Level: Level 2

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QMDM – APR 2024 – L2 – Q6 – Rural Bank Investment Proposals NPV

The management of a Rural Bank must decide between two investment proposals using Net Discounted Value (NPV) calculations at a 14% discount rate, explain the term, compute NPVs, and advise on selection.

Question

The Management of a Rural Bank must decide between two proposals, on the basis of the following information:

Proposal	Investment Now	Net Cash Inflow at the End of	1991	1992	1993
A	GHS 80,000		GHS 95,400	GHS 39,400	GHS 12,000
B	GHS 100,000		GHS 35,000	GHS 58,000	GHS 80,000

Assume that on Projects of this type of the company can earn 14 percent per annum. (a) Explain briefly the term Net Discount Value in relation to the projects. (b) Calculate the Net Discounted Value of Proposal A. (c) Calculate the Net Discounted Value of Proposal B. (d) Using the values in (a) and (b), advise Management regarding the proposal that should be selected.

Answer

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Tags: Decision Making, Discounted Cash Flow, Investment Appraisal, Net Present Value, NPV, proposals, rural bank
Level: Level 2

QMDM – APR 2024 – L2 – Q5 – Normal Distribution in Insurance Policy Payments

Using normal distribution for policyholders' lifetimes to calculate probabilities of receiving payments at specific ages in an insurance policy.

Question

An Actuary in an insurance company formulates insurance policies that will be both profitable and marketable. For a particular policy, the lifetimes of the policyholders follow a normal distribution with a mean of 66.20 years and standard deviation of 4.4 years. One of the options with this policy is to receive a payment following the $65^{\mathrm{h}$ birthday and a payment every five years thereafter. Let $X$ be the age at death (in years) of a policyholder (a) Draw the graph of the distribution of $X$ showing clearly the key decision numbers i.e. 66.2 years, 4.4years, 65years, 70years, 75years. (b) Determine the (i) percentage of policyholders who will receive at least one payment using the option above. (ii) percentage of policyholders who will receive two or more payments. (iii) percentage of policyholders who will receive exactly two payments.

Answer

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Tags: chi-squared tests, hypothesis testing, insurance policies, lifetimes, Normal distribution, policyholders, Probability, Z-Score
Level: Level 2

QMDM – APR 2024 – L2 – Q4 – Exponential Smoothing in Time Series Forecasting for Mango Demand

Using monthly demand data for mangos over 15 months, explain exponential smoothing, compute and compare forecasts using alpha=0.1 and 0.4 with initial forecast of 500, describe plots of actual vs forecasts, and comment on suitability.

Question

Kiki, the commercial mango seller has collected demand figures for mangos over the last 15 months in the table below:

Month	Demand
1	470
2	510
3	460
4	490
5	520
6	460
7	1500
8	1450
9	1550
10	1500
11	1480
12	1520
13	1500
14	1490
15	1500

(a) Explain briefly the term “Exponential Smoothing” in Time Series Analysis of the data above. [3 Marks]
(b) Use an initial forecast of 500 to compare Exponential Smoothing Forecasts with Smoothing Constant Values a = 0.1 and a=0.4.
(c) Plot the actual values of the time series and superimpose the forecast for the Smoothing Constant Values a= 0.1 and a=0.4 on the graph of the actual values.
(d) Comment on the suitability of the forecast from the Smoothing Constant Values a= 0.1 and a=0.4.

Answer

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Tags: alpha values, demand data, Exponential Smoothing, Forecasting, plot description, smoothing constant, suitability comment, Time Series Analysis
Level: Level 2

Topic: demonstrate how time-series analysis can be used in business forecasting
Series: APR 2024

QMDM – APR 2024 – L2 – Q3 – Spearman’s Rank Correlation in Employee Aptitude and Interview Ranking

Using data on aptitude scores and interview rankings for 10 employees at a community bank, state when Spearman's rank correlation is suitable, calculate a suitable correlation measure, and comment on the result.

