactions of all government offices for
effective utilization of resources.
Key Point Government accounting is the systematic and scientific process of
recording, classifying and summarizing the government revenue and
expenditure for the proper utilization of public fund in development and
administrative works.
180 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 181
2. Differences Between Government Accounting and
Business Accounting
As there are some notable differences between government and business organizations,
the objectives of maintaining books of account in both types of offices differ to some
extent. But the accounting, in both types of offices, must be based on the fundamental
principles of double entry system in order to make the complete records of the financial/
business transactions. In this sense, accounting may be studied under the following two
topics viz. (a) business accounting and (b) government accounting.
Basis Government Accounting Business Accounting
1. Meaning Accounting which is used by the Accounting which is used by the
government offices to keep records of business offices to keep records of
government transactions is known as business transactions is known as
government accounting. business accounting.
2. Prepare of The main purpose of the government is The main purpose of commercial
Account to provide administrative and financial firm is to perform business activities
service to the general public; so, it to earn profit. For this purpose, they
prepares accounts of government prepare Trading Account, Profit and
revenues and their expenditures. Loss A/c and Balance Sheet.
3. Budget Head It is based on budget. All expenses of It is not necessary to prepare all
government offices are pre-determined statements of accounts on the basis
on the basis of budget. Similarly, of a budget head. However, budgets
revenues are also projected by the are used to compare the actual
budget. performance with the budgeted
performance.
4. Rules and It has to be maintained as per the It is not based on government rules
Regulations government rules and regulations. and regulations; rather it is based on
the Generally Accepted Accounting
Principles (GAAP) evolved over the
years.
5. Basis level of It has the system of central level and It does not divide the accounting
Accounting operating level accounting. system.
6. Auditing The Office of Auditor General A professional auditor can audit
audits books of account kept under the books of account kept under
government accounting. commercial accounting.
7. Control It is controlled according to the It is controlled by the owner of the
financial act, rule and regulation of the business.
government within budgetary limit.
8. Purpose The main purpose of government The main purpose of business
accounting is to reflect the plans and accounting is to find out the profit
politics of the government in financial earned or loss suffered during a
terms. financial year.
9. Responsible It is responsible towards the people and It is responsible towards the owner of
the government. the business.
180 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 181
3. Historical Development of Government Accounting in Nepal
There is not any evidential proof about the origin of accounting system in Nepal.
Lichchhavi and Malla periods were of great importance from the viewpoint of financial
administration. During the Lichchhavi period, the government revenues were collected
from Panchali (local government body), Guthi (trust), Jinsi Kar (property tax), Sharmdan
(voluntary work), etc. and expenditures were made for war, renovation, construction
and repairs of temples, tapes, ponds, holy-shrines and worshiping expenses, etc. During
Malla period, with the beginning of a trade relation with Tibet, revenues from customs
and trade were also added in the line of government revenue and expenses were incurred
on the same head but to larger and more frequent extent. Thus, accounting is found to
have started form the Lichhavi period in a form according to the need and knowledge of
the ruler and then continued onward to the Malla period. But such an accounting system
was not scientific and long lasting.
The need of accounting was felt necessary with the increase of transactions, in course of
time. Later, in the beginning of the unification of Nepal in 1825 B.S., it is believed that a
memorandum record of government revenues and expenditures as an accounting system
was developed to maintain. In this regard, two books called Laldhadda and Mothdhadda
were introduced in the years 1871 and 1879 B.S. respectively. The book Laldhadda was
used to record the government revenues and administrative expenditures whereas the
book Mothdhadda for recording the transactions of Kipat Byabstha (land management).
These two books have proven to be the foundation for the origin and development of
accounting system in Nepal. In the year 1925 B.S., an office, called, ‘Nepal Kitabkhana’ was
formed to register the name of the government employees and to record the salaries paid
to them, which is still in use to record the salary transactions and the pension transactions
of the retired government employees. The accounting record of salary expenses used to
be recorded in Kaushi Tosha Khana, a section under Kitab Khana.
Again, with the passage of time, transactions were also increased in different sectors
like land revenue in the name of Malpot (land tax), revenue from forest, trade and
customs, etc. in the revenue side and war, peace and security, religious activities, salaries
to the government employees, administrative expenses, government subsides, pension
expenses and other developmental expenditures on the expenditure side. Such an
increase in government transactions led the development of accounting system in the
country. Towards 1936 B.S. Khardar, Gunwanta, a senior official of that time, introduced
a new sort of accounting system called Shyaha Shresta Pranali, with a view to record
the government revenues and expenditures in a simple, uniform and systematic way so
as to exhibit revenues and expenditures in a simple, uniform and systematic way, and
to exhibit the actual position of the government revenue and expenditure. This system
remained in practice in the country till 2022/23 fiscal year and ultimately replaced by the
New Accounting System of Government of Nepal.
Even though Shyaha Shresta Pranali was comparatively more systematic and scientific
accounting system, it could not cover the numerous and complicated transactions in the
Terai-region of the country. As a result, in about 1968 B.S. Faram Shresta Pranali (Form
Accounting System) was introduced and brought into practice in the Terai region. It had
182 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 183
51 different forms to record and report the transactions and thus named as Faram Shresta
Pranali. In this way, after 1968 B.S. and until the implementation of New Accounting
System of Government of Nepal, there were two accounting systems, Shyaha Shresta
Pranali in the Mountainous region and Faram Shresta Pranali in the Terai region and
Kathmandu valley. Since, the autocratic Rana rulers did not give any importance to the
accounting system and to the entire financial administration, the accounting system could
not be developed during the period of Rana-Regime.
