Neco Model Questions Vol1 2019 Financial Accounting Question 24

A municipal corporation maintains two separate funds. **Opening balances** - General Fund cash: ₦5,000,000 - Capital Projects Fund cash: ₦2,000,000 **Transactions during the year** 1. General Fund receives tax revenues of ₦8,000,000 and pays operating expenses of ₦6,500,000. 2. Capital Projects Fund receives a loan of ₦3,000,000 and pays construction costs of ₦6,500,000. 3. An inter‑fund transfer of ₦2,000,000 is made from the General Fund to the Capital Projects Fund. **Statutory cash‑balance requirements** - General Fund must end with cash at least 20 % of its total outflows (operating expenses plus the inter‑fund transfer). - Capital Projects Fund must end with cash at least 10 % of its total outflows (construction costs plus the amount received from the inter‑fund transfer). Determine whether each fund meets its statutory minimum cash‑balance requirement at year‑end. If a fund fails, state the additional cash needed to satisfy the requirement.