Accounting Q&A · Government Accounting · Topic 2
Practise 25 government accounting questions on recognition timing and reconciliation using five worked public-sector cases. Try each answer before revealing it. The cases are illustrative. Check the applicable reporting framework and local budget rules.
December services of 12,000 are paid in January
1. What should the accountant establish?
Recognise the December expense and payable under accrual accounting.
2. What evidence should be obtained?
Use delivery evidence, invoices and payment records.
3. What calculation or procedure would help?
Compare service date with settlement date.
4. What limitation or alternative matters?
Cash reporting records the payment in January under a pure cash basis.
5. What should happen next?
Show how the payable clears on payment.
A public body pays 24,000 for two years of future coverage
6. What should the accountant establish?
Allocate coverage to the periods that benefit.
7. What evidence should be obtained?
Inspect the policy and dates.
8. What calculation or procedure would help?
With even coverage, expense 12,000 after the first year under accrual accounting.
9. What limitation or alternative matters?
Cash spending occurred on the original payment date.
10. What should happen next?
Reconcile the remaining 12,000 prepayment.
An agency buys equipment for 100,000 in cash
11. What should the accountant establish?
Distinguish cash expenditure from initial accrual recognition.
12. What evidence should be obtained?
Obtain invoice, delivery and asset records.
13. What calculation or procedure would help?
Record qualifying equipment as an asset and depreciate it as applicable.
14. What limitation or alternative matters?
Depreciation is separate from the purchase cash flow.
15. What should happen next?
Reconcile the asset register and cash records.
Tax collected is 80,000 and qualifying closing receivables rise by 10,000
16. What should the accountant establish?
Explain the difference between collection and accrual revenue.
17. What evidence should be obtained?
Obtain collection reports and opening and closing receivable schedules.
18. What calculation or procedure would help?
Estimate revenue of 90,000 if there are no other movements.
19. What limitation or alternative matters?
Write-offs and non-cash changes can invalidate the shortcut.
20. What should happen next?
Reconcile each movement rather than assuming all changes are revenue.
A cash-basis department starts an accrual transition
21. What should the accountant establish?
Identify material opening assets and liabilities.
22. What evidence should be obtained?
Gather registers, contracts and unpaid invoice records.
23. What calculation or procedure would help?
Validate opening balances and document measurement methods.
24. What limitation or alternative matters?
Missing historical data can affect comparability.
25. What should happen next?
Plan controls and disclose transition effects as required.