101713 syedsoffiansoa2013 syedsoffiansoa2013 15

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Unformatted text preview: which it is granted. 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 14 Basis of Accounting All transaction of the Government are accounted for on a cash basis, i.e. on a receipt and payment basis, appropriately modified to provide for payments to be made in January in respect of supplies received and services rendered up to 31 December of the preceding year but chargeable to the accounts of that year. 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 15 Financial Year The financial year is defined by the Financial Procedure Act as a period of twelve months ending on the 31st day of December in any year. 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 16 Basis Of Accounting in Public Basis Sector Sector Cash Basis Modified Cash Basis Accrual Basis 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 17 Modified Cash Basis Take into account all information on transactions and economic events which cause receipt and payment of cash in future (short term) i.e. as soon as current financial period end and current information of cash flow. Financial year – 13 months (1/1/2007­ 31/1/2008) 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 18 Modified Cash Basis For expenses being made but not in time to do payment in 12 months – settled within 1 month of the following year. (January 2008) All expenditure are chargeable to the account of that year (2007), subject to: 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 19 Modified Cash Basis • Service rendered and supplies received up to 31 December 2007 • No payment up to 31 December 2007 • Payment could be done between 1/1/2008 – 31/1/2008 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 20 Modified Cash Basis Modified Cash Basis • Used for Federal and State Government Accounting Accrual Basis • Used in accounting for Statutory Bodies, Local Authority and Government­owned companies 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 21 Accounting Equation for Fund Accounting Accounting Accounting Current Assets = Current Liabilities + Fund Balance RM 5,000,000 = RM 2,000,000 + RM 3,000,000 10/17/13 syed soffian/SOA/2013 syed soffian/SOA/2013 22 Debit and Credit Debit Cash RM 5,000,000 Cash Current Liabilities RM 2,000,000 Fund Balance RM 3,000,000 Illustrations on Transaction Journal Dr Current Liabilities Cr Cash RM 2,000,000 RM 2,000,000 Dr Cash Cr Revenue RM 1,000,000 RM 1,000,000 Dr Expenses Cr Cash RM 900,000 RM 900,000 10/17/13 syed soffian/SOA/2013 syed...
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