Indian Audit and Accounts Department

Structured Courseware on Government Accounting

Session: 4 – Classification and form of Government Accounts

Classification and Form of intelligible and usable format.

Government borrows heavy sums and it
Government Accounts must know how much is outstanding at a
given time. Similar is the case for its
Session Overview lending. In day-to-day management, the
most important factor is to know how
It is helpful to know the purposes for much cash is available and what are the
which the accounting information is likely receipts and expenditure in the
required in the Government so that the near future. For this purpose it is
system of accounting is understood and essential to reconcile Government’s bank
its usefulness and its limitations known. account with its bankers.
The first purpose of accounting in
government is to know the revenues, tax This is made possible by adoption of a
revenues or non-tax revenues, collected systematic classification of transactions,
during a year. This information must be their consolidation and their presentation
in sufficient detail so that it may be easy in a useful manner.
to estimate revenues in future years, and
also to decide what increase or decrease In this session we will discuss the main
in revenue is practicable or desirable. divisions of government accounts and
This information on revenues is main features of how the government
segregated in government accounts in transactions are exhibited in final
detail. If these were lumped together, it accounts.
will not be possible to know the details
of each of the revenues. The second Learning Objective
purpose is to know the expenditure on
different items. The Parliament and the By the end of the session, the learner
State Legislatures having authorized the will be able to state the basic structure
respective Governments to spend and form of accounts, the main divisions
different amounts on different activities, of Government Accounts and main
they have a right to know what is the features of classification of transactions
actual expenditure on each of the in Government Account
activities. The third essential purpose is
to ascertain how much loans and
deposits Government has to pay to its
Basic structure of accounts
creditors and how much of these
Period of Accounts
Government has to receive from its
debtors. Governments also resort to
The annual accounts of the Central
borrowings on the security of its
Government, the State Governments and
Consolidated Fund. These borrowings
of Union Territories shall record
have an unprecedented impact on the
transactions, which take place during a
national economy, national wealth, and
financial year running from 1st April to
availability of money supply in economy
31st March of the following year.
and employment and inflation. Both the
The Government Accounts of a year may
Government and economists need to
be kept open for a certain period in the
have a close watch on Government’s
following year, i.e. beyond 31st March,
borrowings and its impact on economy.
for completion of various accounting
Since the impact of borrowings is visible
processes iner-alia in respect of the
over a long period of time, detailed data
transactions of March, for carrying out
on borrowings need to be available in
certain interdepartmental adjustments

Participant Note No. 4 1

Courseware designed and prepared by: Regional Training Institute, Allahabad
Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

and for closing the accounts of several c) The Contingency Fund of India and
provident funds, and suspense heads. Contingency Fund of each State.
Adjustments may also be made after the
close of the year for the rectification of Consolidated Fund of India and of the
mispostings and misclassifications States
coming to notice after 31st March. An
actual cash transaction taking place after Subject to the provisions of Article 267
31st March should not, however, be of the Constitution (relating to
treated as pertaining to previous Contingency Fund) and also subject to
financial year even though the accounts the provisions of the Constitution
for that year may be open for the relating to the assignment of the whole
purposes mentioned above. or part of the net proceeds of certain
taxes and duties to States, all revenue
Cash basis of accounts received by the Government of India, all
loans raised by that Government by issue
The transactions in Government Account of treasury bills, loans or ways and
shall represent actual cash receipts and means advances and all moneys received
disbursements during a financial year as by that Government in repayment of
distinguished from amounts due to or by loans shall form one consolidated fund to
the Government during the same period. be entitled ‘The Consolidated Fund of
Some book adjustments, as may be India’. Similarly all revenues raised by
authorized by rules by any general or the Government of a State, all loans
special orders issued by the Central raised by that Government by issue of
Government on the advice of the treasury bills, loans or ways and means
Comptroller and Auditor General of advances and all moneys received by
India are, however, allowed to be carried that Government in repayment of loans
out in the accounts. shall form one consolidated fund to be
entitled ‘The Consolidated Fund of the
Currency in which accounts are kept State’. (Refer to Article 266(1) of the
Constitution).
The Accounts of the Government shall
be maintained in Indian currency, i.e. in No money out of the Consolidated Fund
rupees. All transactions of the Central of India or the Consolidated Fund of a
and State Government taking place in State shall be appropriated except in
other countries shall be passed on accordance with the law and for the
monthly by the Indian purposes and in the manner provided in
Embassies/Mission to India and brought the Constitution.
to account finally in the Indian books
after they have been converted into Public Account of India and of the
Indian rupees. States
Main Divisions of Accounts
Apart from the money creditable to the
Part XII of the Constitution of India Consolidated Fund of India or to the
(Articles 266 and 267) provide for the Consolidated Fund of a State, all other
establishment of: public moneys received by or on behalf
a) The Consolidated Fund of India and of the Government of India or the
the Consolidated Fund of each State; Government of a State shall be credited
b) The Public Account of India and the to the Public Account of India or the
Public Account of each State; and

