(a) what are the sources of revenue to a federal government
(b) What are the advantages of cash basis in public sector accounting
(c) Mention five reasons for public sector accounting
Explanation
a. Sources of revenue to a federal government:
(i) Direct taxes: Personal Income tax, Company tax, Petroleum tax
(ii) Indirect taxes: Import duties, Excise duties, Export duties, Tarrifs
(iii) Loans
(iv) Grants
(v) Mining: Royalties from mineral resources, revenue from oil sales
(vi) Fee charges
(vii) Revenue from state enterprises
(viii) Dividends
(ix) Fines and penalties
(x) Divestiture/privatisation proceeds
(xi) Interests on bank deposits / Investment proceeds
(xii) Disposal of assets
(xiii) Rent from government properties.
b. Advantages of cash basis in public sector accounting
(i) It saves time since the recording and preparation of financial statements is easy
(ii) Budgetary allocations are easily compared to actual
(iii) It is simple to understand
(iv) It records only the amount earned and spent, hence making it factual
(v) It encourages delegation of duty since the system is simple to operate
c. The purposes of public sector accounting is to:
(i) ascertain the means of financing the capital expenditure
(ii) satisfy the constitutional and legislative requirements of the country
(iii) serve as the basis for decision making
(iv) show sources of government revenue
(v) show items of government expenditure
(vi) serve as basis for planning and control
(vii) provide evidence for financial responsibility
(viii) verify and support general statistical information
(ix) serve as a basis for programme appraisal of government officials
(x) determine which of the government planned obje ctives is cost effective
(xi) provide general statistical information
(xii) serve as a tool for budgeting
(xiii) serve as a control instrument.