Question Tag: Statement of Financial Position

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  • 20 Marks

AAA – Nov 2018 – L3 – Q2 – Regulatory Investigations and Disciplinary Actions

Assessment of joint audit advantages, agenda setup, and addressing regulatory issues in audit planning

Yusuf Olatunji & Co., (Chartered Accountants) have been auditors to XBC Bank Limited. There has been some regulatory and compliance issues for which the bank was sanctioned and paid penalties to both the Central Bank of Nigeria and the Financial Reporting Council of Nigeria. At the board of directors meeting to consider the last annual report audited by the firm, some of the problems caused by the auditors were raised. Following the reoccurrence of such issues, it was proposed that another audit firm be engaged in addition to the present firm. To achieve their objective, a bigger firm that has international affiliation was considered to take a leading position in a joint audit arrangement and to ensure appropriate compliance.

Your firm has been approached for the appointment. A meeting was scheduled between your firm, Yusuf Olatunji & Co., and the executive management of the bank. In preparation for the meeting, you are informed that you will address the meeting on the advantages and disadvantages of joint audit, being an area some members of the management team have expressed concerns.

After the meeting, your firm was subsequently appointed, and the necessary formalities were properly followed. Your partner has directed that you liaise with Yusuf Olatunji & Co. to obtain the necessary materials for the preparation of the audit and that you review your firm’s audit manual with respect to the concerns of management on joint audit.

Your assessment of the documents obtained from the other auditor revealed the following, amongst others:

  1. Part of the penalty was on improper disclosure relating to a material property, plant, and equipment (PPE) acquired during the previous year and a substantial loan above the limit authorised for a sector of the economy;
  2. The classification of unresolved transactions as debit balances in the statement of financial position, resulting in an increase in operating profit and the payment of higher taxes than projected;
  3. The IT operations of the bank had weak controls such that it was possible for some staff to over-ride some of them;
  4. The net current assets have continued to fall and, in the preceding year, have fallen below industry average despite an increase in gross earnings.

Required:

a. Evaluate the advantages and disadvantages of joint audit. (8 Marks)

b. Prepare an agenda for the scheduled meeting between the two audit firms. (4 Marks)

c. Develop the appropriate audit approach to address each of the issues identified from the review of the documents obtained from Yusuf Olatunji & Co. (8 Marks)

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  • 10 Marks

FR – Nov 2023 – L2 – Q7b – Presentation of Financial Statements (IAS 1)

Lists minimum line items for the statement of financial position and changes in equity as per IAS 1

IAS 1- Presentation of Financial Statements provides a list of line items that, as a minimum, must be shown on the face of the statement of financial position.

Required:

i. Give FIVE examples of minimum line items to be shown on the face of the statement of financial position. (5 Marks)
ii. State FIVE items that should be accounted for in the statement of changes in equity. (5 Marks)

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  • 30 Marks

FM – Nov 2017 – L3 – Q1 – Financial Planning and Forecasting

Prepare forecast financials for Lekki Plc and suggest divestment options for a poorly performing subsidiary.

Despite the global recession, demand for the company’s products has recently increased and is expected to grow over the next two years.

As part of a recent strategic review, the directors made the following projections for the years ending March 31, 2018, and March 31, 2019:

  1. An anticipated annual revenue increase of 8% for each year.
  2. Operating costs (excluding depreciation) expected to rise by 4% per year.
  3. Tax rate to remain at 21%, payable in the year liability arises.
  4. The trade receivables/revenue and trade payables/operating costs ratios will stay the same.
  5. Inventory levels to increase by 10% in the year ending March 31, 2018, and then remain stable.
  6. Non-current assets, including Lekki Plc.’s headquarters and factory, are not depreciated, and capital allowances are negligible.
  7. Dividend growth rate to remain at 6% annually, with dividends declared at the year-end and paid the following year.
  8. Purchase of new machinery at N8 million, financed through existing overdraft facilities. Machinery to be depreciated straight-line over 8 years with a N1 million residual value; capital allowances will apply at 18% reducing balance.
  9. Finance costs are projected to increase by 50% in the year ending March 31, 2018, and remain stable thereafter.