Question

Mumuadu Community Bank Ltd’s Personnel Department now has records on ten (10) recent employees that give an aptitude score and an interview ranking, as displayed below:

Employee	Aptitude Score	Interview Ranking
A	38	10
B	59	5
C	68	8
D	40	7
E	14	9
F	33	1
G	87	2
H	71	3
I	62	3
J	81	6

(a) State the situation under which the Spearman’s Rank Correlation Coefficient is a suitable measure of correlation.
(b) Determine a suitable measure of correlation
(c) Comment on your correlation value in (b) above

Answer

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Tags: aptitude score, bank personnel, Correlation Coefficient, interview ranking, non-parametric, ordinal data, Spearman’s Rank Correlation
Level: Level 2

QMFD – APR 2024 – L2 – Q2 – Measures of Central Tendency and Skewness in Student Spending

Analyze spending data from 18 students on textbooks by sketching mean-median-mode relationships for different distribution shapes, calculating central tendency measures, and commenting on the actual data distribution.

Question

The Dean of Students of a premier private university in Ghana has been given the responses of 18 students to a question on how much money (in GHS) they have spent on textbooks in the last semester:

0 0 19.99 32.98 19.99 19.99 48.20 32.98 0 19.99 0 32.98 19.99 0 24.50 0 32.98 24.50

(a) Sketch graphs (not drawn to scale) which will show the relationship between the mean, median and mode, and the shape of the distribution when the data above is

(i) Negative Skew

(ii) Positive Skew

(iii) Symmetric

(b) Determine, the

(i) Mean

(ii) Median

(iii) Mode

(c) Using your answer in (a) and (b) above, give a detailed comment on the distribution of the responses of the 18 students, to the Dean.

Answer

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Tags: Data Distribution, Mean, Median, Mode, negative skew, positive skew, Skewness, student expenditure, summary statistics, symmetric distribution
Level: Level 2

QMFD – APR 2024 – L2 – Q1 – Linear Programming in Delivery Optimization

Formulate and solve a linear programming problem using graphical method to minimize running costs for two lorries delivering minimum quantities of two products with capacity and usage constraints.

Question

Dokument Courier Services has two Vans which it uses for deliveries. The first (X) can carry 10 of Product A or 4 of Product B. The second (Y) can carry 3 of A or 5 of Product B. Minimum deliveries are 200 of A and 150 of B. In order to maintain roadworthiness, each lorry must be used for a minimum of two journeys per week. Suppose the running costs are GHS20000.00 per journey for Lorry X and GHS 15000.0 per journey for Lorry Y. find the number of deliveries made by each lorry to minimize costs. If the aim of the manager of Dokument is to minimize costs. (a) Identify the decision variables. (b) Formulate the problem into a linear programming problem (LPM). (c) Display the LPM on a graph and shade the critical region.

(d) Use the graphical approach to solving the LPM

Answer

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Tags: critical region, Decision Variables, formulation, graph, graphical method, Linear Programming, Minimization
Level: Level 2

Topic: Linear Programming, Mathematical relationships in business problems
Series: APR 2024

MFS – APR 2024 – L2 – Q8 – Measures to Rectify Current Account Deficit

Identify and discuss the most viable measures to rectify a persistent current account deficit on the balance of payments in a developing country.

Question

In a developing country where there has been persistent Current Account Deficit on the Balance of Payments, identify and discuss the most viable measures that could be used to rectify the Current Account Deficit.

Answer

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Tags: Balance of Payments, current account deficit, eveloping country, rectification measures, viable strategies
Level: Level 2

MFS – APR 2024 – L2 – Q7 – Objectives of Macro-Economic Policy and Their Conflicts

Outline the objectives of macro-economic policy, identify their practical incompatibilities or major conflicts, and recommend a useful procedure for satisfactory attainment.

Question

Assume you have been delegated by the Chief Executive Officer of a Financial Institution to represent her at a seminar where she is to deliver a speech on the topic: “Though the objectives of Macro-Economic Policy are logically consistent, they are unattainable simultaneously”. Outline such objectives and identify their practical incompatibility or major conflicts. Recommend a useful procedure towards a satisfactory attainment of the goals of Macro-Economic Policy.

