What is Bank cash book? Importance of bank cash book

Bank cash book

What is Bank cash book?

Meaning of bank cash book

Bank cash book was introduced as part of the new accounting systems to minimize the miss appropriation or embezzlement of cash. Such a book is considered as a mechanism to control and safeguard cash of government office.

Bank cash book is also known as general ledger or multicolored cash book of government office. It is one of the main books of account maintained by operating level office of government of Nepal for recording their cash and bank transaction. It records cash receipts and cash payment including budget release. It is also prepared with analytically column for cash account. Bank account, budget expenditure account, advance account and miscellaneous account. It is prepared in a form designed under AFG No. 5, which includes five (5) account and seventeen (17) columns. Each account under this book is divided into two column i.e. debit and credit. It is prepared under the principle of double entry system of book keeping; it is a basis for preparing trial balance to check the arithmetical accuracy of the government office.

Importance of bank cash book

Bank cash book is one of the most importance books of government accounting to be prepared by operating level officer of government of Nepal. It is importance for government office under operating level due ti following points.

• It shows the amount of expenditure, cash balance, bank balance and advance given and cleared at any time after each transaction.

• It is required to prepare trial balance which helps to check the arithmetical accuracy of finance transaction of government of Nepal.

• It helps to check the misuse, misappropriation and embezzlement of cash.

• It is necessary to safeguard and control cash in a proper way.

• It makes possible for cross checking with the balance as shown by the bank statement.

• It reduces the changes of tried and misuse.
Special of bank cash book

Bank cash book is a book of account which is prepared under auditor general form AGF No.5 and it has 17 columns under 5 different accounts. The specimen of bank cash book is as follows:
Column No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
heading

• Date
• Reference No.
• Particulars
• Debit of cash a/c
• Credit of cash a/c
• Debit of bank a/c
• Credit of bank a/c
• Cheque number
• Bank balance
• Budget expenditure head no.
• Budget expenditure
• Advance paid
• Advance cleared
• Miscellaneous a/c  number
• Debit of miscellaneous
• Credit of miscellaneous
• remarks

Explanation

1. The dates of financial transactions are recorded.
2. The code number or journal voucher number is recorded serially.
3. Short description of narration of the transaction is written.
4. It is  used payment and deposits of cash into bank are 
5. All the cash payment and deposits of cash into bank are recorded.
6. All the receipts through bank are recorded.
7. Issue of cheque for the payment of goods or services is recorded.
8. The number of cheque issued for payment.
9. It is used to show the bank balance after receipt and payment of cheque.
10. The budget head or sub head number is mentioned in cash of transactions relation to budget expenditure.
11. The amount of budget expenditure is shown.
12. The amount of advance given to any person or party for budget head is recorded.
13. It is used to record the amount of advance cleared.
14. The numbers of miscellaneous transaction are mentioned if any.
15. It is shown other than cash, bank, budget expenditures and advance. It shows only debit amount of miscellaneous account.
16. The credit of miscellaneous account is shown.
17. It is used to record any other information which is not mentioned in the other column.

Notes to remember, while preparing bank cash book
• Before preparing bank cash book, journal voucher should be prepared. However, it can be prepared without journal voucher too.
• Inter head transaction of budget is not recorded in bank cash book.
• The amount of debit in journal must be posted in the debit column and the amount of credit must be posted in the credit column of the concerned account.
• Any transaction, which is not concerned with cash, bank, budget expenditure and advance accounts, must be recorded in miscellaneous account.
• No revenues are show in the bank cash book except budget release of bank order.
• All the transactions are followed by principle of double entry system of book keeping except advance given or cleared. The same amount should be shown in the three columns.
Preparation of bank cash book
Bank cash book is a general ledger and it is prepared on the basis of journal vouchers. While posting the transaction from journal voucher to bank cash book, the general rules for making debit and credit of the transaction must be followed. The following types of journal voucher should be prepared while preparing bank cash book.
• General journal voucher.
• Journal voucher for advance transactions.
• Miscellaneous journal voucher.
Posting of a general journal voucher
General journal voucher is also called ordinary journal voucher. The journal voucher prepared for recording budget expenditures under different head in government of office is known as general journal voucher. Voucher relating to payment for salary, allowance, TADA, rent, furniture, machinery, office materials et are some examples of general journal voucher.
Posting of advance given transactions
For advance given transaction, the amount is recorded in three column of bank cash book while advance is given for official purpose; the same amount is recorded first on budget expenditure column, second on credit column of bank account and third on given column of advance account.
Posting from miscellaneous transactions
Those transactions which are not related to budget expenditures, advance given and advance clearance are known as miscellaneous transactions. Budget release, revolving fund, petty cash fund and deduction from salary are example of miscellaneous transactions.

