Gce Model Questions Vol1 2017 Financial Accounting Question 36

Department X has a budgeted appropriation of ₦70,000,000 for the year and received cash receipts of ₦20,000,000. A carried‑forward balance from the previous year of ₦5,000,000 is also available. The department's total expenditures for the year amount to ₦100,000,000. Any unspent balance at year‑end is transferred to the Contingency Fund at \(5\%\) of its amount. The Contingency Fund opened the year with a balance of ₦12,000,000. If the department incurs a deficit, it may borrow the required amount from the Contingency Fund, paying interest of \(2\%\) on the borrowed sum (interest is payable next year). Determine the department's net financial position at year‑end after applying the transfer rule and, if necessary, borrowing from the Contingency Fund. State whether the department ends with a surplus, a deficit or a balanced position, and give the amount (in ₦) of the net position.