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detailed head of classification giving the details of the asset acquired, constructed or replaced

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TypeCommercial Circular
Topicamenities
CurrencyCurrency not verified

Summary

detailed head of classification giving the details of the asset acquired, constructed or replaced replacement, when the cost of replacement is chargeable to DRF and is less than the cost at the debit of

Text of the circular

FINANCIAL RULES - RULES OF ALLOCATION
A careful and well-placed analysis of all expenditure and receipt is most necessary to effective financial
control. It is the primary object of any accounting classification. It is necessary to secure uniformity of
accounting to render suitable comparison between the accounts of different railways. It also helps in
preparation of budget and estimates. The labor spent in the classification will be of no use if accounts office
fails to maintain proper record as per prescribed classification or if the executive omits to review
periodically with the assistance of such record of earning and expenditure for which they are responsible.
The primary responsibility for correct allocation of the initial record in support of receipts and payments
rests with the executive offices. The account office is responsible for ensurance of correct allocation.
Allocation is the process of indicating nature of expenditure (Head of accounts) under which expenditure is
to be finally recorded.
1) Capital Expenditure: Under this category such items of expenditure are included which pertain to
acquisition of concrete assets, constructions, replacement and renewals of assets such as cost of land,
Construction of staff quarters, Construction of Bridges etc.
Expenditure incurred on amenities to passengers and other railway users, amenities to staff, unremunerative
operating improvement works when incurred on acquiring concrete assets is not treated as capital
expenditure but is accounted for separately under “Development Fund” and “Open Line Works Revenue”.
Rules of Allocation
CLASSIFICATION OF EXPENDITURE
The railway expenditure has been classified in to two groups namely: -

The Expenditure on renewals and replacements of railway assets is made out from a separate fund
commonly known as “Depreciation Reserve Fund”. For the purpose of revenue allocation the revenue
working expenses for the railways are classified under thirteen major heads with a separate abstract for
each sub major head.
2) REVENUE EXPENDITURE: - These items of expenditure relate to the
working of railway, repairs and maintenance and operation of rolling stock, Plant and Machinery and
equipment’s.

ABSTRACT ACTIVITY DEMAND NO
General superintendence and
Services

Repairs and Maintenance 04
Of permanent ways and
works

Repairs and Maintenance of 05
Motive Power

Repairs and Maintenance of

Carriage and wagons

Repairs and Maintenance of

Plants and equipment's

Operating expenses Rolling

Stock

J Staff welfare and amenities 17

Mierallananiie WAlarkina Evn

The items of expenditure which are incurred on repairs and maintenance of various assets such as railway
track, bridges, service and residential buildings etc. are in the nature of day to day expenses. To keep the
organization running and also to enable the existing assets to give the same services and to keep them in
good service condition for achieving the above purpose the revenue working expenses of the railways has
been classified in to thirteen abstracts and each abstract being given a different alphabet to identity the
expenditure.
From first April of 1979 the entire structure of railways Demands for Grants and the classification of earning
and expenditure has undergone complete revision and accordingly Revenue abstracts have been utilized for
recording the revenue working expenses. The Demands have been further classified in to main heads, sub
heads and detailed heads to form the allocation for any expenditure. The allocation will be in eight digits,
which will in three parts.
Part I: - This part gives the demand applicable as per the nature of expenditure and consists of First 3 digits.
The same can also be denoted by corresponding abstract applicable to the demand.
Part II: -  Second group of three numerical digits indicate the main head of account which individually
indicate the minor head, sub head and detailed head respectively.

Part III: -  This part consist of two numerical digits wh

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