GOVERNMENT ACCOUNTING

1. One of the following is not considered government income.

(a) proceeds from loans and borrowings
(b) government buildings
(c) grants and aids received from foreign governments
(d) taxes
B

2. The generally accepted accounting principles also apply to:

(a) the Board of Accountancy (c) The Philippine Institute of CPAs
(b) the Bureau of Internal Revenue (d) The Professional Regulation Commission

B
3. A feature of government accounting that provides for the ceiling or maximum amount an
agency can spend or incur in the performance of its functions is known as:
(a) budgetary accounting (c) obligation accounting
(b) responsibility accounting (d) fund accounting
C

4. The Philippine Constitution provides that:

(a) where there occurs a budget deficit, the President of the Philippines shall have the
power to levy and impose taxes in order to meet the deficit.
(b) GAAP as well as sound management and fiscal administration shall be observed in the
utilization of government funds, provided they do not contravene existing laws and
regulations.
(c) the local chief executive is principally responsible for the fiscal administration of the local
government.
(d) the Congress may not increase the appropriations recommended by the President of the
Philippines for the operation of the Government as specified in the budget.
A or D (questionable)

5. In government accounting, the control accounts for revenue and expenditures are found in:
(a) the budget and operation accounts
(b) both the balance sheet and budget and operation accounts
(c) national clearing accounts
(d) the balance sheet accounts A

6. Congressional authorization in the form of law to make payment out of the public treasury
for specific purposes after compliance with certain conditions is known as:
(a) appropriation (c) budgeting
(b) allotment (d) obligation
A
7. The process of analyzing, classifying, summarizing and communicating all transactions
involving the receipt and disposition of government funds and property and interpreting the
results thereof is:
(a) government fiscal administration (c) government accounting
(b) budgetary accounting (d) obligation accounting
C

8. It is applied in the preparation of the national budget where the total estimated revenue
must be more than estimated expenditures.
(a) balanced budget (c) special budget
(b) supplemental budget (d) performance budget
A

9. Which government body prepares the annual financial statements of the national
government, local government agencies and government-owned or controlled corporations?
(a) Commission on Audit
(b) Department of Budget and Management
(c) Bureau of Treasury
(d) Chief Accountant of each government agency
A

10. Which government body keeps the general account of government, promulgates accounting
rules and regulation, and submits to the President and Congress an annual financial report
of the government?
(a) Commission on Audit
(b) Department of Budget and Management
(c) Bureau of Treasury
(d) Department of Finance
A

11. It is the implementation of the national budget by the different departments and release of
allotments.
(a) budget preparation (c) budget execution
(b) budget authorization (d) budget accountability
C

12. This is a sum of money or other government resources set aside for the purpose of carrying
out specific activities or attaining certain objectives in accordance with specific regulations,
restrictions, or limitations, and constitute an independent fiscal and accounting entity.
(a) cash disbursement ceiling (c) fund
(b) appropriations (d) budget
C

13. Which is incorrect concerning government accounting?

(a) Government accounting adopts either cash or accrual basis of accounting.
(b) Depreciation is not taken up regularly in government accounting.
 (c) In government accounting, errors are corrected by negative entries.
(d) A corollary entry arises form the operation of obligation accounting in connection with,
among others, inventories, supplies and materials, fixed assets and long-term
investments.
A

14. In government accounting, it is not correct:

(a) to regularly take up depreciation.
(b) to adopt a combination of the cash basis and accrual basis.
(c) to correct a debit error by a debit entry but in the negative.
(d) to emphasize on correctness, so reports are “certified correct”. B

15. No money shall be paid out of the National Treasury except in pursuance of an
appropriation law. This explicitly describes what salient feature of government accounting?
(a) fund accounting (c) obligation accounting
(b) budgetary accounting (d) treasury disbursement coding system B

16. Who may contract or guarantee foreign loans on behalf of the Republic of the Philippines
with the prior concurrence of the Monetary Board and subject to such limitations as may be
provided by law?
(a) President of the Republic of the Philippines
(b) President of the Senate
(c) Speaker of the House of Representatives
(d) Chief Justice of the Supreme Court A

