Government Accounts Losses Exhibition Rules

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Questions and Answers

What should be done with losses of cash and stores in the accounts?

  • They should be recorded separately under relevant descriptive heads. (correct)
  • They should be ignored if they are below a certain threshold.
  • They should only be noted if they exceed Rs. 5000.
  • They should be lumped together in the main expenditure account.

How should all losses or deficiencies of an important character be treated?

  • They should be mentioned in the explanation on appropriation accounts. (correct)
  • They should be recorded in the annual profit and loss statement.
  • They should be written off immediately without further notes.
  • They are excluded from the financial records altogether.

What is the specified threshold for itemizing losses of stores?

  • Rs. 2500 (correct)
  • Rs. 3000
  • Rs. 1000
  • Rs. 5000

What should be included in the statement of remission and abandonments of claims?

<p>All items of remission and abandonments during the year. (B)</p> Signup and view all the answers

What should happen if money due to the Railway is embezzled before it has reached the Cash Office?

<p>It should be shown as a loan on the expenditure side. (A)</p> Signup and view all the answers

What is the treatment for small losses due to fire or transit?

<p>They need not be mentioned if they are minor in nature. (A)</p> Signup and view all the answers

How should losses related to buildings, land, and stores be recorded?

<p>According to the classification of expenditure. (D)</p> Signup and view all the answers

What do losses due to revaluation of stores appear under?

<p>Stores Account (D)</p> Signup and view all the answers

What should be done with counterfeit coins or notes accepted in cash handling?

<p>They are considered a loss of cash. (C)</p> Signup and view all the answers

What is the proper action for irregular or unusual payments in accounting?

<p>They must be recorded according to the nature of expenditure. (A)</p> Signup and view all the answers

When should extraordinary payments be recorded separately?

<p>When special heads for recording exist. (D)</p> Signup and view all the answers

What is the treatment of heavy losses that are unusual?

<p>They should be mentioned separately in the accounts. (A)</p> Signup and view all the answers

When losses are partly met by non-issue of pay or pension, how is the loss defined?

<p>Only the balance of the claim should be treated as a loss. (A)</p> Signup and view all the answers

In the case of cash in hand, what should be done if a loss is recovered in the same year it was reported?

<p>It should be deducted from the loss recorded. (C)</p> Signup and view all the answers

What is indicated by the term 'net value of stores' in cases of loss?

<p>Value after deductions for any recovered amounts. (C)</p> Signup and view all the answers

Who is considered a Railway/Government servant?

<p>Persons authorized to receive money on behalf of the Railway/Government. (D)</p> Signup and view all the answers

Which statement correctly reflects the accounting treatment of departmental losses?

<p>Departmental losses must be recorded against specific descriptive heads. (D)</p> Signup and view all the answers

What is the consequence of recording transactions under a suspense head regarding losses?

<p>Losses related to those transactions should be written off the suspense head. (C)</p> Signup and view all the answers

When a claim is relinquished, how should it be treated in records?

<p>As an unrecorded loss. (B)</p> Signup and view all the answers

What is the key aspect of overpayments for pay in accounting?

<p>They are debited to the head 'pay'. (D)</p> Signup and view all the answers

What should be done with losses that are below the threshold of Rs. 2500/-?

<p>They can be summarized in total. (C)</p> Signup and view all the answers

Which type of losses is exempt from needing to be mentioned in the accounts?

<p>Minor losses during routine operations. (D)</p> Signup and view all the answers

In the case of important losses, how should the amounts be presented in appropriation accounts?

<p>Mentioned in footnotes under relevant grants. (B)</p> Signup and view all the answers

What happens to losses that are recovered in the same fiscal year they were reported?

<p>Their amount should be recorded as a gain. (B)</p> Signup and view all the answers

Which condition must be met for a loss of stores to be exhibited separately?

