Indian Railway Codes and Manuals-Accounts Code-Chapter-2 (II)

CHAPTER-2

STRUCTURE OF RAILWAY ACCOUNTS

201. Commercial and Government Accounts:- The financial transactions of a commercial concern should be recorded in such a way as to show how its capital has been utilised, how it stands in relation to its debtors and creditors, whether it is gaining or losing, what the sources of its gains or losses are, and whether it is solvent or insolvent. The main requirement of government accounting, on other hand, is that a systematic record of all receipts and expenditure classified under certain appropriate headings, should be available. The Government owned railways in India are a departmental Commercial Enterprise. Railway accounts should, therefore, not only secure the essential requirements of commercial accounting but also conform to the practices of government accounting. This objective is achieved by keeping the accounts of the railways on a commercial basis outside the regular government account and by maintaining a link between the two to show how much is coming into Government revenues through the railways and how much is spent by the Government, whether as capital of revenue expenditure, in carrying on the activities of the railways.

202 Capital and Revenue Accounts: – The accounts of a railway presented in such a form as to facilitate a review of the finances of the railway as a commercial undertaking are known as “Capital and Revenue Accounts”. The Capital and Revenue Accounts of a railway are complied every year (see Chapter VII) and included in the Annual Report of the Railway. The various processes of accounting followed in Railway Accounts offices lead up to these accounts.

203 The financial results of the working of a railway cannot be adequately gauged unless separate accounts are maintained of its Capital transactions as distinguished from its Revenue transactions. Capital transactions may be broadly described as those which pertain to the acquisition of concrete assets while Revenue transactions are those which relate to the working of the railways, comprising both earnings and working expenses. The expenditure incurred on acquiring concrete assets in connection with (i) unremunerative projects, (ii) amenities to passengers and other railway users, (iii) amenities to staff, and (iv) safety works, financed from the Development Fund, the Accident Compensation, Safety and Passenger Amenities Fund and Revenue (Open Line Works-Revenue) is accounted for separately. The expenditure on renewals and replacements of railway assets is financed from the Depreciation Reserve Fund and is accounted for accordingly. Detailed rules regulating the classifications of transactions under Capital, Revenue, Depreciation Reserve Fund, Development Fund, Accident Compensation, Safety and Passenger Amenities Fund and Revenue (Open Line works Revenue) are prescribed in Chapter VII of the Indian Railway Financial code, volume I.

204. Expenditure of a capital nature incurred on railway assets is classified under five heads viz., Capital, Depreciation Reserve Fund, Development Fund, Accident compensation, Safety and Passenger Amenities Fund and Revenue (Open Line works-Revenue). To give an overall picture of the expenditure of a capital nature incurred by the Railways as distinguished from the expenditure actually charged to Capital (loan account) a separate account is compiled namely, a block Account which exhibits the entire expenditure of a capital nature irrespective of the head of account to which it has actually been charged (see paragraph 428 of the Indian Railway Financial Code). The Loan Account will give only the extent of expenditure actually charged to capital.

205. Government Accounts: – The accounts maintained in accordance with the requirements of Government Accounts are collectively termed as the “Finance Accounts.” The Finance Accounts of a railway are compiled annually, for the purpose of presenting in a condensed form, the various transactions brought to account in the books of the railway duly classified in accordance with the heads of account prescribed for Government accounting (see Chapter VII).

206. According to Article 266 of the Constitution of India, the Central Government have a consolidated fund entitled the “Consolidated Fund of India”, into which flow all the revenues (for the railways traffic earnings are the main source of income) received by the Central Government, loans raised by the Government by the issue of treasury bills, loans or ways and means advances, and moneys received by the Government in repayment of loans and form which all expenditure of the Central Government is met when so authorised by the Parliament in accordance with law. The Central government have also a public account entitled the “Public Account of India” into which all other public moneys received by or on behalf of government are credited and from which disbursements are made in accordance with the prescribed rules. The procedure to be followed for the payment into, and the withdrawal, transfer or disbursement of moneys from, the consolidated Fund and the Public Account and for the custody of moneys standing in that Fund and Account, is regulated by law made by Parliament and pending such legislation, by the rules made by the President under Article 283 of the Constitution.

207. The Central Government have also, as authorised in Article 267 of the Constitution, a Contingency Fund entitled the “Contingency Fund of India”. This Fund will be at the disposal of the President to enable advances to be made by him for meeting unforeseen expenditure, pending authorization of such expenditure by Parliament under Article 115 or Article 116. The procedure to be followed for the custody of the payment of moneys into, and the withdrawal of moneys from, the Fund is regulated by law made by parliament. (The procedure for granting advances to meet unforeseen expenditure of railways is laid down in paragraph 382 of the Indian Railway Financial Code.) Note – Though the transactions of the Railway Ministry form part of the Consolidated Fund, the Contingency fund and the Public Account of India, they are accounted for in the “Railway Fund” which has been created proforma in the books of the Reserve Bank of India

208. Classification in government Accounts: – The government accounts are thus kept in the following three parts:- Part I - Consolidated Fund of India. Part II - Contingency Fund of India. Part III – Public Accounts of India.

