Railway Accounts Department Examinations

Monday, April 19, 2021

Link Heads - Connecting Government Accounts with Commercial Accounts

Link Heads between Govt Accounts & Commercial Accounts

First, let us discuss, the differences between Govt Accounts & Commercial Accounts

GOVERNMENT ACCOUNTS

COMMERCIAL ACCOUNTS

1.    Maintained on CASH basis. 

It accounts Actual cash receipts and actual cash payments during the financial year.

1.    Maintained on ACCRUAL basis.

 

That means Accrued earnings, whether realised or not, and the liabilities incurred, whether actually disbursed or not. 

2. Technically known as "FINANCIAL ACCOUNTS"

 

 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.

2.  Technically knows as "CAPITAL AND REVENUE 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.

 

Note: At present, it is not in operation. All Govt organisations are maintained their accounts under Double Entry System only 

3. 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)

4. 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.

5. 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".

5. 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.

 

 

 

 

 

The Link Heads are Four.  They are 1. Demands Payable 2. Demands Recoverable 3. Traffic & 4 . Labour 

Demands Payable

Demands Recoverable

Traffic

 

Labour

Revenue

Revenue

Revenue

Capital

 

 

 

Demands Payable

Labour

 

Traffic

Demands Recoverable

Operated on

 

Expenditure side

Expenditure side

 

Earnings side

Earnings side

Always having

 

Credit balance

Credit balance

 

 Debit balance

Debit balance

How link is established between Govt & Commercial Accounts

SN

 

Receipts

Amount

(Rs. )

 

SN

Expenditure

Amount

(Rs. )

 

1

Commercial A/cs

Coaching Earnings

30

 

1

Ordinary Working Expenses

70

Commercial A/cs

2

Goods Earnings

60

 

2

Appropriation to DRF

15

3

Sundry Earnings

10

 

3

Appropriation to Pension Fund

10

4

Gross Earnings (1+2+3)

100

 

4

Gross Working Expenses (1+2+3)

95

5

 

Suspense (Traffic & DR)

- 10

 

5

Suspense (DP)

+ 5

 

6

Govt  A/cs

Gross Receipts (4+5)

90

 

6

Gross Expenditure (4+5)

100

Govt.  A/cs

7

Misc Receipts

25

 

7

Misc. Expenditure

5

8

Total Revenue Receipts (6+7)

115

 

8

Total Revenue Expenditure

105

Net Receipts/Net Revenue/Surplus  = 115 -105 = 10.

The above surplus will be distributed/appropriated among various funds such as Development Fund, RRSK, Capital Fund, Debt Service Fund etc.

 

 

 

 

DEMANDS PAYABLE

·         One of the Link Heads connecting Government Accounts with Commercial Accounts

 

·         This is a suspense head operated under Demand No.12 N (Working expenses side)

 

·          It is in nature of "Sundry Creditors A/c" in commercial accounts

 

·         First, It records all the revenue liabilities of the month without taking into whether these are liquidated(settled) or not. Hence this Head is credited at this stage.

 

·         The payments towards the liquidation of above liabilities are debited to the Head "Demands Payable" and the balance represents the outstanding liabilities.

 

·         It is always having a Credit balance.

 

·         A separate account is kept for each month.  However on the recommendations of "Simplification committee on procedures in Railways Accounts", the Demands Payable Head should only be operated once towards the close of the year i.e., March to bring all unliquidated liabilities of that year into accounts of the year.

 

·         The object behind this practical method is "the fiscal year for the preparation of accounts is a financial year (not on monthly basis), the non - operation of the Head DP would not materially affect the Railway Accounts for first eleven months.  Hence A separate account of DP for 11 months dispensed and operated in March only in financial year.  However DP for April in subsequent year should operate only to clear the balance of previous year.

 

 

·         Journal Entries are

 

IN THE MONTH OF MARCH ACCOUNTS

Date

Transaction

Debit

Credit

31.03.2020

 

 

Revenue Demands A/c  (Say Demand No.3) Dr

Rs.100

 

                             To Demands Payable A/c      Cr

 

Rs. 100

(To bring into the account of revenue liabilities (not discharged) of last month in March A/cs)

 

 

IN THE MONTH OF APRIL ACCOUNTS

Date

Transaction

Debit

Credit

01.04.2020

 

 

Demands Payable A/c   

Rs.100

 

                             To Cheques& Bills            Cr.    

