Chapter 3

Recording common transactions of federal governments of Ethiopia (FGE)

Introduction to Accounting transactions and recordings

The accounting system is organized in to two subsystems: accounting for transactions using a modified
cash basis of accounting, and accounting for other assets and liabilities using a cost method of valuation.

Accounting for transactions means accounting for daily economic activities. Transactions cause increases
and decrease to: Revenue, receipt from external assistance, Receipts from external loans, expenditures,
transfers, Cash and cash equivalents, receivables, payables, letters of credit, etc.

Although accounting for transactions provides complete pictures of economic activity, the picture of the
economic resources owned and owed is incomplete. Other assets and liabilities that result from
transactions complete the picture. Other assets and liabilities include: stocks, goods in transit, fixed
asset, long term loans, investment etc. Every transaction must be;

o Authorized by the appropriate authority

o Capture when they occur
o Recorded in the accounting system
o Summarized by account
o Reported to the appropriate authority
Capturing transactions
Transactions are captured by the first source document prepared by the accounting unit when the
transaction occurs. The source document varies depending on the transaction. Examples include:
 Receipt voucher when cash is received
 Payment voucher when expenditure are made
 Journal vouchers when the transaction does not involve cash
Capturing transactions without cash movement: Journal Voucher:- transactions that don’t involve the
movement of cash arise in the case of: Non-cash receipts/transfers; aid in kind; receivable and payable
transactions; grace period payable transactions& correction of incorrect entries already recorded in the
register.
3.1. CASH TRANSFERS

From MOFED to BOFED ‐ Subsidy

Example: MOFED transfers Birr 250,000 to BOFED as subsidy for recurrent expenditure.

Transaction Register of BOFED

Ref Description TB Account Other Cash at bank 4105

number
Dr Cr Dr cr
RV Recurrent - 1601 250000 250000
subsidy

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Transfers from BOFED to D/OFED for Region Sub Agencies
There may be Sub‐Agencies budgeted by Region Sector Bureaus located in zones and/or weredas. Each
sub agency is notified its approved budget by BOFED together with copies to the RSB and D/OFED.
D/OFED establishes a separate bank account for receiving and disbursing cash for all sub agencies in its
jurisdiction and maintains a separate Transaction Register and General Ledger for the special bank
account. Cash in the BA belongs to BOFED and is not part of the Zone/Wereda subsidy. BOFED will
transfer the S/As’ budget as requested the separate bank account each month.
Example: BOFED transfers Birr 100,000 to the D/OFED separate bank account.
Transaction Register of BOFED:

No Description TB Account Others Cash at Bank

Number 4105
Dr Cr Dr Cr
PV Cash transfer to ‐ 4010 100,000 100,000
D/OFED

Transaction Register of D/OFED:

No Description TB Account Others Cash at Bank

Number 4105
Dr Cr Dr Cr
RV Cash transfer ‐ ‐ 4010 - 100,000 100,000 -
BOFED

From RSB to Federal Ministry

Example: The Bureau of Health sends Birr 5,000,000 to the Ministry of Health for purchase of medicines.
The Ministry of Health spends Birr 4,700,000.
Transaction #1: Cash is sent to Federal Ministry to purchase medicines by the Bureau of Health

Transaction Register of RSB (Bureau of Health)

Ref Description TB Account Others Cash at Bank

Number 4103
Dr Cr Dr Cr
PV Due from Ministry - 4209 5,000,000 - 5,000,000

Transaction #2: Medicines are purchased at a cost of Birr 4,700,000

Transaction Register of RSB (Bureau of Health)
ref description tb Account Others Cash at bank
no 4103

JV Medical - 6214 4,700,00 -

supplies 0
Due from 4209 4,700,000
ministry

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 From Federal Ministry to RSB
Federal Ministries may transfer donor funds directly to RSB and such payments to a region from the
federal level can be budgeted either as the region’s subsidy or as part of the federal budget.
Budgeted as Revenue by Region
Example: The Ministry of Health sends Birr 50,000 (EU Funds) to the Region Health Bureau and the
amount is budgeted as part of the regional subsidy.
Transaction Register of Region Health Bureau
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Assistance -EU - 2008 50,000 50,000

