4.1.
1 Accounting entries for expenditure (General Ledger)
4.1.1.1 The journal entries in this section will be made to record
expenditure related transactions in the General Ledger (regardless
of whether a commitment is established).
4.1.1.2 Expenditure - the following double entries will be made for
expenditures:
Dr Expenditure head account
Cr Payment clearing account
[to record the amount charged to the relevant expenditure head.
This entry shall be recorded in the General Ledger on the date the
cheque is issued]
Dr Payment clearing account
Cr Bank account
[to record the amount cleared from the bank account. This will be
the date as per the Bank Return]
4.1.1.3 Cancellation of expenditure - where an issued cheque has been
stopped and cancelled by the cheque issuing authority, the
following double entry shall be made:
Dr Payment clearing account
Cr Expenditure head account
[to record cancellation of expenditure]
4.1.1.4 Unclaimed monies - where cheques are not cleared from the bank
account within the prescribed period and are unclaimed, the above
double entry shall be:
Dr Payment clearing account
Cr Unclaimed money account
[to record unclaimed cheques transferred to unclaimed money
account within the Public Account]
Dr Unclaimed money account
Cr Bank account
[to record the amount paid from the bank account where the
unclaimed money is subsequently claimed]
Dr Unclaimed money account
Cr Other income account
[to record transfer of amount from the unclaimed money account
(Public Account) to the other income account (Consolidated Fund)
after three years]
4.1.1.5 Refund - where a refund has been paid, the following double entry
shall be made:
Dr Refunds account (expenditure or revenue)
Cr Payment clearing account
[to record refunds paid against a specified ‘refunds’ expenditure
account (or as a debit to revenue]
Dr Payment clearing account
Cr Bank account
[to record the amount cleared from the bank account. This will be
the date as per the Bank Return]
4.1.1.6 Petty cash expenditure - The double entries shall be:
Dr Petty cash account
Cr Payment clearing account
[to establish the petty cash float]
Dr Payment clearing account
Cr Bank account
[to record the amount cleared from the bank account. This will be
the date as per the Bank Return]
Dr Expenditure
Cr Petty cash account
[to record expenditure on receipts of petty cash vouchers (made
simultaneously with next entry)]
Dr Petty cash account
Cr Payment clearing account
[to reimburse the original petty cash float (made simultaneously
with above entry)]
4.1.1.1 The following double entry shall be made to record the payroll
transactions in the Sub-ledger at the time of payment of salary:
Dr Salary account (gross pay)
Cr Bank account (net pay)
Revenue Head account (income tax)
GP Fund account
Other accounts
4.1.1.1 The following double entry shall be made to record the transaction
relating to grants-in-aid and contributions.
Dr Grants and subsidies account
Cr Payment clearing account
[to record the amount charged to the relevant detailed expenditure
head under grants and subsidies. This entry shall be recorded in
the General Ledger on the date the cheque is issued.]
Dr Payment clearing account
Cr Bank account
[to record the amount cleared from the bank account. This will be
the date as per the Bank Return.]
4.1.1 Accounting entries for receipts
4.1.1.1 The double entry required for the recognition of revenue generally
is:
Dr Bank account
Cr Revenue account (detailed head)
[to record receipts or advances collected, and placed into the
Consolidated / Local Fund]
4.1.1.2 The double entry required for recovery of overpayment or refund
of payment, within the current financial year is:
Dr Bank account
Cr Relevant expenditure head
4.1.1.3 The double entry required for receipt consisting of cash amount
and an associated expense (such as a commission). For example,
cash of Rs 900 received, commission paid of Rs 100:
Dr Bank account Rs 1000
Cr Revenue Rs 1000
and
Dr Commission expense Rs 100
Cr Bank account Rs 100
4.1.1.4 Where a discount has been given by the Government, the discount
shall be recognised as an expense. For example, cash received Rs
500, discount given Rs 50:
Dr Bank Account Rs 550
Cr Revenue Rs 550
and
Dr Discounts given Rs 50
Cr Bank Account Rs 50
For example if an amount of Rs 500 to receipt head 1, should have
been made as Rs 750 to receipt head 2, then the required entries
are:
Dr Receipt head 1 500
Cr Bank account 500
and
Dr Bank Account 750
Cr Receipt head 2 750
4.1.1.5 The following double entries shall be carried out in relation to
disclosures of recoveries of losses.
