Chapter 11: Accounting of Government Expenditure
11.1 Overview of Government Expenditure Accounting
In Nepal’s operating-level government offices, all budget expenditures are executed through the Single Treasury Account (TSA) managed by the District Treasury Comptroller Office (DTCO). Instead of keeping idle cash in individual office bank accounts, operating offices issue a Payment Order (AGF No. 204) or Electronic Fund Transfer (EFT) instruction to the DTCO, which releases and pays the exact amount directly to the supplier’s or employee’s bank account (TSA Credit).
This chapter covers the four core pillars of Operating Level Expenditure Accounting tested in the SEE exam:
- Journal Voucher (AGF No. 203)
- Budget Sheet (AGF No. 208)
- Bank Cash Book (AGF No. 209)
- Statement of Expenditure / Monthly Statement (AGF No. 210)
11.2 Official 5-Digit Budget Expenditure Heads & Codes
Every SEE student must memorize the standard 5-digit Budget Sub-head Codes used in Journal Vouchers, Budget Sheets, and Monthly Statements:
| Budget Code | Budget Expenditure Title | Category |
|---|---|---|
| 21111 | Remuneration / Employee Salary | Recurrent |
| 21121 | Employee Uniform / Dress | Recurrent |
| 21122 | Fooding / Ration Allowance | Recurrent |
| 21123 | Medical Treatment Expense | Recurrent |
| 21131 | Local Allowance | Recurrent |
| 21132 | Dearness Allowance | Recurrent |
| 21133 | Field Allowance | Recurrent |
| 21212 | Contributory Pension & Provident Fund (EPF 10%) | Recurrent |
| 21213 | Insurance Fund Contribution | Recurrent |
| 22111 | Water and Electricity | Recurrent |
| 22112 | Communication Fee (Telephone/Internet/Postage) | Recurrent |
| 22211 | Fuel for Vehicles (Office Purpose) | Recurrent |
| 22213 | Repair and Maintenance of Vehicles/Machinery | Recurrent |
| 22214 | Insurance and Renewal of Vehicles | Recurrent |
| 22311 | Office Supplies and Stationery | Recurrent |
| 22313 | Books and Materials | Recurrent |
| 22314 | Fuel for Other Purposes (Generator, etc.) | Recurrent |
| 22315 | Newspapers, Printing, and Information Publication | Recurrent |
| 22411 | Service and Consultancy Fee | Recurrent |
| 22413 | Contract Services (Security/Cleaning) | Recurrent |
| 22511 | Employee Training | Recurrent |
| 22522 | Program Expenses | Recurrent |
| 22611 | Monitoring and Evaluation Expenses | Recurrent |
| 22612 | Travel Expenses / TADA | Recurrent |
| 22711 | Miscellaneous Expenses | Recurrent |
| 28142 | House Rent | Recurrent |
| 31111 | Residential Building Construction/Purchase | Capital |
| 31112 | Non-Residential Office Building Construction | Capital |
| 31121 | Vehicles | Capital |
| 31122 | Machinery and Equipment (Computer) | Capital |
| 31123 | Furniture and Fixtures | Capital |
11.3 Part I: Journal Voucher (AGF No. 203)
A Journal Voucher (AGF No. 203) is the primary book of original entry in government offices used to record every financial transaction in chronological order using double-entry rules before posting to the Budget Sheet (AGF 208) and Bank Cash Book (AGF 209).
- Notice that in government accounting, Budget Expenditure is always prefixed with B.E., and Bank Balance / Treasury Payment is credited as To TSA (DTCO) / Bank Account.