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3. Management accounting
4. Cost accounting
5. FINANCIAL ACCOUNTING
6. Cost concept and classification
7. Accounting error and their rectification
8. Financial statement analysis
9. Subsidiary Books Account
10. balance sheet
11. Final account of a company
12. accounting worksheet
13. Bank Reconciliation Statement
14. FORFEITUERE AND RE-ISSUE OF SHARES
15. Share Capital Accounting
16. account company
17. Accounting Reserve and Provisions
18. Depreciation for Accounting 
19. profit and loss account
20. Capital and revenue Account
21. Journal Accounting
22. Trial Balance Accounting
23. Petty Cash Book 
24. Cash and Bank Transaction

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What is Journal voucher Accounting? Journal Voucher

Journal voucher
What is  Journal voucher Accounting?

Meaning of journal voucher

Journal voucher is also called 'goswora voucher' in Nepal. Journal voucher is a primary and most important record of financial transaction in new accounting system. It is a kind of voucher, which is used for recording financial transactions of the government in regular order of dates. It is a book of original entry, because every financial transaction of the government is recorded first of all in this journal voucher. Therefore it is also called as the book of original retry. It is based on the principle of double entry system of book keeping i.e. every transaction has two aspects one debit and another credit. The audit general has prescribed the form of journal voucher format as designed by AGF No.10, which is maintained by both central and operating level officers. Journal voucher is the basis for recording transaction in ledger accounts.

From the above specimen form, there are a lot of things, which should be taken into mind while preparing journal voucher.

1. Name of office: name of the office, department or ministry should be written on the top along with the name of district, where the office is located.

2. J.V.No: it refers to the serial number of journal voucher.

3. Date: it refers to the date on which transaction is recorded.

4. Code No.: in this column, reference or code no, refers to the bill number; purchase order number etc. is written.

5. Particular: in his column, name of tge account to be debited and credited along with the short explanation about the financial transaction is written.

6. Ledger folio (L/F): in this column, page number of the ledger where the given transaction ar3 posted.

7. Budget head No: in this column, the budget expenditure heads for transaction affecting budget expenditures is written.

8. Debit Rs. in this column, amount to be debited is written.

9. Credit Rs,; in this column, amount to be credited is written.

10. Receipt no, an amount: receipt number of amount received and the amount (cash) received in words are written.

11. Cheque No. and amount: cheque number and amount of cheque in words for payment made thought cheques are written.

12. Designation: in this part, signature and designation of the person preparing the voucher with date is written.

13. Approved by: in this part, signature and designation of the approving the voucher along with the date are filled in this part.

Notes to be considered while preparing journal voucher

• Each transaction must be recorded in a separate journal voucher.

• While preparing journal voucher, the principle of double entry system of book keeping must be followed.

• The word B.E. must be used immediately after the word 'Dr' in the case of budget expenditure.

• The supporting documents of transaction must be attachment to the voucher, while making its approval.

• Proper narration number must be written for each transaction.

• Dr. before debit transaction and Cr. Before transaction must be written.

Rule for debit and credit while preparing journal voucher

The new accounting system of HMG/ Nepal is also based on the double entry system of book keeping. So the rules of debiting and crediting must be followed while preparing a journal voucher. It has already been thoroughly discussed earlier in commercial accounting. In the preparation of journal voucher, each and every transaction has two aspects i.e. debit and credit. A brief summary of rules of debit and credit can be presented as follows:

Rules of debit and credit on the basis of types of account

a. Personal account

Debit the received

Credit the giver.

b. Real account

Debit what come in

Credit what goes out.

c. Nominal account

Debit all the expenses or losses

Credit all the income gain and profit.

 Rules of debit and credit on the basis of increase or decrease in assets, liabilities, expenditure, losses, income etc.

Increase In assets.

Decrease in liabilities debit

Increase in expenses or losses

 Decree in income or gain

Decreases in assets

Increase liabilities. credit

Decrease in expenses or losses

Increase in income or gain

Types of journal vouchers

Operating level officer prepares the following three types of journal vouchers:

• Journal voucher for budget expenditures.

• Journal voucher for advance transactions.

• Journal voucher for miscellaneous transactions.

Journal voucher for budget expenditure

Journal voucher is also called general journal voucher or journal voucher for ordinary tractions. The journal voucher which is prepared to record the budget expenditures of government is called journal voucher for budget expenditures. To represent budget expenditure, the word B.E. is mentioned before the title of an expenditure under this journal voucher. For example, B.E. salary, B.E. allowance, B.E. rent, B.E. office operating expenses, B.E. furniture etc.

