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Practice Question 1

The Government of Hopeland adopted IPSAS and provided its trial balance for the fiscal year ended June 30, 2021. Additional information included an operating surplus of GHc41,950 million, outstanding taxes of GHc11,000 million with 10% unlikely to be collected, outstanding debt interest of GHc7,000 million, administrative costs including two years of rent, depreciation of GHc22,800 million, salaries and emoluments outstanding of GHc3,000 million, and cash and bank balances of GHc15,000 million with an overdraft of GHc5,000 million as of January 1, 2022. The question requires preparing a cash flow statement and statement of receipts and payments for the

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40 views

Practice Question 1

The Government of Hopeland adopted IPSAS and provided its trial balance for the fiscal year ended June 30, 2021. Additional information included an operating surplus of GHc41,950 million, outstanding taxes of GHc11,000 million with 10% unlikely to be collected, outstanding debt interest of GHc7,000 million, administrative costs including two years of rent, depreciation of GHc22,800 million, salaries and emoluments outstanding of GHc3,000 million, and cash and bank balances of GHc15,000 million with an overdraft of GHc5,000 million as of January 1, 2022. The question requires preparing a cash flow statement and statement of receipts and payments for the

Uploaded by

Josh Jobs
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Practice Question 1

The Government of Hopeland has adopted the accrual basis International Public Sector
Accounting Standards (IPSAS) as basis for preparing and presenting its financial statements.
Below is the trial balance of the Government of Hopeland for the fiscal year ended 30th June, 2021.
Dr Cr
GHS GHS
million million
Property, Plant, & Equipment at 1/7/20 15,000
Infrastructure completed at 1/7/20 40,000
Provision for depreciation: Property, Plant, & Equipment at 1/7/20 4,000
Provision for depreciation: Infrastructure at 1/7/20 6,000
Domestic Debt at 1/7/20 5,000
External Debt at 1/7/20 6,000
Payables at 1/7/20 2,000
Loans & Advances at 1/7/20 4,000
Financial assets at 1/7/20 6,000
Accumulated Fund at 1/7/20 52,000
Corporate Income tax 40,000
Custom and Excise duties 45,000
Value added taxes 50,000
Multilateral grants 15,000
Income tax (PAYE) 10,000
Fee and charges for services 8,000
Dividend and other investment income 4,000
Bilateral grants 6,000
Fines, Penalties and forfeitures 10,000
Recoveries of loans and advances 5,000
External borrowing during the year 20,000
Domestic borrowing during the year 12,000
Established post salaries 25,000
Non-established post salaries 15,000
13% SSF contribution for staff 5,200
Staff allowances 7,800
Administrative cost 15,000
Payment for Property, Plant and Equipment during year 24,000
Payments for infrastructure during year 20,000
Repayment of external borrowing during the year 10,000
Loans and advances granted during the year 15,000
Financial investment during the year 18,000
Seminar and workshops 5,000
Training and capacity building 10,000
Foreign travelling cost 5,000
Repair and maintenance 3,000
Domestic debt interest paid 4,000
External debt interest paid 8,000
Payments for subsidies on utilities 7,000
Payment for subsidies on fuel 2,000
Social benefit payments 2,500
Statutory transfers 7,500
Other expenses 2,000
Cash and bank balance at 30/6/2021 24,000
300,000 300,000

The following additional information is made available:


1. The Government of Hopeland posted operating surplus for the year ended 30th June, 2021
amounting GHc41,950 million.
2. Taxes that had been assessed as payable by tax payers for the fiscal year ended 30th June
2021 but which was still outstanding were:
GHS million
Corporate income taxes 2,000.00
Customs & Excise Duties 3,000.00
VAT 4,000.00
Personal Income Tax 2,000.00
Evidence from past experience shows that 10% of the outstanding taxes are unlikely to be
received by the Government of Hopeland.

3. Domestic debt interest and external debt interest amounting to GHS5,000 million and
GHS2,000 million respectively was outstanding as at 30th June 2021.

4. Payments for administrative cost included rental payments in respect of which GHS5,000
million related to two years from 1/1/2021 to 31/12/2022.

5. The depreciation charged for the year amounted to GHc22,800 million.

6. Salaries and other emoluments outstanding during the year amounted to GHS3,000 million
while that of use of goods and services amounted GHS4,000 million.

7. Cash and cash equivalents as at 1/1/2022 are made up as follows:


GHc million
Bank overdraft 5,000.00
Cash and bank balances 15,000.00

8. Information available to the Government of Hopeland suggest that they are unlikely to
comply with the conditions for 80% of the multilateral grants. As a result of this, an
increase in provision for deferred grants amounting GHc12,000.00 million was made. Also,
total revenue receivable of GHc13,100.00 was included in revenue.

Required:
You are required to:
a) prepare the Cash Flows Statement of the Government of Hopeland for the year ended 30th
June, 2021 in accordance with IPSAS 2: Cash flows statement, using the direct approach
for operating cash flows on the face of the Cash Flows Statement and showing a
reconciliation of surplus to cash flows from operating cash flows as a note.

b) Prepare a statement of Receipts and Payments for the year ended 30th June, 2021
20 marks

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