Complete Rules for All Types of Journal Vouchers (AGF No. 203)
1. General Budget Expenditure
When an office pays for any expense or asset (e.g., Stationery, Rent, Furniture, Water/Electricity) by cheque / payment order (TSA):
- Dr. B.E. [Concerned Budget Head Name] (with 5-digit Code in Budget Sub-head column)
- Cr. TSA (DTCO) / Bank Account
2. Advance Given Transactions
When an advance is given to an employee, contractor, or firm to purchase goods or travel:
- Dr. Advance [Post + Name of Person/Firm] Account (Write the intended Budget Code in brackets for reference)
- Cr. TSA (DTCO) / Bank Account
3. Advance Clearance / Settlement Transactions
When the advance holder submits bills/documents to clear the advance, there are three cases:
- Case 3A: Bill Amount = Advance Amount:
- Dr. B.E. [Budget Head Name] (Actual bill amount)
- Cr. Advance [Post + Name of Person] Account (Advance amount cleared)
- Case 3B: Bill Amount < Advance Amount:
- Dr. B.E. [Budget Head Name] (Actual bill amount spent)
- Dr. TSA (DTCO) / Bank Account (Unspent cash returned via bank voucher)
- Cr. Advance [Post + Name of Person] Account (Total original advance cleared)
- Case 3C: Bill Amount > Advance Amount:
- Dr. B.E. [Budget Head Name] (Total actual bill amount spent)
- Cr. Advance [Post + Name of Person] Account (Original advance cleared)
- Cr. TSA (DTCO) / Bank Account (Excess expenditure paid by payment order/cheque)
4. Salary Distribution and Deductions Voucher
In Nepal’s government offices, the government adds 10% Employees Provident Fund (EPF) to the employees’ basic salary, deducts 20% total EPF (10% government addition + 10% employee deduction), deducts Social Security Tax / Income Tax, Citizen Investment Trust (CIT), EPF Loan, and Insurance Fund, and pays the net salary and deducted funds simultaneously or sequentially:
- When Salary & Deductions are Paid Together in One Combined Entry:
- Dr. B.E. Employee Remuneration (21111) (Total Gross Salary including Govt. EPF / or Basic Salary)
- Dr. B.E. Contributory Pension/EPF (21212) (If Govt. 10% addition is shown separately)
- Cr. TSA (DTCO) / Bank Account (For Net Salary + EPF + Tax + CIT deposited directly into concerned accounts via TSA)
- When Salary is Distributed First and Deductions are Deposited Later:
- On Salary Distribution:
- Dr. B.E. Employee Remuneration (21111) (Total Salary including Govt. contribution)
- Cr. Employees Provident Fund (EPF) Account (20% of Basic Salary)
- Cr. Social Security / Income Tax Account
- Cr. Citizen Investment Trust (CIT) Account
- Cr. TSA (DTCO) / Bank Account (Net payable salary)
- On Depositing Deducted Amounts to Concerned Offices:
- Dr. Employees Provident Fund (EPF) Account
- Dr. Social Security / Income Tax Account
- Dr. Citizen Investment Trust (CIT) Account
- Cr. TSA (DTCO) / Bank Account
- On Salary Distribution:
Solved SEE Numerical: Journal Vouchers (AGF No. 203 — 5 Marks)
Question (Based on CDC Model Question 2080): Prepare Journal Vouchers (AGF No. 203) from the following transactions of District Education Coordination Unit, Bhaktapur:
- 2083/04/05: Issued payment order of Rs. 30,000 for purchasing office stationery.
- 2083/04/10: Paid Rs. 20,000 through payment order for house rent to house owner Mr. Chitrakar.
- 2083/04/14: Advance given to Section Officer Mrs. Rajani Silwal Rs. 25,000 for travelling expenses.
- 2083/04/22: Mrs. Rajani Silwal submitted travelling bill of Rs. 22,000 and bank voucher of Rs. 3,000 for the remaining unspent cash to clear her advance.
- 2083/04/28: Out of total salary of Rs. 2,20,000 (including government contribution to EPF) for the month of Shrawan, deducted Rs. 40,000 for EPF and Rs. 2,000 for Social Security Tax, paid net salary to employees, and deposited the deducted amounts into the concerned offices on the same day.
Solution:
Government of Nepal
District Education Coordination Unit, Bhaktapur
Journal Voucher (AGF No. 203)
| Date | J.V. No. | Particulars | Budget Sub-head No. | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|---|---|
| 2083/04/05 | 1 | Dr. B.E. Office Supplies & Stationery Cr. TSA (DTCO) / Bank Account (Being payment order issued for purchasing office stationery) | 22311 | 30,000 | 30,000 |
| 2083/04/10 | 2 | Dr. B.E. House Rent Cr. TSA (DTCO) / Bank Account (Being house rent paid to Mr. Chitrakar by payment order) | 28142 | 20,000 | 20,000 |
| 2083/04/14 | 3 | Dr. Advance Section Officer Mrs. Rajani Silwal A/C Cr. TSA (DTCO) / Bank Account (Being advance given to Section Officer Mrs. Rajani Silwal for travel expenses) | (22612) | 25,000 | 25,000 |
| 2083/04/22 | 4 | Dr. B.E. Travel Expenses Dr. TSA (DTCO) / Bank Account Cr. Advance Section Officer Mrs. Rajani Silwal A/C (Being travel advance of Mrs. Rajani Silwal cleared as per travel bill of Rs. 22,000 and bank deposit voucher of Rs. 3,000) | 22612 | 22,000 3,000 | 25,000 |
| 2083/04/28 | 5a | Dr. B.E. Employee Remuneration Cr. Employees Provident Fund (EPF) A/C Cr. Social Security Tax A/C Cr. TSA (DTCO) / Bank Account (Being Shrawan salary distributed after deducting EPF and tax) | 21111 | 2,20,000 | 40,000 2,000 1,78,000 |
| 2083/04/28 | 5b | Dr. Employees Provident Fund (EPF) A/C Dr. Social Security Tax A/C Cr. TSA (DTCO) / Bank Account (Being deducted EPF and Social Security Tax deposited to concerned offices) | — | 40,000 2,000 | 42,000 |
11.4 Part II: Budget Sheet (AGF No. 208)
Meaning, Purpose, and Structure
A Budget Sheet (AGF No. 208) is the primary budgetary control ledger maintained by operating-level government offices to record the Annual Budget Appropriation, Budget Release / Payment Orders, and Actual Budget Expenditure under each 5-digit budget sub-head.
