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  • 8 Marks

PSAF – Nov 2024 – L2 – Q1a – Financial Statements Preparation

Prepare the Statement of Financial Performance for Paja Teaching Hospital following IPSAS guidelines.

Below is a Trial Balance of Paja Teaching Hospital (PTH) under the Ministry of Health for the year ended 31 December 2023.

Debit (GH¢000) Credit (GH¢000)
Cash and Bank – GoG 3,400
Cash and Bank – IGF 72,200
Cash and Bank – Donor Funds 210,400
Undeposited Cash – IGF 4,000
Petty Cash 100
Investments 2,000
Debtors 661,400
Other Receivables 17,700
Withholding Tax
Trust Funds
Trade Payables
GoG Subsidy – Employee Compensation
GoG Subsidy – Goods & Services
Development Partners Programmes Receipt
Other Non-Operating Income
Medicines & Pharmaceuticals 433,900
Surgical 50,800
Medical 111,400
Investigation 140,900
OPD 238,400
Obstetrics and Gynaecology 135,300
Dental 8,300
Pediatrics 40,300
Ear, Nose & Throat 5,300
Eye Care 7,300
Mortuary 30,000
Ambulance Fees 300
Ophthalmology 3,000
Physiotherapy 3,300
Examination Fees 200
Dialysis 400
Feeding 30,400
Employee Compensation – GoG 3,912,500
Goods & Services – GoG 20,800
Employee Compensation – IGF 148,000
Goods & Services – IGF 978,500
Capital Expenditure – IGF 27,500
Goods & Services – Partners Fund 472,400
Accumulated Fund
Total 6,530,900

Additional Information:

  1. The hospital previously used modified accrual accounting but switched to IPSAS accrual basis in 2023.
  2. The hospital revalued legacy assets as follows:
    • Motor Vehicles: GH¢50,250,000
    • Buildings: GH¢120,540,000
    • Medical Equipment & Other Equipment: GH¢31,500,000
    • Land: GH¢15,000,000
  3. Gavi supported the hospital with GH¢200,000,000 in 2023, but 20% was allocated for Q1 of 2024. The Global Fund committed GH¢250,000,000, but only GH¢200,000,000 was received.
  4. NHIA rejected 10% of the hospital’s total claims of GH¢100,300,000.
  5. Parliament approved a write-off of GH¢20,225,000 for unpaid hospital services.
  6. The capital expenditure consists of:
    • Medical Equipment: GH¢19,236,000
    • Furniture & Fittings: GH¢8,264,000
  7. Depreciation Policy (Straight-Line Basis):
    • Building: 5%
    • Motor Vehicle: 20%
    • Medical Equipment: 10%
    • Furniture & Fitting: 25%
  8. Year-end inventory values:
Inventory Type Cost (GH¢000) Replacement Cost (GH¢000) Net Realisable Value (GH¢000)
Medicines (for resale) 146,800 176,100 132,100
Medical Consumables (For use on clients) 29,400 33,800 30,800
Office Consumables 19,600 29,400 18,600

Required:

In compliance with IPSAS, the PFM Act, and the Government of Ghana Chart of Accounts, prepare:
a) A Statement of Financial Performance for Paja Teaching Hospital for the year ended 31 December 2023.

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  • 20 Marks

FR – Nov 2024 – L2 – Q3 – Financial Statements Preparation

Preparation of Fahnbulleh LTD’s Statement of Comprehensive Income and Statement of Financial Position using IFRS.

Fahnbulleh LTD (Fahnbulleh) is a well-known company manufacturing thrill rides. During the current economic climate, Fahnbulleh has experienced some difficulties and has had to close down its Merry Go Round division.

The company’s trial balance as at 31 October 2023 is as follows:

Account Description Dr (GH¢’000) Cr (GH¢’000)
Revenue 1,296,000
Cost of Sales 546,480
Distribution Costs 127,080
Administrative Expenses 142,560
Investment Income 28,080
Investment Property 270,000
Interest Paid 17,280
Income Tax 10,800
Property, Plant & Equipment (PPE) – Carrying Value at 1 Nov 2022 1,620,000
Inventories (31 October 2023) 108,000
Trade Receivables 135,000
Bank 64,800
Payables 43,200
Deferred Tax (1 Nov 2022) 75,600
8% Loan Note 432,000
Ordinary Share Capital (GH¢1 per share) 540,000
Retained Earnings (1 Nov 2022) 605,520
Totals 3,031,200 3,031,200

Additional Information:

  1. Revenue Adjustments:

    • Revenue includes VAT of GH¢72 million.

  2. Property, Plant & Equipment (PPE):

    • A building with a carrying value of GH¢54 million was revalued on 1 November 2022 to GH¢72 million.
    • The building had an estimated useful life of 25 years when purchased, and this has not changed after the revaluation.
    • All other PPE should be depreciated at 20% per annum (reducing balance method).
    • All depreciation should be charged to cost of sales.