Financial Statement Extracts (March 31, 2017):

  • Income Statement:
    • Revenue: N60,240,000
    • Operating Costs: N49,500,000
    • Operating Profit: N10,740,000
    • Finance Costs: N800,000
    • Profit before Tax: N9,940,000
    • Tax: N2,286,000
    • Profit after Tax: N7,654,000
  • Statement of Financial Position:
    • Assets:
      • Non-current Assets: N28,850,000
      • Current Assets:
        • Inventories: N9,020,000
        • Trade Receivables: N9,036,000
        • Cash and Equivalents: N396,000
    • Equity and Liabilities:
      • Ordinary Share Capital: N16,700,000
      • Retained Earnings: N12,482,000
      • Non-current Liabilities: N8,000,000 (6% Debentures)
      • Current Liabilities: N10,120,000 (Trade Payables, Dividends)

Assume today is April 1, 2017.

a. Prepare a Forecast Financial Statement (Income Statement, Statement of Financial Position, and Cash Flow Statement) for each of the years ending March 31, 2018, and March 31, 2019.
(24 Marks)

Note: All calculations should be rounded up to the nearest N’000.

b. Beyond March 31, 2019, the directors are considering the disposal of a smaller subsidiary due to poor performance. The Finance Director suggests avoiding liquidation to minimize industrial relations issues.

Required: Discuss three non-liquidation methods to divest the subsidiary.
(6 Marks)

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  • 20 Marks

PSAF – Nov 2015 – L2 – Q4 – Public Sector Financial Statements

Prepare the financial statements of Egbin Electricity Board for 2014, including statement of financial performance and position.

The following information has been extracted from the books of Egbin Electricity Board, a public sector-owned electricity generating company, for the year ended December 31, 2014:

Item N’000
Accumulated Depreciation, January 1, 2014 45,224
Sale of Electricity 114,392
Purchase of Electricity 95,784
Meter reading, billing, and collection 1,624
Non-Current Assets Expenditure 84,102
Debtors for electricity consumption 12,006
Training and welfare 692
Stock and work-in-progress 1,234
Rents, Rates, and Insurance 2,126
Electricity Estimated unread consumption 7,222
Administration and General Expenses 1,476
Electricity Council Grant 21,556
Preparation of Electricity Council’s Expenses 362
Bank Balance and Cash 1,284
Depreciation for the year 3,634
Hire purchase and deferred payment 2,672
Interest and Financing Expenses 2,434
Creditors and accrued liabilities 13,926
Profit on contracting and sale of appliance poles 534
Reserves 23,116
Rental of Meters Application 556
Distribution cost 4,476
Customer Service 1,810

Required:

Prepare in vertical form the Statement of Financial Performance and Statement of Financial Position for Egbin Electricity Board for the year ended December 31, 2014.

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  • 20 Marks

FR – May 2024 – L2 – SA – Q2 – Conceptual Framework for Financial Reporting

Discusses the information needs of financial statement users, CAMA director report requirements, and deferred tax calculations.

a. The Conceptual Framework for Financial Reporting sets out the concepts that underlie the preparation and presentation of financial statements and considers the various users of these financial statements.

Required:
Identify and discuss the information needs of the different users of financial statements. (10 Marks)

b. The Companies and Allied Matters Act (CAMA) 2020 is the primary source of company law that establishes the requirements for financial reporting by all companies in Nigeria.

Required:
Briefly explain FIVE issues that must be contained in a directors’ report in accordance with CAMA 2020. (5 Marks)

c. Babanriga Nigeria Limited acquired a factory machine for N10 million on January 1, 2019. The machine had an estimated life and residual value of 10 years and N2 million, respectively, and is depreciated on a straight-line basis. In lieu of depreciation, the tax authority allows a tax expense of 40% of the cost of this type of machine to be claimed against income tax in the year of purchase, with 25% per annum of its tax base subsequently on a reducing balance basis. The prevailing company income tax rate is 30%.

Required:
Calculate the deferred tax charge or credit which will be recorded in Babanriga Nigeria Limited’s Statement of Profit or Loss and Other Comprehensive Income for the year ended December 31, 2021, and the deferred tax balance in the Statement of Financial Position at that date. (5 Marks)

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  • 30 Marks

FR – May 2022 – L2 – SA – Q1 – Preparation of Financial Statements

Prepare a statement of profit or loss, comprehensive income, changes in equity, and financial position for Endtime PLC.

Endtime PLC is a company based in Benin with the following trial balance for the year ended December 31, 2020:

Additional Information:
(i) Finance costs include full year dividends on preference shares and ordinary share dividends of 2½ kobo paid at the end of the year. Allowances for 4 doubtful debts are no longer necessary as customers paid as at when due from time to time in the past 2 years.

(ii) Severely damaged inventories, which cost N790,000,000 were included in the inventories in the trial balance. This will need to be repaired at a cost of N440,000,000 before a knowledgeable buyer will be interested to pay N940,000,000 at arm’s length transaction.

