PSAF REVISION DAY 3

(1) The Highways Department of the FULANI STATE MINISTRY OF PUBLIC

WORKS is responsible for operating a Toll Gate on the Hausa-Kanuri Road in the
State. The Chief Highway Engineer has reported the need to carry out urgent repair
works, between Km 2 + 250 and Km 9 + 600, the failed portion of the road leading
to the toll gate. Furthermore, he is of the opinion that unless some repairs are
undertaken immediately, the toll gate will have to be closed. The Chief Highway
Engineer has also pointed out that the volume of traffic/commuters using the road
during the third quarter of the year is low relative to the rest of the year.
It is now the end of the first month and he has submitted the following repair
options for the consideration of the Honorable Commissioner for Public Works,
namely:
OPTION 1: To close the toll gate for 15 weeks and complete repairs, once and for
all, in one operation. The opportunity cost will be an immediate repair cost of
N 1,152,000 and the loss of toll revenues of N32,000.
OPTION 2: To carry out the repair works in phases, over the third quarters of the
next three years. The opportunity cost will be an immediate repair cost of
N 432,000 two years from now and N480,000 three years from now. This option
will lead to traffic hold-ups, necessitating the diversion of users of the toll gate to
an alternative route. Loss of revenues from toll charges is estimated as follows:
N72,000 This year
N93,600 Next year
N96,000 Two years from now
N110,000 Three years from now
The Ministry can currently borrow funds from financial institutions at
concessionary rate of 10% per annum.
You are required to:
(i) Calculate the net present value of the two repair options
(ii) Identify the most-effective way of undertaking the repairs, giving your
reasons
(iii) State two other factors that should be considered.

(2) The following Trial Balance was extracted from the general ledger of Metropolitan State
(Accountant General’s Office) for the year ended 31-12-2021
DR CR
₦ 000 ₦ 000
Sub- treasury cash 21,120
Development Fund 60,000

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Personal Income tax 12,000
Other State taxes 6,000
Licences and Fines 2,400
CRF Suspense a/c 64,800
Fees 600
Earnings and Sales 1,800
Rent on Govt. Properties 3,000
Interest and Repayments 720
Re-imbursements 960
Capital Receipts 78,000
Capital Expenditure 66,000
Development Fund 12,000
Federation Account 90,000
Misc. Recurrent Receipts 4,200
Special Funds 1,440
Personal Advances Fund at 1/1/2021
- Allocation from CRF 6,000
-Advances against Fund 7,200
Treasury clearance Fund at 1/1/2021
Deposits Received to Fund 3,720
Deposits Withdrawn from Fund 3,480
State Governments 600 360
223,200 223,200
The following information is relevant:

(i) The consolidated revenue suspense Account included total recurrent expenditure for the year

amounting to ₦60 million;

(ii) The amount of ₦60 million on the development fund represent the deficit on the Account at 31st

December 2020.

You are required to prepare:

(i) Consolidated Revenue Account for the year ended 31st December 2021

(ii) Development Fund Account for the year ended 31st December 2021

(iii) Statement of Assets and Liabilities as at 31st December 2021

QUESTION 3
a. The following information relates to Koki Event Center which is owned and managed by Ogbonge
Local Government.
Koki Event Centre Statement of financial position as at September 30, 2021 (Extract)
Assets 2021 2020
Current assets N N

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Cash and cash equivalents 2,713,337 3,053,277
Investments 1,324,922 980,248
Current pledges receivables–(net) 2,056,445 1,349,314
Contribution receivables for rent 193,357 45,369
Contract receivables 252,784 99,030
Inventories 239,615 296,017
Trust deposits 86,007 46,725
Prepaid expenses 131,529 32,589
Total current assets 6,997,996 5,902,569

Non-current assets
Long-term portion of receivables, less current portion
Pledges receivables(net) 1,061,300 1,410,876
Contribution receivables for rent (net) 240,946 -
Furniture and equipment (net) 468,397 53,867
Endowment investments 3,444,637 3,683,988
Other investments 401,134 423,764
Total non-current assets 5,616,414 5,572,495

Liabilities
Current liabilities
Accounts payables 48,975 37,053
Accrued salaries and related costs 418,486 348,719
Total current liabilities 467,461 385,772

Non-current liabilities:
Long-term debt 5,255,411 4,549,404
Long-term deferred tax liabilities 3,446,901 2,855,900
Required:

a. Compute the following relevant ratios for the event centre and comment on your results:
i. Current ratio (3 Marks)
ii. Acid test ratio (3 Marks)
iii. Working capital/Total assets ratio (3 Marks)
iv. Total debts/Total assets (3 Marks)
v. Long-term debts/Total assets (3 Marks)
b. Highlight THREE ways by which analytical review can be conducted.
(3 Marks)
c. Explain TWO ways the performance appraisal of a profit-oriented entity would differ from that of a
public-oriented entity. (2 Marks)
(Total 20 Marks)

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(4) The bank column of the cash book of College of Arts and Science, Igbonla
showed a debit balance of N5,316,200 as at 31st December 2016 while the bank
statement showed a credit balance of N6,860,010.
However, the following transactions required further consideration:
i. Unpresented Cheques: -
No L0013788 - N350,000
L0013789 - N410,000
L0013791 - N520,000
L0013792 - N1,250,000

ii. Uncredited Cheques: -

No X010007 - N533,000
Y010008 - N296,500
MD03147 – N3,134,385

iii. The following are direct credits discovered:-

a) Government Subvention paid directly into the bank without the knowledge of
the school amounted to N3,000,000
b) Interest received on investment N7,010
c) Interest on Fixed Deposit N18,300

iv. Direct Debits: -

a) Commission on Turnover – N30,300
b) Monthly insurance premium on the School Power Generating Plant – insurance
policy in the sum of N16,000 was on a standing order and was not recorded in the
bank book.
c) Bank Charges for cheques book and VAT on Commission on Turnover
amounted to N1,315.
You are required to prepare :
i. An Adjusted Cash book.
ii. Bank reconciliation statement as at 31st December 2016.