  3. Closure of the Merry Go Round Division (Discontinued Operations):

    • Closure Date: 1 October 2023
    • Division’s Results (1 Nov 2022 – 1 Oct 2023):
    Item GH¢’000
    Revenue 58,800
    Cost of Sales 38,700
    Distribution Costs 12,240
    Administrative Expenses 11,880
    • The division’s net assets were sold at a loss of GH¢19.2 million, recorded in cost of sales.

  4. Investment Property Revaluation (IAS 40):

    • Investment property value increased by 5%, which should be incorporated into the financial statements.

  5. Income Tax and Deferred Tax (IAS 12):

    • The estimated income tax provision for the year: GH¢140.4 million.
    • Deferred tax liability should be adjusted for temporary differences (GH¢129.6 million) at a 25% tax rate.

  6. Damaged Inventory (IAS 2):

    • Inventory worth GH¢46 million was damaged.
    • It can be reconditioned at a cost of GH¢12 million and sold for GH¢52 million.
    • Appropriate adjustments should be made.

Required:

Prepare and present the Statement of Comprehensive Income for the year ended 31 October 2023 and the Statement of Financial Position as at 31 October 2023 for Fahnbulleh LTD.

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  • 30 Marks

FR – May 2016 – L2 – Q1 – Presentation of Financial Statements (IAS 1)

Prepare profit or loss statement and financial position statement for Gbenga Nig. Plc for the year ending December 31, 2015, following IFRS standards.

GBENGANIG Plc. Trial balance as at December 31, 2015 is shown below:

Account Debit (N) Credit (N)
Revenue 2,290,125
Administrative expenses 237,150
Selling and distribution expenses 175,200
Legal and professional expenses 81,150
Allowance for receivables – 31/12/15 8,625
Inventories – finished goods – 31/12/14 276,750
Work-in-progress – 31/12/14 49,125
Inventories – raw materials at cost-31/12/14 162,600
Purchases – raw materials 1,125,900
Carriage inwards – raw materials 15,750
Manufacturing wages 375,000
Manufacturing overheads 187,500
Authorized and issued 900,000 ordinary shares of N0.50 each fully paid 450,000
150,000 8.4% cumulative preference shares of N1 each fully paid 150,000
Revaluation surplus 65,000
Share premium 150,000
General reserve 85,000
Retained earnings-31/12/14 425,250
Patents and trademarks 323,250
Freehold property at cost 375,000
Leasehold property at cost 112,500
Amortization of leasehold property – 31/12/14 22,500
Plant and equipment at cost 225,000
Accumulated depreciation – plant and equipment – 31/12/14 102,750
Furniture and fittings at cost 75,000
Accumulated depreciation – furniture and fittings – 31/12/14 23,625
Motor vehicles at cost 112,500
Accumulated depreciation – motor vehicles 31/12/14 37,500
10% loan notes 150,000
Trade payables 146,250
Trade receivables 266,445
Bank overdraft 76,875
Cash 7,680
Total 4,183,500 4,183,500

Additional Information:

  1. A gain of N20,000 made on the revaluation of old freehold property during the year is yet to be accounted for.
  2. Inventories at December 31, 2015 were:
    • Raw materials: N168,900
    • Finished goods: N413,025
    • Work-in-progress: N56,700
  3. Legal and professional expenses include solicitor’s fees of N7,500 for the purchase of new freehold land.
  4. Provision is to be made for a full year’s interest on the loan notes.
  5. The leasehold land and buildings have an unexpired life of 40 years as of December 31, 2014.
  6. Depreciation for the year is charged as follows:
    • Plant and equipment at 8% on cost (production)
    • Furniture and fittings at 10% on cost (administration)
    • Motor vehicles at 20% on carrying amount (25% to administration and 75% to selling/distribution).
  7. Income tax for the year is estimated at N68,900.
  8. A dividend of N2.25 per ordinary share is recommended by the directors. No dividend was paid in the prior year.

Required:

a. Prepare the statement of profit or loss and other comprehensive income for the year ended December 31, 2015.
b. Prepare a statement of financial position as at December 31, 2015, in accordance with International Financial Reporting Standards.

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  • 40 Marks

FR – May 2021 – L2 – Q1 – Presentation of Financial Statements (IAS 1)

Prepare financial statements from a trial balance, including adjustments for provisions, tax, asset disposals, depreciation, and development costs.