(iii) As at December 31, 2020, a valuer based in Victoria Island in Lagos was contacted by the company to review its land and buildings. The land and buildings was revalued upward by N13,000,000,000 and a certificate was issued to this effect. The board of directors approved the valuation but it has
not yet been accounted for in the trial balance. The valuer advised that the remaining useful life of the asset is reasonably and reliably estimated to be 20 years. Depreciation is on straight-line basis.

(iv) Depreciation on plant and equipment is charged at 15% on reducing balance basis. The multi-users S&P and Sage was bought on September 30, 2020. The amortisation is at the rate of 12.5% annually. The amortisation is evenly distributed over the year. Besides, software installation, customisation and
handling cost of N800,000,000, training costs of N900,000,000, consultancy fee of N600,000,000 and other general overheads of N850,000,000 on the new software were included in administrative expenses. All depreciations are treated as administrative costs.

(v) On December 30, 2020, a chartered surveyor valued investment property at N14,000,000,000 and the company uses fair value model in IAS 40 – Investment Property.

(vi) Current income tax has been estimated for the year ended December 31, 2020 at N9,000,000,000 and deferred tax provision as at December 31, 2020 is to be adjusted in the income statement to reflect the tax base of the company’s net assets of N12,000,000,000 less than the carrying amounts. The current
company income tax rate is 30%.

vii) The plant held for sale is valued in the trial balance at its carrying amount. A broker is readily available to buy the plant for N6,000,000,000 at a fee of 6% of sales proceed. The sale would take place in January, 2021. Any necessary adjustment is to be treated as cost of sales.

You are required to prepare:
a. Statement of profit or loss and other comprehensive income for the year ended December 31, 2020. (13 Marks)
b. Statement of changes in equity for the year ended December 31, 2020. (4 Marks)
c. Statement of financial position as at December 31, 2020. (13 Marks)

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  • 16 Marks

FR – Nov 2019 – L2 – Q1b – Presentation of Financial Statements (IAS 1)

Prepare financial statements for Uchena Nigeria Plc, including profit or loss, changes in equity, and financial position.

The Chief Accountant of Uchena Nigeria plc has just forwarded the trial balance of the company to you for review before the preparation of draft financial statements for the year ended December 31, 2018.

The trial balance is as follows:

Description Debit (N’m) Credit (N’m)
Ordinary share capital 43,200
Revenue 125,280
Staff cost 18,720
Leasehold building 21,600
Patent rights 4,320
Work-in-progress (Jan 1, 2018) 9,000
Accum. Depreciation on building (Jan 1, 2018) 4,320
Inventories of finished goods (Jan 1, 2018) 11,160
Consultancy fee 3,168
Directors’ salaries 25,920
Computer at cost (Hardware) 3,600
Accum. Depreciation on computer (Jan 1, 2018) 1,440
Retained earnings (Jan 1, 2018) 8,712
Dividend paid 9,000
Cash and bank 31,680
Trade receivables 30,240
Trade payables 6,624
Sundry expenses 21,168
Totals 189,576 189,576

Additional information:

  1. On January 1, 2018, buildings were revalued to N25,920 million. This has not been reflected in the accounts.
  2. Computer (hardware) is depreciated over five years. Buildings are now to be depreciated over 30 years.
  3. The patent rights relate to a computer software with a 3-year life span.
  4. An allowance for bad debts of 5% is to be created.
  5. Closing inventories of finished goods are valued at N12,960 million. Work-in-progress has increased to N10,080 million.
  6. There is an estimated liability for current tax of N8,640 million, which has not been recognized.

Required:

  1. Prepare a draft statement of profit or loss (analyzing expenses by nature) for the year ended December 31, 2018. (6 Marks)
  2. Prepare a statement of changes in equity for the year ended December 31, 2018. (4 Marks)
  3. Prepare a statement of financial position as at December 31, 2018. (6 Marks)

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  • 15 Marks

FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

b. Emeka has been in business as a Japan spare part dealer. The last statement of financial position of his business as at September 30, 2019, is given below:

N’000 N’000
Equity
Capital 1,000
Retained earnings 130
1,130
Drawings (60)
1,070
Non-current assets:
PPE 1,100
Current assets:
Inventories 190
Trade payables 40
Bank 45
1,375 1,375

On October 1, 2019, he agreed with Bode to join him, and the new business will trade under the name and style EmBo Ventures.