Not Budgeted as Revenue by Region

In this case, the responsibility for the budgeted expenditure remains with the Federal Ministry, although
the expenditure is executed by the RSB.
Example: The Ministry of Education sends Birr 50,000 to the Regional Education Bureau for training. The
Regional Education Bureau spends Birr 47,000.
Transaction #1: Cash is received from the Ministry of Education to deliver training
Transaction Register of RSB
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Due to federal - 5026 50,000 50,000
ministry
Transaction#2: training is delivered at cost of birr47,000

Transaction Register of RSB

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Due to federal - 5026 47000 47000
ministry

From DOFED/OFED to RSB

The capital budget of D/OFED may be executed by a RSB. Cash is transferred from D/OFED to the RSB to
execute the capital budget.
Example: D/OFED sends Birr 500,000 to RSB to purchase a vehicle.
Transaction # 1: Cash is sent by D/OFED RSB and received by RSB
Transaction Register of RSB
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Payable to - 5028 500,000 500,000
D/OFED

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Transaction Register of OFED
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Advance to RSB - 4210 500,000 500,000
Transaction #2: Cash is spent by RSB with supporting invoice
Transaction Register of RSB
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
PV Payable to OFED - 5028 500,000 500,000
The invoice is returned by RSB to D/OFED using Me/He 42.

Transaction Register of D/OFED

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
JV expenditure 02 6311 500,000
Advance 4210 500,000

From One RSB to another RSB

Example: RSB # 1 transfers Birr 150,000 to RSB # 2 as a temporary arrangement.
Transaction Register of RSB #1
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
PV Cash transfer to - 4210 150,000 150,000
RSB#2
Transaction registers RSB#2
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Cash transfer to - 5028 150,000 150,000
RSB#1

From one budgetary bank account to another budgetary bank account

Cash may be transferred between budgetary bank accounts within the same RSB or within between
budgetary bank accounts of BOFED Treasury
Example: BOFED treasury transfers Birr 150,000 from Bank Account # 1 to Bank Account # 2.
Transaction Register of Bank Account #1
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
PV Cash transfer - 4210 150,000 150,000

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Transaction Register of Bank Account #2
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Cash transfer - 5028 150,000 150,000

From a budgetary bank account to a non budgetary bank account

Cash may be transferred between one budgetary bank account and another non budgetary bank
account within the same RSB or within BOFED Treasury
Example: BOFED treasury transfers Birr 150,000 from BA # 1 to BA # 2.
Transaction Register of Bank Account #1
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
PV Cash transfer - 4210 150,000 150,000

Transaction Register of Bank Account #2

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Cash transfer - 5028 150,000 150,000

From BOFED to RSB – Budgeted Expenditures

A transfer to one bank account may include funds for more than one BI in a RSB or more than one
RSB in a pool. The entire transfer is recorded as one entry in the Transaction Register for the total
amount.
Example: A RSB receives a transfer of Birr 150,000 from BOFED for cap. exp.
Transaction Register of BOFED
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
PV Cash transfer - 4004 150,000 150,000

Transaction Register of RSB

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Cash transfer - 4004 150,000 150,000

From BOFED to RSB ‐ Advances

Example: A RSB requests funds in June to be paid recurrent expenditures out of next year’s budget.
BOFED sends Birr 5,000.
Transaction Register of BOFED
Ref Description TB Account Others Cash at Bank

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 Number 4103
Dr Cr Dr Cr
PV Advance - 4206 5,000 5,000
BOFED maintains a subsidiary ledger for each advance by Reporting Unit.

