Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries
Transfer Entries
(Chapter-7 of Account Code for
Accountant General)
Session Overview
A very large number of transactions take
place on Government Account. The
number of individuals, offices,
organizations, etc. (like drawing and
disbursing officers, individuals permitted
to operate on Government Account
through a special authority, individuals
and corporates remitting tax dues,
individuals and organizations remitting fee
for services provided by Government, etc.)
originating the transactions is also very
large. These innumerable transactions are
captured and recorded in initial accounts
by a larger number of organizations (like
treasuries, district treasuries, offices
authorized to operate on Government
Account through cheque drawing powers,
other Accounts Offices, etc.). The sheer
number of transactions and the sheer
number of organizations capturing the
transactions in initial accounts leads to the
possibility of misclassification of some
(may be a very small number) transactions
under an incorrect head of account. These
misclassifications, when detected, are
required to be set right immediately and
the transactions recorded under the correct
classification head of account so that the
Government Accounts present a true and
fair view of the accounts of the
Government.
The rectification of misclassifications is
carried out through authorizations of
competent authority through a document
known as ‘Transfer Entry’. The Transfer
Entry essentially records the Head of
Account from which the misclassified
amount is withdrawn and the Head of
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Account to which it is ultimately and
correctly taken and reasons for proposing
the transfer.
At the close of the monthly accounts and
at the close of annual accounts, certain
adjustments are required to be carried out
in the Government Accounts to present a
true and fair view of the Accounts. For
example, when the General Provident
Fund Account Ledgers are closed at the
end of the year, interest accrued on the
balances and deposits of individual
accounts is worked out and credited to the
individual General Provident Fund
Accounts by raising a corresponding debit
for the interest amount to the Consolidated
Fund under the Interest Head of Account.
These adjustments are also carried out in
Government Accounts through
authorizations of competent authority
through the document known as ‘Transfer
Entry’. The Transfer Entry in such cases
also essentially records the Head of
Account to which the adjusted amount is
debited and the Head of Account to which
the amount is credited and reasons for
proposing the adjustment.
Transfer Entries and records connected
therewith are important records to keep a
track of various adjustments and to ensure
that transfers and adjustments are allowed
only on the authorizations of competent
authority.
During this session, we will discuss:
>What is a Transfer Entry?
> Preparation of Transfer Entry.
> Object of Transfer Entry.
> Maintenance of Transfer Entry Book
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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries
Learning objective
At the end of the session, the learner will
be able to define Transfer Entry, its use
and accounting procedure.
Concept of Debit and Credit in
Government Accounts
The terms debit and credit or ‘Dr’ and
‘Cr’ used in Government Accounts or
used in the transfer entries have the
following meaning: -
(i) Debit to an expenditure head
means increase in the expenditure
of that head of account.
If Rs.500 are debited to the head
“2210-Medical and Public Health”,
it means expenditure under the
above head has been increased by
Rs.500.
. (vi) Credit to a debt head means
(ii) Credit to an
expenditure head means decrease
in expenditure.
Rs.500 credited to the head “2210-
Medical and Public Health”, means
that expenditure under the above
head has been decreased by
Rs.500.
(iii) Debit to a receipt head means
decrease in receipts.
Rs.500 debited to “0210-Medical
and Public Health”- means that
receipts under the above receipt
head have been decreased by
Rs.500.
(iv) Credit to a receipt head means
increase in receipts.
Participant Note No. 8
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Rs.500 credited to the receipt head
“0210-Medical and Public Health”-
means that receipts under the
above head have been increased by
Rs.500.
(v) Dr. to a debt means repayment of
debt unless it is clearly stated as
“Deduct Receipts”.
Rs.500 are debited to the debt head
“8005 State Provident Funds”, it
means there is a repayment of debt
by Rs.500.
If Rs.500 are deduct-credited to the
above head i.e. Rs.500 are Deduct
credit (D/d Cr.)-8005 State
Provident Fund, it will indicate that
receipts of debt have been
decreased by Rs.500.
increase in receipts of debt unless
it is clearly stated as “Deduct
payments”
Rs.500 is credited to the head
“8005- State Provident Funds”. It
means that receipts have been
increased by Rs.500.
If Rs.500 are deduct debited viz. A.
Rs.500 (Deduct payment)-8005-
State Provident Funds to the above
heads, it will imply decrease the
payments by Rs.500
Expenditure booked in Government
Accounts under the Sections
‘Consolidated Fund’ and ‘Transfers to
Contingency Fund’ has to be carefully
monitored as the expenditure under these
sections can be incurred only with
legislative approval through the
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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries
Appropriation Act. Any adjustment or
correction in accounts has to be carefully
examined to determine its effect on the
expenditure and appropriations for the
year.
Concept of Minus Credit and Minus
Debit in Government Accounts
Unlike commercial accounts, there is a
concept of ‘Minus Debit’ or ‘Minus
Credit’ in Government Accounts. The
concept has been incorporated to clearly
adjust the transactions under their proper
heads of account, either on receipt side
or on payment side.
In commercial accounts, ledgers are
maintained for each set of transactions
under a particular head of classification
and all receipts and all payments
adjustable under that particular head are
captured under that unit of classification
in the ledger. Net effect of transactions
(either credit or debit) is eventually
taken to the trail balance and then to the
annual financial statement (profit and
loss account/income and expenditure
account or balance sheet).
In Government Accounts separate heads
of account are prescribed for receipts
and for payments, even though they
both, i.e. receipts and payments, relate to
the same set of transactions. Thus, we
have a head of accounts for accounting
receipts from petroleum like cess,
concession fee and royalties, etc. On the
other hand we have a head of account for
accounting of expenditure on petroleum
like on exploration and production of
crude and gas or on refining and
marketing. Besides, legislative control
on expenditure out of Consolidated Fund
requires that receipts from government
Participant Note No. 8
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activities should be accounted for
separately from expenditure on the same
activity. It is because of this that the
concept of ‘Minus Credit’ and ‘Minus
Debit’ has evolved in Government
Accounts.
An item of receipt wrongly classified
under a head of accounts is withdrawn
from that head of account through