Terms of the new business:

  1. Bode is to contribute capital of N1,250,000 for an equal share of profits.
  2. The firm will take over the assets and liabilities of Emeka at their book values, except for:
    • PPE: N1,250,000
    • Inventories: N175,000
  3. The partners will maintain equal capital, and any shortfall in Emeka’s capital should be made good by credit from revaluation or through additional funds.

Required:

Prepare for EmBo Ventures: i. Revaluation account (5 Marks)
ii. Partners’ capital accounts (5 Marks)
iii. Statement of financial position as at October 1, 2019 (5 Marks)

(Total: 15 Marks)

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  • 1 Marks

FA – Nov 2020 – L1 – SA – Q13 – Elements of Financial Statements

Identifies a component that is not part of the financial statements as defined by IAS 1.

Which of the following is NOT a component of financial statements under IAS 1?
A. Statement of financial position
B. Statement of profit or loss and other comprehensive income
C. Statement of equity
D. Statement of changes in equity
E. Statement of cash flows

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  • 25 Marks

FR – Nov 2021 – L2 – Q1a – Presentation of Financial Statements (IAS 1)

Prepare the financial statements of United Nigeria PLC including comprehensive income, changes in equity, and financial position as of December 31, 2020.

The trial balance for United Nigeria Plc as at December 31, 2020 is given below:

Additional information:

  1. Inventories at the end of the year were N120,000,000. Included in the closing inventories was a damaged item with a cost of N30,000,000, which has a net realizable value of N18,000,000.
  2. Additional ordinary shares of 50,000,000 were issued and fully paid for at 80 kobo per share, which is yet to be recorded.
  3. Interest on 10% loan notes is outstanding and dividend on 12% preference shares were paid on December 31, 2020. Ordinary shareholders were also paid a dividend of 5 kobo per share.
  4. Allowances for trade receivables are to be increased to 15% per annum. Depreciation is charged on plant and equipment at 15% on reducing balance.
  5. N5,000,000 administrative expenses were outstanding, and N25,000,000 company income tax is estimated for the year. Depreciation is charged to administrative expenses.

You are required to prepare the following:

a. (i) Statement of Comprehensive Income for United Nigeria Plc for the year ended December 31, 2020. (10 Marks)
(ii) Statement of Changes in Equity for the year ended December 31, 2020. (5 Marks)
(iii) Statement of Financial Position as at December 31, 2020. (10 Marks)

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  • 20 Marks

FR – Nov 2016 – L2 – Q3 – Preparation of Financial Statements

Prepare the financial statements of Kwadaso Ltd, including profit or loss, changes in equity, and financial position for the year ended 30 September 2015.

The following is the trial balance of Kwadaso Ltd, a trading company, as at 30 September 2015:

Additional Information:

  1. On 31 March 2015, the company made a bonus issue from retained earnings of one new share for every four shares in issue at GH¢10.00 each. This transaction is yet to be recorded in the books. The company paid ordinary dividends of GH¢2.2 per share on 31 January 2015 and GH¢2.6 per share on 30 June 2015. The dividend payments are included in administrative expenses in the trial balance.
  2. Provision is to be made for a full year’s interest on the Loan notes.
  3. The finance charge relating to the preference shares is equal to the dividend payable.
  4. Non-current assets:
    • Depreciation of Property, Plant, and Equipment is to be provided on the following bases:
      • Plant and equipment – 10% on cost
      • Computer equipment – 25% on cost
      • Motor vehicles – 20% on reducing balance
    • No depreciation has yet been charged on any non-current asset for the year ended 30 September 2015.
    • Kwadaso revalues its buildings at the end of each accounting year. At 30 September 2015, the relevant value to be incorporated into the financial statements is GH¢14,100,000. The building’s remaining life at the beginning of the current year (1 October 2014) was 25 years. Kwadaso does not make an annual transfer from the revaluation reserve to retained earnings in respect of the realisation of the revaluation surplus. Ignore deferred tax on the revaluation surplus.
  5. The available-for-sale investments held at 30 September 2015 had a fair value of GH¢8,400,000. There were no acquisitions or disposals of these investments during the year.
  6. In February 2015, Kwadaso’s internal audit unit discovered a fraud committed by the company’s credit manager who did not return from a foreign business trip. The outcome of the fraud is that GH¢500,000 of the company’s trade receivables have been stolen by the credit manager and are not recoverable. Of this amount, GH¢200,000 relates to the year ended 30 September 2014 and the remainder to the current year. Kwadaso is not insured against this fraud.
  7. Corporate income tax payable estimated on the profit for the year is GH¢3,500,000. An amount of GH¢1,200,000 is to be transferred to the deferred taxation account.