(a) Consolidated Fund of India. – In this part of the Account there are three main divisions, namely:- (1) Revenue, (2) Capital and (3) Debt (comprising public Debt and Loans and Advances). The first division deals with the proceeds of taxation and other receipts, classed as revenue and the expenditure therefrom. (In the case of the Railways, the traffic earnings are the main source of revenues). The second division deals with expenditure incurred with the object of increasing assets of a material character (see paragraph 203) also and also receipts intended to be applied as a set-off to capital expenditure. The third division comprises, so far as Railway Accounts are concerned, of loans and advances made by Government together with the repayments of the former and recoveries of the latter

(b) Contingency Fund of India. – In this part are recorded transactions connected with the Contingency Fund set up by the Government of India under Article 267 of the Constitution.

 (c) Public Account of India – Here there are two main divisions, namely (I) Debt (other than those included in Part I) and Deposits; and (2) Remittances. The first division comprises receipts and payments other than those falling under “Debt” heads pertaining to Part I, in respect of which Government incurs a liability to repay the moneys received or has a claim to recover the amounts paid, together with repayments of the former and the recoveries of the latter such as Contributory/Non-Contributory Provident Fund Accounts, Staff Benefit Fund, and all Railway Funds like the Development Fund, the Depreciation Reserve Fund etc. The second division comprises all adjusting heads, such as transfers between different accounting circles (for transactions appearing in the first instance in the books of one Accounts Officer but finally transferred to those of another).

209. Extra-Railway Transactions.-Besides those mentioned in the preceding paragraph, there are certain other transactions which, for convenience, are adjusted in the books of Railway Account Offices, though they do not appertain to the “Revenue” or “Expenditure” on Railways e. g., 216-Audit-Railway Audit Offices.

210. Division by Heads of Accounts. – Within each of the divisions mentioned in paragraph. 208, the transactions are grouped into sections, further sub-divided into major heads of account. The main unit of classification is the major head which has been allotted a distinct code number. There are sub-major heads, under some of the major heads. The major/sub major heads are divided into minor heads, the minor heads into sub-heads, and the sub-heads into detailed heads. The major and minor heads of account of railway revenue, capital, debt and deposits, and remittance transactions, and all other central transactions which though not pertaining to railways are adjusted in railway books, are given in Appendix IV to this code.

211. “Commercial” and “Strategic” transactions – “Revenue” and “Capital” transactions are further classified as “Commercial” and “Strategic” according to the class of section of the railway line to which they pertain. A similar classification is observed in regard to the Depreciation Reserve Fund transactions also. A list of Strategic Railway lines in given below: -

212. (I) Subject to such detailed instructions as have been prescribed with the approval of the Comptroller and Auditor General of India, the working expenses should be distributed between commercial and strategic sections of a Railway. The actual expenses are to be charged to be the commercial and strategic section where these can be ascertained. The remaining expenses are to be apportioned between them on the following basis:- ( a) Engineering expenses to be divided in proportion to engine track kilometrage. (b) Locomotive expenses to be divided in proportion to engine kilometrage. (c) Carriage and wagon expenses to be divided in proportion to vehicle kilometrage. (d) Traffic expenses to be divided in proportion to train kilometrage. (e) Electrical, Signal and Tele-communication expenses to be divided on the basis prescribed for the department to which the service is rendered, vide clauses (a) to (d) above. As regards Electrical and Signal workshops half of the expenditure may be apportioned on the basis of engine kilometres and the other half in proportion to the wagon/vehicle kilometres. (f) Expenses of other departments to be divided in proportion to gross tonne kilometrage. (2) The Stores balances of the Railway should be distributed between “Commercial” and “Strategic” on the basis of the average issues of stores to the commercial and strategic sections during the preceding three years. This distribution should be shown in the schedule of expenditure (A-331) accompanying the monthly capital accounts.