17. Which prepares the annual financial report of the government?

(a) Commission on Audit (c) Bureau of Treasury
(b) Department of Budget and Management (d) All of the above
A

18. No money shall be paid out of the National Treasury except in pursuance of:
(a) appropriation (c) obligation
(b) allotment (d) special executive order
A

19. It is the government control mechanism which provides for the maximum amount which an
agency can commit the resources of the government.
(a) fund accounting (c) budgetary accounting
(b) obligation accounting (d) accounting system
B

20. Which is responsible for the design, preparation and approval of accounting systems of
government agencies?
(a) Department of Budget and Management (c) Commission on Audit
(b) Bureau of Treasury (d) The government agency concerned A
21. It is the authorization from the Department of Budget and Management to any agency to
incur obligation up to a specified amount that must be within the legislative appropriation.
(a) obligation (c) allotment
(b) appropriation (d) fund release C

22. The review and approval of the national budget by the Congress of the Philippines and the
formulation of an appropriate bill.
(a) authorization (c) execution
(b) preparation (d) accountability A

23. One of the following is not considered government income:

(a) proceeds from loans and borrowings
(b) government buildings
(c) grants and aids received from foreign governments
(d) taxes B

24. This financial statement is submitted by government accounting to the Commission on

Audit. It shows the excess (deficit) of income over expenditures for the fiscal period then
ended.
(a) statement of changes in financial position
(b) preliminary trial balance
(c) statement of operations
(d) final trial balance C

25. Which is responsible for the design, preparation and approval of accounting systems of
government agencies?
(a) Department of Budget and Management
(b) Commission on Audit
(c) Bureau of Treasury
(d) The government agency concerned A

26. Financial plan for the general expenditures of the government agencies.
(a) special budget (c) supplemental budget
(b) deficiency budget (d) general budget D

27. What are the rules on the use of government funds?

(a) no obligations shall exceed allotment(c) no allotment shall exceed appropriation
(b) no liquidation shall exceed obligation (d) all of these D

28. Congressional authorization in the form of a law to make payments out of the public
treasury for specific purposes after compliance with certain conditions.
(a) appropriation (c) budgeting
(b) allotment (d) obligation A
29. State accounting and accounting for business enterprises are different from each other in
which of the following aspects?
I. Basis of accounting
II. Establishing and observance of internal control system
III. Objective
(a) I and II only (b) III and IV only (c) I, II and IV (d) I, II, III, IV B

30. Which is false concerning constitutional provisions related to government budgeting?

(a) No law shall be passed authorizing any transfer of appropriation.
(b) All money collected or any tax levied for a special purpose may be paid out for any
public purpose.
(c) Discretionary funds appropriated for particular officials shall be distributed only for public
purposes.
(d) No money shall be appropriated for any sect, church or denomination. B

31. A feature of government accounting that provides uniform accounting for incurring and
liquidating obligations. The books used in this phase of accounting are the general journal
and analysis of obligations, the journal of disbursements by disbursing officers, the journal
of warrants issued and the journal of checks issued.
(a) obligation accounting system (c) budgetary system
(b) advice of allotment (d) obligation incurred A

32. This consists of money and resources of the local government which are available for the
payment of expenditures, obligations or purposes not specifically declared by law as
accruing and chargeable to, or payable from, any other fund.
(a) general fund (c) special education fund
(b) trust fund (d) depository fund A

33. What is the role of the Bureau of Treasury in relation to government accounting
responsibility?
(a) to receive and keep national funds and manage or control disbursements thereof
(b) to design, prepare, and approve the accounting systems of government agencies
(c) to keep the general accounts of the national government
(d) to prepare the annual financial report of the national government, its instrumentalities
and government-owned or controlled corporations A