Required:
Prepare the following financial statements of Kwadaso Ltd for publication in accordance with International Financial Reporting Standards (IFRS):

a) Statement of profit or loss and other comprehensive income for the year ended 30 September 2015.

b) Statement of changes in equity for the year ended 30 September 2015.

c) Statement of financial position as at 30 September 2015.

d) Show clearly all relevant workings.

(Note: Accounting policy notes are not required)

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  • 7 Marks

CR – May 2018 – L3 – Q2c – Financial instruments: Recognition and measurement Corporate reporting

Show the accounting treatment for a convertible loan note under IFRS 9 for income statement and financial position.

Alfa Limited issued a GH¢5,000,000 18% convertible loan note at par on 1 July 2015 with interest payable annually in arrears. Three years later, on 30 June 2018, the loan note becomes convertible into equity shares on the basis of GH¢100 of loan note for 50 equity shares, or it may be redeemed at par in cash at the option of the loan note holder. The Financial Accountant of Alfa Limited has observed that the use of a convertible loan note was preferable to a non-convertible loan note as the latter would have required an interest rate of 24% in order to make it attractive to investors.

The present value of GH¢1 receivable at the end of the year, based on discount rates of 18% and 24%, can be taken as:

Year 18% 24%
1 0.847 0.806
2 0.718 0.650
3 0.609 0.524

Required:
Show the accounting treatments for the convertible loan note in Alfa Limited’s:
i) income statement for the years ended 30 June 2016, 2017, and 2018. (3 marks)
ii) statement of financial position as at 30 June 2016, 2017, and 2018. (4 marks)
(Note: Assume that the share option is taken at the end of June 30, 2018.)

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  • 15 Marks

CR – May 2018 – L3 – Q1a – Consolidated Financial Statements

Prepare consolidated financial statements for Sawaba Group, including a foreign subsidiary, for the year ended 31 December 2017.

Sawaba Ltd (Sawaba) is a listed entity incorporated in Ghana with the object of producing and selling Designed clothing. The functional and presentation currency of Sawaba is the Ghana cedi (GH¢). In its quest to extend its market outside Ghana, the directors of the company decided to acquire a subsidiary in Nigeria. The corporate name of the investee entity is Enugu Plc (Enugu).

In pursuit to its agenda, Sawaba acquired 4,044,000 of the shares in Enugu for GH¢1,680,000 on 31 December 2014 when Enugu’s retained earnings stood at ₦5,752,000. Enugu operates as an autonomous subsidiary. Its functional currency is the Nigerian Naira (₦). The fair value of the identifiable net assets of Enugu were equivalent to their book values at the acquisition date.

The draft financial statements of Sawaba and its subsidiary, Enugu for 2017 financial year are set out below.

Statements of Profit or Loss and Comprehensive Income for the year ended 31 December 2017

i) Exchange rates moved as follows:
31 December 2014 ₦4.40 = GH¢1.00
31 December 2015 ₦4.16 = GH¢1.00
31 December 2016 ₦4.00 = GH¢1.00
15 May 2017 ₦3.90 = GH¢1.00
31 December 2017 ₦3.60 = GH¢1.00
Average for 2017 ₦3.75 = GH¢1.00

ii) Enugu paid an interim dividend of ₦7,488,000 on 15 May 2017. Sawaba also paid an interim dividend of GH¢1,400,000 on 30 September 2017. No other dividends were paid or declared in 2017.

iii) Assessment of consolidation goodwill for impairment indicated nil impairment in the consolidated financial statements by 31 December 2017. No goodwill impairment had been recognised in the previous years.

iv) Group policy is to measure non-controlling interests at fair value at the acquisition date. The fair value of the non-controlling interests in Enugu was measured at GH¢540,000 on 31 December 2014.

Required:
Prepare the consolidated statements of profit or loss and other comprehensive income, an extract from the statement of changes in equity for income surplus for the year ended 31 December 2017 and the consolidated statement of financial position at 31 December 2017 for Sawaba Group.

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  • 20 Marks

CR – Nov 2019 – L3 – Q5 – Analysis and Interpretation of Financial Statements

Analyze the financial performance of Pep Ltd over the past three years and recommend areas for further investigation.