Transaction Register of RSB

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Due to BOFED - 5024 5,000 5,000

When the RSB receives its budget notification, a Me/He 71 is sent to BOFED. This request includes Birr
5,000 received as an advance as illustrated below:
Transaction Register of BOFED
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
PV Advance to BI - 4206 5000
Transfer recurrent 4002 12000 7000
Transaction Register of RSB
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
RV Due to BOFED - 5024 5000
Transfer recurrent 4002 12000 7000

PAYMENTS MADE ON BEHALF OF RSB

By MOFED
Example: MOFED pays Birr 150,000 for custom duties on purchase motor vehicles from a RSB’s capital
expenditure budget and notifies BOFED of the payment.
Transaction Register of BOFED
Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
JV Non cash transfer - 4054 150,000
Subsidy transfer 02 1602 150,000

Transaction register by RSB

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
JV Motor vehicle 02 6311 150,000
Non-cash transfer 4054 150,000

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By BOFED
Example: A RSB requests BOFED to pay for a motor vehicle on its behalf amounting to Birr 240,000 from
its capital expenditure budget.

Transaction Register of BOFED

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
pV Cash transfer 4004 240,000 240,000

Transaction register of RSB

Ref Description TB Account Others Cash at Bank
Number 4103
Dr Cr Dr Cr
JV Motor Vehicle 02 6311 240,000
Cash transfer - 4004 240,000
3.2. Recording salary transactions
Example: A BI requests salary with the following details:
Gross salary 20,000 Deduction: salary advance 600
Pension expense – 6% 1,200 Fine 250
Employee pension ‐ 4% 800 Net Salary Payable 16,350
Income tax 2,000
Salary Expense
Transaction register of RSB
Ref Description TB Account Others Cash at bank 4103
number
dr cr dr cr
JV Salary 01 6111 20,000
expense
Pension 01 6131 1,200
expense
Salary 5004 16,350
payable
Income tax 1101 2,000
Staff 4203 600
advance
Fine 1489 250
Pension 5003 2,000
payable

Receipt of Salary
Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
dr cr dr cr
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 RV Transfer 16,350
from BOFED
Pension 5003 2,000
expense
Transfer 4001 18,350

Transfer of Salary by BOFED

Transaction Register of BOFED
Ref Description TB Account Others Cash at bank 4103
number
dr cr dr cr
PV Cash 16,350
Transfer to
RSB
Pension 5003 2,000
payable
Transfer 4001 18,350

Payment of Pension by BOFED

Transaction Register of BOFED
Ref Description TB Account Others Cash at Bank
Number 4105
Dr Cr Dr Cr
PV Pension Authority 5003 2000 2,000

Withdrawal of Cash from Bank to Pay Salary

Transaction Register of RSB

Ref Description TB Account others Cash at bank 4103

number
Dr cr dr cr
PV Cash 16350 16350
Transfer for
salary
The cashier records birr 16350 as a receipt in the cash book

Settlement of Salary
Transaction Register of RSB
Employees sign Model 33 to evidence receipt of salary from the Cashier. After salary period is over, the
Model 33 is given to the EA who prepares one PV for the total salary paid.

Ref Description TB Account others Cash IN SAFE 4103

number
dr cr dr cr
PV Salary 5004 15,350 15,350
payable

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The cashier records the PV for birr 15,350 in the cashbook. Birr 1000 remains unpaid.

Deposit of Unpaid Salary into Bank

Transaction Register of RSB

Ref Description TB Account cash in safe 4101 Cash at bank 4103

number
dr cr dr cr
PV Deposit- 1000 1000
unpaid
salary
The cashier records the pV for birr1000 in the cashbook.

