Question

Q3- The newly appointed mayor of XYZ Town noticed that in the recent enacted budget of the city’s General Fund, revenue exceed expenditure by 15,000 SAR. Later that year, after a hurricane caused a large amount of damage, she ordered the city’s finance office to write a check for 15,000 SAR from the General Fund to an emergency relief fund. Because of unexpected nature of the hurricane, no appropriation had been made to cover this transaction. When confronted by the press, she pointed out that the state’s balance budget require only that the General Fund “break- even” and that she could not, in good conscience, allow the city to retain idle resources when people needed help. What, if anything, did the mayor do wrong? Explain.

1. Explain the reason for the budget allocation and how the government will finance this expenditure for 2020.
2. The government has recently introduced value added tax (VAT). Explain two reasons why the VAT is implemented in this country.
3. Explain the impact of VAT to consumer spending and business.
4. The government is planning to change its modified accrual basis to accrual basis. Do you think this is a good practice? Explain your reasons.

Answer 1

In this case mayor do not anything wrong only the reason is mayor this step taken only for needed people not for self so in this case mayor ordered for check and available resources .rom

Reason for the budget allocation

budget allocation important to proper managment of financial system and processores . in other world budget allocation allow for more effective planning and financial control. Ensure that their resources are being used efficiently and effectively.

Without allocation limits, expenditures can exceed revenues and result in financial shortfalls. Anyone working with budgets should understand how they are used and the limitations they provide.

govt will finance this expenditure for different type expenditure and different type industry and divided all to industry

The following reason for that vat is implemented

1. A VAT provides a stronger incentive to earn more money than a progressive income tax does

2 A VAT is assessed and collected on the value of good and service that provided every time transaction detail and can track sales and purchase and evision of taxes and increse govt revenue

Impact of VAT To consumer and business

General consumption taxes encourage savings and labor supply rather than income tax and subsequently have a positive effect on economic growth.

The second characteristic is that general consumption taxes improve competitiveness