<p>The loss must be unexpected or unusual. (A)</p> Signup and view all the answers

What accounting document must reflect losses on account of the revaluation of stores?

<p>The Stock Adjustment Account. (A)</p> Signup and view all the answers

How should the net value of stores be represented in case of a loss?

<p>As the remaining value after recovering sums. (C)</p> Signup and view all the answers

What is required for all items of remission and abandonment of claims to be included in the accounts?

<p>They should be stated separately in Appropriation Accounts. (B)</p> Signup and view all the answers

Which losses are typically not displayed distinctly in financial records?

<p>Small losses such as minor thefts. (D)</p> Signup and view all the answers

For which losses is it required to keep a separate descriptive head in financial accounts?

<p>Losses of identified stores or cash. (D)</p> Signup and view all the answers

How should losses from transactions recorded under a suspense head be managed?

<p>They should be allocated to the relevant expenditure categories. (D)</p> Signup and view all the answers

What is the accounting treatment for losses that result from an embezzlement that occurs before the money has reached the Cash Office?

<p>They are treated as an expenditure under the appropriate loan head. (C)</p> Signup and view all the answers

When should a recovery of loss be recorded if it occurs after the accounts of the financial year are closed?

<p>As an item of receipt in the year the recovery is made. (A)</p> Signup and view all the answers

Which of the following statements correctly describes how irregular or unusual payments should be recorded in accounts?

<p>They must be referenced generally according to expenditure classification. (B)</p> Signup and view all the answers

What happens to unissued pay when it is applied to meet public claims?

<p>Only the resultant balance of the claim is treated as a loss. (D)</p> Signup and view all the answers

Which category of losses requires classification according to the classification of revenue expenditure?

<p>Losses from cash in hand, including those accepted in counterfeit form. (A)</p> Signup and view all the answers

How should overall losses or deficiencies in buildings, lands, and stores be treated?

<p>They should be classified and recorded based on expenditure classification. (A)</p> Signup and view all the answers

In the context of cash handling, what is the consequence of accepting counterfeit coins or notes?

<p>It is recognized as a direct loss of cash. (A)</p> Signup and view all the answers

What classification should be used for excess payments made for materials, such as bricks manufactured?

<p>They should be debited to the head related to the specific project or work. (C)</p> Signup and view all the answers

Which of the following accurately defines who is considered a Railway/Government servant?

<p>Individuals authorized to receive money on behalf of the Railway or Government, even if not full-time employees. (B)</p> Signup and view all the answers

How should losses or deficiencies related to buildings, land, stores, and equipment be recorded?

<p>According to the classification of expenditure (C)</p> Signup and view all the answers

What should be done if counterfeit coins or notes are accepted?

<p>They are considered a loss of cash (D)</p> Signup and view all the answers

When a recovery of loss occurs after the accounts are closed, how should it be recorded?

<p>As a new item of receipt (A)</p> Signup and view all the answers

How should overpayments for pay be categorized in accounting?

<p>Debited to the head 'pay' (B)</p> Signup and view all the answers

If a claim is relinquished, how should it be reflected in the accounts?

<p>Not recorded as a specific loss (A)</p> Signup and view all the answers

Which type of payments should be recorded generally referencing the classification of expenditure?

<p>Unusual or irregular payments (A)</p> Signup and view all the answers

What should happen when losses from suspense heads are recorded?

<p>They should be written off the suspense head (D)</p> Signup and view all the answers

In the case of losses met by non-issue of pay or pension, what constitutes the actual loss?

<p>The resultant balance of the claim (A)</p> Signup and view all the answers

What is considered when classifying unusual payments such as excess payment for manufactured bricks?

<p>Debited to a specific material expense head (B)</p> Signup and view all the answers

What is the treatment for losses related to public money embezzlement if not yet received by the Cash Office?

<p>Bring it into account as a receipt (D)</p> Signup and view all the answers

What should be done with losses of Rs. 2500/- and above in financial records?