Transfer of Unpaid Salary from RSB to BOFED

Transaction Register of RSB

Ref Description TB Account others Cash at bank 4103

number
Dr cr dr cr
PV Deposit- 4009 1000 1000
unpaid
salary

Transaction Register of BOED

Ref Description TB Account Others Cash at bank 4103
number
dr cr dr cr
RV Deposit-unpaid 4009 1000 1000
salary

Transfer of Unpaid Salary from BOFED to RSB

Transaction Register of BOFED

Ref Description TB Account Others Cash at bank 4103

number
Dr cr dr cr
PV Transfer to RSB 4009 1000 1000
Transaction Register of RSB

Ref Description TB Account Others Cash at bank 4103

number
dr cr dr cr
RV Transfer from 4009 1000 1000
BOFED

Payment of Unpaid Salary

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Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
dr Cr dr cr
PV Salary payable 5004 1000 1000
Long‐Term Salary Advance
A long‐term salary advance of Birr 1,000 is approved by BOFED, transferred to the RSB and paid by the
RSB to an employee.
Payment of Salary Advance by BOFED to RSB
Transaction Register of BOFED

Ref Description TB Account Others Cash at bank 4103

number
dr cr dr cr
PV Staff advance 4005 900 900
Receipt of Salary Advance by RSB from BOFED
Transaction Register of RSB

Ref Description TB Account Others Cash at bank 4103

number
dr cr dr cr
RV Staff advance 4005 900 900
The interest is Birr 100 and the net payment to the employee is Birr 900.
Payment of Salary Advance to Employee by RSB
When a long‐term salary advance is processed, interest is charged and withheld from the advance. The
PV is prepared for the net amount (total advance minus interest charged).
Transaction Register of RSB

Ref Description TB Account Others Cash at bank 4103

number
dr cr dr cr
PV Staff advance 4203 1000
Interest 1465 100 900
Employees Transferred with Salary Advance
From One RSB to another RSB
The long‐term salary advance balance is transferred from RSB # 1 to RSB # 2 as follows:
 RSB # 1 writes a letter to RSB # 2 with a copy to BOFED indicating the outstanding salary advance
balance of the transferred employee
 RSB # 1 debits 4005 and credits 4203 by the amount of staff advance
 On receipt of the letter from RSB # 1, RSB # 2 debits 4203 and credits 4005
Example: An employee with salary advance of Birr 2,000 is transferred from RSB#1to RSB#2.
Transaction Register of RSB # 1
Ref Description TB Account Others Cash at bank 4103
number
dr cr dr cr
JV Transfer Staff 4005 2,000
advance
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 Advance to 4203 2,000 900
staff

Transaction Register of RSB # 2

Ref Description TB Account Others Cash at bank 4103
number
dr cr dr cr
JV Advance to 4203 2,000
staff
Transfer staff 4005 2,000
advance

Employees Transferred with Salary Advance

From RSB to D/OFED
The employee’s salary advance balance is transferred to OFED as follows:
 RSB writes to OFED with a copy to BOFED showing the salary advance
 RSB debits 4274 and credits 4203 by the amount of staff advance due
 On receipt of the letter from RSB, D/OFED debits 4203 and credits 5028 (other payables) and
transfers the amount of salary advance to the RSB

Example: An employee with salary advance of Birr 2,000 is transferred from RSB to D/OFED.
Transaction 1: Employee is transferred
Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
dr cr dr cr
JV Transfer staff 4274 2,000
advance
Advance to 4203 2,000
staff

Transaction Register of D/OFED

Ref Description TB Account Others Cash at bank 4103
number
dr cr dr Cr
JV Advance to 4203 2,000
staff
Transfer staff 5028 2,000
advance

Transaction 2: D/OFED transfers cash to RSB

Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
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 dr cr dr cr
RV Cash from DOFED 2,000
Transfer staff 4274 2,000
advance

Transaction Register of D/OFED

Ref Description T Account Others Cash at bank 4103

B number
dr cr dr Cr
PV Transfer staff 5028 2,000 2,000
advance

Employees Transferred with Salary Advance

From D/OFED to RSB
The employee’s salary advance balance is transferred to RSB as follows:
 D/OFED writes a letter to RSB with a copy to BOFED indicating the salary advance
 D/OFED debits 4274 and credits 4203 by the amount of staff advance due
 On receipt of the letter from D/OFED, RSB debits 4203 and credits 5028 (other payables) and
transfers the amount of salary advance to D/OFED