213. Exhibition of recoveries of Expenditure in government Accounts. – The general rules regulating the exhibition of recoveries of expenditure in government Accounts have been printed as Appendix V to this code. Subject to the detailed instructions contained in this and other Indian Railway codes, these rules should be followed in classifying recoveries. Note:- (1) Recoveries on account of over-payment made in the previous year, other than over payments relating to works-in-progress (i. e. works, the accounts of which are still open), stores and other suspense accounts, should be recorded as “Earnings” under Z-650. Other unclassified receipts. However, over-payment due to difference between actual and assumed attendance should, when recovered, be adjusted in reduction of expenditure even though the recovery is made in a subsequent year. (2) Credit upto Rs. 10,000 relating to works, the accounts of which have been closed should also be treated as “Earnings”.

214. Exhibition of Inter-Railway payments in Government Accounts. – Payments andrecoveries made by a Railway for the hire of goods vehicles to other railways or for other items of expenditure for which adjustments between railways are authorised by the railway board should be accounted for under one and the same detailed head of account in the expenditure abstracts of both the railways which are involved in the transaction.

215. Inter-Departmental Adjustments – The principles and rules prescribing the conditions under which one department may charge another department for services rendered or article supplies, and the procedure to be observed in the settlement of such charges have been laid down in Appendix VI to this Code.

216. Purpose of Detailed Classification in Administrative Accounts. – A careful and wellplanned analysis of all items of receipt and expenditure is a condition precedent to an effective financial control and is the primary object of any accounting classification. Such a classification will secure the requisite degree of uniformity of accounting, a mid the volume and variety of the financial transactions of railways. So as to render the accounts of different railways comparable over the same time periods and to enable preparation of budget estimates or forecasts of receipts and payments.

217. Allocation of receipts and expenditure. – The primary responsibility for the allocation of all receipts and payments rests with the concerned departmental officers. Each bill or voucher received from them should show the correct allocation of the receipt/expenditure in the fullest detail. The Accounts Department is responsible for seeing, to the extent it is possible for them to do so, that the allocation shown on the initial document is not prima facie incorrect.

218. Correct classification should be followed in recording the expenditure in accounts irrespective of whether provision in the budget has been made under correct budget head. In order, however, to avoid undue variation between the budget and accounts figures, changed in accounting classification will not ordinarily be introduced during the course of the year. Note – In the case of works, the allocation of which has to be changed during the course of a year from one head of expenditure to another, classification of expenditure in that year should follow the original allocation. The change should be given effect to from the beginning of the next financial year only after making necessary provision in the Budget at the Budget stage or at the Revised Estimate stage to cover not only the estimated expenditure for the budget year but also write back of the expenditure incurred from the commencement of the work to the end of the previous year.

219. Account Heads . – Some of the account heads in the railway books are operated for purpose of maintaining a link (see paragraph 201) between the commercial Accounts of the railway and the government Accounts. These heads are dealt with in paragraphs 220 to 222. Other account heads, which need some explanation have been dealt with in paragraphs 223 to 237.

ACCOUNT HEADS LINKING COMMERCIAL & GOVERNMENT ACCOUNTS

220 Demands Payable. – Unlike government accounts which record expenditure only when actually disbursed or receipts only when actually realised the railway accounts maintained on a commercial basis will record the expenditure incurred or earnings accrued in a month irrespective of whether they have actually been paid or realised. On the Expenditure side, the revenue liabilities of the railway for a month, which are not payable within the same month, are brought to account as working expenses for the month by taking contra credit to a suspense head called “Demands Payable”. When the railway’s liabilities are actually discharged by payments, this suspense head is debited with the amount of the payment so made.Thus, the balance at the end of the month in this suspense head will represent liability of the railway incurred, but not actually discharged, during that month. Demands Payable is a suspense head of account under the major head 346/347, Indian Railway-Commercial Lines/Strategic Lines-Working Expenses. A separate account should be opened for each month, such as “Demands Payable for April”, “Demands Payable for May” etc. The accounts of a month are generally kept open upto the end of the following calendar month. The journal entries exhibiting the debits to the working expenses (for liability incurred) by credit to the suspense head Demands Payable may be made actually in the following calendar month but will be adjusted in the accounts of the relevant (previous) month. However, the liability may be discharged by payment in the following calendar month, and this transaction will be accounted for by debit to the head Demands Payable in the accounts for the month in which the payment is made. This is because the cash book for the month is closed at the end of the same month, whereas the ledger and the journal for a month are kept open upto the end of the following month. This is explained through the illustration given below: -It is important that all working expenses, properly appertaining to a year, should be charged to the Revenue Accounts of that year. For this purpose, it will be necessary to estimate the probable charges for such items as Telegraph Department charges for rent, maintenance and inspection, telephone, water and electricity bills, overtime bills of staff and all other similar bills payable etc. In such cases, the proper head of expenditure will be debited and “Demands Payable” credited, the latter account being cleared in the accounts for the month in which the actual payment is made. If the amount has been under-estimated a further entry debiting the expenditure head by credit to "Demands Payable” will be necessary; but if the estimate was too high “Demands Payable” will be debited by Cash or Transfer only to the extent of the actual payment and a journal entry debiting “Demands Payable” by credit to the head of expenditure previously over debited will be made. Note: The following items of revenue payments should be debited direct to final heads in the accounts of the month in which the payments are made, without operating on the suspense head “Demands Payable”.- (1) Special contributions to the State Railway Provident Fund and gratuties. (2) Settlement dues. (3) Supply of Sundry materials. (4) Advertisement charges. (5) Law charges. (6) Payment of Compensation under Workman’s Compensation Act. (7) Service Postage stamps and other postal charges. (8) Payment of Compensation for goods etc. lost or damaged. (9) Stationery, Forms, Books, News Papers and Publications. (10) Repairs to typewriters and office equipment. (11) Printing and Binding charges.