The following is the trial balance of Almajiri Nigeria Limited as at September 30, 2018:

Account Debit (₦’m) Credit (₦’m)
Revenue 60,000
Cost of sales 40,800
Distribution costs 2,900
Administrative expenses 4,440
Interest on bank borrowings 40
Research and development costs 1,720
Leasehold property (at valuation Oct 1, 2017) 10,000
Plant and equipment (at cost) 15,320
Plant and equipment (accum. depr. at Oct 1, 2017) 4,920
Capitalised development expenditure (Oct 1, 2017) 4,000
Development expenditure (accum. amortiz. at Oct 1, 2017) 1,200
Closing inventory (30 Sept 2018) 4,000
Trade receivables 8,620
Bank 260
Trade payables & provisions 4,760
Preference dividend paid 160
Dividend paid on ordinary shares 1,200
Ordinary shares at 25k each 10,000
8% Redeemable preference shares at N1 each (year 2020) 4,000
Retained earnings brought forward 4,900
Deferred tax 1,160
Leasehold property revaluation reserve 2,000
Total 93,200 93,200

Additional information:
(i)
One of the reputable customers of Almajiri Nigeria Limited sued the company for
N
400 million for breach of contract over a cancelled order. Almajiri Nigeria
Limited obtained a legal opinion that there is 20% chance that Almajiri will lose the
case.
Accordingly, it has provided for N
80 million (N
400 million x 20%) included in
administrative expenses in respect of the claim. The unrecoverable legal cost of
defending the action was estimated at N20 million and these have not been
provided for as the legal action will not go to court until next year.
(ii)
The directors of the Company have estimated the provision for income tax for the
year ended September 30, 2018 at N2,280 million. The required deferred tax
provision at September 30, is N
1,200 million.
(iii) The redeemable preference shares were issued on April 1, 2018 at par. They are
redeemable at a large premium which gives them an effective finance cost of 12%
per annum.
(iv) The leasehold property had a remaining life of 20 years at October 1, 2017. The
company‟s policy is to revalue its property at each year end and as at September
30, 2018 it was revalued at N
8,600 million.
(v) On October 1, 2017 an item of plant and equipment was disposed of for N500
million cash. The proceeds have been treated as revenue by the company. The
plant is still included in the company‟s trial balance figure at the cost of N
million and accumulated depreciation of N
1,600
800 million (to date of disposal). All
plants and equipment are depreciated at 20% per annum using reducing balance
method. Depreciation and amortisation of all non-current assets are charged to
cost of sales.
(vi) In addition to capitalised development expenditure of N
4,000 million further
research and development cost were incurred on a new project which commenced
on October 1, 2017. The research stage of the new project lasted until December
31, 2017 and incurred N
280 million costs, from that date the project incurred
development cost of N160 million per month. On April 1, 2018 the directors
became confident that the project would be successful and yield a profit well in
excess of its costs. The project is still in development as at September 30, 2018.

Capitalised development expenditure is amortised at 20% per annum using straight
line method. All expensed research and development expenditure is charged to
cost of sales.

You are required to prepare:
a. Statement of profit or loss and other comprehensive income for the year ended
September 30, 2018.

b. Statement of changes in equity for the year ended September 30, 2018.

c. Statement of movement in property, plant and equipment to be included in
published financial statements.

d. Statement of financial position as at September 30, 2018.

 

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  • 30 Marks

FR – Nov 2014 – L2 – Q1 – Presentation of Financial Statements (IAS 1)

Analyze a trial balance to prepare financial statements, compute impairment, and adjust inventories for a corporate entity.

The Trial Balance of Excellent Plc. as at 30 June 2014 is as follows:

 

The following notes are relevant:
i. Inventories as at 30/6/2013:

The net realisable values of these commodities per unit are as follows:

ii. Inventories on 30 June 2014 amounted to N9,000,000

iii. Prepaid salaries and wages were N10,000,000

iv. Included in the plant and machinery maintenance cost was depreciation of
N14,800,000.

v. The allowances for receivables are no longer required. The outstanding 10%
loan notes interest was paid on 30 June 2014 and this has not been accounted
for. The fair value of goods is N40,000,000 at the end of the year.

vi. The value in use of delivery van for the year 30 June 2014 is N31,000,000. The
prevailing market interest rate is 21% per annum and the Discounting Factor for
this year is 0.8264.

vii. The fair value of delivery van at an arm’s length transaction as at 30 June 2014
was N28,000,000 and the cost to sell was N2,000,000. All non-current assets
were depreciated at 10% per annum on reducing balance basis.

viii. Current tax provision for the year is N165,000,000.