Answer

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Tags: attainment, Conflicts, logical consistency, macro-economic policy, Objectives, procedure, unattainability
Level: Level 2

Topic: Aims of economic policy, Economic policy
Series: APR 2024

MFS – APR 2024 – L2 – Q6 – Yield Curve Explanation Using Liquidity Preference and Risk Approaches

Explain the upward slope of a normal yield curve using the liquidity preference approach and the risk approach.

Question

Using the Liquidity Preference Approach and the Risk Approach, explain the slope of the Normal Yield Curve.

Answer

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Topic: Distinction between ‘real’ and nominal interest rates, Interest rates, The term structure of interest rates
Series: APR 2024

MFS – APR 2024 – L2 – Q5 – Panic Withdrawals and Deposit Mobilization in Ghana Banking Sector

Identify measures to address panic withdrawals and outline previous measures for enhancing deposit mobilization in Ghana's banking sector amid recent challenges.

Question

The challenges that confronted the Banking Sector in recent times have led to what has been termed ‘panic withdrawals’.

a) Identify four (4) measures the banks could use to address the effects of the ‘panic withdrawals.

b) Outline six (6) measures that the banks previously relied on to enhance Deposit Mobilization.

Answer

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Tags: Banking Challenges, Deposit Mobilization, Financial Stability, Ghana Banking Sector, Liquidity risk, Measures, Panic Withdrawals, Regulatory Compliance
Level: Level 2

Topic: Financial Institutions Overview, Supervision & regulation, Their profitable and prudential management
Series: APR 2024

ATP – Aug 2015 – L2 – Q3 – Income Tax Computation

Advise on tax implications of loans from Zenith Bank and Bank of America for Zabta Company.

Question

(a). Zabta Company Limited has been in operation in Ghana for less than two years. The Managing Director is not comfortable with the Head of Finance with regard to the manner in which he handles tax issues of the company and has therefore sought your advice on the tax implications of the following intended transactions by the company: i) Borrowing from Zenith Bank (Ghana) Limited of an amount of GHS2.50 million at an interest rate of 28% per annum and a commitment fee of 1% flat. ii) Borrowing from Bank of America (in the USA) of an amount of US$4.00 million at an interest rate of 9% per annum and a commitment fee of 0.3% flat.

As a newly appointed tax consultant of the company, you are required to advise the Managing Director (in a memorandum) of the tax implications of the above transactions.

(b). You have been recently appointed an Advisor responsible for Finance and Tax at the office of the Chief of Staff of Ghana. The Chief of Staff has requested you for a reasoned write-up of the taxability status of the Vice-President of the Republic of Ghana under the Internal Revenue Act, 2000 (Act 592) as amended.

You are required to explain the taxability status of the Vice-President of the Republic of Ghana under the provisions of the Internal Revenue Act, 2000 (Act 592), as amended with respect to income tax, capital gains tax, and gift tax.

Answer

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Tags: Borrowing, Ghana tax laws, Interest Deduction, VAT, Withholding Tax
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2015

ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

Question

(a). As a tax consultant, you have been contacted by a prospective investor who is planning his staff budget for expatriates and would like to know if there are any qualifying conditions under which allowances or payments made to an employee (expatriate) by an employer for a passage to or from Ghana in respect of that person’s appointment or termination of employment will not be taxed in the hand of that person (employee) under the tax laws of Ghana.

You are required to indicate the three qualifying conditions available under the Internal Revenue Act, 2000 (Act 592) as amended.

(b). Under what circumstances will a person who owns a chargeable asset be deemed to have realized the asset in accordance with the provisions of the Internal Revenue Act, 2000 (Act 592) as amended. Are there any exceptions?