<p>They should be disclosed in a separate statement. (C)</p> Signup and view all the answers

What constitutes a loss of stores that need not be mentioned in accounts?

<p>Small losses by fire in transit. (B)</p> Signup and view all the answers

How should losses or deficiencies related to important transactions be represented in the accounts?

<p>They should be shown separately in footnotes. (B)</p> Signup and view all the answers

What is the prescribed treatment for losses on account of revaluation of stores?

<p>They should be noted in the Stock Adjustment Account. (D)</p> Signup and view all the answers

What is the action required for heavy losses that are unusual?

<p>They must be noted in the appropriation accounts. (B)</p> Signup and view all the answers

When must losses due to fire or other uncontrollable circumstances be reported?

<p>If they account for significant losses. (A)</p> Signup and view all the answers

What is the limit below which losses may be lumped together?

<p>Rs. 2500/- (C)</p> Signup and view all the answers

In financial accounting, how should items of remission and abandonments of claims be included?

<p>They must be included in a separate statement appended to appropriation accounts. (A)</p> Signup and view all the answers

What is suggested for small losses by fire, or in transit?

<p>They do not need to be mentioned in accounts. (B)</p> Signup and view all the answers

For which losses should a separate descriptive head be kept in accounts?

<p>Significant losses related to departmental operations. (D)</p> Signup and view all the answers

Flashcards

Relinquished Claim

Money owed to the Railway/Government that is never collected, it is not recorded as a loss in expenditure.

Embezzled, Stolen, or Lost Funds

If a Railway/Government servant receives money on behalf of the Railway/Government and then loses it, the loss is recorded as a receipt and then shown on the expenditure side as a loan.

Covered Loss by Unpaid Salaries

If a loss of public money is covered by unpaid salaries or pensions, the remaining balance is considered a loss.

Railway/Government Servant

Includes those not formally employed by the Railway/Government but authorized to receive money on their behalf.

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Losses of Buildings, Land, Stores, and Equipment

Losses related to buildings, land, stores, and equipment should be recorded according to the classification of expenditure.

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Losses of Cash in Hand

Losses of cash in hand, either in the office or with government employees, should be recorded according to the Classification of Revenue Expenditure.

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Counterfeit Coins or Notes

The acceptance of counterfeit coins or notes is treated as a loss of cash in hand.

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Recovery of Losses

Recovery of lost money during the same year should be deducted from the loss account. Recovery after the year end is recorded as a receipt.

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Irregular or Unusual Payments

Irregular or unusual payments should be recorded according to the nature of expenditure, e.g., overpaid salary is debited to the pay head.

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Excess Payment for Materials

Excess payment for materials like bricks is debited to the work where the bricks are used.

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Special Heads

Unusual or extraordinary payments that require separate accounting.

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Losses as an Inevitable Feature

Losses that are a regular part of a department's operations, recorded under specific heads within the department's main account.

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Loss of Cash and Stores

Losses of cash and stores are documented in separate sections of the Classification of Revenue Expenditure and the Stock Adjustment Account.

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Exhibition in Appropriation Accounts

Significant or unusual losses in the Appropriation Accounts must be explained and noted in footnotes under relevant grants. This applies even if the losses were not recorded in the accounts.

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Losses on Revaluation of Stores

Losses due to revaluation of stores are recorded under the Stores Account, as outlined in the Financial Code.

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Itemization of Losses

Losses of Rs. 2500/- or more must be listed individually. Losses below this limit can be grouped together.

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Net Value of Stores Loss

When calculating the loss of stores, subtract any recovered amounts from the initial value to determine the net loss.

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Small and Uncontrollable Losses

Small losses from events like fire, transit issues, or uncontrollable circumstances don't need to be recorded in the accounts.

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Mentioning Major Losses

Major losses (e.g., fire, transit) should be mentioned separately in the accounts.