Example: An employee with a salary advance of Birr 2,000 is transferred from OFED to RSB
Transaction 1: Employee is transferred
Transaction Register of D/OFED

Ref Description TB Account Others Cash at bank 4103

number
dr cr dr Cr
JV Transfer staff 4274 2,000
advance
Advance to 4203 2,000
staff

Transaction Register of RSB

Ref Description TB Account Others Cash at bank 4103

number
dr cr dr Cr
JV Advance to staff 4203 2,000
Transfer staff advance 5028 2,000

Transaction 2: RSB transfers cash to D/OFED

Transaction Register of D/OFED

Ref Description TB Account Others Cash at bank 4103

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 number
dr cr dr Cr
RV Cash from RSB 2,000
Transfer staff advance 4274 2,000

Transaction Register of RSB

Ref Description TB Account Others Cash at bank 4103

number
Dr cr dr Cr
PV Transfer staff advance 5028 2,000 2,000

Salary Adjustments
In certain cases, an employee may be ineligible to collect salary or salary may be computed incorrectly.
In such cases the original salary expense entry should be reversed and the salary adjustment entry is
effected.
Example: An employee salary contains the following details:
Gross salary --------------------------2,000
Deduction
: Salary advance------------------------ 85
Pension expense – 6%--------------- 120
Employee pension ‐ 4%-------------- 80
Income tax----------------------------- 200
Net Salary Payable -------------------1635
It was detected later that the employee was ineligible for any salary payment because he was absent
from duty. Therefore, a salary adjustment entry should be passed to reverse the salary expense entry.
Transaction Register of RSB

ref Description TB Account Others Cash at bank 4103

number
Dr Cr Dr Cr
Salary payable 5004 1635
Income tax 1101 200
Staff advance 4203 85
Pension payable 5003 200
Salary expense 01 6111 2000
Pension expense 01 6113 120

3.3. OPERATIONAL EXPENDITURE

Suspense Payments
Where the SPV remains unsettled beyond the prescribed period it is treated as receivables.
Transaction 1: A SPV for Birr 500 for per diem is outstanding beyond the prescribed period.

ref Description TB Account Others Cash at in safe 4101

number

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 Dr Cr Dr Cr
PV Staff receivables 4211 500 500
The Cashier records the PV in the cashbook as a payment.

The employee may later settle the outstanding amount on per diem as follows:
Alternative 1: Settled for Birr 500.
ref Description TB Account number Others Cash at in safe 4101
Dr Cr Dr Cr
JV Per diem 1 6231 500
Staff receivables 4211 500

Alternative 2: Settled for Birr 400 and Birr 100 is returned in cash to safe.

Ref Description TB Account Others Cash at in safe 4101

number
Dr Cr Dr Cr
JV Per diem 1 6231 400
Staff receivables 4211 400
RV Cash refund 100
Staff receivable 4211 100

Alternative 3: Settled for Birr 600 and Birr 100 is paid in cash to employee.

Ref Description TB Account Others Cash at in safe 4101

number
Dr Cr Dr Cr
PV Per diem 1 6231 600
Staff receivables 4211 500 100
Note: The amount written on the top half of the Payment Voucher in “words” and “figures” as cash paid
out will be only Birr 100