After the historical movement of 2007 B.S., the autocratic Rana Regime was overthrown
and democratic government was established in the country. Since, then the government
seemed to be more responsible for the people, the government declared budget system for
the first time, in the country, in 2008 B.S. to let the people know about the government’s
projected revenues and expenditures. Again, economic planning was started from 2013
B.S. for the balanced economic development of the country. But because of the lack of
appropriate accounting system, the necessary data, figures, and other financial information
could not be obtained for the preparation of a sound budget and economic plans and
for their implementation. Thus, the government felt the necessity of an appropriate
accounting system for recording the government transactions. But due to the political
instability and lack of the guiding rules during the first decade of the democratic era,
such an accounting system could not be introduced. Thus, in the year 2016 an Act called
“Procedural Rules for Government Fund Expenditure 2016” was passed and enacted by
the government in order to establish the uniformity in financial administration. On the
other hand, the Auditor General was appointed as per the `Constitution of Nepal 2015’
as a constitutional body to check the frauds and misappropriation of government budget
and to audit the accounting thereto.
After the enactment of the Act “Procedural Rules for Government Fund Expenditure
2016”, Bhuktani Shresta Pranali (Payment Accounting System) was introduced in 2017
B.S., which was based on the principle of double entry system. But within a very short
period, it was proven to be insufficient to cover the government transactions, specially
the revenues, foreign aids and donation and budget transfer, etc. Thus, it was replaced,
in a short time, by New Accounting System, which is still in use throughout the country.
Even though the political system was changed from multiparty democratic system to
partyless Panchayat System, it did not disturb the development of accounting. Because of
some serous limitations of the Payment Accounting System, a new accounting system was
introduced as per the recommendation of `Accounting Committee 2017’. It replaced the
Payment Accounting System and all other old accounting systems. It is completely based
on the principle of double accounting system. This system is used, nowadays throughout
the country.
Payment Accounting System was replaced by the New Accounting System in the fiscal
year 2019/020 as per the recommendation of the ‘Accounting Committee 2017’. It was
aimed to remove the difficulties and limitations of old accounting systems and even of the
Payment Accounting System and to establish uniformity in account keeping throughout
the country.
182 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 183
New Accounting System
3. Introduction
As the autocratic Rana Regime was overthrown by the historic people’s movement
in 2007 and a democratic government was established in the country. The democratic
government declared the budget system in 2008 B.S. to let the people know about the
financial affairs of the government. Similarly, it started in 2013 B.S. the economic planning
in the country for the all round development of the country. The existing accounting
systems i.e. the Shyaha and Faram Shresta Pranali, could not supply the necessary data
and financial information to the government for the preparation and execution of the
budget and the economic planning. Then it was felt necessary of a scientific system of
accounting for the government offices to make complete record of the transactions, to
facilitate the preparation and execution of budget and economic planning, to decentralise
the job of accounting and to establish uniformity in accounting and so forth. As a result,
Payment Accounting System was brought into practice in the year 2017 as the outcome
of the “Procedural Rule for Government Fund Expenditure 2016”. But this system,
although, was scientific and based on the principle of double entry system, could not
fulfil the accounting need of the government offices because of its serious limitations
and practical difficulties, such as lack of the provision of budget transfer, non-unifomity
of advance transactions, concentrations only towards the payments, etc. Besides, the
Payment Accounting System could not show the actual position of the foreign aid and
donation and the picture of their utilization to the foreign countries because of the lack of
such a provision under this system.
Hence, for the improvement, decentralisation, and modernisation of the accounting
system in the country, the government formed a committee in the name of ‘Account
Committee 2017’ on the 20 Magh, 2017. It was of 4 members:
th
i. Accountant General of Government,
ii. Under Secretary, Ministry of Finance,
Foreign Aid Department, Government of Nepal.
iii. Account Specialist, UNO.
iv. Public Administration Advisor of U.S. Aid.
The committee studied, in detail, about such an accounting system, for 288 days and
presented a draft to the finance secretary on the 18 of Kartik 2018 B.S. by suggesting a
th
New Accounting System for the country.
Since, it was quite a new system of accounting, it was implemented in the country on trial
basis. It was first implemented in the offices of Kathmandu Valley from the fiscal year
2019/ 020, then in the offices on Narayani Zone and the rest of Bagmati Zone from the
fiscal year 2020/021 and again in the phase, it was implemented in the offices of Janakpur
and Gandaki Zone from the fiscal year 2021/022, and finally, all over the country from
the fiscal year 2025/026, after being proved as an appropriate accounting system.
According to the ‘Accounts Summary Book’ of Government of Nepal, “The act of all those
processes of collecting revenue, making expenditure and recording them as well as preparing
statements of those transactions or their result in part or full.”
184 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 185
In this way, the New Accounting System of Government of Nepal may be defined as the
accounting system recommended by ‘The Accounting Committee 2017’ for systematic
recording of government revenue and expenditure preparing statements of those records
and summarising all the government statements so as to facilitate the preparation and
implementation of government budget, economic planning and utilization of government
properties in the welfare of the people.
New Accounting System of Government of Nepal was viewed to avoid the drawbacks of
the previous accounting systems and has become successful in doing so. It has brought
a revolution in the field of accounting. Being an indispensable part of the financial
administration of Government.