Required:

a. Identify any FOUR of the cost items that are EXCLUDED in the valuation of inventories under IAS 2. (4 Marks)

b. Calculate the following:

  • (i) Value of opening inventories to be included in the Statement of Profit or Loss and Other Comprehensive Income. (2 Marks)
  • (ii) The present value in the use of delivery van (1 Mark)
  • (iii) The fair value and recoverable amount of delivery van (2 Marks)
  • (iv) The carrying amount and impairment if any on delivery van (2 Marks)

c. Prepare the Statement of Profit or Loss and Other Comprehensive Income (OCI) and Statement of Changes in Equity for the year ended 30 June 2014. (11 Marks)

d. Prepare the Statement of Financial Position as at 30 June 2014. (8 Marks)

Show all relevant workings

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  • 1 Marks

FA – May 2012 – L1 – SA – Q17 – Control Accounts

Identifying an advantage not associated with control accounts.

The advantages of Control Accounts do NOT include:

A. Locating errors
B. Facilitating the extraction of trial balance
C. Detecting fraud
D. Checking on the accuracy of ledger entries
E. Discouraging adherence to double entry principle

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  • 1 Marks

FA – May 2012 – L1 – SA – Q3 – Trial Balance

Identifying how a trial balance helps disclose errors.

In which of the following circumstances will the preparation of a Trial Balance assist in disclosing an error?

A. Failure to post an entry journal
B. Posting rent expenses to motor running account
C. Failure to post part of a journal entry
D. Posting the debit of a journal entry as a credit and vice versa
E. Failure to record an entry in the journal

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  • 1 Marks

FA – May 2012 – L1 – SA – Q2 – Double-Entry Accounting Principles

Identifying the shortcoming of single entry book-keeping.

Which of the following is NOT a shortcoming of single entry book-keeping?

A. A trial balance is not available
B. Profits are overstated
C. There are no subsidiary books
D. There are no control accounts
E. There are no ledger accounts.

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  • 20 Marks

FR – May 2016 – L2 – Q1 – Preparation of Financial Statements

Prepare the statement of profit or loss and statement of financial position for Zealow Ltd as at 31st December 2015, incorporating relevant adjustments.

The following trial balance relates to Zealow Ltd as at 31st December 2015:

GH¢000 GH¢000
Turnover 213,800
Cost of sales 143,800
Operating expenses 22,400
Trade receivables 13,500
Bank 900
Closing inventories – 31st December 2015 (note i) 10,500
Interest expenses (note iii) 5,000
Rental income from investment property 1,200
Plant and equipment-cost (note ii) 36,000
Land and building- at valuation (note ii) 63,000
Accumulated depreciation 16,800
Investment property-valuation 1st January 2015 (note ii) 16,000
Trade payables 11,800
Joint arrangement (note v) 8,000
Deferred tax (note iv) 5,200
Ordinary shares of 25p each 20,000
10% Redeemable preference shares of GH¢1 each 10,000
Retained earnings – 1st January 2015 17,500
Revaluation surplus (note ii) 21,000

Total: GH¢318,000 | GH¢318,000

The following additional information is relevant:

  1. An inventory count on 31st December 2015 listed goods with a cost of GH¢10.5 million. This includes some damaged goods that had cost GH¢800,000. These would require remedial work costing GH¢450,000 before they could actually be sold for an estimated GH¢950,000.
  2. Non-current assets:
    • Plant: All plant, including that of the joint operation (note v), is depreciated at 12.5% on a reducing balance basis.
    • Land and Building: The land and building were revalued at GH¢15 million and GH¢48 million respectively on 1st January 2015, creating a GH¢21 million revaluation surplus. At this date, the building had a remaining life of 15 years. Depreciation is on a straight-line basis. Zealow Ltd does not make a transfer to realized profits in respect of excess depreciation.
    • Investment property: On 31st December 2015, a qualified surveyor valued the investment property at GH¢13.5 million. Zealow Ltd uses the fair value model in IAS 40 Investment property to value its investment property.
  3. Interest expenses include overdraft charges, the full year’s preference dividend, and an ordinary dividend of 4p per share that was paid in June 2015.
  4. The directors have estimated the provision for income tax for the year ended 31st December 2015 at GH¢8 million. The deferred tax provision at 31st December 2015 is to be adjusted (through the profit or loss statement) to reflect that the tax base of the company’s net assets is GH¢12 million less than their carrying amounts. The rate of tax is 30%.
  5. On 1st January 2015, Zealow Ltd entered into a joint arrangement with two other entities. Each venturer contributes their own assets and is responsible for their own expenses, including depreciation on assets of the joint arrangement. Zealow Ltd is entitled to 40% of the joint venture’s total turnover. The joint arrangement is not a separate entity and is regarded as a joint operation.
    Details of Zealow Ltd joint venture transactions are:

    GH¢000
    Plant and equipment at cost
    Share of joint venture turnover (40% of total turnover)
    Related joint venture cost of sales excluding depreciation
    Trade receivables
    Trade payables
    Total

Required:

  1. (a) Prepare the statement of profit or loss for Zealow Ltd for the year ended 31st December 2015. (10 marks)
  2. (b) Prepare the statement of financial position for Zealow Ltd as at 31st December 2015. (10 marks)

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  • 20 Marks

PSAF – Nov 2016 – L2 – Q1a – Preparation and presentation of financial statements for central government

Prepare the Statement of Financial Performance and the Statement of Financial Position for the Consolidated Fund as of 31 December 2014 under accrual basis, in compliance with IPSAS.

