PROBLEMS:

PROBLEM 2-1: TRUE OR FALSE

1. The budget preparation in the Philippines uses a "bottom-up" approach. Under
this approach, the budget preparation starts from the highest levels of the
government down to the lowest levels.
2. An entity prepares its budget by simply rolling-over the budget in the previous
year and adjusting each line item by 10% increment to reflect inflation. This
process is described as zero-based budgeting.
3. After the budget call from the DBM, the proposed budget of various agencies
are submitted immediately to the Office of the President for review.
4. An entity can incur obligations after receiving notice of its appropriation but
before receiving the allotment.
5. Budget deliberations in the Congress start in the House of Senate.
6. A government entity must first receive an allotment before it can incur
obligations.
7. A government entity can make disbursements even before it receives a
disbursement authority.
8. Appropriation is also called obligational authority.
9. The Notice of Cash Allocation (NCA) is an authority issued by the DBM to
central, regional and provincial offices and operating units to cover their cash
requirements.
10. Responsibility accounting greatly enhances budget accountability because
managers are evaluated only in terms of the costs or other variables that they
control, and therefore, budget deviations can be readily attributed to the
managers accountable therefor.
PROBLEM 2-2: MULTIPLE CHOICE
1. Which of the following does not properly describe the budget process used in
the Philippines?
a. Bottom-up budgeting
b. Top-down budgeting
c. Zero-based budgeting
d. Non-incremental budgeting

2. Arrange the following steps according to the sequence that they appear in the
budget cycle.
I. Allotment
II. Bicameral deliberations
III. Budget accountability reports
IV. President's enactment of the GAA
V. Budget hearings with the DBM

a. V, IV, II, I and III

b. V, II, IV, I and III
c. II, V, II, I and III
d. V, I, II, IV and III

3. Arrange the following steps according to the sequence that they appear in the
budget cycle.
I. Allotment
II. Bicameral deliberations
III. Budget accountability reports
IV. President's enactment of the GAA
V. Budget hearings with the DBM

a. V, IV, II, I and III

b. V, II, IV, I and III
c. II, V, II, I and III
d. V, I, II, IV and III

4. This type of budget is prepared in such a way that estimated revenues exceed
estimated expenditures.
a. Balanced budget
b. Excess budget
c. Obligations budget
d. Budget meal

5. This summarizes an agency's fiscal year plans and performance targets. It

shows the agency's physical and financial plan, monthly cash program, estimate of
monthly income, and list of obligations that are not yet due and demandable.
a. Budget Execution Documents (BEDs)
b. Special Allotment Release Order
c. Statement of Approved Budget, Utilizations, Disbursements and Balances
d. Aging of Due and Demandable Obligations

6. It is an authorization issued by the DBM to NGAs to incur obligations. It is also

referred to as Obligational Authority.
a. Appropriation
b. Allotment
c. Budget call
d. Budget hearings

7. It refers to the amount contracted by a duly authorized administrative officer

for which the government is held liable.
a. Appropriation
b. Allotment
c. Obligation
d. Disbursement

8. Which of the following best describes the Notice of Cash Allocation (NCA)?
a. It is a form of legislative authorization in the allocation of funds for specified
purposes.
b. It is a form of authorization to a government agency to incur obligations on
behalf of the government.
c. It is a form of authorization to a government agency to make disbursements
out of government funds
d. It is a notice received from the Congress that cash is allocated for the payment
of planned expenditures.

9. Disbursements by government entities are most commonly made through

a. MDS Checks
b. Cash
c. Petty Cash Fund
d. Credit Card

10. Responsibility accounting requires all of the following except

a. separate books of accounts to segregate controllable and non-controllable
costs
b. identification of responsibility centers
c. distinction between controllable and non-controllable costs
d. coding structure for responsibility centers

PROBLEM 2-3: MULTIPLE CHOICE

Fact pattern:
A legislation approves the allocation of 100B funds to support the operations of
Entity A (a government agency) in the current year. At the start of first quarter,
Entity A receives authorization to incur obligations for a maximum amount of
P45B in that quarter. Entity A extends half of that authorization to its lower
operating units. During the quarter, Entity A receives monthly authorization to
disburse funds not to exceed $15B per month. Entity A extends half of those
monthly authorizations to its lower operating units. At the end of the quarter,
total obligations incurred amounted to P40B while total disbursements amounted
to $35B.

