(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 f...

Answer Details

(a) Sources of revenue to a federal government

• Taxes (company income tax, personal income tax, value added tax, capital gains tax)
• Customs and excise duties (import and export duties)
• Royalties and proceeds from petroleum, gas and solid minerals
• Licences, fees, fines and penalties
• Earnings and dividends from government-owned corporations and investments
• Loans and grants (internal and external borrowing, aid)
• Rents and rates on government property

(Any relevant sources.)

(b) Advantages of the cash basis in public sector accounting

1. It is simple and easy to operate and understand, needing little accounting expertise.
2. It is objective and less subject to manipulation, since it records only actual cash received and paid.
3. It makes it easy to compare actual cash receipts and payments with the approved budget.
4. It is cheaper to maintain because it avoids complex accruals, provisions and valuations.
5. It readily shows the cash position of the government at any time.

(c) Five reasons for public sector accounting

1. To demonstrate accountability and stewardship of public funds by those entrusted with them.
2. To ensure that public money is spent strictly in line with the approved budget and appropriation.
3. To provide information for planning, control and decision-making by government.
4. To prevent and detect fraud, waste and misappropriation of public funds.
5. To provide information to users such as the legislature, the public and international agencies, and to aid audit.