Chapter 12 Solutions: Store Accounting
Answers to the Chapter 12 exercises. Each answer is as long as its marks call for: a sentence or two for 1 mark, and five marks’ worth of explained points, tables or working for 5 marks.
Group A: Very Short Answer Questions (1 Mark Each)
1. What is Store Accounting?
Store Accounting is the systematic process of keeping records of the receipt, issue and balance of all consumable and durable physical goods in an office, using the 400-series forms (AGF No. 401 to 418) approved by the Office of the Auditor General.
2. Write the names of any four forms used in Store Accounting with their AGF numbers.
Four forms used in Store Accounting are the Store Requisition Form (AGF No. 401), the Purchase Order (AGF No. 402), the Store Entry / Dakhila Report (AGF No. 403) and the Consumable Store Ledger (AGF No. 407).
3. What is a Dakhila Report (Submission/Entry Report)?
A Dakhila Report (AGF No. 403) is the official form the storekeeper prepares after inspecting goods received by purchase, transfer or grant, to enter them formally into the Store Ledger (AGF 407 or 408); without it, the Accounts Section cannot pay the supplier’s bill.
4. Write any two points of importance of Store Accounting.
(1) It protects public goods from theft, loss and misuse by keeping exact accountability for every item, and (2) it shows the exact stock balance of every consumable and durable item at any time.
Group B: Short Answer Questions (5 Marks Each)
1. What is Store Accounting? Write any four uses/importances of it.
Store Accounting is the systematic process of keeping quantity and money records of all consumable and durable physical goods purchased, received, stored, issued, written off and remaining in stock in an office. It uses the prescribed forms of the 400 Series (AGF No. 401 to 418) approved by the Office of the Auditor General. Since a large part of an office’s annual budget is spent on stationery, furniture, computers, machinery and vehicles, these goods need records as careful as those kept for cash.
Four uses and importances of Store Accounting are:
- Protection against misuse, theft and loss: Every item purchased is recorded from the moment it enters the store until it is used up or disposed of. This fixes exact accountability for each item, so goods cannot go missing or be misused without it being noticed.
- Shows the exact stock position: The store ledgers show the opening balance, receipts, issues and closing balance of every item. The storekeeper and the Head of Office can therefore know what is in stock at any time without counting it.
- Prevents over-stocking and under-stocking: Knowing the stock balance tells the storekeeper when to reorder goods. Daily office work is never halted for want of supplies, and public funds are not locked up in idle inventory.
- Facilitates physical verification and annual inspection: The ledger balances give the annual Store Inspection Committee (AGF No. 411) a record against which to check the physical stock. Shortages are detected, and damaged or obsolete goods are identified for auction or write-off.
Store Accounting also ensures a smooth handover-takeover when a storekeeper or office chief is transferred or promoted, because every item to be handed over is already on record.
2. Differentiate between Consumable (Non-durable) Store Ledger (AGF 407) and Non-consumable (Durable) Store Ledger (AGF 408) in five points.
Both ledgers belong to the 400 Series, and goods enter both through the Dakhila Report (AGF No. 403), but they record different kinds of goods:
| Basis of Difference | Consumable Store Ledger (AGF No. 407) | Non-consumable Store Ledger (AGF No. 408) |
|---|---|---|
| Goods recorded | Goods used up within one year or in a single use, such as paper, pens, files, toner, fuel, soap and electric bulbs | Capital and durable goods with a useful life of more than one year, such as land and building, vehicles, computers, printers, tables, chairs and steel cupboards |
| Details recorded | A separate page for each item, showing receipts (from AGF 403), issues (from AGF 401) and the remaining balance in quantity, rate and amount | A permanent record of each asset, showing its manufacturer, model and serial/engine number, specification, country of origin, useful life, acquisition cost, additions, write-offs and present condition |
| Effect of issue from store | Once issued to a section, the item is treated as consumed and is reduced from the stock balance | Even after it is issued, the item remains the office’s property and is tracked in the user’s custody record, the Store Subsidiary Ledger (AGF No. 412) |
| Nature of expenditure | Usually bought under recurrent expenditure heads, such as 22311 Office Supplies & Stationery | Usually bought under capital expenditure heads, such as 31123 Furniture & Fixtures |
| Inspection and disposal | Only the remaining stock is counted at the annual inspection, since issued items are already written off | Every item is inspected every year (AGF No. 411), and unserviceable items are auctioned or written off only with approval |
3. Explain the purpose and importance of: (a) Store Requisition Form (AGF 401), (b) Purchase Order (AGF 402), and (c) Store Inspection Report (AGF 411).
(a) Store Requisition Form / Demand Form (AGF No. 401): A section or employee prepares this form whenever goods are needed from the store or need to be purchased from the market. The demanding employee fills in the name, specification and quantity of the goods and signs it, the Storekeeper recommends it after checking whether the item is available in stock or must be bought, and the Head of Office approves it. Its importance is that:
- no goods leave the store without a written and approved demand, which prevents misuse;
- the Storekeeper’s check stops unnecessary purchases of goods already in stock; and
- it is the source document for recording issues in the Store Ledger (AGF 407) and shows who demanded and who approved each item.
(b) Purchase Order (AGF No. 402): When the demanded goods are not available in the store and the Head of Office approves their purchase on AGF No. 401, the office issues a Purchase Order. It instructs the selected vendor or supplier to supply the specified goods within a stipulated date at the agreed rate and terms. Its importance is that:
- it is the office’s written authority to the supplier, so only approved demands turn into purchases;
- it fixes the item, specification, quantity, rate and delivery date, which avoids disputes with the supplier; and
- when the goods arrive, the storekeeper checks them against the order before preparing the Dakhila Report (AGF No. 403), so the office pays only for what it ordered.
(c) Store Inspection Report (AGF No. 411): Every government office must form a Store Inspection Committee at least once a year, at the end of the fiscal year, to physically inspect all consumable and durable store items. The committee submits its findings to the Head of Office in the Store Inspection Report. Its importance is that it identifies:
- goods in good working condition and goods that need repair, so repairs can be made in time;
- obsolete or unserviceable goods that should be auctioned or written off, so they do not take up store space and any remaining value is recovered; and
- any difference between the physical stock and the Store Ledger balances, so shortages and losses come to light and responsibility can be fixed.