1. The allocation of the P100B funds to Entity A is referred to as

a. Allotment
b. Appropriation
c. Obligation
d. Sub-allotment
2. The allocation of the $100B funds to Entity A is authorized by
a. Department of Budget and Management (DBM)
b. Commission on Audit (COA)
c. Bureau of Treasury (BTr)
d. Congress

3. The P45B authorization is referred to as

a. Allotment
b. Appropriation
c. Obligation
d. Sub-allotment

4. The P45B authorization is received by Entity A from

a. DBM
b. COA
c. BTr
d. Congress

5. The half of the P45B authorization extended by Entity A (Central Office) to its
lower operating units is referred to as
a. Allotment
b. Appropriation
c. Obligation
d. Sub-allotment
6. Which of the following best describes the P15B monthly authorizations?
a. Allotment
b. Obligation authority (e.g. Notice of Cash Allocation 'NCA')
c. Disbursement authority (e.g., Notice of Cash Allocation 'NCA')
d. Disbursement authority (e.g., Notice of Transfer of Allocation 'NTA')

7. The P15B monthly authorizations are received by Entity from A

a. DBM
b. COA
c. BTr
d. Congress

8. The half of the #15B monthly authorizations extended by Entity A (Central

Office) to its lower operating units is referred to as
a. Cash Disbursement Ceiling
b. Non-Cash Availment Authority
c. Notice of Cash Allocation (NCA)
d. Notice of Transfer of Allocation (NTA)

9. In Entity A's first quarter Statement of Appropriations, Allotments, Obligations,

Disbursements and Balances, how much is shown as "unreleased
appropriations?"
a. P65B
b. P60B
c. P55B
d. P45B

10. In Entity A's first quarter Statement of Appropriations, Allotments,

Obligations, Disbursements and Balances, how much is shown as "unobligated
allotments?"
a. P6B
b. P5B
c. P10B
d. P15B

11. In Entity A's first quarter Statement of Appropriations, Allotments,

Obligations, Disbursements and Balances, how much is shown as "unpaid
obligations?"
a. P6B
b. P5B
c. P10B
d. P15B

PROBLEM 2-4: FOR CLASSROOM DISCUSSION

1. All disbursements of government entities must be in conformance with the law
and the
a. National budget
b. COA audit findings
c. PPSASS
d. PERSS
2. An entity prepares its budget for the upcoming year from scratch. It scrutinizes
each item in the budget irrespective of whether the item was included in the
previous budget. This process is called
a. zero budgeting
b. incremental budgeting
c. scratch budgeting
d. zero-based budgeting

3. Under this approach to budgeting, several parties participate in the budget

preparation from the lowest levels of government to the highest levels, and
sometimes even citizen stakeholders participate in the budget preparation.
a. bottoms-up budgeting
b. zero-based budgeting
c. top-down budgeting
d. bottom-up budgeting

4. What is the correct sequence of the following steps in the budget process?
I. Budget Legislation
II. Budget Accountability
III. Budget Preparation
IV. Budget Execution

a. II, III, I and IV

b. III, I, IV and II
c. III, I, II and IV
d. III, IV, I and II
5. After deliberations in both houses in the Congress are finished, a committee is
formed to harmonize any conflicts between the Representatives and Senate
versions of the General Appropriations Bill. This committee is called the
a. Adjudication Conference Committee
b. Bicaramel Conference Committee
c. Referee Conference Committee
d. Bicameral Conference Committee

6. It is the authorization made by a legislative body to allocate funds for purposes

specified by the legislative or similar authority.
a. Appropriation
b. Allotment
c. Obligation
d. Disbursement

7. These are the authorizations programmed annually or for some other period
prescribed by law, by virtue of outstanding legislation which does not require
periodic action by Congress.
a. Automatic Appropriations
b. New General Appropriations
c. Continuing Appropriations
d. Supplemental Appropriations

8. Entity A, a government entity, wants to make disbursements. Arrange the

following events in the correct sequence before Entity A can make valid
disbursements.
I. Allotment
II. Disbursement Authority
III. Appropriation
IV. Incurrence of obligation

a. II, III, I, and IV

c. III, I, II, and IV
b. III, I, IV, and II
d. III, IV, I, and II

9. This is necessary before government entities can enter into contracts that bind
the government for the eventual disbursement of government funds
a. Disbursement authority
b. Notice of cash allocation
c. Allotment
d. Incurrence of obligation

10. Under responsibility accounting, a manager's performance is evaluated

a. based on all resources under his custody
b. only in terms of the costs, or other variables, that he controls.
c. on the basis of both controllable and non-controllable costs.
d. only at year-end.