221. Labour.- The wages and allowances for a month of workshop staff are paid to them only in the beginning of the following month. However, to ascertain the cost incurred on a job in a month, it is essential that the value of the labour employed in the shops is charged in the same month to the specific jobs on which the workshop staff have been engaged. For this and other purposes therefore, the operation of a suspense head similar to “Demands Payable” is necessary. The total wages and allowances of staff employed in the shops during any month will, in the first place, be credited to a head under the workshop manufacture suspense (capital 7210) termed “Labour”. As the Labour Pay Sheets are passed in the Accounts office for payment, the amount passed will be debited in the General Books of the railway (paragraph 302) to the head “Labour” by credit to “Transfers Revenue” (c.f. paragraph 404). The balance of the account “Labour” at the end of the month will consequently represent liabilities on account of the wages and allowances charged, but not as yet cleared by actual payment to the labour.

222. Traffic Accounts. – This is a suspense head of account under the major head 146/147 Indian Railway-Revenue Receipts-commercial/strategic lines. This account serves the same purpose for earnings as “Demands Payable’ does for expenses. This head is debited with all earnings for the realisation of which a Railway Administration is responsible, irrespective of whether the earning relate to its own traffic or to traffic inter-charged with other Railways. This account is credited with the realisation of all such earnings. The balance in this account thus represents unrealised earnings either at the stations or in the Accounts Office.

CERTAIN OTHER ACCOUNTS HEADS

223. Miscellaneous Advances – this is a suspense head of account under the major head 346/347 Indian Railway-Commercial Lines/Strategic Lines-Working Expenses. This head is intended for the booking temporarily, of the following classes of transactions pending adjustment to final heads of account. (a ) Charges the allocation of which is not known or which cannot immediately be adjusted to a final head; (b) Inter-departmental transactions awaiting acceptance. Note – Transactions of outward monthly accounts (vide paragraph 441) pertaining to other Government Departments should as far as possible, be adjusted directly under “Remittance Account with State” and not through “Miscellaneous Advances”. (c) Expenditure incurred for other than Government Works in anticipation of receipt of deposits or pending realisation of the amount expended. (d) Payments made in advance for stores to be supplied. (e) Payments made in advance to Railway officials for local purchases of material and other purposes pending rendering of accounts. Note - This head is not to be mixed up with capital 7300 Miscellaneous Advances appearing in the Classification of Capital and Other Works – Expenditure.

224. “Other Railway” – this is a suspense account under the major head 146/147- Indian Railway Revenue Receipts-commercial Lines/Strategic Lines. All transactions regarding division of earnings between Government railways will be passed through this account. The balance of this account represents unadjusted through traffic transactions with such railways.

225. Deposits – Under the major head 845 Railway Deposit (in K-Deposit and Advances (b)- Deposits not bearing interest), there are separate minor heads for Deposits of Branch Line companies and unclaimed Provident fund Deposits. The sub-heads under the Minor head “Other Deposits” are described in the subsequent paragraphs. (1)Unpaid Wages – Wages and allowances of staff not paid to them by the Cashier within the stipulated period (see para 1989) are taken to the credit of the railway under this head of account. This head is debited with all subsequent payments made to staff and is also debited with the amount of unpaid wages transferred to Revenue or Capital heads of account in accordance with para 319. (2)“Private Companies” – When, under orders of the competent authority, through booking is permitted with companies or other carries who do not bank with a government Treasury moneys due to them on the apportionment of traffic for the month will credited to this sub head of the Deposit account. This credit will be cleared by actual payment or by debit (by credit to earnings) against moneys collected by private companies on behalf of Indian Railways. (3) “Miscellaneous” – Under this sub-head are included Cash Security Deposits, earnest money paid by tenderers for contracts, court attachment recoveries, deposits by other parties on account of estimated cost of works to be executed for them by the railway etc. Unpaid bills of contractors will also be credited to this sub-head. The debits will consist of the refund or repayment of previous credits and of amounts written-off under paragraph 321.