34. What is not an accounting responsibility of department agencies?

(a) to maintain and keep current accounts of the agency
(b) to advise on the financial status of appropriations and allotments
(c) to develop and conduct procedures designed to meet the needs of management
(d) to prepare the annual financial report of the national government, its instrumentalities
and government-owned or controlled corporations D

35. It represents all funds received by the government from taxes, grants, aids and borrowings.
(a) government income (c) cash fund
(b) government revenue (d) borrowings A
36. An authorization by the Department of Budget and Management to the head of a
government agency to incur obligations within a specified amount pursuant to an
appropriation.
(a) continuing operations (c) allotment
(b) current operating expenditures (d) obligation C

37. In government accounting, the control accounts for revenue and expenditures are found in:
(a) the budget and operations account
(b) both the balance sheet and budget and operations account
(c) national clearing accounts
(d) balance sheet accounts A

38. One of the following is not considered government income.

(a) proceeds from loans and borrowings
(b) government buildings
(c) grants and aids received from foreign government
(d) taxes B

39. Expenditures in the government are broadly classified into:

(a) current operating expenditures and capital outlays
(b) obligations incurred and obligations liquidation
(c) capital outlays only
(d) current operating expenditures only A

40. He is principally responsible for the fiscal administration of the local government.
(a) local chief executive (c) provincial treasurer
(b) municipal accountant (d) commission on audit A

41. This financial statement is submitted by government accounting to Commission on Audit. It

shows the excess (deficit) of income over expenditures for the fiscal period then ended.
(a) statement of changes in financial position
(b) preliminary trial balance
(c) statement of operations
(d) final trial balance C

42. Which is incorrect concerning characteristics of government accounting?

(a) The primary emphasis on government accounting is receipt and disposition of
government funds and property.
(b) Common stock and other capital accounts do not exist in government accounting.
(c) State accounting must conform with specific laws, rules and regulations.
(d) Government accounting deals only with the financial management of the national
government. D

43. Government accounting and commercial accounting are similar in the following, except:
(a) Double entry basis (c) Periodic financial reports and statements
(b) Books of original entry (d) Basis of accounting D

44. What are the books of accounts in the government?

 (a) books of COA
(b) books of COA and books of treasury
(c) books of COA and books of agency
(d) books of COA, books of treasury and books of agency D

45. Which is incorrect concerning government accounting?

(a) Laws, rules and regulations guide the accounting procedure for government accounting.
(b) Depreciation is taken up regularly in government accounting.
(c) The use of corollary entry is not adopted.
(d) In government accounting, emphasis is on fair presentation, so that reports are stated
as “opinion”. D

46. The objectives of government accounting include (choose the incorrect one):
(a) to report on the financial position and results of operations of government agencies
(b) to provide for control of the acts of public bodies and offices in the receipt, disposition,
and utilization of funds and property
(c) to provide information concerning past and present operations and to provide a
guidance for future operations
(d) to present fairly the financial position, performance and cash flows of government-
owned corporations
D

47. It is the system of prescribing the procedures for recording appropriations, allotments and
obligations.
(a) fund accounting (c) obligation accounting
(b) budgetary accounting (d) government auditing B

48. The main concern is availability and use of funds for public services.
(a) Commission on Audit (c) National Treasury
(b) Department of Finance (d) National Budget System D

49. Which department prepares the national budget which serves as the basis of the general
appropriation law?
(a) Executive department (c) Judiciary department
(b) Legislative department (d) Each government agency A

50. It is a statement of estimated receipts and estimated expenses of the government which
serves as basis for a general appropriation bill.
(a) National government budget (c) Statement of financial position
(b) Local government budget (d) Statement of operations A

51. It denotes the responsibility to others that one or more persons have for their actions and
behaviors.
 (a) preparation (c) authorization
(b) accountability (d) execution B

52. Budget accountability includes (choose the incorrect one):

(a) safeguarding government resources
(b) adherence to legal requirements, administrative policies and regulations, and efficiency
and economy in operations
(c) results of government programs and activities are reflected in accomplishments, benefits
and effectiveness
(d) payment for misappropriated amount D