Participant Note No. 4 2

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

Public Account of the State, as the case in the case of Union Territory
may be. Governments, the transactions pertaining
to this account shall be booked in the
Contingency Fund Public account of the Central
Government.
Under article 267 of the Constitution,
Parliament may by law establish a The Accounts of Union Territories of
Contingency Fund in the nature of an Delhi, Andaman and Nicobar Island,
imprest to be entitled ‘The Contingency Dadra and Nagar Haveli, Lakshadweep,
Fund of India’ into which shall be paid Chandigarh and Daman and Diu which
from time to time sums (from do not have Legislative Assemblies,
Consolidated Fund of India) as may be form part of the Accounts of the
determined by law, and such Fund shall Government of India.
be placed at the disposal of the President
to enable advances to be made by him Further Classification of transactions
out of such fund for the purposes of in Accounts
meeting unforeseen expenditure pending (MSO (A&E) Vol-I Para 4.3)
authorization of such expenditure by
Parliament by law under relevant articles Broad features of classification of
of the Constitution (under Article 115 or transactions in Government accounts are:
under Article 116).
(1) Under Article 150 of the
Similarly, the Legislature of a State may Constitution, the accounts of the
by law establish a contingency fund in Union and States shall be kept in
the nature of imprest into which shall be such form as the President may
paid from time to time such sums as may on the advice of the Comptroller
be determined by such law, and the said and Auditor General, prescribe.
Fund shall be placed at the disposal of The word ‘Form’ used in Article
the Governor of the State to enable 150 has a comprehensive
advances to be made by him out of such meaning so as to include the
fund for the purposes of meeting prescription not only of the broad
unforeseen expenditure pending form in which the accounts are to
authorization of such expenditure by the be kept but also the basis for
Legislature of the State by law under selecting appropriate heads under
Article 205 or Article 206 of the which the transactions are to be
Constitution. classified.
(2) The estimates of receipts and
Based on the constitutional requirement, expenditure framed by
the Government Accounts are kept in Government or in any order of
these three main divisions, viz.: Appropriation shall indicate
1. Consolidated Fund; provisions, ordinarily against
2. Contingency Fund; and heads opened in conformity with
3. Public Account. the prescribed rules. Where there
is divergence, the corresponding
These funds and accounts exist receipt or expenditure shall be
separately for the Government of India, brought to account under the
for each State and for each Union appropriate major head or minor
Territory having a Legislative Assembly. head or other unit of
There being no separate Public Account classification as determined by