Types of journal vouchers
Operating level officer prepares the following three types of journal vouchers:
• Journal voucher for budget expenditures.
• Journal voucher for advance transactions.
• Journal voucher for miscellaneous transactions.
Journal voucher for budget expenditure
Journal voucher is also called general journal voucher or journal voucher for ordinary transactions. The journal voucher which is prepared to record the budget expenditure of government is called journal voucher for budget expenditures. To represent budget expenditure, the word B.E. is mentioned before the title of an expenditure under this journal voucher. For example, B.E. salary, B.E. allowance, B.E. rent, B.E. office operating expenses, B.E. furniture etc.
Budget expenditure voucher is prepared as follow:
Dr. B.E.(name of the budget head)
Cr. N.R. bank
Notes to be considered while preparing journal voucher for budget expenditure:
• The budget head or sub-head should be debited but not an item of expenditure.
• Budget head or sub-head number must be maintained in the prescribed column.
• All the payments are assumed to be through Nepal rastra bank except the case of petty expenses. So Nepal rastra bank should be credited in each transaction.
• A short or brief or complete narration should be written for an expiration of each traction.
• A separate journal voucher must be prepared for each transaction.
Journal voucher for advance transactions
The payment made in advance for purchase of goods and service is called advance expenditure. But it is not actual expenditure, but it is not actual expenditure; it is paid for purchase of assets. So, advance is recorded in the advance ledger account. accounting to new accounting system, advance expenditure are recorded twice:
• At the time of giving advances.
• At the time of advance clearance.
Journal voucher at the time of giving advance
An advance should be given to a person to make expenditure on budget head. When the advance is given, the journal voucher is prepared debiting the name and post of person taking advance and head against which the advance is given as following way:
Journal voucher for advance clearance
Advance is given to the person for specific purpose. The person taking advance has to submit necessary bills and invoice for the clearance of advance after the complete of the work. The amount of advance may be cleared in any one of the following ways:
• When the total amount of advance has been returned.
• When the amount of expenditure is equal to the advance.
• When the amount of expenditure is less the advance.
• When the amount of expenditure is less than the advance.
• When the partial clearance is made.
Rules for debit and credit for different conditions of advance clearance
1. When the total amount has been returned through bank voucher
Dr. NR Bank
Cr. Designation and name of received
Advance clearance of the relevant BH
2. When amount of expenditure is equal to the advance
Dr. B.E. the related BH
(With the amount of the expenditure)
Cr. Designation and name of the receiver
Advance clearance of the relevant BH
3. When amount of expenditure is more than the advance
Dr. B.E. the relevant BH
(With the amount of expenditure)
Cr. N.R. Bank
(Excess amount paid)
Cr. Designation and name of received
4. When amount of expenditure is less than the advance
Dr. B.E. the relevant BH
(With the amount of expenditure)
Dr. Cash or Nr bank
(With the amount of return)
Cr. Designation and of the receiver
Advance clearance of the relevant BH
(Being advance cleared by Mr.,/Mrs.…)
5. When the partial clearance  is made
Dr. B.E. (Name of the budget head)
Cr. Designation and name of receiver
Partial advance clearance of the relevant BH
(Being practical advance clearance by Mr. / Mrs.…)
Miscellaneous journal vouchers
The journal voucher is to be prepared, relating to other than budget expenditure and advance is called miscellaneous journal voucher. There are certain transactions, which do not after budget head and advance. The following transactions are recorded in the miscellaneous journal voucher.
• Revolving fund released
• Budget release
• Petty cash fund
• Budget transfer
• Distribution of salary and deductions made on it
• Security deposits
• Annual closing
• Rectification of error
Revolving fund release/ impress fund
Accounting treatment
Rules for debit and credit for revolving fund
1. When initial revolving fund received
Dr. Nr bank
Cr. Initial revolving fund
(Being initial revolving fund)
2. When additional revolving fund received
Dr. Nr bank
Cr. Revolving fund
(Being additional fund received)
3. When excess revolving fund refunded
Dr. revolving fund
Cr. N.R. Bank
(Being excess revolving fund refunded)
Budget release
Budget release refers to the amount received from treasury and comptroller in a monthly or three monthly for incurring regular expenses. HMG operating level officer like education health, municipality, village development committee, district development committee, public corporation, company etc. usually received for monthly budget releases for their expenses. These officers do not get impress fund.
Petty cash fund
Petty cash find is created by the NG office both central and operating level for the payment of different type of small expense like coolie, bus, fare, postage, tea and coffee, freight etc. it is not possible to pay such types of expenditure through cheque. Therefore, to pay such types of expenditure, HMG office created a fund which is known as petty cash fund. Journal voucher of petty cash fund are as follows:
1. When petty cash fund is created or established
Dr. petty cash fund a/c
Cr. N.R. Bank
(Being petty cash fund is created)
2. When making a reimbursement of petty cash fund
Dr. BE
Dr. BE
Cr. N.R. Bank
(Being reimbursement of petty cash fund)
3. When the petty cash fund is closed
Dr. BE expenses (budget exp.)
Dr N.R.Bank (unspent amount)
Cr. Petty cash fund
(Being petty cash fund by depositing balance amount into bank)
Budget transfer
The amount transferring from one budget head to another budget head is called budget transfer. In other word, if there is surplus amount in one head and deficit in the another head at the same time, it can be transferred from surplus head to deficit with the permission of ministry. It is not cash expenditure, thus you are not required to use the words. B.E. is not used while passing journal voucher. The journal voucher is this case will be as follow:

Distribution of salary and deduction made on it
Salary is paid to employees of government officer after deduction of provider fund and income tax. Journal voucher is prepared. While deduction is made at the time of the payment of salary, there are following types of journal vouchers.
Employees' provident fund
Provident from is a facility to the employees provided by the government officer to its permanent staffs, which will be given back to the employees after retirement.