Key Point The New Accounting System is the accounting system based on double
entry book-keeping system recommended by the `Accounting Committee
1017’ for systematic recording of government revenue and expenditure.
4. Objectives of New Accounting System
New Accounting System of Government has a number of objectives, from the
recording of the financial transactions of the government to the observation of utilisation
of resources and efficiency of the government office. The objectives of the New Accounting
System, as determined by ‘The Account Committee 2017’, are as follows:
i. To Keep Proper Record
The main objective of New Accounting System is to keep the records of the financial
accounts properly. All financial transactions of government office must be recorded in
their respective accounts promptly. There is greater possibility of misuse of cash income
and expense which should be controlled by accounting system.
ii. To Make Expenditure within the Budget Limit
The Government of Nepal allocates a fixed amount for each organization as its
budget. The organization can not spend more than what has been spent. New Accounting
System does not allow any government organization to exceed the limit fixed by budget.
There is an instrument called `Budget sheet’ to control the expenses by limiting to the
budget through it.
iii. To Provide Information for the Preparation of Budget
The objective of New Accounting System is to provide information which helps to
prepare the coming year’s budget. For the preparation of budget of new year, government
needs actual financial information of income and expense of previous year. Under this
system, monthly statements and statement of expenditures help to provide financial
information for the preparation of budget.
iv. To Provide Information about Fund
This accounting has objectives to inform that whether income is generated as per
estimated or not, how much is available and for different jobs and projects and how much
progress is made, whether released funds have been reached to the destination or not can
be known from New Accounting System.
184 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 185
v. To Safeguard Physical Properties
Government invests lots of its scarce resources in various properties and assets like
machinery, furniture, land, buildings, vehicles, etc. So such various assets are received
and used in the organizations. This accounting has objectives to maintain the store record
of such assets when received and used.
vi. To Make Auditing Simple and Economical
New accounting system uses accounting forms uniformly in every office of all over
the country. This uniformity has made the auditing works simple and economical.
vii. To Help in Preparation of Periodical Reports and Statements
Government officials need to prepare various types of reports and statements at the
end of every fiscal year to inform the people how the taxes paid by the people have been
expensed and what the economical situation of the country.
viii. To Help in Planning and Decision Making
New accounting system provides reliable financial data to the concerned authority.
It helps to prepare different plans and policies and to take right decisions.
Points to Remember
i. To keep proper record ii. To make expenditure within the budget limit
iii. To provide information for the preparation of iv. To provide information about funds
budget
v. To safeguard physical properties vi. To make auditing simple and economical
vii. To help in preparation of periodical reports viii. To help in planning and decision making
and statements
5. Characteristics/Features of New Accounting System
The important characteristics/features of the New Accounting System are discussed
as below:
i. Based on the Principle of Double Entry Book Keeping System
New Accounting System is completely based on the principle of double entry system.
Double Entry Principle refers to the recording of a transaction with double effect with
same monetary value, i.e. it is debited once in one account and the same is credited on the
other account with the same value. Under New Accounting System, all the government
transactions are recorded twice by showing their two effects: debit and credit. It helps to
detect and prevent errors and frauds.
ii. Simplicity and Uniformity
This system is simple to understand and use. Before the introduction of New
Accounting System, there were multi form of systems causing difficulty in auditing and
proper evaluation of financial projects. Similarly, it was difficult for the personnel to
understand the accounting of an office when they were transferred from one office/place
186 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 187
to another. On the otherhand, the accounting systems were also not based on the double
entry principle. Nowadays, with the use of New Accounting System, the same style of
accounting is followed throughout the country and the forms and formats are used for the
accounting and reporting of similar type of transactions and thus it is uniform throughout
the country and has become simple to understand and use with a little knowledge of the
principle of accounting.
iii. History of Financial Transactions
New Accounting System of Government of Nepal presents historical information
about the financial transaction of government offices for a series of years in the past.
Under this, all financial transactions are recorded when they occur, and they are later
summarised in the form of reports and statements and they are preserved for future
purposes, systematically and scientifically, which become the historical evidence.
iv. Branch of Financial Administration
It is one of the most important parts of financial administration. All financial activities
become handicapped in the lack of proper accounting system, which causes the failure of
financial administration. New Accounting System presents the data and other financial
information required for the financial administration from time to time and assists in
taking various financial decisions. Besides, it helps to detects and prevent errors and
frauds, which is a must for the financial administration.
v. Basis for Budgeting and its Control
After the declaration of budget system in 2008 B.S., the existing accounting system
could not supply the necessary data, statistics and other financial information for the
preparation and execution of budget. New Accounting System was brought into practice
to fulfil the necessity of budgeting. Thus, this system is the basis for budgeting. It maintains
the records of all the transactions regarding budget approved in different heads, there
is no ground for manipulation of government revenue and expenditure so that, proper
control can be achieved.
vi. Keeping Accounts under Budget Heads
Budget is not only a statement of estimated revenue and expenditure but also a
financial regulation. With the annual appropriation and regular and additional budget for
each head allocated and the expenditure made are set according to the budget prescription
and thus, New Accounting System keeps the records of revenue and expenses under
the given heads in budget. Ledger accounts are also maintained in accordance to the
budgeted heads of revenue and expenditures.
vii. Confidentiality/Secrecy
As there is no provision of getting signatures of the outsiders in the main accounting
documents under New Accounting System as was in Shyaha Shresta Pranali, there is
no risk of leakage of any official information, moreover, there are separate forms, slips,
receipts, etc. for different transactions and only the responsible officials are entrusted
with the responsibility of maintaining accounting records. Thus, it ensures the secrecy of
accounting records.
