1.

What does that means the modified cash basis of accounting in

FGE and for what benefit the FGE prefer to employ the modified cash
basis of accounting

The modified cash basis of accounting in FGE means that cash basis applies
except for recognition of the following transactions:
● Revenue and expenditure are recognized when aid in kind is received.
● Expenditure is recognized:

○ When payroll is processed.

○ At the end of the year when a grace period payable is
recognized.
○ When goods are received or services are rendered if payment for
the goods or services was rendered in advance.
○ When cash moves from an unrestricted to a restricted bank
account to meet the requirements of a letter of credit. When
cash moves out of the restricted account, no expenditure is
recognized.
● Intergovernmental transfers are recognized in the absence of actual
cash movement.
● Transactions resulting from salary withholdings are recognized in the
absence of actual cash movement.

2. MOFED administers the financial system for the federal

government and has the highest level of administrative authority.
What element of authority MOFED have?

MOFED administers the financial system for the federal government and has
the highest level of administrative authority. MOFED consists of a:
● Budget Department that prepares and distributes notification of
approved federal budgets and administers the budget.
● Central Accounts Department that receives monthly reports and
compiled financial statements for the federal government.
● Central Treasury Department that receives and distributes cash from
the central treasury.
● Credit and Investment Department that manages the federal
government's investments and debt.
3.What are the basic Similarities and Differences of FGE accounting
system with business organizations
There are many similarities between accounting for business and not-for-
profit government organizations. A double entry system of accounting is
recommended for both. The general mechanics for record keeping are the
same: documents from the basic record, books of original entry (journals)
are kept and posted to general ledgers and subsidiary ledgers, trial balances
are drawn to prove the equality of debits and credits, a chart of accounts
properly classified and properly fitted to the organization’s structure is
essential to good accounting, and of course, uniform terminology is highly
desirable in both fields. Both prepare financial statements, closing entries,
etc.
In most of the operations, government budgetary institutions are not
concerned with profit measurement, but only to assure continuity and/or
improvement of services to the public, and the need to ensure compliance
with extensive legal requirements often results in government organizations
having more stringent operational and administrative controls than in
commercial organizations. But the market in which they operate regulates
commercial businesses. If the management is not responsive to the market
demand and fails to provide the quality of services demanded by the
market, the commercial organization will ultimately be forced out of
business.

4.One of the basic Goals achieved by the FGE Accounting System is

controlling a budget.HOW?
The ability of the accounting system to report expenditure consistent with
budgetary principled and
● Including accounting for commitments in the system. A commitment
is an amount of budgeted funds that is reserved for a specific future
expenditure. Any committed budgeted funds are no longer available
for future commitments. Commitments are made against the budget
when a purchase order is approved.

5.Explain the relation between General ledger, subsidiary ledger and

control account
A subsidiary ledger
Is a group of similar accounts whose combined balances equal the balance in
a specific general ledger account. The general ledger account that
summarizes a subsidiary ledger's account balances is called a control
account or master account
A control account
is a summary-level account in the general ledger that contains aggregated
totals. The general ledger is the master set of accounts that summarize all
transactions occurring within an entity
Both general ledgers and subsidiary ledgers are an important part of an

entity’s

accounting system. The subsidiary ledger accounts act as an intermediary

between the journal and the general ledger accounts whereas the general

ledger is the pathway to the trial balance. Each debit and credit of every

journal entry is posted either to a general ledger or a subsidiary ledger or a

combination of both.

6.If your government Organization have not appropriate ledger

format what the effect of this gap on the result of financial

statement

organization experiences a variety of financial transactions throughout the

month. These include providing products or services to customers, using

employee labor or purchasing inventory. Every financial transaction impacts

the company’s financial statements. At times, company employees miss

recording a financial transaction in the period when it occurs. When a

financial transaction is not recorded, the financial statements are misstated

by the amount of that transaction.

1. Income Statement Transactions Not Recorded

2. Balance Sheet Transactions Not Recorded

3. Counterbalancing Errors
4. Non-Counterbalancing Errors
7.A subsidiary ledger is not a set of self-balancing accounts. How?
Explain the meaning

A subsidiary ledger is not a set of self-balancing accounts.

because, Not all debits in a subsidiary ledger are equal to all credits in the
subsidiary ledger. A subsidiary ledger's total debits and credits equal the
balance in the corresponding control account in the general ledger. The
purpose of control accounts and subsidiary ledger accounts is to facilitate the
report generation process, minimize the size of the general ledger, and
maintain sufficiently detailed records regarding account balances to assist
proper financial management.

8.Explain about the relation between MoFED, Public Body and

Budgetary Institution on the FGE financial administrative system

MoFD
MoFED administers the financial system for the federal government and has
the highest levels of administrative authority. MoFED consists of a
Budget department that prepares and distributes notification of approved
federal budgets and administer the budget.
Central accounts department that receives monthly reports and complies
financial statements for the federal government
Public body
It is the next level of financial administrative authority in the federal
government after MoFED.a PB is defined in the budget manual as
● A legal mandate
● Receives a partial or complete budget directly from the respective
finance and planning bodies
● Submits its final accounts directed to MoFED and
● Is on the approved list of bodies by the office of the prime minister
Budgetary Institution (BI)
Budgetary Institutions are defined as those institutions that are fully or
partially financed by Government. The budget process assumes the
appropriation of budgets. The appropriated budget is the budget approved
by the Council of people's Representatives (CPR). The appropriated budget
is broken down by:
● Recurrent and capital expenditure for the federal government, and
● Subsidy for each regional government

9.Two types of ledgers are maintained in the FGE accounting

system: General Ledgers and Subsidiary Ledger
General Ledger
A ledger card is maintained for every account code recorded in the register.
Every amount that is entered as either a debit or credit on the Register is
also entered to the corresponding debit or credit column of the appropriate
ledger card. The aggregate of all such ledger cards is the general ledger.
The general ledger is a set of self-balancing ledger cards because at all
times the total debits and the total credits recorded in the general ledger are
equal. The general ledger is maintained to classify information reported in
the Register by respective account codes. All transaction amounts recorded
in the Register are entered on ledger cards in the general ledger. The
balances for all individual accounts are maintained in the general ledger.
Because the general ledger serves as a basis to prove that the net
cumulative debit and credit balances of all accounts are equal, the general
ledger simplifies and improves the report generation process
Subsidiary Ledger
The accountant maintains a general ledger for each register. Where more
than one BI shares the same bank account, the accounting unit maintains
one Register and one general ledger for the bank account. A system of
control accounts in the general ledger and supporting subsidiary ledgers is
used to maintain sufficient account balance detailed to facilitate
management reporting requirements. A control account is an account in the
general ledger that maintains the total balance of all related accounts in a
subsidiary ledger. A subsidiary ledger is a ledger that is separate from the
general ledger and contains transaction details of each control account in the
general ledger. Any account in the general ledger that requires more detail
than simply the total account balance becomes a control account with a
Subsidiary Ledger

10.Transactions are recorded on the appropriate ledger cards in the

subsidiary ledger from the register immediately after they are
recorded in the ledger cards in the general ledger. Why?
Transactions are recorded on the appropriate ledger cards in the subsidiary
ledger from the register immediately after they are recorded in the ledger
cards in the general ledger. Because,The only source document for the
subsidiary ledger is the register. The format of a ledger card in the
subsidiary ledger is the same as the format of the ledger card in the general
ledger .