- Three Main Horizontal Parts of a Budget Sheet:
- Part 1 — Annual Appropriation: Shows the approved annual budget limit for each budget sub-head so expenditure never exceeds the budget.
- Part 2 — Budget Release: Shows cumulative payment releases through TSA.
- Part 3 — Budget Expenditure: Records every expenditure transaction (B.E.) and advance given/cleared under the respective budget sub-head column:
- When Advance is Given: Entered as normal positive expenditure Rs. X in the concerned budget head column.
- When Advance is Cleared: The original advance is subtracted in brackets (Rs. X) and the actual bill expenditure Rs. Y is added in the same column!
- At the end of every month, two totals are calculated: Total of This Month and Total Up to This Month (Cumulative Total).
11.5 Part III: Bank Cash Book (AGF No. 209)
Meaning and 5-Part Structure
The Bank Cash Book (AGF No. 209) is the main multi-column ledger maintained by operating-level government offices under the double-entry system to record all banking, cash, budget expenditure, advance, and miscellaneous transactions in a single book.
- It contains 6 Major Sections (17 Columns):
- Descriptive Columns: Date, Reference/J.V. No., Particulars.
- Cash Balance: Debit (Dr.), Credit (Cr.), Balance.
- Bank / TSA Balance: Debit (Dr.), Credit (Cr.), Cheque/Payment Order No., Balance. (Note: Under the TSA system, whenever a payment order is issued for an expense, the office simultaneously receives budget release Dr. and makes payment Cr. in the Bank/TSA column, or records Cr. against released budget).
- Budget Expenditure: Budget Sub-head No. and Amount.
- Advance: Given and Cleared.
- Miscellaneous Account: Account No., Debit (Dr.), and Credit (Cr.) (used for Budget Release, EPF, Tax, Petty Cash, etc.).
Golden Posting Rules for Bank Cash Book (AGF No. 209)
| Transaction Type | Bank Column (Dr. / Cr.) | Budget Expenditure Column | Advance (Given / Cleared) | Miscellaneous (Dr. / Cr.) |
|---|---|---|---|---|
| 1. General Budget Expense Paid (Rs. 10,000) | Cr. 10,000 (and Dr. 10,000 if simultaneous TSA release) | Code + 10,000 | — | (If TSA release shown: Cr. 10,000) |
| 2. Advance Given (Rs. 15,000) | Cr. 15,000 | Code + 15,000 | Given: 15,000 | — |
| 3. Advance Cleared (Exact Bill Rs. 15,000) | — | Code + 15,000 and (15,000) (Net 0) | Cleared: 15,000 | — |
| 4. Advance Cleared (Advance 25,000, Bill 22,000, Cash/Bank Returned 3,000) | Dr. 3,000 | Code + (3,000) (i.e. 22,000 - 25,000) | Cleared: 25,000 | — |
| 5. Advance Cleared (Advance 20,000, Bill 24,000, Excess Paid 4,000) | Cr. 4,000 | Code + 4,000 (i.e. 24,000 - 20,000) | Cleared: 20,000 | — |
11.6 Part IV: Statement of Expenditure / Monthly Statement (AGF No. 210)
Meaning, Purpose, and Key Formulas
The Statement of Expenditure (AGF No. 210) is a monthly financial report prepared by every operating-level government office at the end of each month and submitted to its superior office and DTCO within 7 days of the next month.
Essential Formulas for Solving AGF No. 210 (5 or 8 Marks)
- Total Expenditure Up to This Month = Expenditure up to Last Month + Expenditure of This Month.