186 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 187
viii. Changeability
New Accountancy System is changeable as accordance to the time and situation. As
no single system can remain static forever, the `Account Committee 2017’ has mentioned
that this system of accounting can also be changed or amended as per the time and
situation or as the need of the government for making it more advanced and scientific.
ix. Emphasis on Banking Transactions
It has emphasized upon the performance of government transactions through bank.
Cash is manipulative and misusable and thus, in order to have proper control over the
fund, the New Accounting System has given emphasis on banking transaction. According
to this, every government office should deposit all receipts and collections into bank, i.e.
Nepal Rastra Bank and make payments through cheques except for petty expenses made
out of petty cash fund.
x. Provision of Central and Operating Level Offices
For accounting purposes, government offices are divided into operating level and
central level offices. Operating level offices maintain the records of the advance budget
releases, their expenditures and forwards the monthly reports to the respective central
level offices. Similarly, the central level offices maintain their own accounting and the
summary of the reports and statements are obtained from their operating level offices.
There is no interference from the central level offices in account keeping but the operating
level offices should be always responsible for their respective central level offices.
xi. Use of Brackets
Use of brackets is another important characteristic of the New Accounting System.
The mentioning of amount in the brackets indicates the deduction from the amount
mentioned openly. Brackets are used in maintaining ledger accounts and only in case of
clearance of advance and closing of the books to denote the opposite entry of the amount
or deduction.
xii. Inter-head Transfer of Budget
Out of the budget allocated to a number of heads of an office, sometimes there
may be surplus budget under some heads and scarce under some other heads. In such a
situation, the amount, which is surplus under a head can be transferred to the one having
scarce according to the budget limitation and financial rules under the New Accounting
System. There was not such a provision in the other accounting systems. Such a provision
is known as inter-head transfer of budget. Thus, it is also a notable feature of this system.
xiii. Use of Different Forms for Accounting and Reporting
Under the New Accounting System, there is a provision of different forms for the
accounting and reporting of different types of transactions to ensure the uniformity of
records. Journal Voucher, AGF No. 10, for the original record of the transactions; Bank
Cash Book, AGF No. 5, for the general ledger of the transactions: Budget Sheet, AGF
No.8, for budget expenditure, Statement of Expenditure AGF No. 13, for the details about
the position of expenditure and fund etc. and other a number of forms for accounting
and reporting are used under the New Accounting System. Operating level offices use
some of the forms for recording the regular transactions and to furnish the necessary
188 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 189
information to the respective central level offices, central level offices use some of the
forms for recording their regular transactions and for the preparation of the statements to
be submitted to the Ministry of Finance. Thus, use of different forms for accounting and
reporting is also another notable feature of the New Accounting System of Government.
Points to Remember
i. Based on the principle of double entry ii. Simplicity and uniformity
book-keeping system
iii. History of financial transactions iv. Branch of financial administration
v. Basis for budgeting and its control vi. Keeping accounts under budget heads
vii. Confidentiality/secrecy viii. Changeability
ix. Emphasis on banking transaction x. Provision of central and operating level offices
xi. Use of brackets xii. Enter head transfer of budget
xiii. Use of different forms for accounting and reporting
6. Kinds of Government Accounting
After the implementation of New Accounting System in Nepal, the offices of
Government have been divided into central level and operating level offices in accounting
point of view and the accounting also has been divided accordingly as central level
accounting and operating level accounting.
The ministries, departments and constitutional bodies are called central level offices and
the accounting maintained by these offices is called central level accounting. Similarly,
the lower level or branch offices like regional, district level and other local offices, which
are responsible for the respective central level offices are called operating level offices and
the accounting maintained by these offices is called operating level accounting.
i. Central Level Accounting
The act of accounting performed by the central level offices is known as central
level accounting. It refers to the recording of the release of budget to the operating level
offices in terms of advance, clearing of advance against the monthly report submitted by
each operating level office and summarising the report of the operating level along with
its own. Thus, the budget release is a downward process and the report is an upward
process.
The following are the forms used by central level offices:
a. Goshwara Voucher, AGF No. 10
b. Ledger, AGF No. 22
c. Budget Summary and Expenditure Control A/c, AGF No. 24
d. Other Statements and Reports
ii. Operating Level Accounting
The accounting, which is performed by the operating level office, is known as
operating level accounting. It refers to the recording of the budget releases obtained from
the respective central level offices as advances, recording the transactions in the primary
book of account i.e. Goshwara Voucher, posting them into ledger accounts like Bank Cash
188 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 189
Book, Budget Sheet, etc. and preparation of the monthly report to submit to the central
level office. After the budget release is obtained from the central level office as advance,
through the Office of the Treasury and Comptroller, it is recorded under the operating
level accounting by incurring the expenditures under different heads of expenses.