You are the Financial Controller of Oxtom Ltd. Pep Ltd is a competitor in the same industry and has been operating for 20 years. Summaries of Pep Ltd’s Statements of Profit or Loss and Financial Position for the previous three years are given below:

Pep Ltd – Summarised Statement of Profit or Loss for the year ended 31 December

Item 2016 (GH¢’m) 2017 (GH¢’m) 2018 (GH¢’m)
Revenue 840 981 913
Cost of sales (554) (645) (590)
Gross profit 286 336 323
Selling, distribution, and admin expenses (186) (214) (219)
Profit before interest and taxes 100 122 104
Finance cost (6) (15) (19)
Profit before taxation 94 107 85
Taxation (45) (52) (45)
Profit after taxation 49 55 40
Dividends 24 24 24

Pep Ltd – Summarised Statement of Financial Position as at 31 December

Item 2016 (GH¢’m) 2017 (GH¢’m) 2018 (GH¢’m)
Assets
Non-current assets
Intangible assets 36 40 48
Tangible assets (net) 176 206 216
Total non-current assets 212 246 264
Current assets
Inventories 237 303 294
Receivables 105 141 160
Bank 52 58 52
Total current assets 394 502 506
Total assets 606 748 770
Equity and Liabilities 2016 (GH¢’m) 2017 (GH¢’m) 2018 (GH¢’m)
Equity
Stated capital 100 100 100
Retained earnings 299 330 346
Total equity 399 430 446
Non-current liabilities
Long-term loans 74 138 138
Current liabilities
Trade payables 53 75 75
Other payables 80 105 111
Total equity and liabilities 606 748 770

Required:
a) Write a report to the Chief Executive Officer of Oxtom Ltd analyzing the performance of Pep Ltd, showing any calculations in an appendix to the report. (14 marks)
b) Summarize THREE (3) areas which require further investigation, including reference to other pieces of information that would complement your analysis of Pep Ltd’s performance. (6 marks)

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  • 16 Marks

PSAF – May 2017 – L2 – Q4a – Preparation and presentation of financial statements for local government

This question requires the preparation of a Statement of Financial Performance and a Statement of Financial Position for a Municipal Assembly, along with detailed workings.

The Trial Balance was extracted from the books of Bokom Municipal Assembly (BMA) as at 31st December 2015.

Debit GH¢’000 Credit GH¢’000
Property rate 450 Sundry payables 60
Basic rates 200 Short term loans 120
Special rates 50 Deposits 100
Lorry park fees 40 Accumulated Fund 43
Marriage and divorce registration 10
Building permits 110
Penalties 80
Market toll 620
Share of District Assembly Common Fund 980
District Development Facility 350
Compensation for employees 1,000
Herbalist licenses 20
Hawkers licenses 15
Other licenses 12
Royalties 50
Share of stool land revenue 150
Market Store rent 70
Other rentals 40
Interest on investment 10
Gains from business 30
Established post 1,080
Non-established post 700
Goods and services 950
Interest expense 20
Social benefits 180
Other expenditure 260
Bank and Cash 40
Advances and loans 80
Investment 100
Property, Plant, and equipment 1,200
4,610 4,610

Additional Information:

  1. Revenues are classified as follows: Rate, Land Revenue, Fees and Fines, Licenses, Rent income, investment income, and Grants.
  2. The expenditure classification should comply with the harmonized Chart of Accounts.
  3. Consumption of fixed capital for the year is computed as GH¢260,000.

Required:

a) Prepare:

i)  A Statement of Financial Performance for the year ended 31st December 2015.

ii) A Statement of Financial Position as at 31st December 2015. (Please show all workings clearly). (16 marks)

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  • 20 Marks

PSAF – Nov 2017 – L2 – Q4 – Preparation and Presentation of Financial Statements for Local Government

Prepare a Revenue and Expenditure Statement and a Statement of Financial Position for a Local Government Authority based on the provided financial data.

a) Below are extracts from the books of a Local Government Authority for the period ended 31 December 2015.

GH¢
Rates 27,115.16
Non-Governmental Agencies 1,000.00
Grants – District Development Facility 888,828.37
Lands and Royalties 113,563.50
Rents of Lands, Buildings 14,855.20
Licences 55,394.22
Fees 139,784.70
Fines, Penalties and Forfeits 14,231.00
Miscellaneous and Unidentified Revenue 27,345.50
Established Posts –
Non-Established Posts 41,503.62
Other Allowances 40,231.05
Casual labour 7,576.45
Materials /Office Supplies 34,628.40
Utilities 5,286.20
General Cleaning 358.50
Rentals 6,260.07
Transport 90,724.05
Repairs and Maintenance 10,568.40
Training, Seminars, Conferences 46,013.70
Consulting Services 1,500.00
Special Services 37,904.00
Other Charges / Fees 1,735.40
Grants – DACF 459,992.60
Constituency’s Share of the Common Fund 39,000.00
GOG – Grant 206,845.97
Donors 595,086.20
Other expenses 11,163.44

