Manual for Integrated District Planning - National Institute of Rural ...

Manual for Integrated District Planning
Accounting principles
Transactions are recorded in the cash books and the ledgers following the norms stated below
Name of Account When to be Debited When to be Credited
Personal Account When a person receives When a person gives
Real Account When asset increases When asset decreases
When liability decreases
When liability decreases
Nominal Account When there is expense or loss When there is income or gain
Norms for recognising receipts: All revenue receipts regarding property and other taxes are recognised on
cash basis as and when they are received. All receipts are to be deposited in the bank account or local fund
account as soon as it is received. In the event of deposit of such receipts into bank/treasury, contra entry is
made by debiting the bank/treasury account and crediting the cash account. General grants, which are of
revenue nature, are recognised as incomes on actual receipts. Grants towards revenue expenditure, received
prior to incurrence of expenditure, are treated as liability till such time that the expenditure is incurred.
Grants received in respect of specific revenue expenditure are recognised as receipts in the accounting
period in which the corresponding revenue expenditure is charged to the receipts and payments accounts.
Grants received towards capital expenditure are treated as a liability till that fixed asset is constructed.
Norms for recognising payments: Payments are recorded as soon as the custodian of the fund signs the
cheque based on the debit voucher prepared. In case of bank charges, the expenditure is recognised on the
date when it comes to the notice that the bank charge has been so debited in the bank pass book. In case
of advance for payment of labour wage, cash account or bank account is credited and advance ledger for
the programme is debited.
Norms of treatment of statutory deductions: Statutory deductions from salaries and from the contractors
in form of income tax, profession tax, provident fund, contribution, security deposit etc. are recognised as
liability. When the statutory deductions are deposited into the proper head of the government, the liability
is relinquished proportionately.
Monitoring instruments: For monitoring of financial discipline, emphasis is given on regular submission of
receipts and payments accounts. One of the major indicators of financial discipline is regular and updated
availability of the financial disclosure in standardised and pre-defined formats.
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