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Public Sector Accounting Question Paper
Public Sector Accounting
Course:Bachelor Of Commerce
Institution: Kenyatta University question papers
Exam Year:2009
KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE
BAC 410: PUBLIC SECTOR ACCOUNTING
DATE: Wednesday 30th December, 2009 TIME: 8.00 a.m. – 10.00 a.m.
INSTRUCTIONS
1. Attempt ALL questions.
2. Time allowed is 2 hours.
3. Marks allocated to each question are shown at the end of each question.
Question One
(a)
Explain the challenges likely to be faced by a public entity in the adoption of
International Public Sector Accounting Standards (IPSAS).
[4 marks]
(b)
The following details were extracted from the books of a receiver of revenue for
the year 2008/2009:
Estimated
Receipts
Actual Receipts
Shs ‘million’
Shs ‘million’
Income Tax from individual
80 160
79 500
Tax on 2nd Hand vehicle purchases
25
21
Income Tax from Corporations
79 900
79 000
VAT on Domestic Goods
59 800
58 500
Fees on use of Goods & permission to use
goods & services
102
108
VAT on Imported Goods
55 160
55 200
Road maintenance Levy
18 200
18 217
Petroleum Development Fund
1 300
1 500
294
647
292 046
Page 1 of 5
Additional Information:
1.
Revenue paid into the exchequer during the year 2008/2009 amounted to
sh.309,100 million.
2.
Balance of revenue collected during 2007/2008 and not paid to exchequer
by 30th June 2008 amounted to shs.17,500 million.
3.
Arrears of revenue as at 30th June, 2009.
2007/2008
2008/2009
Total
Shs ‘million
Shs ‘million’
Shs ‘million’
Tax on 2nd Hand vehicle purchases
3
1
4
Fees on use of Goods & permission
- 2
to use Goods and services
2
Road maintenance levy
1 500
500
Petroleum Development fund
250
50 300
1
755
551 2
306
Required:
Statement of revenue for the year ended 30th June, 2009.
[8 marks]
(c)
The approved estimates and actual expenditure details of the Ministry of
Mining for the financial year ended 30th June 2009 were as follows:
Approved
Estimates
Actual Expenditure
Shs
Shs
Personal emoluments
147,936,000
117,024,000
House allowances
23,460,000
17,112,000
Passage and leave
40,248,000
800,400
Traveling and Accommodation
1,600,800
1,987,200
Transport and Maintenance
19,320,000
16,311,600
Postage and Telephone expenses
5,520,000
3,974,400
Miscellaneous charges
20,976,000
20,258,400
Training expenses
7,176,000
5,685,600
Purchase of equipment
25,200,000
47,760,000
Appropriations-In-Aid 1,200,000
6,672,000
Page 2 of 5
The Ministry made four equal withdrawals from the Exchequer in July 2008,
October 2008, January 2009 and May 2009. In total the Ministry had withdrawn
Kshs.240 million by the end of the financial year.
Required
(i)
The General Account of Vote
(GAV)
[2
marks]
(ii)
The
Exchequer
Account
[2
marks]
(iii)
The
Paymaster
General
Account
[2
marks]
(iv)
The statement of Assets and liabilities as at 30th June, 2009.
[2 marks]
[Total marks 20]
Question Two
(a)
Explain the accounting treatment of non exchange transactions in Public Sector
Accounting.
[4 marks]
(b)
In accounting for Central Government units a fund called Capital Project Fund is
usually created. What is the purpose of this fund?
[2 marks]
(c)
The City Council of Matopeni authorizes the construction of a new City Hall on
1st January 2008. This hall is expected to cost shs.100 million. Financing for the
project is to be shs 50 million from 6½ percent serial bond issue. Shs 40 million
from a Government Grant and shs 10 million from the General Fund (GF).
Transactions and events during 2008 are as follows:
1.
The city transfers shs 10 million from the GF to the City Hall Capital
Project Fund (a CPF created for the construction).
2.
Planning and architect’s fees are paid in the amount of shs. 4 million.
3.
The contract is awarded to the lowest bidder for shs 95 million.
4.
The bonds are sold for shs 50.20 million.
5.
The amount of the premium is transferred to the debt service fund.
6.
The construction is certified to be 50 percent complete and a bill for shs
47.5 million is received from the contractor.
7.
Contracts payable less a 10 percent retained percentage is paid.
8.
The books are closed and financial statements are prepared.
Required:
(i)
Journal entries to record the above transactions.
[9 marks]
Page 3 of 5
(ii)
Financial statement of the capital project fund for the year ended 30th
December,
2008.
[5
marks]
[Total 20 marks]
Question Three
(a)
In relation to fund accounting, explain what is meant by the following special
funds and explain fully how they are operated:
(i)
Revolving
funds
[2
marks]
(ii)
Trust
Funds
[2
marks]
(iii)
Sinking
funds
[2
marks]
(b)
Posta Limited purchased a machine for shs 30 million on 1st January 2002 and
received a grant of shs 5 million from the government against the purchase of the
machine. The machine was expected to have a useful life of four years and a nil
residual value at the end of its expected life. The straight line method of
depreciation is used by the company. The profit before depreciation was
shs 25 million in each of the four years.
Required:
A balance sheet to show how the company may account for the grant from
government.
[6
marks]
(c)
Distinguish between Commitment Accounting and Fund Accounting in relation to
Public Sector.
[4 marks]
(d)
Discuss the role of the Controller and auditor General. [4
marks]
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