QUESTION 5
“Stores include all moveable property purchased from public funds or otherwise acquired by
government. They may be in the form of Consumable, Expenditure, Non-Expendable, Allocated and
Unallocated stores”. You are required to: (a) Distinguish between “allocated” and “unallocated”
stores. (4 Marks) (b) State any FOUR qualities each, of “allocated” and “unallocated” stores. (4
Marks) (c) State any SEVEN responsibilities of the Storekeeper as specified under Section 2231 of
the Financial Regulations (2009).

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(6) The following is a list of some items (Revenue and Expenditure) in respect of Consolidated
Revenue Fund (CRF) and other receipts of Federal Republic of Nigeria of Yobaria for the years ended
31 December 2011 2012 respectively:
2011 2012
N’000 N’000
Revenue received through the statutory Federation Account Allocation 1,200 1.005
Total Internally Generated Revenue 690 610
Overhead Cost 225 218
Personnel Cost 1,305 1,061
Value Added Tax (VAT) 380 290
Opening balance of Capital Receipts as at 1 January 55 50
Grants and reimbursement from Developed Nations 55 50
External loans 675 577
Consolidated Revenue Fund charges 325 268
You are required to:
(a)Prepare Consolidated Revenue Fund (CRF) and determine the surplus of Revenue over
Expenditure or Deficit of Expenditure over Income.
(b)Identify any FIVE sources of revenue that are credited to Consolidated Revenue Fund (CRF) other
than those listed in the question above.

QUESTION (7)

a. The following transactions took place in the office of the Accountant-General of the Federal Republic of
Wazobia during the month of January 2019:
Details N’ million

Crude oil sale 350,000

Domestic crude oil receipts 445,000

Miscellaneous oil receipts 105,000

Royalty on crude oil 101,000

Royalty on gas 95,000

Rentals on oil field 87,000

Gas flared penalty 77,000

Petroleum profits tax 650,000

Companies income tax 225,000

Other non oil taxes 255,000

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Import duties 255,000

Export duties 125,000

Custom penalty charge 115,000

320,000
Excise duties

i. The Nigeria Customs Service is entitled to 7% of cost of collection on all revenue collected while
Federal Inland Revenue Service is entitled to 4% of non-oil revenue.
ii. The sharing ratio is stated as follows:
Federal government 52.68%
State governments 26.72%
Local governments 20.60%
iii. 13% derivation is paid to oil producing states and it is based on oil and gas related income

b. The following information relates to the accounts of MAIKO State Government in the Federal
Republic of Wazobia for the year ended December 31, 2018:
Dr. Cr.
N’M N’M
Land and buildings (cost) 155,000
Long-term investments 75,000
Equipment and furniture 27,000

Accumulated depreciation:

- Land and building 16,000

- Motor vehicles 12,000

- Equipment and furniture 8,500

Motor vehicles (cost) 58,000

Federation account allocation 115,000

Vat allocation 35,000

Grants from Federal Government 13,500

Internally generated fund 39,000

Grant from donor agency 10,000

Personal emoluments 50,000

Maintenance of premises 2,000

Consolidated revenue fund charges 13,000

Overhead expenses 10,000

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 Miscellaneous expenditure/income 15,000 24,500

Long-term loans 100,000

Current assets/liabilities 15,500 14,500

Consolidated revenue fund 32,500

Total 420,500 420,500

The following additional information is also relevant, viz:

(i) Loan interest outstanding at the end of the year was N5 billion.
(ii) Depreciation on fixed assets is charged at the following rates on cost:
- Building - 5% (cost of land is N100billion)
- Motor vehicles - 20%
- Equipment and furniture - 15%
(iii) A building costing N5 billion with accumulated depreciation of N2 billion was sold for N4.5 billion. This
transaction has not been adjusted in the accounts.
(iv) Interest on receivable amounted to N4 billion

c. Also the following is a summary of the actual and budgeted revenue and expenditure of Federal
Republic of Wazobia for years 2017 and 2018
S/N 2018 2017
Actual Budgeted Actual Budgeted
N’000 N’000 N’000 N 000
Recurrent revenue
Statutory 2,611,780 1,996,950 1,879,920 1,672,390
allocation: faac
Value added tax 76,120 79,120 74,380 76,440
allocation
Internally 89,240 37,630 23,380 37,440
generated
revenue
Total Recurrent 2,777,140 2,113,700 1,977,680 1,786,270
Revenue
Capital Receipts
Internal loans: 1,498,699 1,960,250 - 300,280
treasury bonds
External loans 1,263,410 1,741,480 1,368,595 510,800
Total capital 2,762,109 3,701,730 1,368,595 811,080
revenue
Total recurrent 1,112,159 1,247,035 862,002 792,195
expenditure
Total capital 890,684 1,177,080 606,892 907,300
expenditure

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Required:
a) Prepare the Federation Account for the month of January 2019. (15 Marks)
b) Prepare the Statement of Financial Performance of the State for the year ended December 31
2018 and Statement of Financial Position as at that date (14 Marks)
c) Calculate the following ratios of budgeted to actual for 2017 and 2018 (to 2 decimal places)
i. Statutory allocation
ii. Value added tax
iii. Internally generated revenue
iv. Total recurrent expenditure
v. Total capital expenditure
(11 marks)
(Show all workings)
Total (40 Marks)

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