226. State Railway Provident Fund – this is minor head of account under the major head 805 State Provident Funds-C-Railways (under I-Small Savings, Provident fund etc.). The transactions relating to State Railway Provident fund, both contributory and non-contributory, will be shown as sub-heads under this minor head. Unpaid Provident fund accounts will be credited to this head of account (unless they relate to closed accounts, in which case they will be credited to “Deposits”) Subsequent payment of such amounts will only be made on pay orders drawn out by the Provident fund Section in the usual manner.

227. Staff Benefit fund. – This is a minor head of account under the major head 821 General and other Reserve Funds (under J-Reserve Funds (a)-Reserve Funds bearing interest). It will be operated in accordance with the Staff Benefit Fund rules prescribed in the Indian Railway Establishment Code. It will be credited, besides other items, with all fines realised from employees of the Railway.

228. General Provident Fund and other Provident Funds – These heads record the credits to and payment from, the respective funds. The rules in paragraph 226 to these funds mutatis mutandis.

229. Cash – This head represents the amount held by the Cashier for payment into treasury and the total of cash imprests with the departmental officers. There is a minor head “Railways” under the major head 871-Departmental Balances under L-Suspense and Miscellaneous (c) Other Accounts which is debited and credited with all cash transactions as recorded in the General cash Book (A-304) and summarised in the General Cash Abstract Book (A-306): the balance under this account will represent the amount held by Cashier for payment into bank. Similarly, there is a minor head “Railways” under the major head No. 872- Permanent Cash Imprest (under L-Suspense and miscellaneous (c) Other Accounts) which represents cash imprests held by the Railway Officers.

230. “Capital Outlay” – All capital transactions under final heads (i. e. with the exception of those under final heads “Suspense heads” which will be closed to balance) will be closed to this account.

231. “Net Revenue” – All revenue transactions on account of receipts and expenditure under final heads (i. e. with the exception of those under “Suspense Heads” which will be closed to balance) will be closed to this account.

232. Miscellaneous Government Account – This is a major head No. 880, under LSuspense and miscellaneous (e) miscellaneous, and is operated along with the following minor heads: ---Ledger Balance Adjustment Account. --Write Off from heads of Accounts closing to balance. This Account will be used for closing of all heads of accounts which do not record Railway revenue or expenditure. The balances, if any, under the debt and remittance heads, with the exception of ‘Transfer Railways’ will, however, be closed to ‘Balance’. The transaction under the head ‘Transfer Railways’ will be closed to a minor head of “Miscellaneous Government Account”, in the books of the individual railways and to ‘Balance’ if there is any balance in the books of the Railway Board. The transactions under the head ‘Deposits with Reserve Bank (Railways)’ will be closed to minor head of “Miscellaneous Government Account”. RESERVE FUNDS

233. Depreciation Reserve Fund – Railways – This is a minor head under the major 815 Depreciation/Renewal Reserve Funds. The accounts of this fund will be maintained in the books of the Railways and in the office of the Railway board. The receipts, which mainly consist of contributions from Revenue on the basis of the recommendations of the Railway Convention Committee and the interest on the Fund balances, will be credited to the fund. The payments from the fund, mainly on account of replacement and renewal of assets in accordance with the rules of the fund, will be debited to the Fund. The Balance will be carried forwarded from year to year.

234 Railway Revenue Reserve Fund – This is a minor head under the major head 816- revenue Reserve Funds (under J-Reserve Funds-(a) Reserve Funds bearing interest) the account of the Fund will be maintained in the Office of the Railway Board only. The Fund will be credited mainly with appropriation from revenue surplus, interest on the balances of the fund and loans from General Revenues. The accounts of the Fund will be debited with (i) such sums as may be required for dividend equalisation that is to say to make up the shortfall in the revenue surplus available for payment of dividend to the General Revenues, (ii) repayment of loans form General Revenue and interest on loan. The balance of the fund will be carried forward from year to year.

235. Railway Development Fund- This is a minor head under the major head 817- Development Funds (under J-Reserve Funds-(a)-Reserve Funds bearing interest). The accounts of the Fund will be maintained in railway board’s Office. The Fund will be credited with appropriation from revenue surplus, interest on Fund balances and loans from General Revenue. The withdrawals from the Fund will be in accordance with the rules of the Fund, namely to meet the expenditure on providing amenities for passengers and other railway users, labour welfare works, unremunerative operating improvements etc. The balance of the Fund will be carried forward from year to year.