Operational Expense without Withholding Tax

A Payment Voucher or a Suspense Payment Voucher may be used to effect cash payments. A PV is used
when the exact amount of the invoice is known prior to effecting the cash payment. A SPV is used when
the exact amount of the invoice is not known prior to effecting the cash payment.
Example: Cash of Birr 500 is paid for office supplies. A SPV is used. The Purchaser returns with an invoice
for Birr 450 and Model 19. The Purchaser refunds Birr 50 and a Payment Voucher is prepared for Birr
450. The SPV is cancelled. The GLA records the PV as follows:
Ref Description TB Account Others Cash at in safe 4101
number
Dr Cr Dr Cr
PV Office supplies 6212 450 450
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Example: Cash of Birr 500 is paid for office supplies. An SPV is used. The Purchaser returns with an
invoice for Birr 550 and Model 19. The Purchaser obtains Birr 50 from the Cashier and a PV prepared for
Birr 550. The SPV is cancelled. The GLA records the PV as follows:
Ref Description TB Account Others Cash at in safe 4101
number
Dr Cr Dr Cr
PV Office supplies 6212 550 550

Example: Cash of Birr 500 is paid for office supplies. An SPV is used. The Purchaser returns with an
invoice for Birr 500 and Model 19. A PV is prepared for Birr 500. The SPV is cancelled. The GLA records
the PV as follows:
Ref Description TB Account Others Cash at in safe 4101
number
Dr Cr Dr Cr
PV Office supplies 6212 500 500

3.4. Operational Expense with Withholding Tax

When a purchase is made that requires the withholding of tax a PV for the full purchase price is
prepared. When payment is made, the EA prepares a receipt for the amount of the withholding tax.
Example ‐ withholding tax treated as revenue: A RSB buys office supplies for Birr 15,000 from its
recurrent expenditure budget – It issues a check for only Birr 14,700 as Birr 300 is the withholding tax.
The GLA records the PV as follows:
Ref Description TB Account Others Cash at in bank 4103
number
Dr Cr Dr Cr
PV Office supplies 1 6212 1500 14700
Revenue 1104 300

Example ‐ withholding tax treated as payable: Assume that in the above example the supplier was
located in either the Federal or other sub regional government
Ref Description TB Account Others Cash at in bank 4103
number
Dr Cr Dr Cr
PV Office supplies 1 6212 1500 14700
Payable 5006 300

On transfer of withholding tax for BOFED by RSB

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 Ref Description TB Account Others Cash at in bank 4103
number
Dr Cr Dr Cr
PV Payable 5006 300 300

3.5. Construction Project

Example: A contract is signed to construct a building for 100,000 birr. Terms of contract are that an
initial advance of 20% ‐ 20,000 birr is paid on signing the contract and:
The advance is adjusted proportionately with each payment certificate approval.
Payment certificate when 40% complete.
Payment certificate when 80% complete.
Payment certificate when 100% complete.
Retention of 10% withheld from each payment certificate & paid after final approval.
2% withholding tax is withheld on work certified as completed
Rebate of 5 %

Transaction #1: Payment of Advance of Birr 20,000

Ref Description TB Account Others Cash at in bank 4103
number
Dr Cr Dr Cr
PV Advance to 4251 20000 20000
contractor

Transaction # 2: Payment Certificate When 40% Complete

Ref Description TB Account Others Cash at in bank 4103
number
Dr Cr Dr Cr
PV Construction building 2 6323 40000
Withholding tax 1104 800
Advance to 4251 8000
contractor
Retention to contract 4000 27200

Transaction # 3: Payment Certificate When 80% Complete

Ref Description TB Account Others Cash at in bank 4103
number
Dr Cr Dr Cr
PV Construction building 2 6323 40000
Withholding tax 1104 800
Advance to 4251 8000
contractor
Retention to contract 4000 27200

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Transaction # 4: Payment Certificate when 100% is Complete
Ref Description TB Account Others Cash at in bank 4103
number
Dr Cr Dr Cr
PV Construction building 2 6323 20000
Withholding tax 1104 400
Advance to 4251 4000
contractor
Retention to contract 2000 13600