Below is the Trial Balance of the Consolidated Fund for the year ended 31 December 2014.

Additional Information:
i) It is the policy of Controller and Accountant General to adopt the accrual basis of preparing the public accounts of the Consolidated Fund for the first time in compliance with the Financial Administration Regulation 2004 and the International Public Sector Accounting Standards (IPSAS). The effective date is 31 December 2014.
ii) The current Chart of Accounts based on the GFS 2001 is used in the classification of revenues and expenditures.
iii) Consumption of fixed capital charged on cost for the year has been computed as GH¢156,000,000.
iv) Direct tax revenues due to government but were not received at 31 December 2014 amounted to GH¢49,000,000.
v) An established post salary in arrears as a result of salary increment in the fourth quarter of 2014 was GH¢56,000,000 and goods and services outstanding at the end of the year amounted to GH¢12,000,000.
vi) The grant shown in the trial balance as expenditure represents a statutory transfer to the District Assembly Common Fund (DACF). Any arrears in the DACF should be treated as payable. The current rate of transfer is 7.5% on the amount received.
vii) Public debt interest of GH¢14,000,000 was due to creditors but was not paid as at 31 December 2014.

Required:
a) Prepare in a form suitable for publication and in accordance with the relevant Financial Laws and IPSAS:
i) Statement of Financial Performance of the Consolidated Fund for the year ended 31 December 2014.
ii) Statement of Financial Position of the Consolidated Fund as at 31 December 2014.
(Show all workings clearly)

b) Disclose any TWO significant accounting policies as part of the notes to your accounts, as much as the information provided will permit.

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  • 20 Marks

PSAF – July 2023 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance and Statement of Financial Position for Ayigya Central Hospital for the year ended December 31, 2022, based on the provided trial balance and additional information.

Ayigya Central Hospital is a Public Hospital established in the Ashanti Region, which serves several communities in the Municipalities. Its Trial Balance for the year ended 31 December 2022 is provided below:

Additional information:

  1. Inventory as at 31 December 2022 consists of Drugs and Stationery amounting to GH¢50 million and GH¢20 million respectively.
  2. Four patients who paid GH¢25 million to the Hospital intending to undertake heart surgery are scheduled to have their surgery done in February 2023. This amount is included in Surgical Fees.
  3. The fixed assets in the trial balance were acquired at the beginning of the year. It is the policy of the Hospital to provide for the consumption of fixed assets using the straight-line method:
    • Asset: Laboratory Equipment, Building, Motor Vehicles, Software
    • Useful life: 5 years, 50 years, 10 years, 5 years respectively
  4. Salaries and other emoluments outstanding relating to casual labor during the year amounted to GH¢8 million.
  5. Provision for Bad Debt relates to NHIS Claims Receivables in the Trial balance. The Provision for Bad Debt is 2%.

Required:

a) Prepare a Statement of Financial Performance for Ayigya Central Hospital for the year ended December 31, 2022. (10 marks)

b) Prepare a Statement of Financial Position for Ayigya Central Hospital as at December 31, 2022. (10 marks)

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  • 20 Marks

PSAF – March 2024 – L2 – Q2 – Preparation of Financial Statements for Central Government

Prepare the Statement of Financial Performance, Statement of Financial Position, and Statement of Budget Information for a central government department based on the given trial balance.

The following Trial Balance was extracted from the records of the Department of Social Integration, a central government department, for the year ended 31 December 2023.

Additional Information:

  1. The Department prepares its financial statements in compliance with the International Public Sector Accounting Standards, the Public Financial Management Act 2016, Act 921, and the Chart of Accounts of the Government of Ghana.
  2. Included in printing materials and stationery is a closing inventory valued at cost of GH¢380,000. The estimated net realizable value and replacement cost of the inventory are GH¢320,000 and GH¢330,000 respectively. The printing is not for commercial purposes.
  3. In June 2023, the government conducted a massive recruitment into the civil services, of which 20 employees were posted to the Department. However, they have not been paid salaries for the period. The amount owed to these employees is GH¢2,500,000 and this should be reflected in the financial statement of the period.
  4. The Department currently pays rent for two of its Regional Offices, and at the end of the year rent of GH¢200,000 was outstanding. Further, the Department also rented part of its premises at the Headquarters. At the end of the financial year, an amount of GH¢150,000 was received to cover 2024 rent. Meanwhile, GH¢20,000 rent has not been received from tenants for the year 2023. These transactions have not been accounted for.
  5. Depreciation of fixed assets is charged on a straight-line basis as follows:
Assets Estimated useful life (in years)
Motor vehicle 5 years
Furniture 4 years
Computers 3 years
Premises 20 years
  1. It was revealed that computer accessories costing GH¢340,000 acquired in 2022 were accounted for as goods and services. However, the Auditor for the 2023 financial year recommended that the transaction should be accounted for as a non-current asset. The recommendation is yet to be implemented.
  2. The budget extract of the Department for 2023 is as follows:
Item GH¢’000
Approved budget allocation 20,000
Internally generated fund 3,000
Donor support 1,000
Compensation for employees 10,000
Use of Goods and Services 6,000
Other expenses 5,500