236. Railway Pension Fund – This is a minor head under the major head 821 General and other Reserve Funds (under J-Reserve Funds (a) Reserve Funds bearing interest). Receipts into the Fund will consist of appropriation from revenue/capital account, transfer from contributory Provident Fund and interest on Fund balances. All payments relating to pension and other retirement benefits to pensionable employees will be debited to the accounts of the Fund. The balance of the Fund will be carried forward from year to year.

237 Accident Compensation, Safety and Passenger Amenities Fund - This is a minor head under the major head 821-General and other Reserve Funds (under J-Reserve Funds, (a) Reserve Funds bearing interest). The Fund will be credited with the amount collected as surcharge on passenger tickets (towards accident compensation etc.) and interest on the balance in the Fund. The Fund will be debited with (a) payments of compensation to passengers involved in railway accidents, (b) expenditure on safety works such as Track Circuiting or Axle Counters, Automatic warning System, Vigilance Control Device, Lifting Barriers at level crossings, inter-locking of level crossing gates with signals and such other safety works as may be authorised to be financed out of this fund from time to time and (c) expenditure on specified items of passenger amenities and allied works such as provision of platforms and covers there on, Train indicator Boards, Rest Shelters for licensed porters etc. The balances of the Fund will be carried forward from year to year.

 Multiple choice questions:

Paragraph 201

1. What is the main requirement of government accounting?
• A) To show how capital is utilized
• B) To maintain a systematic record of all receipts and expenditures classified under certain headings
• C) To determine if a business is solvent or insolvent
• D) To track the sources of gains or losses
2. Railway accounts in India must:
• A) Only conform to commercial accounting practices
• B) Only conform to government accounting practices
• C) Conform to both commercial and government accounting practices
• D) Maintain separate records without any links

Paragraph 202

3. The accounts of a railway presented to facilitate a review of its finances as a commercial undertaking are known as:
• A) Finance Accounts
• B) Block Accounts
• C) Capital and Revenue Accounts
• D) Public Accounts
4. The Capital and Revenue Accounts of a railway are included in the:
• A) Monthly Report
• B) Annual Report
• C) Quarterly Report
• D) Weekly Report

Paragraph 203

5. Capital transactions pertain to:
• A) Earnings and working expenses
• B) Acquisition of concrete assets
• C) Day-to-day operational expenses
• D) Debt and equity management
6. Expenditure on renewals and replacements of railway assets is financed from the:
• A) Development Fund
• B) Revenue (Open Line Works-Revenue)
• C) Depreciation Reserve Fund
• D) Accident Compensation Fund

Paragraph 204

7. Expenditure of a capital nature incurred on railway assets is classified under how many heads?
• A) Three
• B) Four
• C) Five
• D) Six
8. The Loan Account shows the extent of expenditure:
• A) Actually charged to capital
• B) Financed from the Development Fund
• C) For renewals and replacements
• D) For unremunerative projects

Paragraph 205

9. The accounts maintained in accordance with the requirements of Government Accounts are termed as:
• A) Railway Accounts
• B) Finance Accounts
• C) Public Accounts
• D) Block Accounts

Paragraph 206

10. The Consolidated Fund of India includes:
• A) All revenues received by the Central Government
• B) Public moneys received by or on behalf of the government
• C) Unforeseen expenditure funds
• D) All other public accounts

Paragraph 207

11. The Contingency Fund of India is at the disposal of:
• A) The Prime Minister
• B) The Finance Minister
• C) The President
• D) The Comptroller and Auditor General

Paragraph 208

12. Which of the following is not a part of the government accounts?
• A) Consolidated Fund of India
• B) Contingency Fund of India
• C) Public Accounts of India
• D) Finance Accounts of India

Paragraph 209

13. Extra-Railway Transactions refer to transactions:
• A) Related to railway revenue
• B) Not pertaining to the "Revenue" or "Expenditure" on Railways
• C) Pertaining only to government receipts
• D) Included in the block account

Paragraph 210

14. In government accounts, transactions are grouped into sections under:
• A) Major heads
• B) Minor heads
• C) Detailed heads
• D) All of the above

Paragraph 211

15. Revenue and capital transactions are further classified as:
• A) Commercial and Departmental
• B) Financial and Operational
• C) Strategic and Non-strategic
• D) Commercial and Strategic

Paragraph 212

16. Locomotive expenses should be divided in proportion to:
• A) Vehicle kilometrage
• B) Engine kilometrage
• C) Train kilometrage
• D) Wagon kilometrage

Paragraph 213

17. Recoveries on account of over-payment made in the previous year should be recorded as:
• A) Earnings under Z-650
• B) Revenue transactions
• C) Capital transactions
• D) Loan recoveries