Below The Line Accounts

GH¢
Cash and Bank 200,740.71
Receivables 29,100.97
Equity Investment –
Infrastructure, Plants and Equipment 322,929.71
Work-in-progress 125,064.79
Accounts Payables 5,000.00
Deposits and Other Trust Monies 25,000.00
Accumulated Fund 1,002,096.58

Required: Prepare a Revenue and Expenditure Statement for the year ended 31 December 2015 and a Statement of Financial Position as at that date. (Show workings) (20 marks)

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  • 20 Marks

PSAF – May 2016 – L2 – Q1 – Preparation and presentation of financial statements for central government

Prepare a statement of financial performance and a statement of financial position using IPSAS for the Department of Aviation Affairs.

Stated below are the balances extracted from the books of the Department of Aviation Affairs for the year ended 31st December 2014.

Account Description Amount (GH¢000)
Taxes 2,570.00
Wages 1,000.00
Fees, fines, licenses, penalties 104.00
Grants and other transfer payments 120.00
Finance costs 52.00
Supplies and consumables 170.00
Transfers from other government entities 250.00
Revenue from exchange transactions 60.00
Depreciation and amortization expense 66.00
Other revenue 150.00
Impairment of property, plant, and equipment 46.00
Other expenses 70.00
Cash and cash equivalents 255.00
Receivables 80.00
Investments (short-term) 45.00
Prepayments 47.00
Inventories 75.00
Intangible assets 190.00
Land and buildings 1,044.00
Payables (short-term) 1,420.00
Other non-financial assets 15,000.00
Investments (Long-term) 170.00
Receivables (Medium-term) 851.00
Short-term borrowings 700.00
Provisions (Current) 45.00
Superannuation 104.00
Payables (Medium-term) 240.00
Borrowings (Long-term) 665.00
Provisions (Long-term) 82.00
Employee Benefits (Medium-term) 150.00
Other non-financial assets 200.00
Current portion of borrowings 55.00
Employee Benefits (Short-term) 74.00
Capital contributed by other Government entities 194.00
Reserves 850.00

Required:
Use the International Public Sector Accounting Standards (IPSAS) to prepare a statement of financial performance for the year ended 31st December 2014, and a statement of financial position for the year ended 31st December 2014, including Net Assets / Equity.

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  • 20 Marks

PSAF – May 2018 – L2 – Q4 – Preparation and presentation of financial statements for central government

Prepare the Statement of Revenue and Expenditure and the Statement of Financial Position for the Consolidated Fund for the year ended 31 December 2017.

The following are the balances extracted from the Consolidated Fund of Public Accounts for the year ended 31st December 2017:

Description Amount (GH¢ ‘000)
Consumption of fixed Capital 208,878
Miscellaneous Direct Taxes 98,238
Social Security Benefit in Kind 66,120
13.5% SSF Contribution 45,000
Project Grant 9,370
Fines, Penalties and Forfeitures 25,928
Materials and Office Consumables 117,526
General Taxes on Goods & Services 265,064
Travel & Transport 41,610
Social Assistance Benefits 68,678
Established Post- salaries 800,800
Domestic Debt Interest 40,200
Gratuity 20,000
Training, Seminar and Conference Cost 54,250
External Debt Interest 83,772
Allowances to Employees 56,000
Repairs and Maintenance 34,560
Property Income 25,000
Cash & Bank Balances 1,960,898
Advances & Receivables 60,164
Taxes on Exports 581,588
Long Term Receivables 2,836,616
Non-Established Post-salaries 400,104
Payables 1,211,044
Accumulated Surpluses (1/1/2017) (61,343,676)
Deposit and Other Trust Monies 3,752,412
Short-Term Borrowing 11,299,822
Taxes paid by individuals 810,436
Subsidy on Petroleum Products 15,000
Fertilizer Subsidies 24,068
Equity Investment 3,619,752
End of Service Benefit 25,880
Infrastructure, Plant & Equipment 2,028,806
Taxes paid by Companies & Enterprises 135,784
Work-In-Progress 304,880
Domestic Debt 23,719,588
External Debt 32,283,148
Employer Social Benefits in Cash 30,500
Other Expenses (note i) 22,584
Excise Duties 92,900

Additional Notes:
i) Other Expenses:
During the year, the Government of Ghana benefited from free services provided by medical experts who were task forces of the British Government. The main objective of this task force was to help curb cholera in the country. The fair value of these services amounted to GH¢ 18,740,000. It is the policy of the Government to include goods and services received during the year in kind in its financial statements at fair values.

ii) The annual estimates for the year ending 2017 were as follows:

Required:
a) Prepare a Statement of Revenue and Expenditure of the Consolidated Fund for the year ended December 31, 2017, indicating the accompanying variances to the statement.

b) Prepare a Statement of Financial Position of the Consolidated Fund as of December 31, 2017.