Required: Prepare in compliance with the International Public Sector Accounting Standards, the Public Financial Management Act 2016, and the Chart of Accounts of Ghana: a) A Statement of Financial Performance for the year ended 31 December 2023.

b) A Statement of Financial Position as at 31 December 2023.

c) A Separate Statement of Budget Information in comparison with the Actuals for the year ended 31 December 2023.

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  • 20 Marks

PSAF – Nov 2021 – L2 – Q2 – Preparation and presentation of financial statements for covered entities

Prepare the Statement of Financial Performance, Statement of Financial Position, and Notes to the Accounts for a Municipal Hospital based on the provided trial balance and additional information.

Kologo Municipal Hospital is a Public Hospital established in the Upper East Region, which serves several communities. Its Trial Balance for the year ended 31 December 2020 is provided below.

Trial Balance as at 31 December 2020

Additional Information

i) The hospital’s policy is to apply the Accrual Basis of Accounting in preparing its Financial Statements in compliance with the Public Financial Management Act, 2016 (Act 921), Public Financial Management Regulation 2019 L.I 2378, and the International Public Sector Accounting Standards (IPSAS).

ii) The hospital purchased equipment at the cost of GH¢200,000 on 1 April 2020.

iii) A new equipment valuing GH¢100,000 was donated to the hospital on 1 July 2020. The equipment was assessed to have a useful life of ten (10) years. This has not yet been accounted for in the Trial Balance.

iv) The Fixed Deposit attracts an interest of 15% per annum.

v) Inventory of drugs as at 31 December 2020 amounted to GH¢95,000,000 at cost and had a net realizable value of GH¢110,000,000 but its replacement cost is GH¢78,000,000. In addition, stationery stock as at 31 December 2020 cost GH¢28,000,000 and has a replacement cost of GH¢25,000,000 with an estimated net realizable value of GH¢35,000,000.

vi) Redundancy pay outstanding as at the end of the year amounted to GH¢25,950,000.

vii) Provision for undertaking is estimated at 10%.

viii) The hospital currently owes Healer Pharmaceuticals for Drugs amounting to GH¢1,950,000 supplied to the hospital during the years 2020 and 2021 in respect of the following months:

  • November 2020: GH¢820,000
  • December 2020: GH¢610,000
  • January 2021: GH¢520,000
  • Totals: GH¢1,950,000

ix) Consumption of Fixed Assets is charged on a straight-line basis with time apportionment in the year of acquisition.

  • Asset | Useful life
    • Laboratory Equipment | 20 years
    • Building | 50 years
    • Motor Vehicles | 10 years
    • Software | 5 years

Required:

Prepare in compliance with the IPSAS and relevant legislation:

a) Statement of Financial Performance for the year ended 31 December 2020.
(8 marks)

b) Statement of Financial Position as at 31 December 2020.
(8 marks)

c) Notes to the Accounts.
(4 marks)

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  • 20 Marks

PSAF – May 2020 – L1 – Q2 – Preparation and presentation of financial statements for central government

Prepare the Statement of Financial Performance, Statement of Financial Position, Statement of Budget Information, and Notes to the financial statements for Damsa Municipal Assembly.

Below is the extract from the records of Damsa Municipal Assembly (DMA).

Additional Information:

