Indian Railways will adopt adopt the widely used accrual basis of accounting, switching from the cash basis of accounting which is currently being used in the organization. This decision has been made to optimally utilize the public funds by tracking the expenditure of the desired outcomes.
The major difference between the two methods of accounting is the timing of recognition of the revenues and expenses. The cash method recognizes these two things as and when the cash is actually received or paid out whereas the accrual method recognizes the revenues and expenses when the transaction takes place irrespective of the money received or paid during that time.
The accounting reform is an integrated project on management accounting, cost accounting and management information systems.
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