Financial Accounting WASSCE (PC 2ND), 2018

Section A: Theory of Financial Accounting

 

 

 

Question 4:

 

1) Differentiate between Public sector accounting and Private sector accounting

 

2) Sources of revenue for a local government

 

3) Items of expenditure of a local government

 

 

 


Observation

 

 

Majority of the candidates that attempted this question on public sector accounting performed well. However some of them lose reasonable marks as they could not properly differente between private sector and public sector accounting. Some of the suggested answers were:

 

  1.  

SN

Public Sector Accounting

Private Sector Accounting

  1.  

Objective is to ascertain the efficiency of the collection and use of public funds.

Objective is to ascertain profitability or otherwise of the business.

  1.  

Does not adopt matching concept. Here, expenditure is compared with the fund voted for that activity or sector.

Adopts the matching concept of accounting where expenses are compared with the associated income.

  1.  

Accounts mainly prepared are the Revenue and Expenditure Accounts and the Statement of Assets and Liabilities (i.e. Statement of Financial Position).

Accounts prepared are the Statement of Comprehensive Income (Profit and Loss Account) and the Statement of Financial Position (Balance sheet).

  1.  

Cost of fixed asset is written off immediately after purchase.

Cost of fixed assets is spread over the useful life of the asset.

  1.  

Accounts are mainly prepared on cash basis of accounting. (Debtors and creditors are not recognized).

Accounts are prepared on accrual basis of accounting.(recognizes debtors and creditors).

  1.  

Uses the fund and vote system of accounting.

Uses entity or proprietorship system of accounting.

  1.  

Tangible fixed assets are not recorded separately and shown in the Balance Sheet.

Tangible fixed assets must be shown in the Balance Sheet together with the aggregate depreciation and net book value to date.

  1.  

Accounts are prepared for the general public.

Accounts are prepared for owners/ shareholders and other stakeholders.

  1.  

The preparation and presentation of accounts is regulated by the Constitution of the country as well as the Financial Administration Acts and Regulations.

The preparation of accounts is regulated by Company’s code, other Acts related to that specific business and International Accounting Standards.

  1.  

There is no distinction between capital and revenue expenditure and income.

There is clear distinction between capital and revenue expenditure and income.

 

  1. Sources of revenue for a local government
  2. Property/tenement rates
  3. Court fines
  4. Market tolls
  5. Lorry park levies
  6. Television and land licenses
  7. Subventions from central/federal government
  8. Donations/Grants from donor agencies
  9. Business operating permits
  10. Building permits
  11. Proceeds from sale of land
  12. Births and deaths registration fees
  13. Poll tax
  14. Customary court fines
  15. Rent
  16. Marriage registration fees
  17. Revenue from stool lands
  18. Burial permits
  19. Entertainment permits
  20. Interest on investments

 

 (c)       Items of expenditure of a local government

 

  1. Educational projects
  2. Health projects
  3. Honorarium
  4. Wages and salaries /personal emoluments
  5. Rent and rates
  6. Bank charges
  7. Protocol expenses
  8. Maintenance of roads
  9. Payment for utilities
  10. Repairs and maintenance
  11. Sanitation and environmental expenses
  12. General Office expenses – stationery
  13. Donations and grants
  14. Investments
  15. Repayment of debts