In this way, an operating level office serves the functions like receiving budget as advance
under different heads, making expenditures as per the prescribed rules and creating
records of budget received and spent, forwarding monthly reports of expenditure to
clear the advance remaining in their names, getting accounting audited internally and
preparing budget estimate for the next year, etc. There are a number of forms and records,
which are to be maintained by an operating level office.
a. Goshwara Voucher, AGF No. 10
b. Bank Cash Book, AGF No. 5
c. Budget Sheet, AGF No. 8
d. Monthly Report of Revenue, AGF No. 9
e. Statement of Expenditure, AGF No. 13
f. Monthly Report of Unclear Advance, AGF No. 14
g. Bank Reconciliation statement, AGF No. 15
7. Differences between Central & Operating Level Accounting
S.N. Central Level Accounting Operating Level Accounting
1. Central level accounting is prepared by central Operating level accounting is prepared by the
level offices like ministries, departments operating level offices like regional, district
and constitutional bodies, which have the level and other local offices, which get budget
subordinating offices working under them. releases from the respective central level
offices.
2. It acts as a link and intermediary between the It has link only with its Central level offices
operating level offices and Ministry of Finance. and has no any concern with the Ministry of
Finance.
3. It records the budget releases in the advance It records the budget releases received from its
account of each of its operating level offices. central level offices and its expenditures as the
instruction of the central level office according
to the financial rules.
4. Central level accounting is the record of central Operating level accounting is just the
level office for its own operation and also, the accounting of the operating level offices and
accounts of the operating level offices. not of any other offices.
5. Central level accounting gets the accounts and Operating level accounting gets the accounts
financial statements internally and externally and statements internally audited and they are
audited by the Office of the Auditor General. submitted to the central level office.
6. Central level accounting uses small number of Operating level accounting uses comparatively
forms for accounting and reporting. a large number of forms for accounting and
reporting.
7. Central level accounting helps the Ministry of It does not directly help in the preparation of
Finance, Office of the Comptroller General to central accounts but it helps in the preparation
prepare central accounts. of central level accounting.
190 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 191
Office of Auditor General
There is a provision of Auditor General Office in Nepal. Auditor General is the chief of the
office. Auditor General is responsible to check the books of accounts of all the government
offices, constitutional bodies and corporations fully owned or more than 50% shares
owned by government. Functions, duties and powers of the Auditor General as stated
by the Act. Supreme Court, the Legislature Parliament, the Constituent Assembly, the
Commission for the Investigation of Abuse of Authority,
the Office of the Auditor General, the Public Service
Commission, the Election Commission, The National
Human Rights Commission, the Office of the Attorney
General and other offices of the Constitutional Bodies,
the Nepal Army, the Armed Police or Nepal Police, and
all other government offices and courts are audited by the
Auditor General in manner as maybe determined by law,
also having regard to the regularity, economy, efficiency,
effectiveness and the propriety thereof. Office of Auditor General
King Mahendra appointed the Auditor General on 16 Ashadh, 2016 B.S. for the first
th
time in Nepal. Now, as per the provision made as section 22 of the Constitution of Nepal
2072, the Auditor General is appointed by the President on the recommendation of
Constitutional Council for 6 years.
The Auditor General is responsible for preparing and presenting the audited financial
reports to the President of the government of Nepal for its final approval after the
completion of each fiscal year.
Key Point The office which performs auditing in Government offices, constitutional
organs and corporations having full or partial ownership of the government
taking the responsibility of maintaining financial accuracy according to the
specified principle is called Office of Auditor General.
Functions, Duties and Rights of the Office of Auditor General
As per the provision made an section 22 of Constitution of Nepal, 2072, the functions,
duties and rights of the Auditor General are as follows:
i. Auditing the books of accounts of all constitutional organs, army, police, government
offices and court.
ii. Prescribing forms for making accounting work uniform and effective.
iii. Auditor general should be consulted while appointing the auditor of all corporations
owned by government at least 5 l% of total shares.
iv. Auditor general should prepare and present report to the head of the state for final
approval. The head of state shall refer that report to the parliament.
v. Auditor general and his subordinates can check the books of accounts at any time for
the purpose of auditing and it is the duty of all government offices to give documents
and information to them.
vi. Auditor general can be made liable to audit the book of accounts of any government
office or institutions by making rules.
190 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 191
Office of Finance Comptroller General
Financial Comptroller General Office is the main
government agency responsible for the treasury
operation of Government of Nepal. This office is
under the Ministry of Finance and is headed by
Financial Comptroller General who is a special
class officer of Government of Nepal. Financial
Comptroller General Office is responsible for
observing all government expenditure against
budget, tracking revenue collection and other
receipts and preparation of consolidated
financial statements of the government. It also Office of Finance Comptroller General
provides necessary advice, suggestion and
remedial measures to the government on the problems related with financial acts, rules
and regulations. It is also called Mahalekha Niyantrak Ko Karyalaya in Nepal. It was
established in 2008 B.S. as the Office of Account General which has been converted the
Office of Financial Comptroller General in 2032 B.S.
Key Point Office of the finance Comptroller General is a department level government
office established under the Ministry of Finance which prepares the central
level account relating to the government revenues and expenditures.
Functions, Duties and Rights of Office of Finance Comptroller General
According to the Financial Administration Act, 2056, the functions, duties and rights of
Financial Comptroller are as follows:
i. Preparing central account of government revenue, expenditures, financial assistance,
loan, interest, dividend, etc.
ii Implementing forms for keeping record of financial transactions of government
offices recommended by the Auditor General.
iii. Keeping record of consolidated fund i.e. Sanchit Kosh, emergency fund and other
government funds.
iv. Inspection of government offices whether financial rules and regulations are followed
or not.
v. Preparing accounts related with appropriation, revenue and expenditures of
government and getting them audited from the Office of the Auditor General.
vi. Solving any misunderstanding or disputes regarding financial administration.
vii. Recording irregularities based on the annual list of irregularities received from
Ministries and constitutional bodies.
viii Providing direction to Treasury and Comptroller Office for making internal audit of
budget, collection of tax and security deposit.
ix. Other works which are decided by the Finance Ministry as the functions of Office of
Comptroller General.