Where recoveries are certain during a financial year
Dr Bank account
Cr Expenditure head account
[to record recoveries received during a financial year]
Where account for the financial year is still open
Dr Suspense loss account
Cr Expenditure head account
[to transfer the loss to suspense loss account where ultimate
amount of a loss is uncertain]
Dr Bank account
Cr Suspense loss account
[to record recoveries received]
On closure of account for the financial year
Dr Unrecovered losses (expenditure) account
Cr Suspense loss account
[to record any net loss not recovered at the financial year end]
Where account for the financial year is closed
Dr Bank account
Cr Other revenue account
[to record recoveries received after the account for the
financial year is closed]
Where recoveries received are more than the loss (excess
recoveries)
Dr Bank account
Cr Other revenue account
[to record excess recoveries in the financial year in which the
amount is received]
1. The following accounting entries are applicable to transactions involving
liabilities. These entries shall be made in the Sub-ledger at a transaction level,
and subsequently transferred into the General Ledger.
4.1.1.6 The accounting entry posted , upon receipt of loan monies is:
Dr Bank Account
Cr Capital Receipts - loans
[recording of loan monies received]
4.1.1.7 Also upon receipt of loan money, the liability record shall be
updated through following entry and supporting details recorded in
the Liabilities Register.
Dr Equity Account
Cr Liability Account - loans
[recording of loan as liability]
4.1.1.8 Repayments of principal and interest shall be accounted for under
separate heads of account in the Chart of Accounts. The
accounting entries required are as follows:
Dr Interest Expenditure and/or
Dr Loan Principal Repayments
Cr Bank Account
[to record the repayment of principal and interest on loans]
4.1.1.9 Also upon repayment of the loan, the liability record shall be
updated through the following entry and supporting details
recorded in the Liabilities Register.
Dr Liability Account - loans
Cr Equity Account
[recording of repayment of principal amount of loan]
4.1.1.10 Where the Government receives loan monies on behalf of
other bodies, the loan receipt should be recorded in the Public
Account against an appropriate head, from which the loan monies
will be transferred. The required accounting entries are as follows:
Dr Bank Account
Cr Loans received (Public Account)
[to record the receipt of loan monies by the Government, on
behalf of other bodies]
Dr Loans received (Public Account)
Cr Bank Account
[to record the transfer of loan monies by the Government, to
recipient bodies]
4.1.1.11 Inter-Government transactions
Example: The Federal Government incurs an expenditure and
charges for issues supplied to a provincial government
(Direction 12.1.4.1).
recognition of incurring the expenditure
Federal accounts
Dr Federal/Provincial settlement account
Cr Payment clearing account
recognition of inter-entity transfer, when transaction is passed
from AGPR to the Provincial AG.
Provincial accounts
Dr Expense head account
Cr Federal/Provincial settlement account
Recognition of transfer of the cash between bank accounts, from
Provincial AG to Federal AG, on receipt of clearance memo
from bank.
Federal accounts
Dr Bank account
Cr Federal/Provincial settlement account
Provincial accounts
Dr Federal/Provincial settlement account
Cr Bank account
4.1.1.12 12.4.3.3 Inter-department transactions
a) Transaction between departments centrally accounted for by
the Government (Direction 12.1.4.2)
Example: Department A initially incurs an expense on behalf of
Department B
recognition of inter-department transfer
Dr Department B Expenditure Head
Cr Department A Expenditure Head
b) Additionally where the departments do not share the same
bank account the department making the cash transfer shall notify
the SBP of the transfer (Direction 12.1.4.2).
c) Transaction between departments accounted for involving
self-accounting entities, not requiring a transfer of funds (Direction
12.1.4.2).
Example: Department X provides supplies/services to the
Department Y.
Recognition of incurring the expenditure
Department X’s accounts
Dr Dept X/Dept Y exchange account
Cr Payment clearing account
X sends the voucher to Department Y, Department Y will either
accept or reject the transfer. Upon acceptance, and exchange of
vouchers, the journal entry is:
Recognition of inter-entity transfer
Department Y’s accounts
Dr Expenditure
Cr Dept Y/Dept X exchange account
d) Additionally where the departments do not share the same
bank account the department making the cash transfer shall notify
the SBP of the transfer (Direction 12.1.4.2).
4.1.1.13 At the end of the month, the monthly civil accounts
must net out the exchange account. This exchange process may be
carried out on a monthly basis, and not necessarily on an individual
transaction basis.
Recognition of transfer of the cash between bank accounts, from
Department Y to Department X on receipt of clearance memo
from bank.
