/Addis Ababa University/Department of Accounting and Finance/ Accounting for Public Sector and Civil Society/ Drill/

ADDIS ABABA UNIVERSITY

C O L L E G E O F B U SI N E S S A N D E C O N O M I C S
Department of Accounting and Finance
Accounting for Public Sector and Civil Societies
Drill
[

Date: February 08, 2022

Time Allowed: 1:30 hours

Name________________________________ID. No._________Section______
PART I- Multiple Choice Questions
Write the correct choice of each of the following multiple choice questions in
the space provided beside each question.
______1. The accounting system designed for Awasa City Council must make it possible:
a. To Prepare consolidated statements for the reporting entity in conformity
with FASB Standards
b. To prepare financial statements as required by relevant laws only.
c. To present fairly the financial position and results of financial operations
of the government in conformity with GAAP and to demonstrate compliance
with finance-related legal and contractual provisions
d. To demonstrate service efforts and accomplishments
______2. Which of the following reports is not a component of the financial statements
according to IPSAS 1?
a. Statement of Financial position.
b. Statement of changes in equity.
c. The Director’ s report.
d. Notes to the financial statements.
______3. Governmental units that engage in self supporting activities by providing goods
and services to the public on a user charge basis should be accounted for in what
fund category?
a. Governmental Fund c. Proprietary Fund
b. Any Non-expendable fund d. Fiduciary Fund

______4. As per IPSAS 2 Inventory should be stated at

a. Lower of cost and fair value.

b. Lower of cost and net realizable value.
c. Lower of cost and nominal value.
d. Lower of cost and net selling price.

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______5. Which of the following is not a budgetary account?

a. Encumbrance c. Expenditure
b. Appropriation d. Disbursement

______6. As per IPSAS 2 Inventories are assets which are not

a. Used in the production or supply of goods and services for administrative

purposes.
b. Held for sale in the ordinary course of business.
c. In the process of production for such sale.
d. In the form of materials or supplies to be consumed in the production
process or the rendering of services.
______7. An expense account appears in:
a. A pension trust fund c. Special Revenue Fund
b. An Enterprise Fund d. Debt Service Fund

______8. Hamlin Charity has in stock paper envelopes. The stock of envelopes was
included in the closing inventory as of December 31, 2021, at a cost of $50 each
per pack. During the final audit, the auditors noted that the subsequent sale price
for the inventory at January 15, 2022, was $40 each per pack. Furthermore,
inquiry reveals that during the physical stock take, a water leakage has created
damages to the paper and the glue. Accordingly, in the following week, Hamlin
has spent a total of $15 per pack for repairing and reapplying glue to the
envelopes. The net realizable value and inventory write-down (loss) amount to

a. $40 and $10 respectively.

b. $45 and $10 respectively.
c. $25 and $25 respectively.
d. $35 and $25 respectively.

______9. The Town of Shire General Fund’s Estimated Expenditures account had a
balance of Br. 807,000. When the town’s General Fund closes its books, this
Br. 807,000 Estimated Expenditure account should have:
a. Been Debited
b. Been Credited
c. Remained Open
d. Appeared as Contra account

______10. XYZ Inc. changes its method of valuation of inventories from weighted-average
method to first-in, first-out (FIFO) method. XYZ Inc. should account for this
change as

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a. A change in estimate and account for it prospectively.

b. A change in accounting policy and account for it prospectively.
c. A change in accounting policy and account for it retrospectively.
d. Account for it as a correction of an error and account for it retrospectively.

PART II- TRUE OR FALSE QUESTIONS

Write TRUE if the statement is correct. Write FALSE if the statement is incorrect
in the space provided beside each question.
______1. Entries similar to those of the city’s Pension Trust Fund may appear to that of Special Revenue Fund.
______2. IPSAS 39 deals with the classification, recognition, measurement, presentation and disclosure of financial
instruments.
______3. A special revenues fund and debt service fund are always considered Major Funds.
______4. As per IPSAS 23 revenue stipulations that provide to use the fund for specific purpose or to return are
conditions
______5. Depreciation should be recorded for fixed assets accounted for in the Capital Projects Funds
______6. IPSAS 42 deals with social costs
______7. The appropriation Control account of is Debited when the budgetary accounts are closed.
______8. Machines held for rental purposes are accounted for though IPSAS 17
______9. The operating statement of a General Fund is a Statement of Revenues, Expenses and Change in Fund Balance
______10. IPSAS 21 differes from IPSAS 26 in that the later defines value in use as the present value of remaining
service potential

PART III-WORK OUT QUESTIONS

Work out the following exercises in a neat and readable manner. Neatness has a credit.
Exercise 1
The Common Council of the City of Dire Dawa is the administrative unit of the Dire Dawa City. In its 2012/13 budget
year the city accomplished the following activities through its special revenue fund.
1. The common Council adopted the revenues budget for the general operations as:
VAT 1,500,000
Fines and Forfeits 500,000
License and Permits 437,500
Intergovernmental Revenues 87,500

2. Expenditures for the following functions were legally budgeted for the year:
General Administration 525,000
Education 972,500
Public Safety 175,000
Health and Welfare 750,000

3. During the year, revenues were received in cash from the following sources:
VAT 1,482,500
Fines and Forfeits 497,500
License and Permits 435,000
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/Addis Ababa University/Department of Accounting and Finance/ Accounting for Public Sector and Civil Society/ Drill /

Intergovernmental Revenues 96,250

4. During the year, contracts and purchase orders were issued as follows :
General Administration 112,500
Education 200,000
Public Safety 70,000
Health and Welfare 125,000

5. Goods and Services ordered in transaction four were received as follows:

Estimated Actual
General Administration 112,500 113,000
Education 125,000 127,500
Public Safety 68,750 69,000
Health and Welfare 125,000 125,000

6. A budget revision was approved by the Commission. Estimated revenues for

intergovernmental revenues were decreased by Br. 8,750. Appropriations for General
Administration were increased to Br. 550,000.

7. Vouchers were issued for items not previously encumbered, primarily personal
services, in the following amounts:
General Administration 436,750
Education 770,000
Public Safety 104,500
Health and Welfare 625,000

Required:
Show all the necessary General Ledger entries

Exercise 2
A city has a building held for rental purposes. The building was acquired for ETB 100,000
on Hamle 1, 2001. The revaluation model with straight line depreciation method was
adopted as policy as per IPSAS 3. The Building has an estiamted 10 year useful life with
zero residual value. On Sene 30, 2002 the building’s fair value increases to ETB 120,000.
On Sne 30, 2014 the building’s fair value was ETB 300,000 while its value in use stood
ETB 250,000. However, on Sene 30 2006 its Fair value increases to ETB 140,000.
Required: Show all the necessary entries from 2001 thorugh 2006

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/Addis Ababa University/Department of Accounting and Finance/ Accounting for Public Sector and Civil Society/ Drill /

PART IV- DISCUSSION QUESTIONS

Write according to the directions beside each question in a short paragraph. Neatness
and readability has value.

1. Write three principal characteristics that distinguish governmental and NFP entities from that of business

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