(c). Jones Lamptey completed construction of a building at a cost of GHS105,000.00 in June 2011 at Madina. In April 2014, he had undertaken repairs to the building amounting to GHS3,600.00 as a result of cracks and leakages to the roof. In June 2014, he also paid an amount of GHS800 for fire insurance on the building to State Insurance Company of Ghana. In September 2014, Jones sold the house to Abeiku Martey for GHS150,900.00 and paid sales commission of 3% of the sales proceed to Dumsor Real Estate Agency, who arranged and facilitated the transaction. In November 2014, Jones used GHS130,000.00 of the sales proceed of the building at Madina to purchase another building at Lakeside Estate because he wanted to live in a gated community.

You are required to determine capital gains, if any, accruing to Jones Lamptey from these transactions.

Answer

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Tags: Expatriate Allowances, Ghana tax laws, Income Tax, Passage Costs
Level: Level 2

Topic: Employment Income Taxation
Series: AUG 2015

ATP – Aug 2015 – L2 – Q1 – Income Tax Computation

Advise on tax implications of church income and pastoral allowances under Ghana tax laws.

Question

(a). The Pastoral Council of the Church of Soul Resurrection has approached you as a tax consultant for tax advice on the operations of the Church, including allowances paid to the Pastors and other Reverend Ministers. You are informed that the income of the Church is from donations, offertories and tithes from its congregants which are used towards charitable causes in the community and the upkeep of the Church. You are also informed that the Church was registered as a company limited by guarantee under the Companies Act, 1963 (Act 179) as amended.

You are required to write a memorandum (since you also double as a member of the Pastoral Council) to the Chairman of the Pastoral Council of the Church of Soul Resurrection to explain the tax implications of the income of the Church and the allowances paid to the Pastors and other Reverend Ministers. Please note that your advice should be based on the provisions of the tax laws of Ghana.

(b). Under Section 20 of the Value Added Tax Act, 2013 (Act 870), “supply of goods” means an arrangement under which the owner of goods parts with possession of the goods, by way of sale, barter, lease, transfer, exchange, gift or similar disposition; and

“supply of services” means a supply which is not a supply of goods or money, and in the nature of the performance of services for another person; the making available of a facility or advantage; or tolerating a situation or refraining from doing an activity.”

With reference to the above quotation, you are required to indicate the activities that do not constitute supply of goods or services under the Value Added Tax Act, 2013 (Act 870).

Answer

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Tags: Allowances, Church Income, Exemptions, Ghana tax laws, Income Tax
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2015

POT – Mar 2025 – L2 – Q5 – Withholding Tax

State five payments exempt from withholding taxes in Ghana.

Question

a) The Managing Director of Kantorse LTD is worried about the amount of withholding tax deductions the company suffers when the company receives payment for the supply of goods to some customers. He has heard that some payments could be exempted from withholding taxes.

Required: State FIVE payments that are exempt from withholding taxes.

b) State FIVE responsibilities of a VAT Withholding Agent.

c) The Ghana Revenue Authority (GRA) has implemented an online tax filing system that allows taxpayers to submit their tax returns through the GRA portal. This system is part of the broader digitalization effort aimed at enhancing tax compliance and administration in Ghana.

Required: i) Discuss FOUR benefits of using the GRA online tax filing system for both taxpayers and tax administrators.

ii) Identify TWO challenges that taxpayers may face when using the online tax filing system and recommend possible solutions.

Answer

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Tags: Exempt payments, Income Tax Act, Tax Compliance, Withholding Tax
Level: Level 2

Topic: Digital Taxation, Tax Administration
Series: MAR 2025

POT – Mar 2025 – L2 – Q4- Partnership Taxation

Compute Nmani Pharmacy’s chargeable income for 2023.

Question

a) Three pharmacy students, Abanga, Banzey and Chambas who completed the Tamale Technical University have teamed up to undertake a business venture in the pharmaceutical sector under a Trading Name Nmani Pharmacy. They agreed to share profit and losses in the ratio 3:2:1 for Abanga, Banzey and Chambas respectively. The details provided below relate to the business financial performance for the year 2023.