Salary is distributed to employees every month for the services rendered by then after deducting 10% provided fund from the salary of each staff and then adds 100% of such deduction as contribution to his provident fund. Such as total amount should be deposited by the officer to the provident fund officer.
1. When journal voucher for salary and allowance distributed to staff as per payroll.
Dr. BE salary
Dr. BE allowance
Cr. Provident fund
Cr. NR Bank
(Being salary distributed to staff as per payroll)
2. When journal voucher for the deducted amount is deposited in the provident fund officer.
Dr. provident fund
Cr. N.R. Bank
(Being the deducted amount deposited into concerned account)
Income tax
Income tax is to be paid by the employee (staff) out of their salary. Income tax is deducted only from the taxable salary as per income tax act. Income tax act has been certain exemption limit of income for tax purpose. An employee should be paid income tax on the income over the exemption limit. The deducted amount of income tax must be deposited into the income tax office.
1. Journal voucher, while distributed after deducting income tax
Dr. BE salary
Cr. Income tax
Cr. NR Bank
2. When journal voucher, while deposit the amount of income tax office
Dr. Income tax
Cr. NR Bank
Provident fund loan
HMG employees deposit their provident fund in the provident fund officer. They can get a facility to tae loans in case of financial crisis, out of their provident fund deposit. Such loan is repaired in monthly installment basis by making deduction from their monthly salary.
Citizen investment fund
It is a voluntary investment, which can be made by interested employees in the scheme introduced by government. In other word, government has introduced a social security scheme called scheme of citizen investment fund. Therefore, the government officer makes a deduction in the monthly salary of employees and deposited it to the citizen investment fund officer. The employment gets interest on and they can utilize their fund when required.
1. when distribution of salary after deduction citizen investment fund
Dr. BE salary
Cr. Citizen Investment fund
Cr. NB bank
2. When deposit of amount deducted as citizen investment fund to the concerned officer.
Dr. Citizen investment fund
Cr. NB Bank
Personal loan
The personal of the government officer can borrow the loan from the officer. When they are in financial crisis. The loan taken by an employee from the officer personal loan. Such a loan is to be repaid by the employees in small installment deducted from their monthly salary.
1. When distribution of alary after deducing loan to employees
Dr. BE salary
Cr. Personal loan
Cr. NR Bank
2. When deposit of deducted amount into bank account of the office.
Dr. BE salary
Cr. Personal loan
Cr. NR Bank
Security deposit
Security deposits are concern with the amount received from the contractor or goods suppliers for supplying goods and services as security. The contractor should be deposited as supplier 5% of contract amount. Such amount will be refund after the competition of concerned contract. Thus, two journal vouchers are prepared to record the receipt and return of deposit.
1. When security deposit money is received
Dr. NR Bank (security deposit)
Cr. Security deposit a/c of Mr. /Mrs.
2. When security deposit money is refunded
Dr. Security deposit a/c or Mrs
Cr NR Bank
Loan
Loan the operating government office can receive loan or provide loan to other office with the approval of district treasury and comptroller's office. The loan is issued in the condition of repaying bank it later on. The journal vouchers are maintained by both officers (given and received) as follows:
a. When loan is received
dr. NR Bank
Cr. Office loan
b. When loan is repaid
Dr. Office loan
Cr. NR Bank
Rectification of errors
As error is a mistake, may be intentional or international and rectification denotes act of correcting the errors that have already committed in the process of preparing government account. There are several types of errors, committed; these errors should be ratified by preparing rectifying journal voucher. The following steps are preparing rectifying or errors:
• Make a correct entry
• Make a wrong entry
• Make the opposite of wrong entry
• Make a rectified entry
Notes: it can be prepared same as rectification of journal entries. Which is already discussed?
Annual closing
All the books of accounts of Nepal government officer are to be closed at the end of the ashard. At the end of the every year some temporary accounts like security deposit account. Advance account and loan to employees are closed. Likewise, other account should have been closed like petty cash fund a/c, budget release a/c, budget expenditure and bank a/c. the process of closing different accounts operating during the year for different transaction  is called annual closing. At the end of the fiscal years, the following types of closing entries should be made:
j. When artificial clearance of advance:
Dr. B.E.
Cr. Employees

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Budget heads for the fiscal year ,What is Budget heads for the fiscal years?