transfer entry by giving ‘Minus Credit’
to that head and crediting the
misclassified transactions under the
correct head of account. Similarly an
item of disbursement wrongly debited to
a head of account is withdrawn from that
head of account by giving a ‘Minus
Debit’ to that head per contra debit to the
correct head of account.
Corrections and Adjustments
Corrections and adjustments within
departmental accounts are effected by
means of transfer entry. If an items in a
transfer entry has to be taken to a head in
another Departmental Account in the
accounts of the same Government it
should be classified in the transfer entry
as pertaining to the Suspense head
“Departmental Adjusting Account”
relating to the other department. The
transfer entry with the necessary
suspense slip should then be sent, for
acceptance and return, to the section
which maintains the Detail Book or
Departmental Abstract in which the
transferred item will be finally adjusted
under the proper head. When received
back with the acceptance, the transfer
entry will be posted in the Combined
Transfer Ledger and Abstract.
The Section to which a transfer entry is
sent with a suspense slip for acceptance
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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries
should retain the suspense slip and deal
with it in the same way as if it had been
received with the departmental schedules
of a treasury.
If an item of receipt or payment relating to
the Central Government (other than central
pensions) is wrongly included in the
schedule of State receipts or payments, the
amount should be credited or debited as
the case may be, to the Suspense head
“8658 Suspense Accounts PAO Suspense-
items adjustable by Ministry/Department
in the State Classified Abstract”. At the
same time, the relevant particulars of
receipts/payments should be passed on to
the section dealing with inter-Government
Settlement Accounts in the office (which
is generally called Account Current
Section) for eventual cash settlement with
the concerned Pay and Accounts office of
the Ministry/Department. This procedure
applies mutatis mutandis when an item of
State receipt/payment is wrongly included
in the schedule of Central receipts or
payments (except the Central Pensions).
In respect of items of receipt/ payment
relating to Central Pensions wrongly
included in the State schedule of
receipts/payments the amount should be
credited or debited as the case may be, to
the head “8786 Adjusting Account
between Central and State Governments”
in the State Departmental Classified
Abstracts of pensions. At the same time,
the Departmental Accountant concerned
will prepare a transfer entry for
incorporation in the Central Section of
Accounts in which debit or credit for the
amount in question, should be given to the
head “Adjusting Account between Central
and State Governments” by corresponding
credit or debit either to the appropriate
trial head of account or to the relevant
Participant Note No. 8
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Departmental Suspense head, as may be
considered necessary or suitable. Except
as provided otherwise this transfer entry
should invariably be included in the
Central Accounts of the same month. This
procedure applies mutatis mutandis when
an item of State pension receipt/ payment
is wrongly included in the schedule of
Central receipts/ payments.
The recoveries of overpayments whether
made in cash or from payment vouchers
shall be posted direct under the service
head concerned in the Compilation Book
as reduction of expenditure irrespective of
whether they relate to overpayment
pertaining to the current year or to any
previous year.
Object of Transfer Entries
Transfer entries, which are entries
intended to transfer an item from one
head of account to another, are
necessary: -
(a) In order to correct an error of
classification in the original
accounts;
(b) In order to adjust, by debit or
credit to its proper head, an item
outstanding under a Debt,
Deposit or Remittance Head;
(c) In order to adjust inter-
departmental and other
transactions which do not
involve the receipt or payment of
cash.
Another type of case in which transfer
entries are necessary occurs when it is
found more convenient to classify items
pertaining to more than one head of
account under a single head of account
in the first instance than to classify them
under each head of account from the
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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries
beginning; for example when a definite
proportion of any receipt or charge is
taken to a separate head, it is often
convenient to make the distribution upon
the totals of the Departmental Abstract
or the Detail Book.
Preparation of Transfer Entry
Transfer entry should be prepared in
Form AC 23. On one side of every
transfer entry there should be only one
major head to which there may be a
debit by credit to sundry heads or vice
versa; debit should not be taken against
sundry head by credit to sundry heads. A
fortiori, the same entry should not
contain independent corrections of two
major heads; it may not debit A by credit
to B, and again C by credit to D.
In a transfer entry all particulars
explaining both the nature of the
adjustment and (if it is a correcting
transfer) the grounds of the correction
must be clearly stated.
A list of adjustments which have to be
made periodically should be maintained
in order to ensure that they are regularly
made. These adjustments should, as a
rule, be made monthly. If this is found
inconvenient and if the Accountant
General considers that there are
sufficient grounds for postponing any
adjustments, they may be made
quarterly. Unforeseen adjustments
should, however, be made as soon as the
necessity for them arise.
Save as may be authorised by the
Comptroller and Auditor General or by
Government in consultation with the
Comptroller and Auditor General, annual
Participant Note No. 8
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and half yearly transfers should be
avoided.
Correction of Accounts
(a) If an item which properly belongs
to a Revenue or Expenditure head
is wrongly classified under another
Revenue or Expenditure head in
the accounts of the same
Government, the error may be
corrected at any time before the
accounts of the year are closed, but
after the accounts are closed, no
correction is admissible, it being
sufficient to make a suitable note
of the error against the original
entry. If, however, the error affects
the receipts and disbursements of
another Government, or the
transactions of a Commercial
Department it should be corrected
by transfer in all cases as soon as
the error is discovered.
(b) An error, which affects a Debt,
Deposit or Remittance head, must
be corrected by transfer, however
old and however small it may be. If
the accounts of the year in which
the error took place are not closed,
the correction should be made by
the removal of the item from the
head under which it was wrongly
taken to that to which it properly
belongs. If the accounts of the year
in which the error took place are
closed, then the following
procedure should be followed in
the case referred to:
1- an item taken to one Debt,
Deposit and Remittance Head
instead of another- the
correction should be made by
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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries

