Module-c community Based Financial Management

List of Annexes 
Annex A:
Basic Ledger of Water Fee Collection 
64
Annex B:
Income & Expense Ledger 
65
List of Boxes 
Box 1: Operation and maintenance costs include 
19
 
Box 2: Example of Running Cost for Hand Pump Scheme 
20
 
Box 3: Options for collection of O&M Fund 
35
 
 

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Ministry of Water, Irrigation and Electricity 
 Operation and Maintenance Management Manual 
Training Module - D 
Community Based Financial 
Management 
 
DEMEWOZ CONSULTANCY 
iii
DEFINITIONS OF TERMS: 
Accounts Payable 
Accounts Receivable 
Accounts Summary 
Accrued Expenses 
Accumulated Depreciation 
Accounts Payable are routine expenses that have already been 
incurred but not yet paid. The fact that the expense has been 
‘incurred’ is evidenced by the supplier’s invoice or statement of 
account. 
Accounts Receivable represents the balance of water bills not yet 
collected from customers. This is entered as a Current Asset. 
The Accounts Summary is a worksheet where all accounts of the 
water utility from the Bills for Collection Report, Cash Receipts Book 
and Cash Disbursements Book are posted. This worksheet also 
allows for special adjusting entries. The Balance Sheet and Income 
Statement are prepared based on this Accounts Summary. 
Accrued Expenses are routine expense that have already been 
incurred but not yet paid and unlike the ‘Accounts Payable’ have not 
been recorded in the financial statement for the period because no 
invoice or statement of account has yet been received. 
In common use, ‘depreciation’ is the reduction in value of a fixed 
asset due to wear and tear and passage of time. 
Using this principle, in accounting, the cost of a fixed asset is usually 
spread over the number of years that the asset can be used (useful 
life). The cost attributed for one year is called ‘depreciation.’ 
Accumulated Depreciation refers to the sum of the year-to-year 
depreciation for the period that the asset has been used. 
So ‘net asset value’ is the cost of the asset minus ‘Accumulated 
Depreciation.’ 
Accumulated Depreciation is presented in the Balance Sheet as a 
deduction to ‘Fixed Assets at cost.’ 
Accounting Year 
or “year” means the Financial year 
Administration Fee 
Advances 
Amortization 
The Administration Fee represents a charge imposed on all 
customers during the specified period for the administration of the 
billing and collection of accounts of customers. 
Advances are payments made to either employees or third parties 
with the intention of collecting them back within one year. 
This is a Current Asset account. 
Amortization refers to that portion of a loan that is repaid periodically 
until the loan is fully paid. This does not include the interest on the 
loan. 

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Ministry of Water, Irrigation and Electricity