Sunday, April 29, 2018
JOURNAL/ACCOUNTING ENTRIES FOR SCRAP SALES OF RETURNED STORES
JOURNAL/ACCOUNTING ENTRIES FOR SCRAP SALES OF RETURNED STORES
Codal provisions:
Sales (Capital 7140 and 7150).
I.In the case of cash sales, auction sales or sales by tender where the value of material sold by the Railway is received in advance of actual issue of stores, the credit to this account will appear earlier than the debit. The credit will be by debit to 'Cash'.
(So Sales Suspense A/c is always showing credit balance. Because Credit appear first in Sales Suspense A/c by debiting the Remittance Into Bank A/c (RIB) .
Example : Rails released from CTR (Complete Track Renewal) work - Journal Entries
STAGES/STEPS
I. On receipt of released material at Scrap Depot - CJV - Capital Journal Voucher
Date
|
Particulars
|
Ledger folio
|
Debit(Rs)
|
Credit (Rs.)
|
Stores in stock A/c 207161-08 - Dr
|
100
| |||
To Demand No.16 PH 3100 ( 21-3100) Cr
|
100
| |||
Credit to work at Book value for the released material by taking debit in Stores Suspense A/c
| ||||
2. When EMD (Earnest Money Deposit) & BSV (Balance Sale Value) received from the successful bidder - MCR
Date
|
Particulars
|
Ledger folio
|
Debit(Rs)
|
Credit (Rs.)
|
Remittance into Bank A/c 008677-88 Dr
|
90
| |||
To Sales Suspense A/c 207142 Cr
|
90
| |||
On receipt of MCR for EMD/BSV paid by the successful bidder
| ||||
3. At the time of delivery of material to successful bidder and adjust the difference between Book value and realised value of released materials through Stock Adjustment A/c (SA A/c) - CJV - Capital Journal Voucher
Date
|
Particulars
|
Ledger folio
|
Debit(Rs)
|
Credit (Rs.)
|
Sales suspense A/c 207142 Dr
|
90
| |||
Stock Adjustment A/c 20-7185 Dr
|
10
| |||
To Stores in Stock A/c 207161-08 Cr
|
100
| |||
On receipt of Issue note for having delivered the material
| ||||
4. Clearance of Stock Adjustment A/c (SA A/c) by adjusting debit or credit to the Dept/Demand. - CJV -Capital Journal Voucher
Date
|
Particulars
|
Ledger folio
|
Debit(Rs)
|
Credit (Rs.)
|
Demand No.16 –PH 3100 (21-3100) Dr
|
10
| |||
To Stock Adjustment A/c 20-7185 Cr
|
10
| |||
Clearance of SA A/c by adjusting to the Final Head
| ||||
Left over of journal entries, after cancel out/nullify the Stores in stock A/c, Sales Suspense A/c & Stock Adjustment A/cs one to one i.e., by equaling Debits/Credits
Date
|
Particulars
|
Ledger folio
|
Debit(Rs)
|
Credit (Rs.)
|
Remittance into Bank (RIB) A/c Dr
|
90
| |||
Demand No.16 –PH 3100 (21-3100) Dr
|
10
| |||
To Demand No.16 –PH 3100 (21-3100) Cr
|
100
| |||
PS: Candidates are advised to furnish the journal entries wherever required /possible to obtain good scoring in examination.
%%%%
Variety Reduction
VARIETY REDUCTION
· is nothing but standardization of items/materials.
· The basic purpose of standardization is to eliminate diversity among items/materials that serve the same purpose and to attain a high degree of uniformity in the manufacture.
· is a rationalization of the number of items to be stocked. It achieves by elimination of non-standard and non-rationalized sizes/designs whose demand is very small.
· enables few items will be purchased in large quantities.
· It is an essential requirement to any modern mass production economy such as Indian Railways.
ADVANTAGES:
1. Reducing the Unit cost, because few items will be purchased in large quantities.
2. Reducing the inventory carrying cost.
3. Will root out the unneeded and duplicate items.
*****
Repeat Orders
Repeat Orders
·
When
materials are required during a contract period in excess of the quantities
contracted for,
·
And
such excess is not sufficiently large to justify the invitation of fresh
tenders,
·
Then,
increasing the quantities suitably under the existing contract is called Repeat
Order.
·
However,
before placing repeat order, negotiations should be conducted with the supplier
for securing the favourable terms.
·
No
such Repeat orders to be placed on previously accepted rates obtained on
limited or single tenders. That means,
Repeat orders to be placed only in case of open tenders.
&&&
Saturday, April 28, 2018
Duties of I.S.A - Inspector of Stores Accounts
Duties of I.S.A - Inspector of Stores Accounts
1.