Paragraph 214

18. Payments and recoveries for the hire of goods vehicles to other railways should be accounted for under:
• A) Different detailed heads of account
• B) The same detailed head of account
• C) Capital expenditure heads
• D) Revenue expenditure heads

Paragraph 215

19. The principles and rules for inter-departmental adjustments are laid down in:
• A) Appendix IV
• B) Appendix V
• C) Appendix VI
• D) Chapter VII

Paragraph 216

20. The primary object of any accounting classification is:
• A) Financial reporting
• B) Effective financial control
• C) Budget estimation
• D) Uniformity of accounting

Paragraph 217

21. The primary responsibility for the allocation of all receipts and payments rests with:
• A) Accounts Department
• B) Finance Department
• C) Departmental officers concerned
• D) Railway Board

Paragraph 218

22. Correct classification should be followed in recording expenditure in accounts:
• A) Only if provision in the budget has been made
• B) Irrespective of budget provision
• C) Only at the end of the financial year
• D) Based on the initial document

Paragraph 219

23. Some account heads in the railway books are operated for:
• A) Maintaining a link between commercial and government accounts
• B) Tracking only commercial transactions
• C) Tracking only government transactions
• D) Maintaining a link between revenue and expenditure

Answer keys:

Paragraph 201

1. B) To maintain a systematic record of all receipts and expenditures classified under certain headings
2. C) Conform to both commercial and government accounting practices

Paragraph 202

3. C) Capital and Revenue Accounts
4. B) Annual Report

Paragraph 203

5. B) Acquisition of concrete assets
6. C) Depreciation Reserve Fund

Paragraph 204

7. C) Five
8. A) Actually charged to capital

Paragraph 205

9. B) Finance Accounts

Paragraph 206

10. A) All revenues received by the Central Government

Paragraph 207

11. C) The President

Paragraph 208

12. D) Finance Accounts of India

Paragraph 209

13. B) Not pertaining to the "Revenue" or "Expenditure" on Railways

Paragraph 210

14. D) All of the above

Paragraph 211

15. D) Commercial and Strategic

Paragraph 212

16. B) Engine kilometrage

Paragraph 213

17. A) Earnings under Z-650

Paragraph 214

18. B) The same detailed head of account

Paragraph 215

19. C) Appendix VI

Paragraph 216

20. B) Effective financial control

Paragraph 217

21. C) Departmental officers concerned

Paragraph 218

22. B) Irrespective of budget provision

Paragraph 219

23. A) Maintaining a link between commercial and government accounts

Paragraph 220

24.  What is the purpose of the "Demands Payable" suspense head in railway accounts?

A) To record the earnings accrued in a month

B) To account for the revenue liabilities of the railway for a month

C) To maintain a record of payments made to staff

D) To manage cash transactions of the railway

Answer: B) To account for the revenue liabilities of the railway for a month

25.  What happens when the railway’s liabilities are actually discharged by payments?

A) The working expenses head is credited

B) The suspense head "Demands Payable" is debited

C) The revenue account is credited

D) The cash book is closed

Answer: B) The suspense head "Demands Payable" is debited

26.  What is an example of an item that should be debited directly to final heads without operating on the "Demands Payable" suspense head?

A) Telegraph Department charges

B) Law charges

C) Electricity bills

D) Overtime bills of staff

Answer: B) Law charges

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27.  Why is a suspense head similar to "Demands Payable" necessary for workshop staff wages and allowances?

A) To ensure timely payment to staff

B) To ascertain the cost incurred on a job in a month

C) To manage inter-departmental transactions

D) To clear unpaid wages at the end of the month

Answer: B) To ascertain the cost incurred on a job in a month

28.  What represents liabilities on account of wages and allowances charged but not cleared by actual payment to labor at the end of the month? A) Transfers Revenue B) Labour Pay Sheets C) The account "Labour" D) The General Cash Book

Answer: C) The account "Labour"

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29.  What is the purpose of the "Traffic Accounts" suspense head?

A) To record all expenses of the railway

B) To account for liabilities not discharged within the month

C) To serve the same purpose for earnings as "Demands Payable" does for expenses

D) To manage inter-departmental transactions awaiting acceptance

Answer: C) To serve the same purpose for earnings as "Demands Payable" does for expenses

30.  What does the balance in the "Traffic Accounts" suspense head represent? A) Realised earnings B) Paid wages C) Unrealised earnings D) Cleared advances

Answer: C) Unrealised earnings

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31.  Which of the following is NOT an example of a transaction booked under "Miscellaneous Advances"?

