Question Tag: Reimbursement

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  • 1 Marks

FA – Mar/July 2020 – L1 – SA – Q9 – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Calculating the amount to be reclaimed under the imprest system

The following is a summary of the petty cash transactions for a week:

  • Opening balance: N50,000
  • Sales of stamps: N10,000
  • Sales of paper: N50,000
  • Travelling expenses: N150,000
  • Subsistence expenses: N250,000

What sum should be reclaimed by the cashier at the end of the week?
A. N550,000
B. N500,000
C. N400,000
D. N340,000
E. N160,000

C. N400,000

Explanation:
Under the imprest system, the amount to be reimbursed is the total amount spent. Here, the total expenses (N150,000 + N250,000) amount to N400,000, which is what the cashier should reclaim to restore the imprest balance.

  • 7 Marks

BCL – May 2017 – L1 – Q6a – Sources of Law

Explain a partner's right to claim reimbursement for personal expenses incurred during authorized duties.

a) A partner in a firm in the course of an authorized duty incurred liability of which he/she made personal payment. The partner later made claims of reimbursement of expenses incurred. At a meeting of the partners of the firm, the reimbursement was declined.

Required: Explain whether the partner has any rights to claim reimbursement. (7 marks)

 

Under the Incorporated Private Partnerships Act, 1962 ACT 152:

  • From the date of registration and incorporation, a firm is a body corporate under the firm name, distinct from the partners of whom it is composed and capable of a natural person of full capacity in so far as those powers can be exercised by a body corporate. (2 Marks)
  • Although the firm is a body corporate, each partner in the firm is liable, without limitation, for the debts and obligations of the firm. A partner is entitled to an indemnity from the firm and to contribute from the co-partners in accordance with the rights of that partner under the partnership agreement. (5 Marks)

(Total: 7 marks)

 

  • 10 Marks

BCL – May 2020 – L2 – Q2a – Agency

Advise on whether a firm should bear the cost of an expenditure incurred by a partner during an assignment.

Jabi is a partner of an Accounting Firm. The firm’s office is located in Accra. In May 2019, Jabi was assigned an approved accounting duty outside Accra with the use of the Firm’s car. During the journey, the car had a burst tyre. The driver of the car, for unexplained reasons, had no spare tyre on the car. He therefore recommended the purchase of a brand new tyre, which Jabi bought with his personal money. He obtained a receipt in the name of the Firm.

Jabi sought for a refund of his money amounting to GH¢1,280 for the tyres bought. The Managing Partner refused the refund, saying it was the sole responsibility of Jabi to bear the expenditure.

Required:

i) Advise the Manager as to why the Firm should bear the full or part of the cost and not only Jabi.
(4 marks)

ii) Advise Jabi why it is not the sole responsibility of the firm to bear the cost.
(6 marks)

i) Advise the Manager:

  • Sections 4, 10, and 14 of the Incorporated Private Partnerships Act, 1962, Act 152 provide the relevant legal framework.
  • Section 4: Upon registration, a firm becomes a corporate entity, and the certificate states that the partners’ liability is not limited.
  • Section 10: A registered firm has the powers of a natural person and full capacity. While the firm is a corporate entity, each partner is liable for the firm’s debts and obligations, with an entitlement to indemnity from the firm.
  • Section 14: Partners are jointly and severally liable with the firm and other partners for the firm’s debts and obligations incurred while they remain partners.
  • Therefore, the firm, being a corporate entity with shared responsibilities, should bear the full or part of the cost.

(4 marks)

ii) Advise Jabi:

  • Section 10: The firm has a corporate nature and full capacity, making it responsible for the reimbursement of the expenditure on the tyres. However, Jabi, as a partner, shares responsibility with the firm and other partners.
  • Under Section 4: Jabi, as a partner, has liability towards the firm’s obligations and is entitled to indemnity from the firm.
  • Section 14: Jabi is jointly and severally liable with other partners for the firm’s debts, indicating a shared responsibility for the incurred cost.

(6 marks)

  • 8 Marks

BCL – Nov 2018 – L1 – Q4b – Public Sector Entities

State two reasons why a partnership firm should reimburse a partner's expenses.

Apina is a partner in an accounting firm known as Dtd & Associates. On 3rd October 2018, he went out to execute an approved course of duty for the firm. Instead of being assigned an official car, the supervising partner asked that he should use his own car and provision was made for his fuel. In the course of duty, he burst a tire. He brought the receipt of the replaced tire bought to the supervising manager for a refund. The supervising manager, however, refused to reimburse Apina.

Required:
State TWO (2) reasons why the firm should reimburse Apina. (8 marks)

  • From the date of registration of the firm, the firm becomes a body corporate under the firm name, distinct from the partners of whom it is composed, and capable of exercising the powers of a natural person and of full capacity insofar as those powers can be exercised by a body corporate.
    (3 marks)
  • Although the firm is a body corporate, each partner in the firm is liable, without limitation, for the debts and obligations of the firm; but is entitled to an indemnity from the firm and to contribution from the co-partners in accordance with the rights of that partner under the partnership agreement. (Section 10 of the Incorporated Private Partnerships Act, 1962 ACT 152)
    Apina is therefore entitled to the reimbursement with contributions from the firm and co-partners.
    (5 marks)

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