Transaction #5: Payment of Retention

Ref Description TB Account number Others Cash at in bank 4103
Dr Cr Dr Cr
PV Retention on 5061 10000 10000
contract
Note:
Contractors may offer rebates as part of the price offer. Such rebates should be deducted to determine
the value of the construction. The actual net costs after deducting the rebate are accounted for as
expenditure. The rebate is not accounted.
3.6. RECEIPT OF REVENUE/ASSISTANCE/LOAN
Regular Revenue
Example: A RSB collects Birr 5,000 in miscellaneous fees.
Transaction Register of RSB
Ref Description TB Account Others Cash at in safe 4101
number
Dr Cr Dr Cr
RV Miscellaneous fee 1489 5000 5000

Aid In Kind
Aid in kind represents a receipt of revenue (assistance) and an expenditure. Aid in kind should be
budgeted. It is recorded as a revenue and expenditure on a JV. The JV should be is recorded in the
Budget/Expenditure Subsidiary Ledger Card for the budgeted project. If aid in kind was not budgeted, a
budget supplement should be requested.

Example: Aid in kind is received in the form of a motor vehicle with a cost of Birr 150,000 from USAID
(donor revenue account code 2084) under the capital expenditure budget for project code 2356.
Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
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 number
Dr Cr Dr Cr
JV Motor vehicles 2 6311 150000
Assistance 2084 150000

The expenditure should be recorded in the Budget/Expenditure Subsidiary Ledger Cards of expenditure
account code 6311 and donor revenue account code 2084.
3.7. RECEIVABLES
Due from Employees
Example: A Public Body receives a telephone bill for Birr 200. Included in the bill are personal
telephones calls made by an employee.
The PB settles the bill first and then receives reimbursement from the employee.

Ref Description TB Account Others Cash in safe 4101

number
Dr Cr Dr Cr
PV Telephone expense 1 6258 200
RV Telephone expense 6258 100 100

Personal Calls are identified prior to settling the telephone bill.

Ref Description TB Account Others Cash in safe 4101
number
Dr Cr Dr Cr
PV Telephone expense 1 6258 100 200
Receivable 4203 100

The receivable may be settled by cash by the employee in which case an RV is issued or may be
deducted from salary in which case a JV is prepared
Due from Suppliers
Example: RSB pays an advance of Birr 1,000 to a supplier for office supplies. The supplier
delivers the supplies after 30 days and the invoice is for Birr 2,000.
Transaction # 1: Payment of advance
Ref Description TB Account Others Cash in safe 4101
number
Dr Cr Dr Cr
PV Advance to supplier 1 4253 1000 1000

Transaction #2: Delivery of supplies

Ref Description TB Account Others Cash in safe 4101
number
Dr Cr Dr Cr
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 PV Office supplies 1 6212 2000
Advance to supplier 4253 1000 1000

3.8. PAYABLES
Deposits
A deposit is a payable and is returned upon the demand of the depositor. When the deposit is
refunded the payable is cancelled.
Example: A RSB collects a deposit of Birr 10,000 as bid security. The bidder is unsuccessful and
the deposit is returned at a later date.
Transaction # 1: Receipt of Deposit
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
RV Bid security Deposit 5054 10000 10000

Transaction #2 refund of deposit

Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
PV Bid security Deposit 5054 10000 10000

Due to Employees
Funds may be received by a RSB that are intended for the use of an employee, for example, to
allow the employee to undertake research. The RSB is simply a channel used for passing the
funds from a donor to an employee.
Example: A donor deposits Birr 2,000 to support research of an employee.
Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
RV Due to staff 5021 2000 2000

If the employee receives Birr 500 from the fund

Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
PV Due to staff 5021 500 500

Due to Suppliers

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Payables are created when a supplier delivers goods or services prior to receiving payment.
Example: A RSB receives office supplies amounting to Birr 2,000 on credit from a supplier.
Transaction # 1: Receipt of office supplies
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
JV Office supplies 6212 2000
Sundry creditors 5002 2000

Transaction#1: receipt of supplies

Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
PV Sundry creditors 5002 2000 2000

Grace Period Payables

Example: On Hamle 15, RSB pays Birr 5,000 for office supplies that were received before June 30
and recorded as grace period payables
Last Yearʹs Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
JV Office supplies 2 6212 5000
Grace period 5001 5000
payable5001

Grace Period Payables are transferred by BOFED

TR of BOFED
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
PV Transfer 2 4007 5000 5000

Grace Period Payables are received by RSB

TR of RSB
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
RV Transfer 2 4007 5000 5000

Grace period payables are paid on Hamle15.