  1. The central government has a constitutional responsibility to pay all established post salaries of the Assembly from the Consolidated Fund. The established post salaries paid by the central government on behalf of the assembly for 2019 amounted to GH¢64,000,000. This payment has not reflected in the books of DMA.
  2. Office consumables in respect of stationery and other items bought for GH¢1,800,000 remained unused during the year. The current replacement cost of the inventories is GH¢1,050,000. Meanwhile, the net realizable value of the inventories is estimated at GH¢1,400,000. No market exists for unused office consumables and other items.
  3. Consumption of fixed capital is to be charged as follows:
    • Motor vehicles: 5 years
    • Furniture and fittings: 5 years
    • Premises: 10 years
    • Equipment: 8 years
  4. During the year, the following assets were acquired and outright payments made for them: Motor Vehicle GH¢7,000,000; Equipment GH¢4,000,000. These have been accounted for.
  5. DMA could not pay the electricity bill for the last quarter of 2019. This was brought to its attention by the Electricity Company Ltd. of Ghana. The amount involved is GH¢4,000,000.
  6. The government has assigned some young graduates to DMA as part of the Nation Builders Corp programme to support the Assembly in revenue mobilisation. The allowances amounting to GH¢2,000,000 due them from DMA for the last month of the year was outstanding. DMA promises to pay them by the end of the first quarter of 2020.
  7. Fixed deposit attracts interest of 20% per annum and some interest is due as at 31 December 2019.
  8. The market store fees received were for two years: 2019-2020.
  9. During the year, the chiefs and people of the Assembly donated a new vehicle valued at GH¢400,000 to the DMA. No record was made in the books.
  10. Extract of the 2019 Budget of the DMA is as follows:
    Decentralised transfer 185,000
    Compensation of employees 74,300
    Goods and Services 35,600
    Other expenses 1,700
    Internally Generated Funds 102,000
    Donations and grants 1,000

Required: Prepare in accordance with the IPSAS and the Public Financial Management Act, 2016 (Act 921): a) Statement of Financial Performance for the year ended 31 December 2019.
(5 marks)

b) Statement of Financial Position as at 31 December 2019.
(5 marks)

c) Statement of Budget Information in Comparison with Actuals for the year ended 31 December 2019.
(5 marks)

d) Notes to the financial statements.
(5 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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  • 20 Marks

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

Prepares the Statement of Profit or Loss and Statement of Financial Position for a limited liability company, including depreciation and adjustments.

Vemso Oil Ltd has been in business for the past ten years. The following trial balance was extracted from the books of Vemso Oil Ltd for the year ended 31 December 2021:

Account GH¢’000 GH¢’000
Bank 46,200
Trade Payable 25,000
Petty Cash 4,000
Directors’ Current Account 320,000
Computer and Accessories 8,370
Computer and Accessories: Accumulated Depreciation 3,348
Furniture and Fittings 10,255
Furniture and Fittings: Accumulated Depreciation 2,050
Land and Building 214,000
Land and Building: Accumulated Depreciation 8,560
Office Equipment 12,250
Office Equipment: Accumulated Depreciation 2,450
Plant and Machinery 239,400
Plant and Machinery: Accumulated Depreciation 47,880
Inventory 1,900
Staff Loan 5,088
Payroll Liabilities 550
Taxation 3,003
Retained Earnings 49,282
Share Capital 10,000
Sales 574,145
Purchases 355,000
Bank Service Charges 1,300
Business Promotion 1,500
Communication 1,900
Insurance 1,660
Licenses and Permits 6,650
Medical expenses 155
Printing and Stationery 300
Professional Fees: Legal Fees 500
Repairs: Equipment Repairs 2,600
Salaries 23,050
Electricity 780
Water 280
Vehicle Running Expense 4,560
Totals 993,983 993,983

Additional information:
i) Closing inventory as at December 2021 amounts to GH¢48,500,000.
ii) The following assets were bought during the year 2021. However, this transaction was not recorded in the above trial balance:

  • Computer and Accessories: GH¢8,000,000
  • Fixtures and Fittings: GH¢5,000,000
  • Plant and Machinery: GH¢25,000,000
    iii) The following are the rates of depreciation being used by the company, however, depreciation for 2021 is yet to be charged:
  • Land and Building: 1%
  • Computer and Accessories: 20%
  • Furniture and Fittings: 10%
  • Plant and Machinery: 20%
  • Office Equipment: 20%
    iv) Electricity stated in the trial balance includes January 2022 electricity bill, while that of water represents six months’ payment for the year 2021.
    v) Staff bonus amounting to GH¢15,000,000 was agreed on 31 December 2021 for staff. However, it was paid after the year-end.

Required:

a) Prepare the Statement of Profit or Loss for the year ended 31 December 2021. (10 marks)
b) Prepare the Statement of Financial Position as at 31 December 2021. (10 marks)

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  • 20 Marks

FA – Dec 2023 – L1 – Q4 – Inventory | Preparation of limited liability company financial statements

Prepares the Statement of Profit and Loss and the Statement of Financial Position for a limited liability company based on a trial balance and additional information.