- Remaining Annual Budget = Annual Appropriation Budget - Total Expenditure Up to This Month.
- Net Expenditure Excluding Advance = Total Expenditure Up to This Month - Uncleared Advance.
Solved SEE Numerical: Statement of Expenditure (AGF No. 210 — 5 Marks)
Question: From the following particulars of District Police Office, Sindhuli, prepare a Statement of Expenditure (AGF No. 210) for the month of Poush 2082:
| Budget Sub-head No. | Budget Head Title | Annual Budget (Rs.) | Expenditure Up to Mangsir (Rs.) | Expenditure of Poush (Rs.) |
|---|---|---|---|---|
| 21111 | Employee Remuneration | 48,00,000 | 18,00,000 | 4,00,000 |
| 22111 | Water and Electricity | 1,20,000 | 40,000 | 10,000 |
| 22311 | Office Supplies & Stationery | 2,40,000 | 85,000 | 25,000 |
| 22612 | Travel Expenses | 3,00,000 | 90,000 | 40,000 |
| 31123 | Furniture and Fixtures | 4,00,000 | 1,50,000 | 50,000 |
Additional Information: Out of the expenditure of Travel Expenses (22612), an advance of Rs. 15,000 given to Police Inspector Mr. Thapa remains uncleared.
Solution:
Government of Nepal
District Police Office, Sindhuli
Statement of Expenditure (AGF No. 210)
Fiscal Year: 2082/83 | Month: Poush
| Budget Sub-head No. | Budget Head Title | Annual Budget (Rs.) | Release/Exp. Up to Mangsir (Rs.) | Expenditure of Poush (Rs.) | Total Release/Exp. Up to Poush (Rs.) | Remaining Budget Balance (Rs.) |
|---|---|---|---|---|---|---|
| 21111 | Employee Remuneration | 48,00,000 | 18,00,000 | 4,00,000 | 22,00,000 | 26,00,000 |
| 22111 | Water and Electricity | 1,20,000 | 40,000 | 10,000 | 50,000 | 70,000 |
| 22311 | Office Supplies & Stationery | 2,40,000 | 85,000 | 25,000 | 1,10,000 | 1,30,000 |
| 22612 | Travel Expenses | 3,00,000 | 90,000 | 40,000 | 1,30,000 | 1,70,000 |
| 31123 | Furniture and Fixtures | 4,00,000 | 1,50,000 | 50,000 | 2,00,000 | 2,00,000 |
| Total | 58,60,000 | 21,65,000 | 5,25,000 | 26,90,000 | 31,70,000 |
Summary of Advance and Net Expenditure:
- Total Expenditure Up to Poush (including Advance): Rs. 26,90,000
- Less: Uncleared Advance (Travel Advance of Inspector Mr. Thapa): (Rs. 15,000)
- Net Expenditure (Excluding Uncleared Advance): Rs. 26,75,000
11.7 CDC Textbook Exercises & SEE Practice Questions
Group A: Very Short Answer Questions (1 Mark Each)
- Write the AGF numbers of Journal Voucher, Budget Sheet, Bank Cash Book, and Statement of Expenditure.
- What are the 5-digit budget sub-head numbers for Employee Remuneration, Office Supplies, and Machinery & Equipment?
- Why is a Budget Sheet (AGF No. 208) prepared?
Group B & C: Short and Long Numerical Questions (5 & 8 Marks)
- Practice Problem (Journal Voucher & Bank Cash Book): Prepare Journal Vouchers (AGF No. 203) and post them into a Bank Cash Book (AGF No. 209) for District Health Office, Lalitpur for Mangsir 2083:
- 2083/08/03: Paid Rs. 15,000 for Water and Electricity (22111) by payment order.
- 2083/08/08: Purchased computers and printers (31122) for Rs. 85,000 through payment order.
- 2083/08/15: Issued payment order of Rs. 30,000 as advance to Storekeeper Mr. Bikash Gurung for purchasing office stationery (22311).
- 2083/08/24: Mr. Bikash Gurung submitted stationery purchase bills of Rs. 34,000; his advance was cleared and the excess Rs. 4,000 was paid by payment order.
- 2083/08/29: Distributed monthly salary of Rs. 3,30,000 (21111 including government EPF contribution) after deducting EPF Rs. 60,000 and Social Security Tax Rs. 3,000, and deposited the deducted amounts to the concerned offices on the same day.
Worked answers to these exercises are in Chapter 11 Solutions.