53. Cash and other resources of the government which are available for any purpose and which
are not by law or contractual agreement specifically designation to another fund.
(a) general fund (c) trust or fiduciary fund
(b) special fund (d) depository fund A

54. Which is not charged with the government accounting responsibility?

(a) Commission on Audit (c) Bureau of Treasury
(b) Department of Budget and Management (d) Legislative Department D

55. Which is an ordinary income?

(a) Tax (c) Repayment of advances
(b) Grant or aid from foreign country (d) Loan or borrowing A

56. It is an appropriation for incurring obligations only during a specified fiscal year usually one
year.
(a) annual appropriation (c) multi-year appropriation
(b) continuing appropriation (d) no-year appropriation A

57. It is an appropriation which does not require periodic legislative action and referred to as
“automatic appropriation”.
(a) standing appropriation (c) supplemental appropriation
(b) special appropriation (d) contingent appropriation A

58. It is an appropriation to cover deficit or overdraft incurred over the amount originally
authorized.
(a) deficiency appropriation (c) indefinite appropriation
(b) definite appropriation (d) interim appropriation A

59. It is an amount committed to be paid by the government arising from an act of a duly
authorized administrative officer and which binds the government to the immediate and
eventual payment of money.
(a) obligation (c) allotment
(b) appropriation (d) commitment A

60. The services, products, or benefits accruing to the public are known in the budget process
as:
(a) expected results (c) project
 (b) program (d) resources A

61. The functions and activities necessary for the performance of a major purpose for which a
government entity is established.
(a) program (c) resources
(b) project (d) internal control A

62. These are the appropriations for the purchase of goods and services the benefits of which
extend beyond the fiscal year and which add to the assets of the government.
(a) capital outlays (c) obligations incurred
(b) current operating expenditures (d) obligations liquidated A

63. It is a list of ledger accounts prescribed by COA for use of the national government, local
government and government-owned or controlled corporations except financial institutions.
(a) standard government chart of accounts (c) balance sheet
(b) chart of accounts (d) statement of operations A

64. These are the subsidiary ledger accounts showing the details of income and expenditures.
(a) balance sheet accounts (c) subsidiary ledger accounts
(b) budget and operation accounts (d) statement of operations accounts B

65. It is the trial balance prepared after the adjusting and closing entries have been posted.
Preliminary Final Preliminary Final
(a) Yes Yes (c) No Yes
(b) Yes No (d) No No C

66. It is the financial statement prepared directly from the final trial balance.
Statement of Balance Statement of Balance
operations sheet operations sheet
(a) Yes No (c) Yes Yes
(b) No Yes (d) No No B

67. Which is not a fundamental principle of government fiscal operations?

(a) Fiscal responsibility shall, to a greater extent, be shared by all those exercising authority
over financial affairs, transactions, and operations of the government agency.
(b) Claims against government funds shall be supported with complete documentation.
(c) All laws and regulations applicable to financial transactions shall be faithfully adhered to.
(d) Generally accepted accounting principles must be observed in recording government
financial transactions.
D

68. Which is not a characteristic of the local government accounting system?

(a) The fundamental principles of government fiscal operations governing the national
government are also applicable to the local government.
(b) The local government is not required to formulate its budget for the fiscal year.
(c) The local government follows the standard government chart of accounts.
 (d) The fundamental accounting principles and procedures observed by the local
government do not differ from those adopted by the national government.
B

69. The following are the basic features and policies of the new government accounting
systems, except:
(a) A modified accrual basis of accounting shall be used except for transactions where
accrual basis is impractical or when other methods are required by law.
(b) The one-fund concept shall be adopted. Separate fund accounting shall be done only
when specifically required by law or by a donor agency or when otherwise necessitated
by circumstances subject to the approval of the Commission.
(c) Special accounts in the General Fund complete with subsidiary ledgers shall be
maintained for public utilities, contributions for specific purposes, development projects
funded, and such other special accounts which may be created by law or ordinance.
(d) A new chart of accounts and coding structure with a two-digit account numbering
system shall be adopted.