A) Payments made in advance for stores to be supplied

B) Charges the allocation of which is not known

C) Payments made in advance to Railway officials for local purchases

D) Payments of compensation under Workman’s Compensation Act

Answer: D) Payments of compensation under Workman’s Compensation Act

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32.  What does the balance in the "Other Railway" suspense account represent?

A) Payments made in advance

B) Unadjusted through traffic transactions with other railways

C) Cleared inter-departmental transactions

D) Realised earnings from other railways

Answer: B) Unadjusted through traffic transactions with other railways

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33.  Under which major head is the "Deposits" account categorized?

A) 346/347 Indian Railway-Commercial Lines/Strategic Lines-Working Expenses

B) 845 Railway Deposit

C) 146/147 Indian Railway-Revenue Receipts-commercial/strategic lines

D) 880 Miscellaneous Government Account

Answer: B) 845 Railway Deposit

34.  What is included under the "Miscellaneous" sub-head of the "Deposits" account?

A) Unpaid Provident fund accounts

B) Cash Security Deposits and earnest money paid by tenderers

C) Payments made in advance for stores to be supplied

D) Charges the allocation of which is not known

Answer: B) Cash Security Deposits and earnest money paid by tenderers

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35.  Under which major head is the "State Railway Provident Fund" categorized?

A) 805 State Provident Funds-C-Railways

B) 821 General and other Reserve Funds

C) 872 Permanent Cash Imprest

D) 880 Miscellaneous Government Account

Answer: A) 805 State Provident Funds-C-Railways

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36.  The "Staff Benefit Fund" will be credited with all fines realized from employees under which major head?

A) 346/347 Indian Railway-Commercial Lines/Strategic Lines-Working Expenses

B) 845 Railway Deposit

C) 821 General and other Reserve Funds

D) 880 Miscellaneous Government Account

Answer: C) 821 General and other Reserve Funds

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37.  What do the "General Provident Fund and other Provident Funds" heads record?

A) Credits to and payments from the respective funds

B) Unpaid wages and allowances of staff

C) Unrealised earnings from traffic inter-charged with other railways

D) Payments made in advance for stores to be supplied

Answer: A) Credits to and payments from the respective funds

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38.  What does the minor head "Railways" under the major head 871-Departmental Balances represent?

A) Amount held by the Cashier for payment into the treasury

B) Credits and payments of Provident Funds

C) Unpaid wages and allowances of staff

D) Realised earnings from traffic inter-charged with other railways

Answer: A) Amount held by the Cashier for payment into the treasury

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39.  What will all capital transactions under final heads be closed to?

A) Miscellaneous Government Account

B) Capital Outlay

C) Net Revenue

D) Suspense Heads

Answer: B) Capital Outlay

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40.  What will all revenue transactions on account of receipts and expenditure under final heads be closed to?

A) Miscellaneous Government Account

B) Capital Outlay

C) Net Revenue

D) Suspense Heads

Answer: C) Net Revenue

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41.  Which head of account is used for closing all heads of accounts that do not record Railway revenue or expenditure?

A) Ledger Balance Adjustment Account

B) Write Off from heads of Accounts closing to balance

C) Miscellaneous Government Account

D) Remittance Account with State

Answer: C) Miscellaneous Government Account

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42.  What does the "Depreciation Reserve Fund" mainly consist of?

A) Appropriation from revenue surplus

B) Loans from General Revenues

C) Contributions from Revenue and interest on Fund balances

D) Payments for replacement and renewal of assets

Answer: C) Contributions from Revenue and interest on Fund balances

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43.  What is the "Railway Revenue Reserve Fund" credited with?

A) Appropriation from revenue surplus

B) Expenditure on safety works

C) Payments relating to pension and other retirement benefits

D) Replacement and renewal of assets

Answer: A) Appropriation from revenue surplus

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44.  What is the "Railway Development Fund" used for?

A) Payment of compensation to passengers involved in railway accidents

B) Replacement and renewal of assets

C) Providing amenities for passengers and other railway users

D) Repayment of loans from General Revenue

Answer: C) Providing amenities for passengers and other railway users

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45.  What are the receipts into the "Railway Pension Fund" composed of?

A) Contributions from Revenue and interest on Fund balances

B) Payments of compensation to passengers involved in railway accidents

C) Appropriation from revenue/capital account and interest on Fund balances

D) Payments made in advance for stores to be supplied

Answer: C) Appropriation from revenue/capital account and interest on Fund balances

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46.  What will the "Accident Compensation, Safety and Passenger Amenities Fund" be debited with?

A) Contributions from Revenue and interest on Fund balances

B) Payments relating to pension and other retirement benefits

C) Expenditure on specified items of passenger amenities and allied works

D) Appropriation from revenue surplus

Answer: C) Expenditure on specified items of passenger amenities and allied works

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