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Bac 410: Public Sector Accounting Question Paper

Exam Name: Bac 410: Public Sector Accounting 

Course: Bachelor Of Commerce

Category: Kenyatta University question papers

Exam Year:2010

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2009/2010
INSTITUTE OF OPEN LEARNING EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
BAC 410: PUBLIC SECTOR ACCOUNTING

DATE: Wednesday 17th February, 2010 TIME: 8.00 a.m. – 10.00 a.m.

INSTRUCTIONS
1.
Attempt ALL questions.
2.
Marks allocated to each question are shown at the end of each question.
3.
Be clear and precise stating ALL the assumptions made showing all your
workings.
Question One.
(a)
The estimates and expenditures details relating to the Ministry of Natural
resources as at 30th June 2009 were as follows:









Original Estimates
Actual Expenditures

Shs ‘000’
Shs ‘000’
Personal emoluments
160,000
180,000
House allowance
30,000
26,000
Passages and leave
10,000
9,000
Travelling expenses
44,000
46,000
Electricity and water
12,000
13,000
Purchase of plant & Equipment
100,000
80,000

Supplementary estimates authorized during the year were:


Personnal emoluments



shs.16,000,000


Travelling expenses (reduced)


(shs.4,000,000)
Page 1 of 4



Required: Appropriation account for the year ended 30th June, 2009 showing the
net surplus to be surrendered to the exchequer.


[10 marks]
(b)
One of the key differences between governmental organization and commercial
firms is that they have different reasons for their existence. Consequently,
governmental units follow some accounting principles which differ from those
followed by commercial firms.

Required:
Briefly discuss the role of accountants in both types of firms
explaining the accounting principles they apply in each firm.
[5 marks]

Question Two
(a)
In the context of accounting and financial reporting for the public sector define
and write explanatory notes on the following:

(i)
Revolving funds





[2 marks]

(ii)
Fiduciary funds





[2 marks]

(iii)
Proprietary funds





[2 marks]

(iv)
Controller and Auditor General



[4 marks]
(b)
The City Nai recorded the financial transactions which occurred during the year
ended 30th September, 2009 as follows:
1.
The city Council adopted a budget estimating general ravennes of
shs.740 million and establishing approved expenditures of sh.610 million
and operating transfers out of shs 100 million. A surplus of sh 30 million
is projected. The council also agrees that an additional shs 8 million in
anticipated parking meter receipts is to be donated to a needy Watoto
Wetu Children’s Home.
2.
Property rates and service charges of shs 700 million are levied for 2009.
Based on past experience, 3% of this total should be collected in
subsequent financial periods while 2% are estimated as uncollectible.
3.
The council agrees to put curbing on several local streets at a cost of
shs 80 million. 40% of this money will come from the general fund with
the remainder to be charged to the estate residents being benefited.

Page 2 of 4


4.
A contract to build a new city hall at a cost of shs.828 million is signed
and the commitment is recorded.
5.
Licences and fees of shs 18 millions are collected by the council. No
previous recording has been made.
Required:
Journal entries with full narrations to record the above transactions.









[10 marks]
Question Three
(a)
The following information was obtained from the books of a pension fund and
relates to the period ending 30th June, 2009.

1.
A payment of shs 750,000 was made to the members.

2.
Management expenses for the period were shs.225,000

3.
Total contributions received from the members was 1,200,000.

4.
The total investments in the fund amounted to shs.3,000,000 and this
earned an investment income of shs.600,000 in the form of interest.
5.
The fund account had a credit balance of shs.2,700,000 while the
paymaster general account had a debit balance of shs.525,000.
Required:
(i)
Compute the surplus/deficit income of the fund by preparing the relevant
account.






[6 marks]
(ii)
Prepare the balance sheet for the fund as at 30th June, 2009.









[4 marks]
(b)
The following information relates to a certain ministry in the government for the
year 2007/2008








Shs ‘000’

Gross Estimated Expenditure


13,600,000

Estimated Appropriations in Aid


800,000

Net Estimate




12,800,000

Drawings from Exchequer



10,600,000

Gross Expenditure




9,800,000

Actual appropriations in Aid


600,000

You are required to prepare the following for the ministry:
Page 3 of 4



(i)
The General Account of vote (GAV)

[4 marks]

(ii)
The Exchequer Account



[3 marks]

(iii)
The Paymaster General (PMG) Account

[3 marks]

Question Four
(a)
In the context of public sector accounts, explain the meaning and purpose of the
following:

(i)
Appropriations-in-aid



[2 marks]

(ii)
Contingencies fund



[2 marks]

(iii)
Encumbrances




[2 marks]
(b)
Write brief notes on the following in the context of government accounting.

(i)
Sinking fund




[2 marks]

(ii)
Revolving fund




[2 marks]

(iii)
Special funds




[2 marks]
(c)
Outline the role played in Government accounting by the Public Accounts
Committee.





[3 marks]






…………………………………..








Page 4 of 4




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