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Remission and Abandonment of Claims

All cases of remission and abandonment of revenue claims in a year are summarized in a separate statement and attached to the Appropriation Accounts.

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What are Special Heads of Account?

Unusual payments or expenditures that require separate accounting because of their nature or value.

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What are Losses as an Inevitable Feature?

Losses that occur regularly as part of a department's operations. These losses are recorded under specific descriptive heads within the main account of the department.

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How are Losses Shown in Appropriation Accounts?

Significant losses or deficiencies of an important or unusual character are mentioned in the explanation on appropriation accounts, with the amount displayed separately in footnotes under the relevant grants.

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How are Losses on Revaluation of Stores Recorded?

Losses due to the revaluation of stored goods are recorded under the Stores Account, as defined in the Financial Code.

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How are Losses Itemized?

Losses of Rs. 2,500 or more must be listed individually, while losses below this threshold can be grouped together.

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How is the Net Value of Stores Loss Calculated?

When calculating the loss of stores, subtract any recovered amounts from the initial value to determine the net loss.

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When are Small Losses Excluded from Accounting?

Small losses due to fire, transit issues, or other uncontrollable circumstances do not need to be recorded in the accounts.

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When Should Major Losses be Mentioned Separately?

Major losses, such as those caused by fire or transit issues, should be mentioned separately in the accounts.

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How are Remission and Abandonment of Claims Recorded?

All instances of remission and abandonment of revenue claims during a year are summarized in a separate statement and appended to the Appropriation Accounts.

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Special Heads of Account

Unusual or extraordinary payments that require separate accounting due to their nature or value. These payments are recorded under specific heads, separate from the regular expenditure.

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Study Notes

Rules Regarding Exhibition of Losses in Government Accounts

  • Receipts: If a claim is relinquished, it's not recorded as a loss in expenditure. However, if money intended for the railway reaches a railway/government employee and is lost or stolen, it must be recorded as a receipt, then shown as a loss (loan) in the appropriate expenditure category. Losses partially or fully covered by not issuing pay/pension are handled by treating the unissued amount as a loss and the due amount as a charge to the correct account. "Railway/Government servant" includes those authorized to receive funds on behalf of the railway. Losses must be recorded showing the nature of the loss.

  • Buildings, Land, Stores, and Equipment: Losses and deficiencies are recorded according to the expenditure classification. If a transaction is recorded under a suspense account, the related losses are also removed from the suspense account. Losses should be recorded using the appropriate expenditure classification.

  • Cash: Losses in cash (e.g., counterfeit coins/notes) are recorded as required by Revenue Expenditure. Any recovery during the year is deducted from the loss account, and any recovery after the year's accounting is treated as a receipt. Recovery amounts should be recorded specifically.

  • Irregular/Unusual Payments: These are recorded in accounts based on the nature and classification of the expenditure (e.g., overpayment of pay, excess brick payments). Unusual or extraordinary payments are recorded in separate accounts. Specific examples are given for illustration (overpayment of pay/excess payments for bricks).

  • Loss of Stores: If store losses are a recurring issue for a particular department, the main expenditure account should contain specific sections to record these losses. This aligns with losses of cash and stores, which are also handled in this way. Losses should be recorded based on the nature of the loss and the value of the item. Losses should be recorded under specific descriptive headings.

  • Exhibition of Losses in Appropriation Accounts: Significant or unusual losses are detailed in the supporting documentation for appropriation accounts. Amounts should be explicitly shown as footnotes to the appropriate grants. Losses related to revaluation of stores are listed in the stores account in Chapter IV of the Financial Code. Losses of ₹2500 and above are individually itemized, while smaller losses can be grouped. The net value of stores (after recovery) represents the loss. Minor losses (fire, transit, etc.) aren't explicitly listed but significant ones are. Remittances and abandoned claims for Revenue during a year are included in a separate, appended statement. This section includes specific criteria for when losses are individually itemized.

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