transfer from the one to the

other;
2- an item credited to a Debt, Procedure of making a transfer
Deposit and Remittance Head entry
instead of to a revenue head,
or debited to a Debt, Deposit
A correction by a transfer entry may be
and Remittance Head instead
proposed by any section of an Accounts
of to an expenditure head, the
Office. It should be accepted by the
correction should be made by
other section concerned if the entry has
transfer to the head under
been drawn up according to rule and
which it should originally
necessary particulars are furnished,
have appeared;
original vouchers and other documents
3- an item credited to a revenue
in support of the entry should be
head instead of to a Debt,
recorded in the section which originally
Deposit or Remittance head,
dealt with them and not sent to the other
correction should be made by
section concerned along with the transfer
debiting the proper head and
entry.
crediting the relevant receipt
.
head.
Maintenance of Transfer Entry Book
4- an item debited to an
expenditure head instead of a
A Transfer Entry number book in form
Debt, Deposit or Remittance
AC 24 should be maintained in each
head, correction should be
accounting section in which should be
made by debiting the proper
entered in brief but clear detail the
head and crediting the
particulars of each transfer entry
relevant receipt head.
originating in that section, it being
sufficient to fill in columns 1 and 2 only
After the accounts of the year are closed,
in respect of transfer entries received
corrections or transfers affecting capital
from other sections. The Transfer Entry
major heads, unless they affect the
Number Book for Central transactions
account of different Governments,
should be kept separate from that for
should usually be effected without
State transactions. The entries proposed
financial adjustment by alteration of
by the several sections should be
progressive figures, without passing the
numbered serially by each, a distinctive
debit and credit entries through the
letter being used by each section and
accounts of the year’s financial
these numbers entered in their respective
transactions, when the error is detected.
Number Books. The number to be given
This would prevent unnecessary
to an entry received from another section
inflation of the current year’s accounts
should be expressed as a fraction, the
and the voting of grants of doubtful
numerator of which will denote the
propriety which the inclusion of the
number as given by the originating
correcting entries in the current accounts
section and the denominator will show
would otherwise involve.
the number assigned to the entry in the
Number Book of the receiving sections.