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  • 20 Marks

FA – Nov 2023 – L1 – Q2 – Preparation of Partnership accounts

Adjust the net profit or loss of a partnership firm and prepare the revised current accounts and statement of financial position.

Adu, Boateng, and Dogbe are trading in partnership under an agreement which provides for interest on partners’ capital accounts at the rate of 10% per annum, annual salaries of GHȼ7,500 and GHȼ4,000 for Boateng and Dogbe respectively, and the balance of the profit or loss shared among Adu, Boateng, and Dogbe in the proportion 5:3:2 respectively.

Partners’ cash drawings for the year ended 30 April 2021 were as follows:

Partner Amount (GHȼ)
Adu 8,000
Boateng 5,000
Dogbe 6,000

The draft Statement of Financial Position as at 30 April 2021 of Adu, Boateng, and Dogbe is as follows:

After the preparation of the draft final accounts for the year ended 30 April 2021, which disclosed a net loss of GHȼ10,500, it was discovered that:

  1. The partners’ cash drawings for the year under review have been debited to purchases.
  2. On 1 November 2020 it was agreed that Boateng should increase his partnership capital from GHȼ25,000 by transferring to the partnership a freehold property bought by Boateng five years earlier at a cost of GHȼ10,000 and currently valued at GHȼ30,000. Although the appropriate debit entry has been made in the non-current asset account, the corresponding credit entry appeared in the profit and loss appropriation account.
  3. The partners’ salaries for the year ended 30 April 2021 have been debited to staff salaries and credited to the relevant partners’ current accounts.

The partners have now decided that an allowance for receivables should be 4% of trade receivables.

Required:

a) Compute the revised net profit or loss of the partnership for the year ended 30 April 2021. (5 marks)
b) Prepare the revised partners’ current accounts for the year ended 30 April 2021. (Note: the partners’ current accounts should commence with the balances shown in the draft partnership Statement of Financial Position as at 30 April 2021). (7 marks)
c) Redraft the Statement of Financial Position of the partnership as at 30 April 2021. (8 marks)

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  • 20 Marks

FA – July 2023 – L1 – Q4 – Preparation of limited liability company financial statements

Prepare the statement of profit or loss and statement of financial position for a limited liability company using the provided trial balance and adjustments.

The following trial balance relates to Pakro Ltd at 31 July 2022:

The following matters remain to be adjusted for in preparing the financial statements for the year ended 31 July 2022:

  1. The cost of inventory of GHȼ 38,400 for the year ended 31 July 2022 was based on an inventory count on 4 August 2022. Between 31 July 2022 and 4 August 2022, the following transactions took place:
Item GHȼ
Purchases of goods 8,000
Sales of goods (profit margin 20% on sales) 12,000
Goods returned by Pakro Ltd to a supplier 800
  1. Trade receivables totaling GHȼ24,000 are to be written off and allowance for receivables is to be adjusted to GHȼ8,000. The irrecoverable debt expense is to be included in administrative expenses.
  2. Pakro Ltd receives rent for subletting part of its building. The rent, which is receivable quarterly in advance, was received as follows:
Date of receipt Period covered GHȼ
1 July 2021 3 months to 30 September 2021 7,200
1 October 2021 3 months to 31 December 2021 7,200
30 December 2021 3 months to 31 March 2022 9,000
4 April 2022 3 months to 30 June 2022 9,000
1 July 2022 3 months to 30 September 2022 9,000
  1. The loan of GHȼ60,000 was taken out on 1 January 2022 with annual interest of 12%. The interest is payable in equal instalments on the first day of April, July, October, and January in arrears. The loan is repayable in full during the financial year ended 31 July 2026.
  2. Depreciation is to be provided for as follows:
    • Buildings 2.5% per year on cost
    • Plant and equipment 25% per year on cost
    • 70% of the depreciation is to be charged in cost of sales, and 15% each in distribution costs and administrative expenses.
  3. Current year income tax charged was GHȼ18,105.

Required:

a) Prepare the Statement of Profit and Loss for the year ended 31 July 2022. (10 marks)
b) Prepare the Statement of Financial Position as at 31 July 2022. (10 marks)

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