KASNEB Public Finance and Taxation - Question 1b

Outline four purposes of Public Finance Management Equalization Fund Regulations, 2015. ... [Click to view full question and step-by-step solution]

KASNEB Public Finance and Taxation - Question 2b

Summarise six benefits of applying e-procurement in the public sector. ... [Click to view full question and step-by-step solution]

KASNEB Public Finance and Taxation - Question 4a

Pareto Ltd. has provided the following income statement for the year ended 31 December 2018: Income:Sh.Sh.Gross profit6,290,000Dividends (net)675,000Foreign ... [Click to view full question and step-by-step solution]

CPA Public Finance and Taxation May 2019 Past Paper with Answers (PDF)

1a

Relationship between National and County Governments on budget and economic matters

Budgetary rules exercise effective control over government entities in public spending and accountability.

With reference to the above statement, identify four ways used by the national government to demand budgetary accountability by the government entities.

	Sh.
Purchases at standard rate	487,200
Audit fees	41,760
Exports to Malawi	400,000
Sales at standard rate	1,136,800
Purchases of printing materials	29,000
Fuel for delivery van	78,880
Exempt supplies	280,000
Catering for firm employees	81,200
Entertainment expenses	24,360
Telephone expenses	58,000
Payment of water bill	21,000

		Sh.
	Basic monthly salary	250,000
	Monthly hardship allowance	45,000
	Monthly responsibility allowance	50,000
	Monthly commuter allowance	25,000

2	During the year, she received Sh.90,000 as a bonus for the previous years' reported profits.
3	She made a donation of Sh.50,000 to the National Kidney Fund during the year.
4	She was provided with a fully furnished apartment by the employer. The employer paid a monthly rent of Sh.80,000 and the cost of furniture was Sh.320,000.
5	The employer paid her monthly medical insurance premiums of Sh.5,000 during the year.
6	PAYE deducted from her monthly salary was Sh.68,000.
7	The company provided her with a 2,500cc saloon car on 1 October 2018 for official and private use. The car had been purchased for Sh.1,800,000.
8	She contributed Sh.15,000 per month towards a registered pension scheme.
9	She obtained a mortgage loan for the purpose of constructing her residential house from the National Savings Bank. The loan amount was Sh.4,000,000 with a monthly repayment of Sh.232,000. During the year, the total interest paid on the loan was Sh.144,000.
10	The company has a medical scheme for its managers. She was reimbursed Sh.380,000 during the year respect of medical bills.
11	During the year, she was voted as the best employee and the company rewarded her with a cash of Sh.60,000.
12	The company paid her son's college fees amounting to Sh.120,000 during the year. This amount was treated as an allowable expense in the company's books of account.

Income:	Sh.	Sh.
Gross profit		6,290,000
Dividends (net)	675,000
Foreign exchange gain	175,000
Rent received (commercial building)	580,000
Interest received from Fahari Bank Ltd. (net)	289,000
Bad debts recovered	370,000
Insurance claim	785,000
Profit on sale of equipment	88,000
Sale of debentures	4,200,000	7,162,000
		13,452,000
Less expenses:
Salaries and wages	1,450,000
Increase in provision for bad and doubtful debts	145,000
Contribution to N.S.S.F.	78,000
Advertising	710,000
Stationery	400,000
Depreciation	280,000
Subscriptions	1,140,000
Trading loss	390,000
Interest	760,000
Transport	150,000
Legal costs	365,000	(5,868,000)
		7,584,000

1	Dividends comprise:	Sh.	Sh.
	Dividends from Beta Ltd.	505,000
	Dividends from Bona Cooperative Society	170,000
2	Foreign exchange gain comprise:
	Amount of realised foreign exchange gain	125,000
	Amount of unrealised foreign exchange gain	50,000
3	Bad debts recovered related to:
	Bad debts on sale of furniture	130,000
	Bad debts on credit sale of goods	240,000
4	Insurance claim related to:
	Insurance compensation on loss of profit	380,000
	Insurance claim on loss of motor vehicle	405,000
5	Advertising comprise:
	Advertising through daily newspapers	280,000
	Advertising on passenger sheds at bus stops	230,000
6	Subscriptions related to:
	Annual subscription fee to chamber of commerce and industry		530,000
	Subscriptions to employees' sports club		610,000
7	Interest comprise:
	Interest on debentures		580,000
	Interest on loan acquired to build commercial rental houses		110,000
	Interest on money borrowed to pay tax and penalties		70,000
8	Legal costs comprise:
	Appeal to tax tribunal		155,000
	Defending business property rights		120,000
	Registration of lease agreement (100 years)		90,000

	Sh.
Factory building	5,200,000
Processing machinery	2,400,000
Furniture and fittings	980,000
Godown	1,800,000
Water pump	360,000
Motor vehicle (saloon)	1,600,000
Computers	450,000
Drainage system	320,000
Staff canteen	960,000

1	On 1 May 2018, the company imported a forklift for Sh.1,200,000 before VAT at the rate of 16% and import duty at 25%
2	A sports pavilion was constructed and utilised with effect from 1 October 2018. The total construction cost was sh 650,000
3	A borehole was drilled at a cost of Sh.680,000 and utilised with effect from 1 November 2018.
4	On 2 December 2018, the company acquired the following additional assets:

		Sh.
	Photocopier	180,000
	Pick-up	1,900,000
	Cash registers	120,000
	Conveyor belts	780,000
	Fax machine	200,000
	Office cabinets (wooden)	160,000
	Boilers	920,000

5	The saloon car was disposed of for Sh.1,200,000 in October 2018 and replaced with a delivery van costing Sh.1,500,000.
6	Labour quarters were constructed at a cost of Sh.2,600,000 and the employees moved in the houses on 1 October 2018.

Income:	Sh.	Sh.
Sale of fruits		1,050,000
Sale of livestock		1,550,000
Profit on sale of tractor		45,000
Sale of milk		480,000
Insurance claim		510,000
Discount received		80,000
Sale of manure		170,000
Interest received		90,000
Rental income		200,000
		4,175,000
Less expenses:
Salaries	540,000
Transport	70,000
Drawings: Soi	350,000
Timothy	460,000
Fertilizers	510,000
Construction of gabion	120,000
Purchase of milking machine	200,000
Subscriptions to agricultural research institute	155,000
Interest	480,000
Mulching	60,000
Fuel	140,000
Rates	30,000
Presumptive tax	45,000
Legal costs	80,000
Wages	620,000
Clearing land for planting fruits	210,000
Depreciation	15,000
Repairs and maintenance	54,000	(4,139,000)
		36,000

		Sh.
	Tax appeal	35,000
	Recovery of bad debts	22,000
	Defending Soi for breach of contract	23,000

1	Sale of fruits and sale of milk include own consumption of Sh.30,000 and Sh.50,000 for Soi and Timothy respectively.
2	Interest received relates to interest earned from Kenya Post Office Savings Bank (Postbank).
3	Insurance claim is in connection with a partial destruction of the farm house.
4	Salaries relate to salaries paid to partners as follows: Sh. Soi. 240,000 Timothy 300,000
5	Rates relate to the rental income from commercial building.
6	Interest expense include interest on capital to partners as follows: Sh. Soi 105,000 Timothy 125,000
7	Legal costs related to:

CPA Public Finance and Taxation – May 2019 Past Paper & Answers

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