The trial balance for Odum Ltd. as at 31 December 2021 is as follows:

Account Dr (GHȼ) Cr (GHȼ)
Sales revenue 377,615
Purchases 130,006
Inventory as at 1 January 2021 60,890
Insurances 5,678
Salaries 61,600
Electricity 4,250
General expenses 8,663
Allowance for receivables 540
Land and Buildings at cost 80,000
Buildings accumulated depreciation 21,500
Machinery at cost 65,000
Machinery accumulated depreciation 12,400
Fixtures and fittings at cost 24,000
Fixtures and fittings accumulated depreciation 9,600
Trade receivables 64,500
Trade payables 14,062
Bank 20,110
Ordinary shares 50,000
Retained earnings as at 1 January 2021 15,480
10% Loan 25,000
Loan interest 1,500

(Dr Total: 526,197 GH¢ / Cr Total: 526,197 GH¢)

Additional Information:

  1. Inventory at 31 December 2021 amounted to GHȼ80,000. Some goods sent out on a sale or return basis have been treated as credit sales. These goods cost GHȼ6,000 and had been invoiced to the customer for GHȼ7,500. The customer has informed the company that it now intends to return these goods.
  2. The balance shown for salaries covers the 11 months to 30 November 2021. Salaries for December 2021 are due and unpaid. There have been no salary increases over the previous 12 months, and an equal amount is paid each month.
  3. Insurances include GHȼ660 for the half-year ended on 31 March 2022.
  4. Dividends paid during the year of GHȼ2,700 have been credited to bank and debited to General expenses.
  5. The loan was obtained in August 2018 and is repayable in full during the financial year ended 31 December 2023.
  6. Depreciation is to be provided on all machinery at 15% per annum using the reducing balance method. Machinery costing GHȼ15,000 was purchased on 1 July 2021, and this is included in the balance shown for machinery. Depreciation is calculated for each proportion of the year for which machinery is held. There were no disposals of machinery during the year.
  7. All the fixtures and fittings were purchased for GHȼ24,000 on 1 January 2019. Depreciation is to be charged using the straight-line method.
  8. Buildings are to be depreciated by GHȼ3,500 for the year. Land is not depreciated.
  9. Allowance for receivables is to be provided as GHȼ2,400 for a specific debt, plus 4% on the remainder of receivables.
  10. Taxation for the year is estimated as GHȼ42,012.

(Note: Revenue and expenses are deemed to accrue evenly throughout the year)

Required:
Prepare, for Odum Ltd, the following statements in accordance with International Financial Reporting Standards (IFRS).

a) The Statement of Profit and Loss for the year ended 31 December 2021. (10 marks)
b) The Statement of Financial Position as at 31 December 2021. (10 marks)

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  • 20 Marks

FA – Aug 2022 – L1 – Q3 – Correction of errors

Preparation of journal entries to correct errors, adjustment of the trial balance, and explanation of error types that do not affect the trial balance.

The following list of balances was extracted from the books of Awatey at 30 April 2021:

Account Amount (GHȼ)
Sales 134,200 (Cr)
Purchases 62,300 (Dr)
Inventory at 1 May 2020 4,700 (Dr)
Discounts received 390 (Cr)
Discounts allowed 240 (Dr)
Salaries and wages 12,700 (Dr)
Rent and rates 8,100 (Dr)
Motor vehicle expenses 7,500 (Dr)
Machinery repairs 14,200 (Dr)
General expenses 2,600 (Dr)
Machinery at cost 45,000 (Dr)
Machinery accumulated depreciation 8,000 (Cr)
Motor vehicles at cost 30,000 (Dr)
Motor vehicles accumulated depreciation 6,000 (Cr)
Bank 4,400 (Dr)
Trade receivables 4,600 (Dr)
Trade payables 2,200 (Cr)
Drawings 7,400 (Dr)
Capital at 1 May 2020 52,950 (Cr)

After the extraction of the above balances, the following errors and omissions were discovered: i) A sale on credit to Ali Baba of GHȼ800 had been entered in the Sales Journal as GHȼ80 and had also been posted to the Sales Ledger at the same amount. ii) A new Motor Vehicle costing GHȼ15,000 bought during the year had been debited to the Purchases Account. iii) Purchase of goods on credit from Agyemang Duah, amounting to GHȼ600, had been omitted from the books. iv) A cheque for GHȼ435 paid for Motor Vehicle expenses was recorded in the Cash Book and the Motor Vehicle Expenses Account as GHȼ475. v) Sales of goods on credit to Nii Ayi, amounting to GHȼ1,000, had been omitted from the books. vi) A cheque for GHȼ689 paid for general expenses was recorded in the Cash Book and the General Expenses Account as GHȼ698. vii) The purchase of machinery for GHȼ8,500 had been debited to the Machinery Repairs Account.

Required:
a) Prepare journal entries with appropriate narratives to correct each of the errors and omissions.
(8 marks)

b) Prepare the Trial Balance of Awatey as at 30 April 2021 after adjusting for the errors and omissions.
(8 marks)

c) Explain TWO (2) types of errors which would not affect the balancing of a trial balance.
(4 marks)

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