192 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 193
Office of the District Treasury and Comptroller
This office was established in the fiscal year 2038/039 B.S. in all 77 districts managed
and directed under the Comptroller General’s Office. It still exists as one of major
financial offices. The office of the treasury and comptroller of each district releases the
approved budget to all the district level government offices and conducts internal audit
of appropriation, budget release, budget expenditure, revenues and security deposits.
This office is responsible to provide essential fund for implementing approved budget.
This office works under the supervision and guidance of the Office of the Comptroller
General. It is called Kosh Tatha Lekha Niyantrak Ko Karyalaya in Nepal.
Key Point The office which is established to conduct internal audit, monitor and
supervise the financial activities of district level government offices is known
as Office of the District Treasury Comptroller.
Functions, Duties and Rights of Office of the Treasury and Comptroller
According to the provision made on the “Government Revenue and Expenditure
Operation Rules 2064”, the duties, rights and functions of Office of the District Treasury
Controller’s Office are as follows:
i. Releasing the amount of impress fund equivalent to 1/6 of last fiscal year’s budget
th
expenditure in the amounts of concerned offices in case budget approval letter is not
received.
ii. Releasing the amount of impress fund equivalent to the 1/6 of current fiscal year’s
th
budget after adjusting already released imprest fund.
iii. Reimbursing revolving fund by releasing budget equal to the expenditure of previous
month after receiving statement of expenditure.
iv Updating list of the offices which are situated in the working area of treasury and
comptroller’s office.
v. Monitoring and supervising the financial activities of offices of the concerned district
and providing directions and suggestions as prescribed by the rules.
vi. Receiving monthly statement of revenues from the concerned offices. Preparing
integrated report of revenue and submitting to the concerned authority.
vii. Conducting internal audit of the accounts maintained by all district level government
offices.
viii Preparing annual statement of budget release after the completion of fiscal year.
ix. Verifying and depositing unspent amount of budget into consolidated fund.
x. If any office has not maintained account properly or misused budget or not presented
regular reports, it can stop bank account of the concerned office.
xi. Other works which are decided by the Office of Comptroller General as the functions
of Treasury and Comptroller’s Office.
xii. Handling the Treasury Single Account (TSA) of each government offices.
192 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 193
Auditing
8. Introduction
In English audit means examination of accounts. It is derived from Latin word
‘audire’. Its meaning is to hear. At the end of fourteenth century, auditors were to read
the status of accounting information in front of the kings or the rulers of that time and in
the later days the ‘audire’ turned as audit.
In the ancient days, the works of the auditors were mainly to check the arithmetical
accuracy. In the modem period, the auditors not only check the arithmetical accuracy but
also see whether the rules have been followed or not, whether the entries have been made
according to companies policies or not and whether complete and full accounting have
been maintained or not.
A.W. Hanson has defined auditing as “An auditing is an examination of such records to
establish their reliability and reliability of statements drawn from them.”
The United Nations has given a comprehensive definition through the book “Government
Auditing in Developing Country’, that auditing refers to the systematic, managed and objective
oriented professional examination of the books to improve that if any inefficiencies, undue expenses;
and mismanagement occur in the financial and administrative works of government office and
programs.”
In the word of L.R. Dickse, “Auditor is an examination of the accounting records under taken
with a view of establishing whether they correctly and completely reflect the transactions to which
they purpose to relate.”
In conclusion, it is an examination of the books of accounting data to ascertain correctness,
reliability, efficiency, etc. depending upon the financial data and statements.
Key Point Auditing is the systematic examination, review and verification of the
accounting records or books for the, accuracy and reliability of accounting
statements and reports.
9. Development of Auditing In Nepal
The Office of the Auditor General (OAG) was established with the appointment of
the first Auditor General as per the Constitution of the Kingdom of Nepal, 2015 B.S. Prior
to establishment of Office of the Auditor General, the institution named Kumari Chowk
Adda used to review the government accounts. It is assumed that Kumari Chowk
Adda was established in the year 6 Baishakh, 1828 B.S. with the aim of strengthening
th
administrative system after the unification of Nepal. It is also anticipated that there was
also existence of audit institution prior to unification. Since the fiscal year 2031/32, some
new forms were brought into use on the recommendation of Auditor General.
After the historical change of 2046, Constitution of 2047 and Auditing Act 2048 brought
changes in the field of auditing system of government office. According to Company
Act 2063, every business office should audit the accounts and present the audit report in
Annual General Meeting and Company Registrar’s Office.
194 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 195
10. Types of Auditing
i. Internal Auditing
Internal auditing is the act of examining the accounts and reporting by the employee
of same organizations considering the organizational objectives and activities. Purpose
of the internal audit is to assist the board of directors and managers in promoting sound
operations of the company and reasonably ensuring the objectives listed. At the same
time, purpose is to make timely recommendations for improvements to ensure sustainable
operating effectiveness of the internal control system and to provide a basis for review
and correction for the system. Office of the Treasury and Comptroller has the power and
rights to check the books of financial transactions as internal audit. For this government of
Nepal has established the office of the Treasury Comptroller in all 77 districts providing
responsibility of internal audit of government offices. This office uses the red ink to audit
the books. Final audit is conducted after the completion of internal audit. Following are
the main objectives of internal audit:
1. To detect the errors and frauds and prevent them.
2. To verify the books of accounts and statements continuously.
3. To give suggestions to the management in accounting and financial matter of the
organization.