Answer: D A new chart of accounts and coding structure with a three-digit

account numbering system shall be adopted.

70. What are the books of accounts maintained by both national and local agencies?
National Local National Local
(a) Journal & Ledger Journal & Ledger (c) Journal Journal
(b) Journal Ledger (d) Ledger Journal

Answer: A

71. What are the set of financial statements to be prepared by the National Agencies?
(a) (b) (c) (d)
Balance Sheet Yes Yes Yes No

Statement of Government Equity Yes No No Yes

Statement of Income & Expenses Yes Yes Yes No
Statement of Cash Flows Yes Yes No No
Notes to Financial Statements Yes Yes Yes Yes

Answer: A

72. What are the set of financial statements to be prepared by the Local Agencies?
(a) (b) (c) (d)
Balance Sheet Yes Yes Yes No

Statement of Government Equity Yes No No Yes

Statement of Income & Expenses Yes Yes Yes No
Statement of Cash Flows Yes Yes No No
Notes to Financial Statements Yes Yes Yes Yes
 Answer: B

73. The following are the basic features and policies of the new government accounting
systems, except:
(a) The receipt of Notice of Cash Allocation shall be recorded in the books as debit to
account “Cash-National Treasury, Modified Disbursement Systems (MDS)” and credit to
account “Subsidy Income from National Government”.
(b) Obligation accounting modified to simplify procedures in the incurrence and liquidation
of obligations and the recording of the budgetary accounts (allotments and obligations
incurred and liquidated).
(c) Cost of ending inventory of supplies and materials shall be computed using the weighted
average method.
(d) Supplies and materials purchased for inventory purpose shall be recorded using the
perpetual inventory system.

Answer: C Cost of ending inventory of supplies and materials shall be computed

using the moving average method.

74. The following are the basic features and policies of the new government accounting systems
as to the treatment of depreciation, except:
(a) The straight line method of depreciation shall be used.
(b) Depreciation shall start on the first month during the purchase of property, plant and
equipment, and residual value equivalent to 10% of the purchase cost shall be set up.
(c) Public infrastructures/ reforestation projects as well as serviceable assets that are no
longer being used shall not be charged any depreciation.
(d) Serviceable assets no longer being used shall be reclassified to “Other Assets” account
and shall not be subject to depreciation.

Answer: B Depreciation shall start on the second month after purchase of

property, plant and equipment, and residual value equivalent to 10% of the purchase cost
shall be set up.

75. The following are the basic features and policies of the new government accounting
systems, except:
(a) Whenever practical and appropriate, interest income and/ or expense shall be accrued
and recognized in the books of accounts.
(b) All borrowings and loans incurred shall be recorded to the appropriate liability accounts.
(c) The use of corollary and negative journal entries shall be continued.
(d) The petty cash fund shall not be used to purchase regular inventory/ items for stock.

Answer: C The use of corollary and negative journal entries shall be stopped.

76. What registry shall be maintained by the Department of Budget and Management for each
department of the National Government to control approved appropriations and allotments
released?
(a) Registry of Notice of Cash Allocation and Replenishments
(b) Registry of Allotments and Obligations – Capital Outlay
(c) Registry of Appropriations and Allotments
 (d) Registry of Allotments and Notice of Cash Allocation Issued C

77. What registry shall be maintained by the Bureau of Treasury to record the Notice of Cash
Allocation releases and the bank replenishments made to cover checks issued by agencies?
(a) Registry of Notice of Cash Allocation and Replenishments
(b) Registry of Allotments and Obligations – Capital Outlay
(c) Registry of Appropriations and Allotments
(d) Registry of Allotments and Notice of Cash Allocation Issued A

78. What registry shall be maintained by the Department of Budget and Management to control
the funding of allotments?
(a) Registry of Notice of Cash Allocation and Replenishments
(b) Registry of Allotments and Obligations – Capital Outlay
(c) Registry of Appropriations and Allotments
(d) Registry of Allotments and Notice of Cash Allocation Issued D