 

Rs. 100

(To account the discharging of last year (March) liabilities in April A/cs)

 

 

 

              Ledger Account of Demands Payable A/c for the month of March, 2020

Date

Debit

Amount

Date

Credit

Amount

31.03.2020

To Balance C/d

Rs. 100

31.03.2020

By Demand No. 03

Rs.100

Total

Rs.100

Total

Rs. 100

 

 

 

01.04.2020

By Balance C/d

Rs. 100

*****

 

 

 

 

 

Demands Recoverable

        Introduced from 01.04.1988.

        Purpose: to bring to account all dues pertaining to Rent/lease of Railway Land and Buildings and Interest and Maintenance Charges of Sidings.

        When the amounts due for Railway has been raised in the form of Bills – Debited to Demands Recoverable and Credited to Abstract Z earnings.

        On the receipt of remittance from the parties – Debited Cash A/c (RIB) and Credited to Demands Recoverable.

Journal Entries:

Date

Transaction

Debit

Credit

01.04.2010

 

 

Demands Recoverable A/c   Dr   

Rs.100

 

                    To Abstract Z (Sundry Earnings)        Cr.    

 

Rs. 100

(Raising bills for amounts due to Railways)

 

 

 

Date

Transaction

Debit

Credit

20.04.2010

 

 

RIB - Remittance Into Bank  A/c  Dr   

Rs.50

 

                             To Demands Recoverable            Cr.    

 

Rs. 50

(Receipt of Cash from the parties)

 

 

 Ledger Account of Demands Recoverable A/c for the month of April, 2010

Date

Debit

Amount

Date

Credit

Amount

01.04.2010

To Abstract Z (Sundry Earnings) A/c

Rs. 100

20.04.2010

By RIB  A/c

Rs.50

30.04.2010

By Balance C/d

Rs.50

 

Total

Rs. 100

 

Total

Rs. 100

01.05.2010

To Balance B/d

Rs. 50

 

 

 

        Closing Balance of D.R.: Represents unrealized amount in the form of outstanding “Demands Recoverable”

        Examples: A. Land rent charges for engineering and commercial plots. B. Interest, maintenance charges & Inspection charges for sidings. C. Rent of Buildings & D. Maintenance charges for ROBs, FOBs and level crossings.

        These are form a part of Sundry earnings (Abstract Z)

        Clearance under the “Demands Recoverable” leads to reduction in Traffic Suspense.  Thus resulting in Better operating Efficiency.

        It is always having Debit Balance.

Traffic A/c

Link Head connecting Govt Accounts and Commercial Accounts.  It is in nature of "Sundry Debtors A/c" in commercial accounts

      Debtor - All earnings (Local & Through)

      Creditor - All Recoveries for such earnings

      Balance: Unrealized earnings  - Always Debit balance

      OB - Previous Month's CB

 Specimen Journal entries

 Date

Transaction

Debit

Credit

01.01.2020

Traffic A/c Dr

Rs.200

 

 

     To Coaching Earnings A/c      Cr

 

Rs. 200

 

(Being accounted the earnings for which realisation is due)

 

 

 

Date

Transaction

Debit

Credit

25.01.2020

Remittance Into Bank (RIB) A/c Dr

Rs.150

 

 

         To Traffic A/c                                 Cr

 

Rs. 150

 

(Realisation of earnings due)

 

 

            Ledger Account of Traffic A/c for the month of January, 2020

Date

Debit

Amount

Date

Credit

Amount

01.01.2020

To Coaching Earnings A/c

Rs. 200

25.01.2020

By RIB A/c

Rs. 150

 

 

 

31.01.2020

By Balance b/d

Rs.50

 

Total

Rs. 200

 

Total

Rs. 200

01.02.2020

To Opening Balance

Rs. 50

 

 

 

·         So, Traffic Account, being a Suspense account operated on Earnings side is always shows a Debit Balance.

