Q3- The newly appointed mayor of XYZ Town noticed that in the recent enacted budget of the citys General Fund, revenue exceed expenditure by 15,000 SAR. Later that year, after a hurricane caused a large amount of damage, she ordered the citys 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 states 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.