Using the guidelines and formats set out in the applicable IPSASs, you are to: 1. Prepare CORIS RA Statement of Cash Flow for the year ended December 31, 2020 2. Prepare CORIS RA Statement of Financial Performance for the year ended December 31, 2020
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
CORIS RA is a government owned enterprise which is legislated to generate its own income which it uses
to cover capital and recurrent expenditures. The legislations also give the government the powers to
order CORIS RA to transfer all or part of the income it generates to the consolidated fund as it deems fit.
Outside of these powers, its government also provide CORIS RA with monthly subventions to cover its
recurrent expenditures based on CORIS RA budgetary demands and the legal allocations by the
government.
For the 2017 and 2018, CORIS RA used the cash basis to prepare its financial statements, although some of the accounting transactions were recorded using the accrual basis. It should be noted that the government instructed all of its agencies to use an accrual basis that is guided and recommended by IPSASs.
You were asked by to government to assist CORIS RA with its accounting processes, which involved the recording, generation and preparation of accounting transactions and
IPSASs.
Working with a team of qualified and experienced accountants, you were able to prepare the following accounting information of CORIS RA for the year ending December 2020:
|
Details |
Amount |
|
Dividend Received |
93,250 |
|
Loan payment |
143,000 |
|
Amounts Recovered |
194,000 |
|
Interest Expense |
200,000 |
|
Court Administration Fees |
240,000 |
|
Cost of Training |
275,000 |
|
Bar License |
300,400 |
|
Store Rent |
300,750 |
|
Fines and Penalties |
330,000 |
|
General Cleaning |
350,000 |
|
Sanitation |
370,000 |
|
Accumulated Fund (1/1/2020) |
370,600 |
|
Basic Taxes and Rates |
370,900 |
|
Allowances |
390,470 |
|
Equity Investment Acquired |
420,000 |
|
Royalties |
430,000 |
|
Accountancy and Consultancies cost |
470,000 |
|
Work-In-Progress |
490,000 |
|
Herbalist License |
530,370 |
|
Posts not on Establishment |
580,000 |
|
Other Expenditure |
600,000 |
|
Stool Land Revenue |
600,000 |
|
Transport and Travelling cost |
620,000 |
|
Utilities |
630,000 |
|
Hostel License |
630,920 |
|
Details |
Amount |
|
Advances to Staff |
660,000 |
|
Local Park Fees |
720,400 |
|
Inventory and Consumables |
800,000 |
|
Special Services |
820,000 |
|
Property Rate |
820,900 |
|
Social Benefit |
840,300 |
|
Market Tolls |
870,000 |
|
Consumption of Fixed Assets |
960,000 |
|
Infrastructure, Plant and Equipment |
980,000 |
|
Permit Fees |
990,000 |
|
Proceeds from Sale of Equity |
990,320 |
|
Established Posts |
1,140,700 |
|
Development Bonds Issued |
1,300,000 |
|
Business Income |
2,300,600 |
|
Loans Received |
2,330,000 |
|
Local Fund |
2,930,000 |
|
Rent from Land and Building |
6,120,800 |
|
Central Government Salaries |
12,000,000 |
|
Cash and Cash Equivalent |
12,300,240 |
|
Parish Development Facility |
15,000,600 |
NOTES
- You are to ensure that CORIS RA adopts and maintain the accrual accounting basis when preparing its financial statements
- As of December 31, 2020, the Established Post had outstanding salaries of $180,000,000.00
- Closing Inventory and Consumables as at December 31, 2020 stood at $170,000,000.00
Using the guidelines and formats set out in the applicable IPSASs, you are to:
1. Prepare CORIS RA Statement of Cash Flow for the year ended December 31, 2020
2. Prepare CORIS RA Statement of Financial Performance for the year ended December 31, 2020
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