To
supervise the work of ASV’s working under his control.
2.
To
distribute the work evenly among the ASV’s under his control in such a way, to
complete the stock verification of stores , T & P in due time.
3.
To
make surprise visits to ensure that the ASV’s are actually employed on the
duties on which they have been deputed.
4.
To
test check the works done by ASV’s wherever considered necessary and furnish
Test check report to the Stores Accounts Officer.
5.
To
submit Weekly Periodical report to the Stores Accounts Officer of progress made
by each ASV.
6.
To
attend Auctions where necessary.
7.
Disposal
of stock sheets at the earliest and report on the action taken to Stores
Accounts Officer.
8.
To
overhaul the depot numerical ledgers and accounts of the after completion of
Stock verification to see that:
A.
They
are maintained in proper order.
B.
They
are no unattested corrections or over-written figures in the ledgers and
accounts.
C.
Find
out any non moving stocks (if any) and bring to the notice of Executives for
their disposal.
D.
Investigate
the reasons for huge differences between the ground balance and ledger balance
of stock items found out during actual stock verification.
####
Engineering Plant Reserve
Engineering Plant Reserve
ü Created for items of Plant which
rendered surplus on completion of special works/schemes.
ü On completion of special works or
construction, all useful plants for which there is no demand on the OPEN LINE
should be returned to this Reserve by Engineering dept to the nearest Stores
depot accompanied by advice note.
ü So that the items of plant in that
reserve will be required for future special works.
ü Created on each Railway with the
previous sanction of the Railway Board.
ü Maximum financial limit of such
reserve is fixed by the Railway Board only.
ü Engineering Dept. responsible for
deciding what materials are to be maintained in that reserve. Also responsible for arranging inspection of
items plant on return from any work, such plant should be attended to and kept
in readiness, for issue again, if need be.
ü Stores Dept. responsible for maintain the records i.e., receipts, issues
and balances of the items in that reserve.
ü Separate Priced Ledgers are
maintained for such Plan represented by the No. painted on the items.
ü Hired such plants to other Govt.
Depts, Private parties:
ü Resorted to that option, when it is
used in the interest of public service.
ü Hire charges and 12.5 % supervision
of all handling , packing, loading and unloading etc also be levied on the
parties.
ü COS is responsible for recovery of
such charges.
&&&
Risk Purchase
Risk Purchase
·
is
fresh purchase made by the Railways ordered at the risk and cost of the
defaulting firm , by cancelling the original purchase order under the
conditions of the Contract.
·
It
happens, when a firm has failed to make supply against P.O/agreement wholly or
in part within the Delivery period including extension granted if any., or
·
When
supply made has been rejected and the firm has failed to replace the same in
spite of additional time having been given.
·
Under
the above circumstances, the contractor/supplier shall be liable for any loss
which the railway may sustain provided:
·
Such
a risk purchase is covered by the Agreement.,
·
Risk
purchase is made within 6 months from the date of failure or cancellation of
the contract owing to repudiation of the contract before the expiry of delivery
period incl: extension period if any.
·
Important
points to be observed, while making risk purchase are:
·
Risk
purchase should be ordered in the same manner as for the original purchase.
That is description, inspection method,
system of tender should be similar to the original purchase.
·
No
offer with any unusual condition at variance with the original purchase should
be accepted.
·
The
defaulting firm should also be invited to tender against the Risk tender even
though not obligatory.
·
If
acceptable, the defaulting firm’s offer, ensure that the same may be accepted
only after paying the security deposit, irrespective of the fact, that the said
firm is exempted from depositing security money otherwise.
·
The
original contractor becomes liable for to the difference between the higher
price incurred and the contracted price.
·
For
this purpose, MAR account to be operated for watching the realization of the
above said difference amount.
&&&
SMS - Stores Monthly Summary
S M S - Stores Monthly
Summary
·
SMS
is the summary of all store transactions about Stores issued from
Stores Depots to the Consumers /consignees (various executives) during the
month.
·
Contains
particulars like Depot, Ward, Voucher No., Date of issue, P L (Price List)
No, consignee code, Quantity drawn, Rate and Total value debited.
·
Also
gives Allocation code and totals for Department and Division.
OBJECTIVE:
·
To
Bring into account, all the Stores Transactions (issues and receipts)
about the Zone ( say S C Rly) for stock items, which are booked to
Capital P (20-7100) – Stores Suspense Under Demand No.16.
·
Through
SMS JV, the above transactions clubbed into FMIS, so the JV is
incorporated in the Account Current wherever required.
·
Once
the final processing is complete at EDP/SC, the reports generated and sent to WAO’s
Offices are as follows.