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This Yearʹs Transaction Register of RSB
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
PV Grace period payable 2 5001 5000 5000

3.09. CLOSING ENTRY AT THE END OF THE FISCAL YEAR

The purpose of closing entries is to set all temporary accounts in the General Ledger to zero. Temporary
accounts are:

Revenue/Assistance/Loan account codes 1000 – 3999.

Transfer account codes 4000 – 4099.

Expenditure account codes 6000 – 6999.

The procedures for making the closing entry are:

1. After the June monthly report for the fiscal year is accepted by BOFED, prepare a JV from the Me/He
27 Trial Balance:

a. From the line for Revenue/Assistance/Loan:

Record a debit in the JV for any amount that is a credit on this line in Me/He 27.

b. From the line for Expenditure:

Record a credit in the JV for any amount that is a debit on this line in Me/He 27.

c. From the line for Transfers:

Record a credit in the JV for any amount that is a debit on this line in Me/He 27

Record a debit in the JV for any amount that is a credit on this line in Me/He 27

d. In Net Asset/Equity account code 5601:

Record the appropriate amount as a debit or a credit to make the entry balance.

e. Record the JV into the TR

From the TR, post the amount for Net Asset/Equity on the Net Asset/Equity account code 5601
ledger card in the GL and post the revenue/assistance/loan, transfer and expenditure account codes to
the respective individual accounts in the GL.

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 Remove all GL cards for account codes Revenue/Assistance/Loan, Expenditure and Transfer
account codes and all budget/expenditure subsidiary ledger cards

Example: A Public Body prepares its final Me/He 27 Trial Balance for the fiscal year. BOFED accepts the
final report. The final Me/He 27 shows, in part:

Account code Account description Debit credit

Revenue/assistance/loa 1,200,508
n
Expenditure 9,057,974
Transfer 2,013,491 9,703,216
The Public Body makes its closing entry.
Transaction Register of the Public Body:
Ref Description TB Account Others Cash at bank 4103
number
Dr Cr Dr Cr
JV Closing entry 5000
Revenue/assistance/loa 1,200,509
n
Expenditure 9,057,974
Transfer 9,703,216 2013,491
Net asset/equity 5601 167,740

The Public Body removes all ledger cards from its general and subsidiary ledgers that have account
codes 1000‐3999, 4000‐4099, and 6000‐6999. The cards are labeled and filed in the Archives Section. A
debit of 167,740 is recorded in Net Asset/Equity ledger card account code 5601. The RSB should submit
a Zegeba at the end of the year together with the June reports.

3.11. BEGINNING OF YEAR PROCEDURES

A set of general and subsidiary ledger cards and sets of budget/expenditure subsidiary ledger

cards should be prepared at the beginning of each fiscal year as follows:

Step 1 Balances in all permanent accounts should be carried forward to the next fiscal year by

using new general ledger cards. Last year’s cards should not be continued to be used in the

following year. The beginning balance (equal to last year’s ending balance) should be recorded

on the new ledger card.

Step 2 Open budget expenditure subsidiary ledger cards for each sub agency using the

approved budget

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Step 3 Open new general ledger cards and subsidiary ledger cards (as required) for the

following types of account codes as and when they occur during the fiscal year

a. Revenue/Assistance/Loan account codes 1000 – 3999

b. Transfer account codes 4000 – 4099

Step 4 Open new general ledger cards and subsidiary ledger cards (as required) for the other new
permanent account codes (that do not have an opening balance from the previous fiscal year) as and
when they occur during the fiscal year

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