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PSAF – Nov 2023 – L2 – Q2 – Preparation and presentation of financial statements for local government

Prepare a Cash Flow Statement for a Municipal Assembly and explain benefits of cash flow information.

a) Below are items of transactions obtained from the financial records of Ganigani Municipal Assembly for the year ended 31 December 2022.

Transaction Items GH¢’000
Share of District Assembly Common Fund received 68,000
Share of District Assembly Common Fund in arrears 120,000
District Development Facility 60,000
Clean Ghana grant (i) 40,000
Hawkers licenses 5,000
Dog licenses 2,000
Hotel and Restaurant licenses 43,000
Akpeteshie Distillers or sellers’ licenses 9,000
Non-established post salaries (Paid from Consolidated Fund) 87,000
Casual labour 77,000
Pensions contribution 8,000
Assembly members sitting allowances 7,000
Salary related allowances (ii) 20,000
Training, Seminar and Conferences (iii) 45,000
Travel and transport 12,000
Utility expenses (iv) 1,000
Consumables 200
Interest expense (v) 500
Consumption of fixed asset (Accumulated) 44,000
Consumption of fixed asset (charged for the year) 4,800
Purchase of motor vehicle (vi) 30,000
Premises (old premises revalued by experts) 167,000
Cash proceeds from auction of old furniture 300
Recoveries from loan and advances 1,200
Loans and advances granted during the year 5,000
Issue of Municipal Bonds 100,000
Redemption of Municipal Bonds 28,000
Bank loan borrowed during the year 12,000
Loan repayment 3,400
Investment income received 100
Property rates 65,000
Basic rate 21,000
Market tolls and fees 12,400
Fees and miscellaneous charges 11,400
Cash and cash equivalent at 31 December 2022 (Debit) 70,000
Accumulated Fund Balance (Debit) 123,500
Donation of Cement from Concerned Citizens 3,500

Additional Information:

i) Clean Ghana grant of GH¢40,000 has a component of 40% in kind. ii) The Assembly paid 40% of the GH¢20,000 salary related allowances. iii) 60% of the GH¢45,000 representing Training, Seminar and Conferences expenses was funded by donors. iv) 25% of the GH¢1,000 representing utility expenses was in arrears. v) 90% of the GH¢500 representing interest expense has been paid. vi) 80% of the GH¢30,000 representing Motor Vehicle has been paid.

Required:

a) Prepare a Cash Flow Statement for the year ended 31 December, 2022 for Ganigani Municipal Assembly in compliance with the International Public Sector Accounting Standards 2: Cash Flow Statement and the current Chart of Accounts of Government of Ghana. (16 marks)

b) Explain FOUR (4) benefits of Cash Flow Information to the users of the financial statements of Ganigani Municipal Assembly. (4 marks)

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PSAF – Nov 2023 – L2 – Q2 – Preparation and presentation of financial statements for local government

Prepare a Cash Flow Statement for a Municipal Assembly and explain benefits of cash flow information.

a) Below are items of transactions obtained from the financial records of Ganigani Municipal Assembly for the year ended 31 December 2022.

Transaction Items GH¢’000
Share of District Assembly Common Fund received 68,000
Share of District Assembly Common Fund in arrears 120,000
District Development Facility 60,000
Clean Ghana grant (i) 40,000
Hawkers licenses 5,000
Dog licenses 2,000
Hotel and Restaurant licenses 43,000
Akpeteshie Distillers or sellers’ licenses 9,000
Non-established post salaries (Paid from Consolidated Fund) 87,000
Casual labour 77,000
Pensions contribution 8,000
Assembly members sitting allowances 7,000
Salary related allowances (ii) 20,000
Training, Seminar and Conferences (iii) 45,000
Travel and transport 12,000
Utility expenses (iv) 1,000
Consumables 200
Interest expense (v) 500
Consumption of fixed asset (Accumulated) 44,000
Consumption of fixed asset (charged for the year) 4,800
Purchase of motor vehicle (vi) 30,000
Premises (old premises revalued by experts) 167,000
Cash proceeds from auction of old furniture 300
Recoveries from loan and advances 1,200
Loans and advances granted during the year 5,000
Issue of Municipal Bonds 100,000
Redemption of Municipal Bonds 28,000
Bank loan borrowed during the year 12,000
Loan repayment 3,400
Investment income received 100
Property rates 65,000
Basic rate 21,000
Market tolls and fees 12,400
Fees and miscellaneous charges 11,400
Cash and cash equivalent at 31 December 2022 (Debit) 70,000
Accumulated Fund Balance (Debit) 123,500
Donation of Cement from Concerned Citizens 3,500

Additional Information:

i) Clean Ghana grant of GH¢40,000 has a component of 40% in kind. ii) The Assembly paid 40% of the GH¢20,000 salary related allowances. iii) 60% of the GH¢45,000 representing Training, Seminar and Conferences expenses was funded by donors. iv) 25% of the GH¢1,000 representing utility expenses was in arrears. v) 90% of the GH¢500 representing interest expense has been paid. vi) 80% of the GH¢30,000 representing Motor Vehicle has been paid.

Required:

a) Prepare a Cash Flow Statement for the year ended 31 December, 2022 for Ganigani Municipal Assembly in compliance with the International Public Sector Accounting Standards 2: Cash Flow Statement and the current Chart of Accounts of Government of Ghana. (16 marks)

b) Explain FOUR (4) benefits of Cash Flow Information to the users of the financial statements of Ganigani Municipal Assembly. (4 marks)

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