Details	GH¢
Sales	663,400
Cost of goods sold:
Opening inventory	150,000
Purchases	300,000
	450,000
Closing inventory	(120,000)
	330,000
Gross profit	333,400
Less expenses:
Staff cost	102,000
Business promotions	58,100
Depreciation	98,200
Electricity and water	53,000
Expired drugs	12,100
Donation	78,000
Rent and rates	15,000
Sundry expenses	50,000
Vehicle running cost	63,000
	(529,400)
Net profit	134,000
Tax paid	(15,200)
Net profit after tax	118,800

Additional Information:

Staff cost includes monthly stipend allocations to the aged parents of the partners totaling GH¢18,000.
All three Partners are taking care of their aged parents who are more than 60 years.
Business promotions include lunch expenses of the partners amounting to GH¢21,200.
Donations include funeral donation made during the funeral of the mother of the Vice Chancellor of the Tamale Technical University amounting to GH¢20,000.
Sundry expenses include fine amounting to GH¢32,000 imposed by the Food and Drugs Authority for failure to remove some expired drugs from shelves.
The Partners received Withholding Tax Certificates indicating an amount of GH¢15,200 from the Binabaani European Hospital for medical consumables supplied to the hospital.
Capital allowance has been agreed with the Ghana Revenue Authority at GH¢104,200.

Required: i) Compute the chargeable income for Nmani Pharmacy for the 2023 Year of Assessment.

(ii) Compute the net tax payable by each partner for the year 2023.

(b) In line with the provisions of the Income Tax Act, 2015 (Act 896), partnership and limited liability companies in Ghana are taxed in accordance with their residency status in a year of assessment.

Required: State the criteria for the determination of the residency status of partnership and limited liability companies.

(c) All over the world, countries have introduced policies to guarantee income for their hard-working workforce who may go on retirement to enable them to live meaningful lives after retirement. Ghana’s pension system aims to provide personal financial security for employees in their retirement years.

Required: Describe the current pension system in Ghana.

Answer

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Tags: Allowable expenses, Capital Allowance, chargeable income, Disallowable expenses, Partnership
Level: Level 2

Topic: Pension System
Series: MAR 2025

POT – Mar 2025 – L2 – Q3 – Taxation of Individuals

Determine Selassi Afolabi’s chargeable income for 2023.

Question

a) Selassi Afolabi was employed as the Personnel Manager of Tano North District Assembly on 1 March 2021 on salary scale of GH¢72,000, which is expected to increase by GH¢4,000 annually to a maximum of GH¢84,000. As part of his conditions of employment, he is entitled to the following: i) He has a fully furnished accommodation. ii) He has a vehicle, fuel and driver for official use only. iii) Risk allowance of GH¢2,000 a month. iv) Inconvenience allowance of GH¢1,500 a month. v) Professional allowance of GH¢2,500 a month. vi) He was paid a bonus of GH¢16,000. vii) He had the services of a gardener who receives monthly salary of GH¢800, paid by the employer. viii) He is divorced with three children who are schooling in government approved schools in Ghana. ix) He contributes 5.5% of his salary to the Social Security Scheme. x) He contributes 8% of his salary to an approved Provident Fund and his employers also contributes 10% on his behalf to the Provident Fund. xi) He received a net dividend of GH¢12,800 in 2023 from shares owned in a resident company. xii) He received a director’s fee of GH¢16,000 net of 20% WHT in 2023 from being a Board member in a private company.

Required: Determine his chargeable income for the 2023 year of assessment.

b) Adwoa Ntowbea is an investor in several companies in Ghana and abroad. Below are details of ordinary share dealing of Adwoa Ntowbea in Amaraaba LTD, a limited liability company in Ghana which is not listed on the Ghana Stock Exchange.

Date	Details
1 Jan 2023	Bought 500 shares at GH¢11 each
18 Sept 2023	Bought 1500 shares at GH¢12 each
30 Dec 2023	Bought 800 shares at GH¢10 each
19 Nov 2024	Sold 500 shares for GH¢12 each

Required: i) Determine the gains on the shares sold

ii) Determine the tax, if any, on the shares sold.

iii) Explain the withholding tax regime on realization of capital assets.

iv) What are the tax return requirements on realization of capital gains?