Department X accounts
Dr Bank Account
Cr Dept X/Dept Y exchange account
Department Y accounts
Dr Department Y/ X exchange account
Cr Bank Account
4.1.2 13.6.2 Accounting entries
13.6.2.1 The double entry in relation to acquisition of fixed assets is as
follows.
Dr Expenditure head account
Cr Bank account
[to record expenditure incurred on fixed asset]
Also
Dr Fixed assets account
Cr Equity account
[to record acquisition of fixed asset in the Asset account]
4.1.2.1 13.6.2.2 The double entry in relation to proceeds from
disposal is as follows.
Dr Bank account
Cr Revenue head account
[to record proceeds from disposal of fixed asset]
Also
Dr Equity account
Cr Fixed assets account
[to record disposal of fixed asset in the Asset account]
4.1.2.2 13.6.2.3 The double entry for trade-in is as follow.
Dr Expenditure head account
Cr Bank account
[to record the net expenditure incurred during trade-in of fixed
asset]
Also
Dr Fixed assets account (new asset)
Cr Fixed assets account (old asset)
[to add the new asset and remove the old asset during a trade-in,
from the Asset account]
4.1.2.3 13.6.2.4 The double entry for swap is as follow.
Dr Fixed assets account (new asset)
Cr Fixed assets account (old asset)
[to add the new asset and remove the old asset during a swap,
from the Asset account]
Payments - the following entry shall be recorded when a payment is
made, as approved expenditure under the rules and regulations of a
trust (e.g. disaster relief fund), or as repayment of a previously
deposited amount (e.g. savings scheme or court deposit):
Dr Relevant Public Account Head
Cr Bank Account
[to record payment from the Public Account - at detailed head
level].
14.3.3.7 In the case of repayments of deposits (e.g. savings
schemes), the liability record/register shall be updated to reflect the
decrease in liability arising from the payment.
14.3.3.8 Transfers to and from the Consolidated Fund (where a
common bank account is used for Public Account and
Consolidated Fund) - where funds held in the Public Account are
utilised in operations by the Government, the amount transferred to
the Consolidated Fund should be also recorded as a receivable and
payable through the following accounting entry:
Dr. Relevant Public Account Head
Cr Payable to Public Account Head (in consolidated
fund)
[to record the utilisation of public account funds by consolidated
funds]
14.3.3.9 Transfers to and from the Consolidated Fund (where
there is a separate bank account for Public Account) - When
Public Account funds are transferred to the Consolidated Fund or
Local Government Fund, the following entries shall be recorded:
Dr Relevant Public Account Head
Cr Bank Account (Public Account)
[to record the transfer of cash out of the Public Account].
Dr Bank Account (Consolidated Fund/Local
Government Fund)
Cr Public Account Receipts (CF)
[to record the receipt of cash into the Consolidated Fund/Local
Government Fund].
14.3.3.10 At the same time the above entries are made, the asset
(receivable) records shall be updated to reflect the increase in
amount receivable to the relevant trust fund and the liability
records updated to reflect the increase in amount payable from the
Federal, Provisional and District/Local Government.
14.3.3.11 When the Government makes a repayment to the Public
Account, the following entry shall be made:
Dr Bank Account
Cr Relevant Public Account Head
[to record the receipt of cash into the Public Account].
Dr Relevant Expenditure Head (CF)
Cr Bank Account (Consolidated Fund/Local
Government Fund)
[to record the transfer of cash out of the Consolidated Fund].
4.1.3 15.4.2 Accounting entries
4.1.3.1 15.4.2.1 The double entry in relation to insurance premium
paid is as follow.
Dr Insurance head account [Expense item]
Cr Bank account
[to record insurance premium paid as an expense item]
4.1.3.2 15.4.2.2 The double entry in relation to compensation paid to
concerned party is as follow.
Dr Compensation account [Expense item]
Cr Bank account
[to record damages/compensation paid to concerned party]
4.1.3.3 15.4.2.3 The double entry where the compensation paid to
concerned party is reimbursed by the insurance company within
the same financial year.
Dr Bank account
Cr Compensation account [Expense
item]
[to record reimbursement received from the insurance company
in the same financial year]
4.1.3.4 15.4.2.4 The double entry where the compensation paid to
concerned party is reimbursed by the insurance company in
another financial year.
Dr Bank account
Cr Other income account [Revenue
item]
[to record reimbursement received from the insurance company
in another financial year]