What is Budget heads for the fiscal year? 

Budget heads for the fiscal year 

1. expenditure for consumption:

1.01 salary

1.02 allowance

1.03 TADA (transfer)

1.04 Dress materials

1.05 Food and feeding materials

1.06 Medical treatment

1.07 Retirement facilities

1.08 Trading programmed

2. Expenditure for operating of office & service:

2.01 Water & electricity charges.

2.02 Communication charges.

2.03 Office operating expenses

2.04 Rent

2.05 Repair and maintenance

2.06 Fuel and other fuel items.

2.07 Advisory and other service charge

2.08 miscellaneous

3. grants (current transfer)

3.01 grants to public organization

3.02 Grants to local government bodies.

3.03 Grants to social services

3.04 Grants to social securities.

4. Production/services expenses

4.01 production material service

4.02 medicine

4.03 books & sports materials 

4.04 expenses on seminar etc

4.05 TADA other than transfer

4.06 Maintenance cost of public assets.

5. Expenses for capital transfer:

5.01 purchase of land

5.02 purchase of building

6. capital formation:

6.01 furniture

6.02 means of transport

6.03 machinery, plants and equipment

6.04 construction cost of other capital assets,

6.05 Capital assets improvements.

6.06 Research, study & technical advisory service

7. Investment: 

7.01 investment in shares

7.02 investment in loans

8. capital subsidy: 

8.01 financial assistance to public organization

8.02 financial assistance level government

8.03 financial assistance to public utilities

9. contingencies:

9.01 contingencies

10. payment of loan:

10.01 payment of internal loan

10.02 payment of external loan

11. payment of interest:

11.01 invest payment on internal loan

11.02 invest payment of external loan

12. refund of expenses

12.01 refund of revenue receipts

12.02 refund of capital expenses

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what is the total budget heading expenditure list

what is total budget head expenditure?
Classification of budget head expenditure
what is the total budget heading  expenditure sheet?
what is the total budget heading  expenditure list

0.0 Expenditure of his majesty's the king and royal palace: all the expenditures   of his majesty's the king, members of royal place come under this head.

1. Consumption expenditures

Under consumption expenditures following expenditures are included with code no. as follows.

1.01 salaries includes

• Salary of the permanent government staff/employees.

• Contribution to employees' provident fund.

• Annual increment and incentive award and prizes.

• Salary, wages, remuneration of the temporary staff.

• Leave-annual leave, sick level and other leave-adjustment payment.

• Dasai festival bonus/benefits.

• Overtime payment.

• Remuneration of staff appointed under contract.

1.02 allowances includes

• Remote area allowance

• Meeting allowance

• Overtime allowance

• Foreign allowance

• Other allowance

1.03 transfer travelling allowance and daily allowance (f-data) includes

• transfer travelling expenses of employee's family includes:

• fair charges including government tax

• walking (travelling on food) allowance

• other related and approved expenses

• Daily travelling allowances as per the HMG's rules.

1.04 clothing/uniform includes

• Clothing for government employees including postman.

• Uniform to military, police and institutional staff including boots, hats etc.

• Uniform to hospital staff.

• Cloth allowance provided to the staff for visiting countries

1.05 food and feed includes

• food for military police and other government employees

• Food allowance given to the government employees.

• Food for animal and birds

1.06 medical allowances includes

• Medical expenses given to government employees

1.07 retirement benefit includes

• Pension, gratuity and allowance to the retired employees

• Allowance to retired unable employees

1.08 training programmer expenditure includes

• Expenses on training, seminar and workshop organized for employees for developing their capability and career.