Answer

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Tags: chargeable income, Directors’ Fees, Dividends, Employment Income, Provident fund, Social Security, Tax Allowances
Level: Level 2

Topic: Capital Gains Tax (CGT)
Series: MAR 2025

MA – Mar 2025 – L2 – Q5 – Decision making techniques

Determine whether Moree Engineers LTD should make or buy extra seating assemblies for scooters, considering costs and opportunity costs.

Question

a) i)
Moree Engineers LTD (MEL) makes electrically-driven disability scooters aimed at elderly and/or disabled customers. At present, wheels and tyres are bought from external suppliers but all other parts are manufactured in-house. The scooters have a strong reputation due mainly to innovative designs, special power units that can be recharged at home and seats that enable easy access for a wide range of disabilities. MEL also sells power units to other firms.
Current monthly costs are as follows:

	Seating Department	Power Unit Department
Costs	GH¢	GH¢
Direct Materials	9,300	4,140
Direct Labour	12,600	9,450
Apportioned overheads	26,700	17,200
	48,600	30,790
Production level	60 units	90 units

The power unit department currently produces 90 units a month, 60 units are used in MEL’s own scooters while 30 units are sold externally at GH¢376 each.
A contract has been won to supply an additional 10 scooters per month. However, the directors are considering how best to meet the additional demand.
Sufficient capacity exists for the company to increase its monthly production to 70 scooters, except that making an extra 10 seating assemblies would require reallocation of labour and other resources from the power unit to the seating department. This would cut power unit output by 20 units per month.
The alternative course would be to buy 10 seating assemblies from an outside supplier and fit the 10 power units from the present production of 90 units. The cheapest quote for seating assemblies is GH¢610 per assembly.

Required:
Based on the figures given, show whether Moree Engineers LTD should make or buy the extra seats.

a) ii) Discuss FOUR other factors that should be considered before a final decision is taken to make or to buy the extra seats.

b) i). Bambo LTD produces three medical products namely, gloves, bandages and syringes. The budgeted sales in the coming year for the three products is GH¢4,530,000. The company accordingly projected GH¢750,000 post-tax profit on the three products for the period.
Detailed budgeted Cost and sales data for the coming year are as follows:

	Gloves	Bandages	Syringes
Sales Volume (%)	40%	25%	35%
Variable cost to Sales ratio	60%	67.5%	54.5%

The fixed cost for Bambo LTD amounted to GH¢1,330,000.
Other information:
Corporate tax rate is 25%

Required:
Calculate margin of safety in percentage (%) terms.

b) ii) Calculate post-tax revenue to achieve the projected profit.

Answer

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Tags: CVP Analysis, Multi-product, Post-tax revenue, Profit Calculation, Tax adjustment
Level: Level 2

Topic: Cost-Volume-Profit (CVP) Analysis
Series: MAR 2025

POT – Mar 2025 – L2 – Q2 – Value Added Tax

State circumstances for declining voluntary VAT registration in Ghana.

Question

a) Although the Value Added Tax Act, 2013 (Act 870) as amended, allows for voluntary VAT registration, there are situations where an application for such registration may be declined.

Required: State the circumstances under which a voluntary VAT registration application might be declined by the Commissioner-General.

b) Maame Yeboah, a VAT-registered trader, set aside goods valued at GH¢12,000 for Nene Abayateye, who made a deposit of GH¢2,000. The agreement stipulated that the goods would be delivered once the remaining GH¢10,000 was paid. However, by mutual agreement, the contract was terminated before the full payment was made.

Required: Explain the VAT implications of these transactions.

c) Woara Manufacturing LTD, based in Techiman, produces roofing sheets. The company has recently registered for VAT but is uncertain about how to handle input VAT paid before their registration. The company seeks your advice on this matter.