####

 

 

Labour Account

First stage:

The amount on account of Labour should be debited to "WMS Account" by credit to 'Labour Suspense'   - in Capital JV

 Date

Transaction

Debit

Credit

28.01.2020

WMS A/c                          Dr

Rs.200

 

 

     To Labour Suspense            Cr

 

Rs. 200

 

(Being the details posted from Labour schedule)

 

 

Second stage:

The Muster Rolls/ Labour Pay sheets having been passed for payment and debited to 'Labour Suspense'  -   in CO7s

Date

Transaction

Debit

Credit

29.01.2020

Labour Suspense A/c       Dr

Rs.200

 

 

         To Cheques & Bills                                 Cr

 

Rs. 200

 

(Being posted from the various Abstract of Bills {CO 7s) passed

 For the month)

 

 

 Ledger Account of Labour Suspense A/c for the month of January, 2020

Date

Debit

Amount

Date

Credit

Amount

29.01.2020

To Cheques & Bills A/c

Rs. 190

28.01.2020

By WMS A/c

Rs.200

 31.01.2020

To Balance c/d

Rs. 10

 

Total

Rs. 200

 

Total

Rs. 200

 

 

 

01.02.2020

By Opening Balance

Rs. 10

**

 


Sunday, April 11, 2021

BRS - Book keeping Question Paper of Appendix3 Exam 2017

 


BRS - Bank Reconciliation Statement   Appendix3 exam 2017 - 10 marks


  1. The following is the summary of Cash book for December, 2014


Cash Book (Bank column)



Amount (Rs)


Amount (Rs)

Receipts

13221

Balance B/d

6849

Balance c/d

4986

Payments

11358

Total

18207

Total

18207


Note: All receipts and payments are through Bank only. 


On investigation, the following are observed: 


  1. Bank charges of Rs. 1224 in the Bank statement have not been entered in Cash Book

  2. Cheques drawn amounting to Rs. 2403 have not been presented to the Bank for payment.

  3. Cheques receiving totalling Rs. 6858 have been entered in a Cash Book and deposited in the Bank, but have not been credited by the Bank until January, 2015

  4. A cheque for Rs. 198 has been entered as a receipt in the Cash Book instead of payment. 

  5. A cheque for Rs. 225 has been debited by the Bank in error. 

  6. A cheque received for Rs. 720 has been returned by the Bank and marked “no funds available”, no adjustment has been made in the Cash Book. 

  7. All dividends receivable are credited directly to the bank account. During December, an amount of Rs. 558 was credited by the bank and no entry is made in the cash book.

  8. A cheque drawn for Rs. 54 has been incorrectly entered in the cash book as Rs. 594.

  9.  The balance brought forward should have been Rs. 6399.

  10.  The bank statement as on December 31st 2014 showed an Overdraft of Rs. 10458.

  11. You are required to prepare an amended cash book.

Note: Red color - Amended Cash Book and Blue Color - BRS

 prepare bank reconciliation statement as on December 31st 2014

Solution

Amended Cash Book 



Amount (Rs)


Amount (Rs)

Receipts

13221

Balance B/d

6399

A cheque drawn for Rs. 54 has been incorrectly entered in the cash book as Rs. 594.

540

Payments

11358



Cheque 198 wrong side posted

396





To Balance c/d

4392



Total

18153

Total

18153



By Balance b/d

4392



Bank Reconciliation Statement as on 13.12.2014

Particulars


Amount (Rs.)

Overdraft balance as per Cash Book


4392

Add Items



Cheques receiving totalling Rs. 6858 have been entered in a Cash Book and deposited in the Bank, but have not been credited by the Bank until January, 2015


6858


A cheque for Rs. 225 has been debited by the Bank in error. 


225


Bank charges

1224


A cheque received for Rs. 720 has been returned by the Bank and marked “no funds available”, no adjustment has been made in the Cash Book. 

720


Total of Add Items

9027

( +) 9027

Less Items



Cheques drawn amounting to Rs. 2403 have not been presented to the Bank for payment.

2403


All dividends receivable are credited directly to the bank account. During December, an amount of Rs. 558 was credited by the bank and no entry is made in the cash book.

558






2961

(-) 2961

Overdraft balance as per Pass Book


10458.