1.
Transaction
Ledger
2.
Stores
Monthly Summary
3.
S
A A/c (Stock Adjustment )
4.
SINT A/c ( Stores in Transit)
5.
Sales
A/c
6.
Class
Ledger
7.
OB
(quarterly)
8.
Multi
depot print out ( for COS office use)
9.
Exception
Report 1 – below the danger level ( for COS office use)
10.
Exception
Report 2 – above danger level ( for COS office use)
11.
Exception
Report 3 – Out of stock (for COS office use)
·
After the generation of the above reports, SMS JV is generated.
&&&
Book Examination Clause
BOOK EXAMINATION CLAUSE
v
Meaning:
Government/Purchaser to call for and verify and examine the books of the
contractor/Supplier is called Book Examination Clause.
v
Books include
Account books, vouchers, receipts, memorandum, paper or writing or any copy of
or extract from any such document.
v
Object:
Verifying or ascertaining the cost of execution of the contract.
v
When : before
or after the prices have been finally fixed.
v
Contractor's duty:
Afford facilities to the Government Officer concerned to visit the Contractors
works for the purpose of examining the processes of manufacture and estimating
or ascertaining the cost of production of the articles. If any portion of the
work be entrusted by a sub-contractor or any of its subsidiary, the authorized
Government Officer shall have power to examine all the relevant books of such
sub- books of such sub-contractor or any subsidiary shall be open to his
inspection as mentioned in clause.
v
Period: The
Contractor or its agency is bound to allow
examination of its books within a period of 60 days from the
date the notice is received by the Contractor, or its agencies.
v
If Contractor fail to
produce the Books: The
purchaser can reduce the Contract price according to his best judgment. The decision of the Purchaser in regard
contract price is final and binding on the Contractor and his agencies.
v
Result : If on such examination, it is established that
the contracted price is in excess of the actual cost plus reasonable margin of
profit, the Purchaser shall have the right to
reduce the price and determine the amount to a reasonable level.
****
Differences between Government & Commercial Accounts
Differences between Government & Commercial Accounts
Are the Government Accounts and Commercial Accounts are same or not? If not explain the differences between both with the backdrop of Indian Railways ? The Indian Railways is a departmental commercial undertaking of the Government of India. That means on one side, It performs as departmental functions like other Government depts such as Defence, Finance, CPWD, etc and on other side act as Commercial undertaking since Railways manufacture and sells the perishable commodity "TRANSPORT". Hence the accounts of Indian Railways should comply the Government Accounts as well as Commercial Accounts. To achieve this distinguishing accomplishment, Indian Railways has performing dual role of maintaining the both sets of Accounts with the help of Four suspense Heads i.e., 1. Demands Payable (DP) 2. Labour 3. Traffic Account 4. Demands Recoverable. These are called "LINK HEADS", since the same are linking Government accounts and Commercial Accounts. The discussion on LINK HEADS will be discussed separately in the same blog. The following features are the differences between Government accounts and Commercial Accounts.
GOVERNMENT ACCOUNTS
|
COMMERCIAL ACCOUNTS
|
1. Government Accounts are maintained on CASH basis. It accounts Actual cash receipts and actual cash payments during the financial year.
|
A. In Commercial Accounts, ACCRUAL is the basis. That means Accrued earnings, whether realised or not, and the liabilities incurred, whether actually disbursed or not. In the above example,
|
2. The Govt. Accounts are technically known as "FINANCIAL ACCOUNTS" and maintained in accordance with the requirements of Government Accounts. These accounts compiled annually for the purpose of representing a Consolidated Fund duly classified under the heads of accounts prescribed for Government accounting system.
|
B. The Commercial Accounts are technically knows as "CAPITAL AND REVENUE ACCOUNTS". These accounts facilitate a review of finances of the Railway as Commercial undertaking. These are compiled every and included in the Annual Report of the Railway.
|
3. Mostly Government Accounts are maintained on Single entry system.
|
C. Commercial Accounts are maintained on Double entry system. (For every Debit, there is equivalent Credit existed)
|
4. Government prepares Accounts of its incomings and outgoings only. (Not Profit & Loss A/c and Balance Sheet, since it is not commercial oriented)
|
D. Commercial firms prepares Profit & Loss A/c and Balance Sheet to know how much profit they earned during the year and what is their position (Assets and Liabilities) at the end of the year.
|
E. Government Accounts are designed "How little money it (Govt) need to take out of the pocket of the tax payer (citizen) in order to maintain its necessary activities i.e., welfare of the people, defence of the country etc".
|
E. Commercial Accounts are designed to show how much money the firm can put into the pockets of the owner/business in the form of Profit.
|
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