Participant Note No. 4 3

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

the President on the advice of the (c) The Sections 'Public Debt' and
Comptroller and Auditor General 'Loans and Advances' which
of India. comprise of loans raised and their
repayments by Government such as,
(3) In Part-I, namely the Internal Debt. External Debt of the
Consolidated Fund, there are two Central Government, and Loans and
main sub-divisions, namely Advances made by Governments,
(i) Revenue: consisting of and their recoveries.
sections for ‘Receipt Heads
(Revenue Account)’, and The sources of inputs into the
‘Expenditure Heads (Revenue Consolidated Fund are clearly
Account)’. defined. These are:
(ii) Capital, Public Debt, Loans (a) Revenues;
consisting of sections for 'Receipt (b) Loans and ways means advances;
Heads (Capital Account)' and
'Expenditure Heads (Capital (c) Recoveries of loans granted by
Account)’ and 'Public Debt', Government.
'Loans', and Advances'.
The Constitution of India does not
The first division comprising the mention whether grants form part of
section Receipts Heads (Revenue revenue.
Account) dealing with the proceeds
of taxation and other receipts classed There are two kinds of grants: One is
as revenue and the section; grant to States whose revenues are
‘Expenditure Heads (Revenue inadequate to meet their normal
Account)’ dealing with expenditure expenditure of running the
met there from. Government and these grants are as
per the provisions of the
The second sub-division comprises Constitution. Obviously, these can be
the following sections: considered revenues of the receiving
State. Then there are grants which
(a) The Section 'Receipts Heads the Government of India gives for
(Capital Account)' which deals with Centrally Sponsored Schemes; these
receipts of capital nature, which are also considered revenues. Similar
cannot be applied as a set off to is the case of foreign aid in form of
Capital Expenditure. grants received by the Government
of India.
(b) The section 'Expenditure Heads
(Capital Account)' which deals with (4) In Part II, namely Contingency
expenditure met usually from Fund, of the Accounts are
borrowed funds with the object either recorded the transactions
of increasing concrete assets of a connected with the Contingency
material and permanent character or Fund set up by the Government
reducing recurring liabilities. It also of India or by a State
includes receipts of a capital nature Government or by a Union
intended to be applied as set off to Territory Government under
capital expenditure. Article 267 of the Constitution/
Section 48 of the Union Territory
Act, 1963.

Participant Note No. 4 4

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

Rules 1983 elaborates the

The Contingency Fund is at the concept of the Public Account. It
disposal of President/Governor; says that in the Public Account
therefore, only Government can the transactions relating to Debt
issue authority for use of its (other than those included in the
moneys. No subordinate Consolidated Fund), deposits,
authority can of itself, authorise Advances, Remittances and
its use. Suspense shall be recorded. The
transactions under Debt, Deposit
(5) In Part III, namely Public and Advances in the Public
Account, of the Account, the Account are such in respect of
transactions relating to Debt which Government incurs a
(Other than those included in liability to repay the moneys with
Part-I), 'Deposits', 'Advances', the repayments of the former
'Remittances' and 'Suspense' are (Debt and Deposits) and
recorded. The transactions under recoveries of the latter
Debt, Deposit and Advances in (Advances).
this part are such in respect of
which Government incurs a The transaction under the head
liability to repay the moneys Remittances and Suspense in the
received or has a claim to recover Public Account are booked only
the amounts paid, together with for a temporary period until these
the repayments of the former are transferred to the correct
(Debt and Deposits) and the accounts in the Consolidated
recoveries of the latter Fund or the Public Accounts.
(advances). The transactions
relating to 'Remittances' and (6) As already discussed in previous
'Suspense' in this part embrace all session, the transactions in the
merely adjusting heads under Consolidated Fund are classified
which shall appear such into:
transactions as Remittances of (i) Charged and Voted
cash between treasuries and expenditure;
currency chests and transfers (ii) (ii) Plan and Non-Plan
between different accounting expenditure; and
circles. The initial debits or (iii)Revenue and Capital
credits to these heads will be Account.
cleared eventually by
corresponding receipts or The concepts of voted expenditure and
payments either within the same charged expenditure and of Plan
circle of account or in another expenditure and non-Plan expenditure
account circle. have been explained in Session 2 on
Introduction to Government Accounting.
For payments out of the Public The concepts and classification of
Account, approval of the expenditure between revenue and capital
Parliament or State Legislature is account is explained subsequently in this
not required. session.

Rule 19 of the Form of Accounts Sectors and Sub-sectors of

of the Union and States (Basic) Accounts
Participant Note No. 4 5
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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