2. Operating and services expenditure included

2.01 electricity and water supply charges includes
• Electricity and water supply charges
• Installation charges (electricity and waters)
• Deposits for installation of electricity and water supply.
2.02 communication charges includes
• Telephone, telex, telegram charges
• Fax, e-mail charges
• Expenses for internet, weave site
• Other communication expenses or charges
• Deposit for installation of communication services
2.03 office expenses includes
• Postages, parcel, registry, insurance, postage return, Currier charges
• Expenditure for circulating information for tender, action etc.
• Bank charges, compensation and other service charges
• Stationary for day to day operation of office
• Expendable office material, security related to office equipment, and durable office materials and equipment costing less than one thousand use.
• Office printing, news paper, magazine office goods from one place to another.
• Transportation charges for transporting office goods from one place to another. (note that the transportation charges for the purchase of goods and other purchase related expenditures will be includes in the value of gods purchased)
• Insurance premium for vehicles, equipment, building etc.
2.04 rental charges includes
• Building rent
• Land rent
• Go down rent
2.05 repairs and maintenance
Includes regular expenditure for wages and materials for repairs and maintenance of
• Building machinery
• Road vehicles
• Bride furniture
• Equipment irrigation channels
• miscellaneous
2.06 consultancy and other service charge includes
• Expenditure on preparation of research paper, study report, fees paid to the experts and advisers, remuneration provided for study report and research paper relating to other than those which are not within capital formation.
• Services charges paid to sweeper for cleaning office building
• Services charges for maintenance of office garden
• Contract services charges of office postage and parcels, primary health services agriculture extension service, running vehicle service, charges for maintenance of office machinery and equipment
2.08 miscellaneous expenditure includes
• Approved expenditure for entertainment like shows, refreshment and parties.
• Expenditure for maintaining law and order
• Expenditure for providing hospitality services to the foreign delegates
• Expenditure for observing festival/ worshipping
• Approved contingency for foreign visit.
• Miscellaneous expenditures not chargeable to other budget heads
3. Grants (current transfer)
• It includes grants provides to independent social organization, commission, committee etc. established by different rules and regulation based on law relating to them for performing social, economic and judicial services by the states through them
3.01 grants to public corporation includes
• Grants to government and semi-government corporations, boards in economic field autonomous body, committees and operational grants to private business organization based on government decision.
3.02 grants to local includes
• Operational grants to local bodies
3.03 social services grants includes grants provides to
• Educational institutes and hospitals
• Compensation and amount provides for acquiring private property (land) to the party suffering due to natures disaster and other causes.
• Operational grants provides to temples and Martha
• Donation to national and international organization and membership subscriptions
• Foods, clothing and other facility given to the particular (hospitals) and prisoners (jails)
• Financial assistance and rewards
3.04 social security grants includes
• Financial assistance provides to senior citizens, helpless citizens, widows and others.
• Refund to the employees provident fund corporation for financial assistance/help provides to the heirs of the deceased government employees.
• Grant provides through public retirement fund.
4. Production expenditures includes
4.01 materials/services for production includes
• Raw material, labor and production overhead incurred on material for converting into finished products to be sold for cash, e.g.
• Cost of postage stamps, postcard, pesticide,
• Cost of animal , birds, fisheries, other agriculture products
• Cost of maps under server work, legal books.
4.02 medicines includes
• Medicines provides by hospital, health posts, Ayurveda aushadhalays and medicines used in treatment to the patients.
4.03 books and materials
• Cost of books purchase for libraries and educational materials like books and sports materials freely distributed public schools.
4.04 programs expenditure includes
• Cost of public seminars, cost includes allowance to the participants in public training for increasing efficiency, self employment for income generation, employment building senses.
• Cost for circulation of information, advertisement that builds sensitivity.
• Allowance to resources person for providing services to the recipients of the services
• Cost of ritual function by state operated temples and math's
4.05 program travelling expenses (PTE) includes
• Cost of travelling for government/office work or cost of travelling and daily allowance for travelling for execution of programs.
• Daily allowances, accommodation, and miscellaneous expenses to be released from central finance budget for high level personality and member of deflate.
4.06 maintenance cost/ expenses of public (assets) includes
• Regular maintenages expanses and insurance premium of public properties like roads and highway, bridges, Cannes, power houses, and government buildings.
5. Capital transfer expenditures includes
5.01 land purchases includes amount for
• Purchase and acquisition of land
• Tax and other related expenditure for land purchase and acquisitions
5.02 furniture includes
• The cost of purchase of furniture
• Transportation, insurance, vat and import duty and other related expenses incurred on the purchase of furniture.
5.03 vehicles incurred
• The cost of purchase of vehicles e.g. aero plane, all kinds of motor vehicles, bicycles and tractors used for transportation I including animal like bulls, horse etc.
• Cost of vehicle engine
• Cost relating to import of vehicle and vehicle engine like, insurance, transportation, and duty etc.
6.03 machinery and equipment includes
• The cost of all kind of machinery except used for transpiration, e.g. generator, transformer, machinery used for production of goods and services, constructional machinery, communication equipment, scientific equipment, surveying equipment drafting equipment.
• Office equipment like photocopy machine, computer telephone set, tv, heater fan radio etc.
• Agriculture tools, veterinary equipment, security equipment.
• Cost of major part of machine and equipment
• Cost, transportation, important duty, insurance and other for importing machine and equipment
6.04 building construction includes
• Cost for construction of building and shed
• Cost of expansion like addition of room, story etc
6.05 public (civil) constructions includes
• Cost of construction and expenses of highway, road, bridge, ropeway, and airdrome, project for communication, electricity, drinking water, irrigation, forestry and mining, construction cost includes.
• Cost of fuel directly related to construction
• Nursery establishment and plantation cost
6.05 capital maintenance includes
• maintenance  on building and other capital assets for extending the quality and life of the assets but does not include the cost of expansion and addition to the existing capital assets
6.07 study and capital oriented technical consultancy services cost includes
• cost of feasibility study
• cost of server, design and drafting
• Technical consultancy services charges for supervision of construction work, cost of excavation and research.
7. Investments includes
7.01 investment in shares
7.02 investment in debentures/loan
8. capital subsidy includes
8.01 Subsidies to public corporation includes Subsidy to purchase furniture, vehicle, machinery and equipment, building, land and for construction of building, civil work to produce goods and services.
8.02 Subsidies to local bodies includes
Subsidy to purchase furniture, vehicles, machinery and equipment, building land and to construct building and civil work and to produce goods and services.
8.03 subsidiary to services oriented instituted include
Subsidy to purchase furniture, vehicles, machinery and equipment, building, land and to construction building and civil work and to produce goods and services to educational institute, hospitals and social organization created by law.
9. Unforeseen/ contingencies includes