4. To prepare basis for final audit.
5. To ensure the reliability in way of keeping accounting records.
6. To assist the management.
Key Point It is the act of examining the books of account by an internal staff to ensure
proper result and correction of error.
ii. Final Auditing
Final auditing is the auditing of presented financial statements and related documents,
done by independent body under the prevalent rules and regulations. This auditing is
done for a certain period, for example, Department of Auditor General conducts such
audit for the government offices. Business organizations are audited by the registered
auditors according to the provisions mentioned in the existing Act and rules. In case of
companies, the auditor appointed by the Annual General Meeting conducts such audit.
Thus, final audit refers to the act of checking the books of accounts of all the government
office, constitutional bodies in corporation with the Office of the Auditor General. This
office uses green ink to audit the books of accounts.
In Nepal, Auditor General has got sole right to conduct audit of government organizations
under the provision of Auditing Act, 2048. The scope and functions of final auditing are
provisioned by the constitutions and laws. So, auditor is free to put any comments freely
on the irregularities. Therefore, the auditors conduct auditing on the basis of legality,
economy, efficiency, effectiveness, and reasonability.
194 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 195
Following are the main objectives of final audit.
a. To fulfil the legal requirement.
b. To examine the financial records and transactions as per prevailing financial rules
and regulation or not.
c. To detect and prevent the errors and frauds.
d. To show the real and fair financial position of the firm.
e. To evaluate the effectiveness, efficiency, economy and authenticity of the financial
transactions.
f. To encourage the firm to maintain public account ability and transparency, etc.
Key Point It is the act of examining the books of account by an individual auditor to
disclose the real and true financial position for a certain period.
Differences Between Internal Auditing and Final Auditing
Internal Auditing Final Auditing
Internal auditing is conducted by the Final auditing in the company is done by the
employees of the same organizations. auditor appointed by AGM.
The duties and responsibilities of internal The duty of final auditors is to certify truth.
auditors are fixed by the management.
Internal auditor works as the helper of office The final auditor works as controller.
chief.
In government organizations, the employees Auditor General or by the auditor stated by
of the Treasury and Comptroller Office conduct the office conducts external auditing.
internal audit.
Internal auditing is done to correct mistake Final auditing is done to find mistake and
and for advice. take actions to the faulty.
The faults found by internal auditor can be The faults found by final auditors are
corrected before the final auditing. forwarded for action.
Internal audit is carried out on a detailed External audit is carried out generally on a
basis. random sampling basis.
11. Importance of Auditing
There is increasing importance of auditing in both the sectors: government and
business. Auditing makes the accounts transparent, so creditability to business and
government from the people increases.
Some benefits are given below:
i. Detect and Prevent Frauds and Mistakes
Mistakes committed unintentionally or intentionally in the government and
businesses are found by the internal and external auditing. So personnel involved will be
cautious for doing such mistake in the future.
196 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 197
ii. Depicts Financial Position
Auditor checks the crucial financial documents of business and government; So, true
picture of the financial position can be depicted. So helps and belief from different sectors
increase towards the organizations.
iii. Formulation of Plans
The data of the reports after auditing are true; So, the works of planning and
budgeting work will be easy and valid.
iv. Helps in Tax Fixation
The tax can be fixed on the basis of audited accounts and government will have
easiness to frame tax policies in the future.
v. Helps in Financial Administration of Government
Government can find defaulters through the internal and external auditing and
forward action against them. This way financial administration becomes sound and fair.
vi. Helps to Obtain Loan
Financial institutions or banks provide loan on the basis of audited financial
statements. So an organization should make audit compulsorily to obtain loan.
Points to Remember
i. Detect and Prevent Frauds and Mistakes ii. Depicts Financial Position
iii. Formulation of Plans iv. Helps in Tax Fixation
v. Helps in Financial Administration of Government vi. Helps to Obtain Loan
Classification of Budget Expenditures under New
Accounting System
To have proper control over the expenditures and to make the recording work simple,
clear and accurate, government expenditures have been classified into different budget
heads. Numerical codes are allocated for every budget expenditure account. The code
number is called budget head number and the amount is called budget expenditure
amount. The new budget expenditure concept has been implemented from the fiscal year
2068/069 by the government of Nepal.
All budget expenditures are allocated under budget expenditure head no. 20000. They
are categorized as base heads, main heads, heads and sub expenditure heads. The
expenditure heads having ‘000’ at last like 24000, 23000, etc. are base heads, heads having
`00’ at last like 21100, 22200, etc. are main heads, heads having ‘0’ at last like 21110, 21120
are heads and other heads having no ‘0’ at last like 21111, 22111, etc. are sub expenditure
heads. Only the sub expenditure heads are treated as expenditures but other base heads,
main heads and heads are not treated as budget expenditures. Government offices should
strictly follow the heads of expenditure classification while recording the expenditures
made by them which are given below:
196 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 197
21000 Salary and Benefits (Base Head)
A. 21100 Salary and Benefits (Main Head)
1. 21110 Salary and Benefits Paid on Cash:
21111 Salary: It includes
Remuneration paid to staff like salary, provident fund, pension, grade,
insurance, other reward and incentives paid to employee as per the
prescribed rules and regulations of the government.