(b) Health and Family

(a) Within each of the Divisions and welfare
sub-divisions of the Consolidated (c) Water supply,
Fund referred to above, the sanitation, Housing and
transactions are grouped into Sectors Urban development
and sub-sectors as under: (d) Information and
Broadcasting
Revenue Receipts (e) Welfare of Scheduled
Sector Sub-sector castes, Scheduled Tribes
A. Tax (a) Taxes on Income and and Other Backward Casts
Revenue Expenditure (f) Labour and Labour
(b) Taxes on Property and Welfare
Capital transactions (g) Social Welfare and
(c) Taxes on commodities Nutrition
and Services (h) Others
B. Non-Tax (a) Fiscal Services C. Economic (a) Agriculture and allied
Revenue (b) Interest Receipts, Services Services
Dividends and Profits (b) Rural Development
(c) Non-Tax revenue (c) Special Areas
(i) General services Programme
(ii) Social Services (d) Irrigation and Flood
(iii)Economic Services Control
C. Grants –in Grants –in –Aid and (e) Energy
–Aid and Contributions (f) Industry and Minerals
Contributions (g) Transport
(h) Communication
Expenditure Head (Revenue Account) (i) Science Technology and
Sector Sub-sector Environment
A. General (a) Organs of State (j) General Economic
Services (b) Fiscal services Services
(i) Collection of Taxes on D. Grants-in
Income and Expenditure –Aid and
(ii) Collection of Taxes on Contribution
Property and Capital
Transactions (b) Similar segregation of transactions
(iii) Collection of Taxes on into Sectors and Sub-sectors,
commodities and Services depending on the type of
(iv) Other Fiscal Services transaction is made in respect of
(c) Interest payments and Capital Receipts Head.
servicing of debt
(d) Administrative Services The transactions are further classified
(e) Pensions and into different Major Heads of Account.
Miscellaneous General The Sectors/ Sub-Sectors will be
Services distinguished by letter of the alphabet.
(f) Defence Services
B. Social (a) Education, sports, Art
Services and Culture (b) In Part-II- Contingency Fund,
there is a single Major Head and all

Participant Note No. 4 6

Courseware designed and prepared by: Regional Training Institute, Allahabad
Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

the transactions met out of the Head or Revenue Expenditure Head, or

Contingency Fund are recorded Capital Expenditure Head or Loans and
under it. Advances Head or it pertains to Public
Account. The allocation of first digit on
(c) In the case of Part-III- Public numeric code for different sections is as
Account, the transactions are under:
grouped into the Sectors and Sub-
sectors, as under: First Digit of Represents
Sector Sub-sector Major Head
I. Small (a) Small savings ‘0’ or ‘1’ Revenue Receipts
Savings, (b) Provident Funds ‘2’ or ‘3’ Revenue
provident (c) Other Accounts Expenditure
Funds, etc. 4000 (exception) Capital Receipt
J. Reserve (a) Reserve Funds ‘4’ or ‘5’ Capital
Fund Bearing Interest Expenditure
(b) Reserve Funds not ‘6’ or ‘7’ Loans and
Bearing Interest Advances Head
K. Deposits (a) Deposits bearing ‘8’ Public Account
and Advances Interest 8000 (exception) Contingency Fund
(b) Deposits not
bearing Interest Adding 2 to the first digit of the Revenue
(c) Advances Receipt will give the Code Number
L. Suspense (a) Coinage Accounts allotted to corresponding Revenue
and (b) Suspense Expenditure Head; adding another 2- the
Miscellaneous (c) Other Accounts Capital Expenditure Head and another 2-
(d) Accounts with the Loans and Advances Head of
Governments of Accounts; e.g.
Foreign Countries
(e) Miscellaneous 0401 represents the Receipt Head for
M. (a) Money Orders and Crop Husbandry 2401 represents the
Remittances Other Transactions Revenue Expenditures Head for Crop
(b) Inter Government Husbandry 4401 represents the Capital
Adjusting account Outlay on Crop Husbandry 6401
(c) Exchange Accounts represents Loans for Crop Husbandry.
N. Cash
Balances Such a pattern is however, not relevant
for those departments, which are not,
The transactions are further classified operating Capital/Loan Head of
into Major Heads of Account. The Accounts e.g. Department of Supply. In
Sectors/ Sub-Sectors will be a few cases, however, where
distinguished by letter of the alphabet. receipt/expenditure is not heavy, certain
Major Heads have been combined under
and single number, the Major Heads
Allotment of Code to each Major themselves forming sub –major heads
Head and range of code numbers under that number. The range of code
numbers allotted under the scheme of
A four-digit code has been allotted to the codification is shown below: -
Major Head, the first digit indicating
whether the Major Head is a Receipt