9.01 contingencies includes
Approved amount but not specified in any budget heads
10. principle repayment includes
10.01 principle repayment of internal loan
10.02 principle repayment of external loan
11. interest payment includes
11.01 interest payment for internal loan
11.02 interest payment for external loan
12. return expenses
12.01 return expenses includes
Return of import duty, taxed, excise duty, land tax, penalties and other including foreign one.

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what is New accounting system & Importance of new accounting system

New accounting system
what is New accounting system & Importance of new accounting system?

Concept of new accounting system

As we have already discussed in the previous chapter that shyaha srestha pranali and form srestha pranali failed to record the increasing number of transaction in a systematic way. As a result. Bhuktani srestha pranali was introduced in 2017 B.S. but this system also became unsuitable to re

cord all the revenues and expenditure of the government in a more systematic and scientific way. Therefore, to make suggestions and recommendations in a more systematic efficient accounting system, an account committee, have four members was formed on magh 20, 2017 B.S. the four members of committee comprised of:

• Accounting general of his majesty government

• Under secretary of ministry of finance (foreign aid department)

• Public administrative of the U.S. aid.

• Accounting specialist of the U.N.

The committee, after a detailed study for about 288 days. Presented a draft as suggestions and recommendations for the scientific, modernization, improvement and decentralization of accounting systems in Nepal. The draft was approved by the auditor general on 20th magh 2018. B.S. and it was also approved by his majesty the king of 2nd chaitra 2018. The system was introduced as a new accounting sytems of his majesty government and it was implemented in the office of Kathmandu valley since the fiscal year 2019/2020 B.S. it was called 'new accounting system". The new accounting system became fully operational from shrawan 2025 through Nepal.

Feature and characteristics of new accounting system

Some of the basic features of new accounting systems of his majesty government may be studied under the following headings:

1. Based on the principle of double entry system: new accounting system is based on double entry system of book keeping. Under this principle, each financial transaction has two aspects i.e. each tractions is recorded on both debit and credit sides of books of account with the same monetary value thus, arithmetical accuracy can be easily tested and accounting errors are also detected and rectified.

2. Uniformity and simplicity: new accounting systems are used in the entire government officer throughout the keeping of Nepal. It is simple to understand and easy to operate because it is based on the principle of double entry system. An employee having lower qualification can easily understand it.

3. Emphasis of banking transaction: there are more probability of misuse and manipulation of cash. The new accounting system of HMG has given more emphasis of banking transaction. every government officer should deposit all revenues into bank and payment are made through cheques except petty cash payment.

4. Classification of offices: government organizations are classified into central level offices of organization (ministry) and operating level office on the basis of their financial transaction.

5. Secrecy: in new accounting system, high degree of secrecy can be maintained for accounting records. Separate forms, receipts slips etc are used for the separate nature of transaction.

6. Based on budget heads: the new accounting systems is based upon different budget heads for making expenditures of public government officer should not make expenditures more than allocated to a head.

7. Inter-head transfer of budget: in new accounting systems, the surplus amount of a budget head can be transferred from one budget head to another budget head by taking permission of finance ministry.

8. Used of bracket: use of bracket is another most important feature of new accounting system. The bracket is used to show the amount to be credited. It the time of payment for effective budgetary control.

9. Treatment of advance: in new accounting system, an advance payment given for any expenditure is treated as budgeting expenditures at the time of payment for effective budgetary control.

10. Level of government office and decentralization: the new accounting system is given emphasis is decentralization for accounting work. The government officers have been classified into two level i.e. central level and operating level accounting. Central level account is maintained by central level office and operation level account by operating level office. Central level offices do not interfere in regular accounting work of operating level office.