Salary wages and remuneration paid to temporary staff of government
offices and projects.
Amount paid to government employee for annual leaves, sick leave,
annual increment, Dashain allowance, etc.
21112 Local Allowance:
It includes allowances paid for working at remote hilly area.
21113 Dearness Allowance:
It includes the allowances declared by the government for the employee to bear
inflection.
21114 Field Allowance:
It includes the allowances declared by the government to the employee for field
visit.
21119 Other Allowance:
It includes other allowances like meeting allowances, foreign allowance,
maternity allowances, over time allowance, festival allowances, etc. Which are
declared by the government.
2. 21120 Salary and Benefit Paid Other Than Cash:
21121 Uniform:
It includes the expenditures of dresses and uniforms like shoes, boots, clothes,
caps, hats, etc. provided to government employee like postman, policeman,
military, medical staff, teacher and staff.
21122 Food:
It includes the cost of food to be paid for the supply of food materials to the
government employees like army, police and other civil servants.
21123 Medical Allowance:
It includes the expenditures given to government employees for their medical
treatment, health insurance, medicine, etc.
22000 Materials and Services (Base Head)
A. 22100 Service and Rental Charge (Main Head)
1. 22110 Service Charge:
22111 Water and Electricity:
It includes the expenses paid for water and electricity for the official consumption
along with the deposit and installation of these facilities.
198 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 199
22112 Communication Charge:
The amount paid for telephone, telex, telegrams, internet, website, trunk
call, e-mail, fax and other communication expenses and deposit expenses for
installation of communication services.
2. 22100 Rental Charge:
22121 House Rent:
It includes rent of building, land, godown, etc. hired for office purpose
22122 Other Rent:
It includes the rent paid for the use of other assets like vehicles, plants, machinery
and other capital assets hired for official purpose.
B. 22200 Circulation and Maintenance of Capital Assets (Main Head)
1. 22210 Circulation and Maintenance of Capital Assets:
22211 Fuel:
It includes the cost of fuel or lubricants like petrol, diesel, battery, distilled
water mobil for vehicle, etc. But if the fuel used for construction work should be
added on concerned expenditure head.
22212 Repair and Maintenance:
It includes repairs and maintenance charges paid for the maintenance of
capital assets like furniture, building, bridge, machinery equipment and other
capital properties which are used regularly for official purpose. But repair of
maintenance of capital assets are treated as capital expenditures and included
in concerned budget head.
22213 Insurance:
It includes the insurance of public properties like road, bridge, cannel,
hydropower house, machinery, building, equipment, vehicle and third party
insurance. But insurance of assets under construction are included on concerned
capital expenditure head.
C. 22300 Office Materials and Services (Main Head)
1. 22310 Office Materials and Services:
22311 Office Expenses:
It includes
Postage, parcel, registry, insurance and courier charge, paper, record
files, envelop, stapler, punching machine, official printing, news papers,
magazine, books, etc. for office use.
Expenses for publication and circulation of government notice for tender,
quotation, contract, etc.
Stationery required for day to day operation of an office.
Expenditures for office materials and equipments and durable office
materials and equipments costing less than Rs. 2000.
Transportation charges of office materials.
Charge paid to bank, compensation and other service charge.
198 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 199
22312 Feeding Materials:
It includes the expenses made for feeding materials for birds and animals like
horse, elephant, cow, bull, etc. .
22313 Books and Material:
This heading includes the cost of books, sport materials and educational
materials freely distributed by public schools and cost of books purchased for
public libraries.
22314 Fuel for Other Purpose:
It includes the cost of fuel for other purposes like gas, kerosene, petrol, diesel,
coal, firewood, battery, etc. for administrative purpose. But fuel and battery for
vehicle is included in B.H. No 22211.
2. 22320 Repair and Maintenance of Constructed Public Properties
22321 Repair and Maintenance of Constructed Public Properties:
It includes the amount paid for regular maintenance expenses and insurance
premium of public properties like roads and highways, bridge, dams, canals,
power house, government building, etc.
D. 22400 Consultancy and Service Expenditure (Main Head)
1. 22410 Consultancy and Other Service Expenditure:
22411 Consultancy and Service Expenditure:
It includes expenditure related to study report, advisors’ free, software
renewable charge and service charge.
22412 Other Service Charge:
It includes service charge paid to sweepers for cleaning office, building,
maintenance of garden, service charge paid to contractor for maintenance of
office, machinery and equipments like computers, Photocopy, telephone, Fax,
service charge for carrying parcel, expenditure for security of office, facility of
primary treatment, etc.
E. 22500 Program Expenditure (Main Head)
1. 22510 Training and Seminar:
22511 Employee Training:
It includes the expenses on training, conference, seminar and workshop
organized for developing capability and skill of the staff.
22512 Skill Development and Public Awareness Training and Seminar Expenses:
It includes the cost of public seminars and training ans seminar allowances
for the participants and trainer and cost of training materials to increase the
efficiency and skill of public.
Allowance to resource person for providing services.
TADA (travelling and daily allowance) to trainee and trainer as per
government rules.
2. 22520 Production Materials and Services:
22521 Production Materials and Services:
200 Aakar’s Office Practice and Accountancy - 10 Government Accounting System 201
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