Participant Note No. 4 7

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

Part I- Consolidated or nature of expenditure on a scheme

Fund or activity or organization in terms of
Section I Receipt Heads 0020-1999 inputs such as 'Salaries', 'Office
(Revenue Account) Expenses', 'Grants-in-Aid', 'Loans',
Expenditure Heads 2011-3999 'Investments'.
(Revenue Account)
Section II- Receipt 4000 (d) Accounts and the Order in which the
Head (Capital Account) Major and Minor Heads shall appear
Expenditure Heads 4046-5999 in all account records shall be such
(Capital Account) as are prescribed by the Central
Section III Public Debt, 6001-7999 Government from time to time on the
loans and Advances advice of the Comptroller and
Part II-Contingency 8000 Auditor General of India. The 'List of
Fund Major and Minor Heads of Account
Part III-Public Account 8001-8995 of Central and States-Receipts and
Disbursements' contain the
Major, Minor and Detailed Heads classification prescribed in this
regard. The classification prescribed
(a) The main unit classification in (including the code No. assigned up
accounts is the major head, which is to the major heads and minor heads
divided into minor heads, each of there under) are strictly followed.
which has a number of sub-ordinate
heads, generally known as sub-heads. (e) In certain cases, especially in regard
The sub-heads are further divided to non-developmental expenditure or
into detailed heads. Sometimes major expenditure of an administrative
heads may be divided into sub-major nature, the sub-heads may denote the
heads before their further divisions, components of a programme, such as
into minor heads. Organisations or the different Wings
of Administration.
(b) Major Heads of accounts falling
within the Consolidated Fund Summing up, the classification of
generally correspond to 'Functions' transactions in Government account
of Government such as different follows a coding pattern as below:
services like 'Agriculture’ 'Defence'
provided by Government, while Major Head: 4-Digit Code
minor heads subordinate to them Sub-Major Head: 2-digit Code
identify the Programme undertaken Minor Head 3-digit Code
to achieve the objectives of the Sub-Minor Head 2-digit Code
function represented by the major Detailed Head 2-digit Code
head. Object Head 2-digit Code

(c) A 'detailed head', is termed as an

object classification. On the This may be graphically represented as
expenditure side of the accounts under:
particularly in respect of heads of
accounts within the Consolidated Activity Accounts Numerical
Fund, detailed heads are primarily Level Classification code
meant for itemised control over Structure
expenditure and indicate the object

Participant Note No. 4 8

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

Function Major Head XXXX (4 ‘Charged’ or ‘Voted’ shall be

digit) appended to the heads concerned to
Sub- Sub-Major XXXX- distinguish the two categories of
Function Head XX (2 expenditure.
digit)
Programme Minor Head XXXX- 2. Under Article 150 of the
XX-XXX Constitution, the accounts of the
(3 digit) Union and of the States shall be
Scheme Sub-Minor XXXX- kept in such form as the President
Head XX-XXX- may on the advice of the
XX (2 Comptroller and Auditor General,
digit) prescribe. The word from used in
Sub Detailed XXXX- Article 150 has a comprehensive
Scheme Head XX-XXX- meaning so as to include the
XX-XX (2 prescription not only of the broad
digit) form in which the accounts are to
Object of Object Head XXXX- be kept but also the basis for
Expenditure XX-XXX- selecting appropriate heads under
XX-XX- which transactions are to be
XX (2 classified.
digit)
3. The estimates of receipts and
Example: expenditure framed by Government
or in any order of Appropriation
Pay of Rs. 5000 drawn for an allopathic shall indicate provisions, ordinarily
doctor employed in an urban dispensary against heads opened in conformity
will be classified as under: with the rules. Where there is
Major Head: 2210 Medical and Public divergence, the corresponding
Health receipt or expenditure shall be
Sub-Major Head: (a) Urban Health brought to account under the
Scheme – Allopathy appropriate major head or minor
Minor Head: 110-Hospitals and head or other unit of classification
Dispensaries as determined by the President on
Sub-Minor Head: XX-Dispensaries the advice of the comptroller and
Object Head: XX-pay Auditor General.