Participant Note No. 8 6

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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries
The provision may be relaxed, at the
discretion of the Head of the Accounts
Office, when, in view of the large
number of transfer entries received from
other sections, it is considered more
economical only with reference to the
entries so received and not those
originating in the receiving section itself,
to maintain a simple Index of Transfer
Entries showing the general number as
allotted by the receiving section and the
sectional number of the originating
section.
The addition or deduction, which should
be posted in Departmental Abstracts or
the Detail Books on account of the
transfer entries, should be worked out
from the separate transfer entries of all
sections. This procedure shall consist
mainly of the preparation of an abstract
known as the Combined Ledger and
Abstract (Form AC 25) showing the
debits and credits to be made under each
detailed head affected by the entries of
the month, the totals of the debits and
credits of the month necessarily being
equal. The combined transfer ledger and
abstract for Central transactions should
be kept separate from that for State
transactions.
In the case of revenue and expenditure
heads, it is the net outcome of the
transfer entries against each i.e. the
balance of the head, in the Combined
Transfer Ledger and Abstract (Form
AC25), which should appear as a debit
or credit in the Abstract but in the case
of Debt, Deposit or Remittance Heads,
the gross credit and the gross debit
should both appear in the Abstract- the
former in the receipt part and the latter in
the disbursement part, as these heads
Participant Note No. 8
Courseware designed and prepared by: Regional Training Institute, Allahabad
have corresponding accounts on both
sides.
When large transfers are made from one
Debt, Deposit and Remittance Head to
another in order to correct the original
classification in account the transaction
should, wherever possible be made by a
deduct entry against the original debit or
credit, so as to prevent exaggeration of
the transactions in the accounts.
When, however, such a transfer affects a
Debt, Deposit and Remittance Head for
which grants are obtained, it should be
adjusted, irrespective of the amount
involved on the following principles: -
(a) When the correction is in
rectification of a
misclassification of the same
year, - by deduct entry against
the original debit or credit, as the
case may be;
(b) When the correction is in
rectification of a
misclassification of the previous
year- plus credit or minus credit
under the heads concerned,
without affecting the debits for
the year; provided that in either
case, if the correction involves
the transfer of balance from one
account circle to another within
the accounts of the Central
Government, the adjustment in
both circles must be made
without any reservation within
the same official year.
The transfer entries, after being noted in
the Number Book, should be posted
individually into the left hand columns
of the Combined Transfer Ledger and
Abstract, against the respective heads
affected. The column for “Number” of
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Indian Audit and Accounts Department
Structured Courseware on Government Accounting
Session: 8 – Transfer Entries

the entry and that for the “District or
Department” which provides for the
name of the district or department in
whose accounts the original error
appeared should be filled in at the same
time.
monthly volumes of the Combined
Transfer Ledger and Abstract should be
arranged in order of the months and
bound into convenient volumes.

From the right hand money columns of

the Combined Transfer Ledger and
Abstract, the figures should be posted
under appropriate heads in the
Departmental Abstract of the month in
which the error occurred. Transfers
affecting a Debt, Deposit and
Remittance Head should be made by
new entries in the month of correction
and need not be noted against the
original entry. In the case of important
transfers, however, a note should be
made in reducing ink, across the original
entry in the Detail Book, of the month of
its reversal and across the correcting
entry of the month of the original one.

Closing of the Combined Transfer

Ledger and Abstract

The Combined Transfer Ledger and

Abstract should be closed by totaling
under each head the figures in the
columns on the left, and carrying into the
columns on the right the balance in the
case of revenue and expenditure heads,
and the totals in the case of Debt,
Deposit and Remittance Heads. The
totals of the two money columns on the
left need not be carried forward, but
amounts in the two money columns on
the right hand side should be totaled and
agreed. After the Combined Transfer
Ledger and Abstract is thus proved by
the agreement between the totals of these
two columns, an abstract should be
drawn up. At the end of the year, the

Participant Note No. 8 8

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