11. Provision of auditing: in new accounting systems, there is the provision of audit, so audit of books of accounts is compulsory to detect and payment the misuse of government property and revenue. The office of the auditor general is responsible for audit in government officer.
Objective of new accounting system
The following are the objectives of new accounting system started by the account committee 2017:
• To provide financial data this is required time to time for preparing financial report.
• To prepared proper systematic accounting for cash and other properties to control such possible misuses.
• To provide necessary and relevant information required for the preparation of budget to the concerned office.
• To determine the level and position of officers who are responsible to submit the accounts of different projects implemented.
• To check the financial transactions if they are true and fair thought the auditing.
• To make the audit job simple, less time consuming and economical.
• To collect the historical data of budget head.
Important of new accounting system
The important of new accounting system are summarized below:
• To keep the real picture of financial transaction of government offices to prepared the records of government fund. Investment, revenue, and expenses.
• To provides all financial data, statistics and other information required for financial administration and control.
• To provide proper guidance to government for the preparation and implementations of economic plan and policy of the nation.
• To provide necessary information and financial data to the government for preparation of annual budget.
• To control the financial activities of the government because all the revenues and expenditures of government are recorded according to the financial rules and procedures.
• To prevent the measure of government revenues and its properties because there is a to provision of audit of the books of account.
• To provide certain guidelines for preparation of finical statements.
• To ensure and effective uses of the aid and loan amount provided by foreign donors and agencies.
Limitation of new accounting system
New accounting systems of HMG are also not free from weakness and limitations. Some of the limitations are:
• There is no proper mechanism to check frauds and errors committed in the books of account and also if failed to control corruption, misuse and embezzlement of government cash and properties.
• It has given less emphasis on goods, properties and assets because it has given emphasis only on expenditures.
• It is based on cash basis of accounting. No record is made on accruals basis.
• There are higher chances of misappropriation of stock (investment) due to the lack of systematic and proper store keeping system.
• It cannot provide necessary information or data for making decision on the cost of production and labor efficiency.
• It does not following the principle of double entry system in practice. For example, entry for advance transaction required triple positing inn bank cash book.
• All the forms are designed by the department of general do not fulfill the requirement of managerial need.
Levels of new accounting system
HMG's officers are divided into two levels i.e. central level and operating level under new accounting system.
Central level accounting
Central level accenting refers to the accounting maintained by central level offices. Those officers received budget directly directly from the ministry of financial and release them to operating level officers. The ministry of financial does not release budget directly to operating level officer. They co-ordinate and control the operating level officer thought the country. Ministries, department and the legal bodies come under come under central level officers. The accounting. Under this accounting, the budget received from the ministry of financial and released to operating level officer in terms of advance basis and cleaning the advances as against their monthly reports are recorded. The following are some major account maintained by central level offices.
a. Journal voucher 
b. General ledger
c. Subsidiary books
d. Advance ledger
e. Bank statements
f. Statement of advance given
g. Control ledger for the amount deposited into consolidated fund etc.
Operating level accounting
Operating level officer refer to those government branches or regional officer which received budget from central level officer and make expenditure according to the prescribed budget heads. The accounting systems adopted by operating level officer are known as operating level accounting. The operating officers are responsible for their respective central officer and have to submit their statement of expenditures to the concerned central level officer. In shown operating level:

• Receives budget under different heads.
• Incurs budget expenditure accounting to the budget instruction and prescribed rules and regulations.
• Creates records of budget received and spent.
• Forward monthly report and statement to clear advance remaining in its name.
• Gets its accounts audited internally from the office of the treasury and comptroller and financial from the department of audit general.
• Prepares budget estimate for the next fiscal year.
The following are the accounting documents maintained by the operating level officers.
a. Journal voucher
b. Bank cash bank
c. Subsidiary ledger

d. Statement of expenditures.
Different between central level and operating level accounting
Basis

1. Office
2. Accounts
3. Recording
4. Responsible
5. Forms
6. Helps

Central level accounting

• It is maintained by central level office.
• It is maintained both by the central as well as operating level accounts.
• It records budget received from ministry of finance and release made to operating level offices.
• Central level offices are responsible for the ministry of finance and reports are submitted to ministry of finance.
• Under this system only a few number of accounting and statements are used for making records.
• Central level officer helps the office of the comptrollers general in preparing central accounts.

Operating level accounting

• It is maintained by operating level office
• It is maintained only by operating level accounts.
• It keeps record of budget received from concerned central level offices and the expenditure made on different heads.
• Operating level officers are responsible to the central level officer and reports are submitted to the concerned central level officer.
• Under this system a large number of accounting forms are used for making accounting records.
• Operating level officer do not directly help in the preparation of central account.

Forms used in new accounting system
The new accounting system prescribes a number of forms to be used at central level as well as operating level officers. The following are some form in new accounting system.
1. Primary books
a. Journal voucher
b. Cash receipts
c. Cash payment slip
2. ledger
a. budget sheet
b. bank cash book
c. cash receipts book
3. reports
a. statement of expenditures
b. monthly reports regarding revenue
c. requisition form for the reimbursement of cash payment
d. monthly  report of unclear advance
e. statement of bank account
f. summary of bank account
g. statement of budget sheet
h. statement of outstanding payments
i. monthly report of security deposits
4. miscellaneous
a. cash payment slip and cash receipts control
b. budget requisition form

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