Required: Provide guidance on the rules regarding the deductibility of input VAT that was incurred prior to a company’s VAT registration.

d) Naa Pioluo, a postpaid customer of Telecel Ghana LTD, received his billing for June 2024, amounting to GH¢638,250, which includes all applicable taxes and levies. Concerned about the charges for his telephone usage, he wishes to understand the tax breakdown within the total amount.

Required: Calculate the amounts for the following taxes included in the June 2024 bill: i) VAT ii) National Health Insurance Levy (NHIL). iii) Ghana Education Trust Fund Levy (GETL). iv) COVID-19 Levy. v) Communication Service Tax (CST).

e) A close relative of yours is into a profitable business in Ghana. The business has had a tax decision made on it by the Commissioner-General. Your relative has objected to the tax decision and the matter has been referred to the Technical and Objection Committee of the Ghana Revenue Authority (GRA) for a determination. Your relative has invited you on the matter to represent him before the Technical and Objection Committee.

Required: What steps will you follow to ensure proper representation and success in resolving the matter?

Answer

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Topic: Value-Added Tax (VAT)
Series: MAR 2025

POT – Mar 2025 – L2 – Q1- Ghana Tax Structure

Explain the nature of Ghana's tax structure with examples focusing on tax classification and calculation methods.

Question

a) Tax imposes a burden on the tax payer. The type and nature of the burden depends on the tax structure that is being used in a jurisdiction. Ghana’s case is no different.

Required: Explain the nature of Ghana’s Tax Structure with applicable examples.

b) The Ghana Revenue Authority has recently made some major tax reforms in its tax administration efforts. These, by and large, have created convenience to the tax paying community.

Required:

i) State FOUR areas that would usually need tax reforms.

ii) State SIX reforms that have been made to tax administration in Ghana over the years.

Answer

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Tags: Direct Tax, Ghana tax system, Indirect Tax, Progressive Tax, Proportional Tax, Regressive Tax, Tax Structure
Level: Level 2

Topic: Tax Classificatio
Series: MAR 2025

MA – Mar 2025 – L2 – Q4 – Capital Budgeting

Evaluate two projects using benefit-cost ratio for GKIA with given financial data and 20% required rate of return.

Question

a). GKIA, an Early Childhood Development Centre (ECDC) under Ghana’s Ministry of Health (MOH) has obtained funding from the Global Fund (GF) to implement targeted programmes in line with the vision of the GF. In GF’s recent grant releases, GKIA received an amount of GH¢2 million and has the option of spending the amount on any project provided it falls within any of the thematic areas specified by the GF.
Accordingly, GKIA is considering spending the funds on either of two projects. The first option involves the construction, equipping and full furnishing of a 30-bed paediatric unit for the Centre. The second option involves the refurbishment of all existing leisure and recreational facilities that the Centre currently operates. Both options qualify for funding under the thematic areas of the GF.
The information in the table below presents financial details of both options that GKIA is considering.

	Option A: Paediatric Unit		Option B: Leisure and recreational facilities
Initial capital outlay	GH¢2 million		GH¢2 million
Year	Costs (GH¢)	Benefits (GH¢)	Costs (GH¢)	Benefits (GH¢)
1	175,000	150,000	150,000	1,000,000
2	218,750	225,000	187,500	1,050,000
3	262,500	562,500	225,000	997,500
4	301,875	1,687,500	258,750	847,875
5	332,062.50	5,906,250	271,687.50	975,056.25

The required rate of return on any investment project undertaken by GKIA is 20%.

Required:
As the Management Accountant of GKIA, you are required to evaluate the acceptability of each project on the basis of benefit-cost ratio.

b). The term Value for Money (VFM) is synonymous with spending in the public sector, where it is expected that little resources should be used to generate the best possible output/outcome for the public good.

Required:
Explain the ‘three Es’ that public sector management accountants will need to take into consideration when making public spending decisions.

c). In the application of the controllability principle, identify the cost centre manager who is responsible for any adverse impact of labour on production. (provide three reasons to justify your answer).

