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CHAPTER 9
ACCOUNTING CLASSIFICATIONS
Each year the Navy must have billions of dollars to
carry out its mission.
This money comes from the
taxpayers of the United States as determined by the
Congress.
The Navy must keep accounts to show the receipt
and expenditure of public funds. Also for the amount
of government money, materials, and property on hand,
and the cost of all operations. These accounts are
broken down by projects, programs, and other
functional/subfunctional categories (i.e., budget
classification, expense element, cost account codes, and
object classes). All these function as part of financial
management, which is necessary to make sure that
government property and money are economically used
in the public interest. Cost data assembled by the above
methods are used for budget planning and justification.
This chapter explains how the Navy gets its money,
and the procedures used to account for it.
As a Storekeeper, you need to know the types of
accounting and their uses in the Navy. They are:
APPROPRIATION ACCOUNTING—tells how
much money has been spent, how much is obligated,
and how much is available under each appropriation or
subdivision (e.g., operating budget). Thus, the Navy
controls expenditures to keep them within the monetary
limits established by the appropriation act.
COST ACCOUNTING-through which the Navy
can accumulate all costs according to activity or unit,
purpose, and type of expenditure.
INVENTORY (STORES) ACCOUNTING—
which is used to maintain records of material and
supplies on hand.
These records provide the
information necessary to prepare returns or reports.
PLANT PROPERTY ACCOUNTING—which is
used to maintain records of all Navy-owned or
Navy-controlled real property and equipment of a
capital nature ashore.
PAYROLL ACCOUNTING—which is used to
maintain records of payments to civilian and military
personnel of the Navy.
For accounting purposes, Navy activities are
designated either shore activities or operating forces.
As a general rule, shore activities perform all of the
accounting functions listed above. In the interest of
economy, large shore activities frequently perform
some of these functions for the smaller activities.
If accounting is to be performed accurately, the
correct accounting classifications must be assigned by the
Originator of any document This could be your job.
The Navy expends money from one of two major
classifications, appropriations or funds. This chapter
explains the purpose and use of the two classifications
so that you have some understanding of what
appropriations and funds are, and the difference
between them.
The accounting performed to control expenditures
is covered in another chapter.
APPROPRIATIONS
An appropriation is an authorization by an Act of
Congress to incur obligations for a specified time and
purpose and to make payments out of the Treasury. It
is in this form that the Navy receives money to pay for
ships and the cost of their operation and maintenance.
It also covers the cost of training, the pay for those who
operate them, and the money to operate the shore
establishment that supports the fleet.
ACCOUNTING PERIOD
The accounting period of the Navy is the fiscal
year. Fiscal year differs from the calendar year in that
it begins on 1 October and ends on the following 30
September. The fiscal year is designated by the
calendar year in which it ends. Thus, Fiscal Year 1996
began on 1 October 1995 and ended on 30 September
1996.
TYPES OF APPROPRIATIONS
Three types of appropriations maybe used in the
Navy, depending upon the purpose for which they are
issued. Most appropriations are for 1 fiscal year and are
used to finance the normal operating costs of the Navy.
Other types may be granted without a time limitation or
for a specific period of time which is more than 1 year.
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