4. As general rule, the classification

Basis of Classification of transactions in Government
accounts shall have closer
1 Expenditure, which under the reference to the functions,
provisions of the Constitution is programme and activity of the
subjected to the vote of the Government and the object of the
Legislature, shall be shown in the revenue or expenditure, rather than
accounts separately from the department in which the
expenditure, which is ‘charged’ on revenue or expenditure occurs.
the Consolidated Fund of India or This principle is however,
of a State or Union Territory subjected to such exceptions as
Government. The expression may be authorised specially in any
individual case or class of cases

Participant Note No. 4 9

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

e.g. receipts representing ‘Interest’

are shown under “0049-Interest (V) The following are the main
Receipts” and expenditure on the principles governing the allocation
maintenance and repairs of the of expenditure on a Capital Scheme
non-Residential buildings under the between Capital and Revenue
administrative control of the Public accounts: -
Works Department are shown (MSO (A&E) Vol-I Para 4.8)
under the major head “2059-Public
works” irrespective of the a) Capital account shall bear all
functions to which they relate. charges for the first construction
and equipment of a project as well
Criteria for determining whether as charges for intermediate
expenditure should be classified under maintenance of the work while not
heads of Capital Section or Revenue yet opened for service. It would
Section of the Consolidate Fund also bear charges for such further
additions and improvements as
(I) Expenditure of a capital nature to may be sanctioned under rules
be classified in the Capital Section made by competent authority.
shall broadly be defined as
expenditure incurred with the b) Subject to (c) below, revenue
object either of increasing concrete account shall bear all subsequent
assets of a material and permanent charges for maintenance and all
character or of reducing recurring working expenses. These embrace
liabilities all expenditure on the working and
upkeep of the project and also on
(II) Expenditure of a Capital nature such renewals and replacements
shall be distinguished from and such additions, improvements
Revenue expenditure both in the or extensions as prescribed by
budget Estimates and in Government.
Government Accounts.
c) In the case of works of renewal
(III) Expenditure of a Capital nature as and replacement which partake
defined above shall not be classed both of a capital and revenue
as Capital expenditure in the nature, the allocation of
Government accounts unless the expenditure should be regulated by
classification has been expressly the broad principle that revenue
authorised by general or special should pay or provide a fund for
orders of Government. the adequate replacement of all
wastage or depreciation of property
(IV) The allocation of expenditure originally provided out of capital
between capital and revenue grants and that only the cost of
expenditure on a Capital Scheme genuine improvements, whether
for which separate capital and determined by prescribed rules or
revenue accounts are to be kept formulae or under special orders of
shall be determined in accordance Government, should be debited to
with such general or special orders Capital account. Where under
as may be prescribed by the special orders of Government, a
Government on the advice of the Depreciation or Renewals Reserve
Comptroller and Auditor General. Fund is established for renewing

Participant Note No. 4 10

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 4 – Classification and form of Government Accounts

assets of any commercial others or it has to return money to others,

department or undertaking, the and these are carried forward from year
distribution of expenditure on to year until settled.
renewals, and replacements
between Capital Account and the Generally speaking the consolidated
Fund should be so regulated as to impact of transactions that is the
guard against over capitalisation on balances under Part-I (Consolidated
the one hand and excessive Fund) of the Accounts excluding Public
withdrawals from the Fund on the Debt and Loans and Advances are closed
other. to Government Accounts. The year-end
balances in these heads are not carried
d) Expenditure on account of forward and close to the Government.
reparation of damage caused by
extraordinary calamities such as Balances appearing under Major Heads
flood, fire, earthquake, and enemy in Public Debt, Loans and Advances
action should be charged to Capital under Part I, Part II-Contingency Fund
account or to Revenue account or and Part III-Public Accounts do not close
divided between them in such a to Government. Theses balances close
way as may be determined by to these head and are carried forward
Government according to the from year-to-year.
circumstance of each case.

e) Capital receipts in so far as they

relate to expenditure previously
debited to Capital heads, accruing
during the process of construction
of a project, should be utilised in
reduction of capital expenditure.
Thereafter, their treatment in the
accounts will depend on
circumstances but except under a
special rule or order of
Government, they should not be
credited to the revenue account of
the department or undertaking.

Accounts closing to balance and

accounts closing to Government

One important classification of accounts

is Closing Accounts and Balancing
Accounts. Closing Accounts are those,
which are closed to Consolidated Fund
of India or State or Union Territory
having Legislature. They close to
Government that is no balance in these
accounts is carried from year to year.
Balancing Accounts are those where
Government is to recover money from

Participant Note No. 4 11

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