Answer

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Tags: Controllability Principle, Labour Efficiency, Production Manager, Variance Analysis
Level: Level 2

Topic: Other Aspects of Performance Measurement
Series: MAR 2025

Level: Level 2

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QMDM – APR 2024 – L2 – Q6 – Rural Bank Investment Proposals NPV

The management of a Rural Bank must decide between two investment proposals using Net Discounted Value (NPV) calculations at a 14% discount rate, explain the term, compute NPVs, and advise on selection.

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QMDM – APR 2024 – L2 – Q5 – Normal Distribution in Insurance Policy Payments

Using normal distribution for policyholders' lifetimes to calculate probabilities of receiving payments at specific ages in an insurance policy.

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QMDM – APR 2024 – L2 – Q4 – Exponential Smoothing in Time Series Forecasting for Mango Demand

Using monthly demand data for mangos over 15 months, explain exponential smoothing, compute and compare forecasts using alpha=0.1 and 0.4 with initial forecast of 500, describe plots of actual vs forecasts, and comment on suitability.

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QMDM – APR 2024 – L2 – Q3 – Spearman’s Rank Correlation in Employee Aptitude and Interview Ranking

Using data on aptitude scores and interview rankings for 10 employees at a community bank, state when Spearman's rank correlation is suitable, calculate a suitable correlation measure, and comment on the result.

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QMFD – APR 2024 – L2 – Q2 – Measures of Central Tendency and Skewness in Student Spending

Analyze spending data from 18 students on textbooks by sketching mean-median-mode relationships for different distribution shapes, calculating central tendency measures, and commenting on the actual data distribution.

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QMFD – APR 2024 – L2 – Q1 – Linear Programming in Delivery Optimization

Formulate and solve a linear programming problem using graphical method to minimize running costs for two lorries delivering minimum quantities of two products with capacity and usage constraints.

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MFS – APR 2024 – L2 – Q8 – Measures to Rectify Current Account Deficit

Identify and discuss the most viable measures to rectify a persistent current account deficit on the balance of payments in a developing country.

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MFS – APR 2024 – L2 – Q7 – Objectives of Macro-Economic Policy and Their Conflicts

Outline the objectives of macro-economic policy, identify their practical incompatibilities or major conflicts, and recommend a useful procedure for satisfactory attainment.

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MFS – APR 2024 – L2 – Q6 – Yield Curve Explanation Using Liquidity Preference and Risk Approaches

Explain the upward slope of a normal yield curve using the liquidity preference approach and the risk approach.

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MFS – APR 2024 – L2 – Q5 – Panic Withdrawals and Deposit Mobilization in Ghana Banking Sector

Identify measures to address panic withdrawals and outline previous measures for enhancing deposit mobilization in Ghana's banking sector amid recent challenges.

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ATP – Aug 2015 – L2 – Q3 – Income Tax Computation

Advise on tax implications of loans from Zenith Bank and Bank of America for Zabta Company.

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ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

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ATP – Aug 2015 – L2 – Q1 – Income Tax Computation

Advise on tax implications of church income and pastoral allowances under Ghana tax laws.

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POT – Mar 2025 – L2 – Q5 – Withholding Tax

State five payments exempt from withholding taxes in Ghana.

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POT – Mar 2025 – L2 – Q4- Partnership Taxation

Compute Nmani Pharmacy’s chargeable income for 2023.

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POT – Mar 2025 – L2 – Q3 – Taxation of Individuals

Determine Selassi Afolabi’s chargeable income for 2023.

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MA – Mar 2025 – L2 – Q5 – Decision making techniques

Determine whether Moree Engineers LTD should make or buy extra seating assemblies for scooters, considering costs and opportunity costs.

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POT – Mar 2025 – L2 – Q2 – Value Added Tax

State circumstances for declining voluntary VAT registration in Ghana.

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POT – Mar 2025 – L2 – Q1- Ghana Tax Structure

Explain the nature of Ghana's tax structure with examples focusing on tax classification and calculation methods.

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MA – Mar 2025 – L2 – Q4 – Capital Budgeting

Evaluate two projects using benefit-cost ratio for GKIA with given financial data and 20% required rate of return.

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