Summative Quiz No.

2: The Government
Accounting Process
Total points 35/35

"Government that is open and HONEST will

always be able to withstand the light of day."
-Rick Perry

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Amee Therese S. Pabalan

Multiple Choice 35 of 35
Questions points

Choose the best answer among the choices

given.
The trial balances of Entity A, a 1/1
government entity, show the
following amounts:
• Unadjusted Trial Balance
– P2,753,000
• Adjusted Trial Balance –
P2,765,000
• Statement of Financial
Position (Debit Columns) –
P1,880,000

• Statement of Financial
Performance (Credit) –
P1,137,000

How much is the surplus (deficit)

for the period?

252,000

885,000

(252,000)

(743,000)
The “Subsidy from National 1/1
Government” account is credited
when recording a

Receipt of NCA

Reversion of unused NCA

Constructive remittance of customs

duties or taxes withheld through TRA

a and c

Which of the following accounts 1/1

is credited when a government
entity remits taxes withheld to the
BIR?

Cash-Tax Remittance Advice

Cash-ModiVed Disbursement System

(MDS), Regular

Cash-Treasury/Agency Deposit,
Regular

Cash-Collecting OXcers
The various registries maintained 1/1
by government entities are
considered, technically, as

Books of accounts

Budget records

General ledgers

Log books

A journal entry with a credit to the 1/1

“Cash-Modified Disbursement
System (MDS), Regular” account
will most likely be recorded in the

General Journal

Special Journal

Cash Disbursements Journal

Check Disbursements Journal

Entity A, a government entity, had 1/1
the following transactions during
the period:
• Received Notice of Cash
Allocation (NCA) amounting to
P750,000.
• Earned total
revenue of P290,000 from billings
and collections of unbilled
income.
• Incurred total expenses of
P885,000.
• Remitted total taxes
withheld of P140,000 to the BIR
through Tax Remittance Advice
(TRA). • The
“Cash-Modified Disbursement
System (MDS), Regular” has an
unused balance of P43,000 at the
end of the period.
How much is the
surplus (deficit) for the period?

(595,000)

155,000

252,000

112,000
In accordance with the GAM for 1/1
NGAs and the Revised Chart of
Accounts, how does a
government entity recognize the
uncollectability of accounts
receivable?

By debiting the “Bad Debts Expense”

account

By debiting the “Impairment Loss-

Loans and Receivables” account

By debiting the “Allowance for

Impairment-Accounts Receivable”
account

b and c

The receipt of an allotment is 1/1

recorded by a government entity
in the

RAOD

ORS

RAPAL

a and c
A government entity pays an 1/1
accounts payable. The entry to
record the payment will most
likely include a

Debit to the “Cash-ModiVed

Disbursement System (MDS), Regular”
account

Credit to the “Due to BIR” account

Credit to the “Cash-Treasury/Agency

Deposit, Regular” account

The event is recorded only in the

Registries and the Obligation Request
and Status.
Which of the following statement 1/1
is correct?

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.

Government entities and business

entities uses the term obligation or the
phrase incurrence of obligation
similarly

A government entity must Vrst

receive an allotment before it can
incur obligations

An entity prepares it budget by simply

rolling over the budget in the previous
year and adjusting each line item by
10% increment to redect indation. This
process is described as zero based
budgeting

The only valid modes of disbursement

for a government entity are through
cash or checks.
Entity A received Notice of Cash 1/1
Allocation (NCA) amounting to
P625,000 for the year. Unused
NCA at the end of the period
amounted to P6,000. Entity A
remitted taxes withheld to the BIR
amounting to P48,000 through
Tax Remittance Advice (TRA).
How much is the “Net Financial
Assistance/Subsidy” to be
reported in Entity A’s statement of
financial performance?

667,000

619,000

571,000

0
When determining depreciation, 1/1
an entity considers all of the
following except

Initial Cost

Useful Life

Expected Residual Value at the end of

the asset's useful life

Whether the asset is classiVed as

with Vnite or inVnite useful life.

None of these

Which of the following is not one 1/1

of the special journals prescribed
by the GAM for NGAs?

Sales Journal

Cash Disbursements Journal

Check Disbursements Journal

Cash Receipts Journal

The entries to record the 1/1
constructive remittance of taxes
withheld through Tax Remittance
Advice include all of the following
except

A debit to the “Cash-Tax Remittance

Advice” account

A credit to the “Cash-Tax Remittance

Advice” account

A debit to the “Subsidy from

National Government” account

A debit to the “Due to BIR” account

All of these are included.

Obligations recorded in the 1/1

registries but not yet in the
accounting books are refereed to
as

Not Yet Due and Demandable

Contingent liabilities

Erroneous recording

Unpaid obligations
Which of the following accounts 1/1
is credited when a government
entity remits contributions to the
GSIS, PhilHealth and Pag-IBIG?

Cash-Tax Remittance Advice

Cash-ModiVed Disbursement
System (MDS), Regular

Cash-Treasury/Agency Deposit,
Regular

Cash-Collecting OXcers

The entry to record the receipt of 1/1

Notice of Cash Allocation (NCA)
by a government entity is:

(Debit) Cash-ModiVed Disbursement

System (MDS), Regular; (Credit)
Accumulated Surplus (DeVcit)

(Debit) Cash-ModiVed
Disbursement System (MDS),
Regular; (Credit) Subsidy from
National Government

(Debit) Cash-Collecting OXcer; (Credit)

Subsidy from National Government

No journal entry. The event is recorded

only in the Registries
Expenditures to acquire long-term 1/1
assets are most likely classified
as

Personnel Services (PS)

Maintenance and Other Operating

Expenses (MOOE)

Financial Expenses (FE)

Capital Outlays (CO)

Which of the following does not 1/1

affect the amount of surplus or
deficit that is reported in the
statement of financial
performance?

Receipt of NCA

Constructive remittance of taxes

withheld through TRA

Closing of the “Cash-

Treasury/Agency Deposit, Regular”
account

Adjustment of the “Cash-ModiVed

Disbursement System (MDS), Regular”
account for the unused Notice of Cash
Allocation

All of these affect surplus or deVcit

This type of expenditure pertains 1/1
to all types of employee benefits.

Personnel Services (PS)

Maintenance and Other Operating

Expenses (MOOE)

Financial Expenses (FE)

Capital Outlays (CO)

Which of the following applies to 1/1

business entities but not to
government entities?

Accounting for biological assets at fair

value less cost to sell

Preparation of interim Vnancial

statements

Presenting information on
earnings per share

Contiuned depreciation of idle

equipment
Which of the following is recorded 1/1
in the Obligation Request and
Status (ORS)?

Receipt of notice of appropriation

Receipt of allotment from the DBM

Receipt of Notice of Cash Allocation

from the DBM

Entering into employment

contracts with employees

According to the Revised Chart of 1/1

Accounts (RCA) issued by the
COA, the “Subsidy from National
Government” account is a(an)

Asset account

Liability account

Revenue account

Equity account
Which of the following 1/1
expenditures is not shown in the
statement of financial
performance?

Personnel Services (PS)

Maintenance and Other Operating

Expenses (MOOE)

Capital Outlays (CO)

Financial Expenses (FE)

All of these expenditures are shown in

the statement of Vnancial
performance.

This is used to recognize the 1/1

constructive remittance of taxes
withheld to the BIR or customs
duties withheld to the BOC.

Tax Remittance Advice (TRA)

Notice of Tax Allocation (NTA)

Tax and Customs Remittance Advice

(TCRA)

Notice of Tax Remittance Advisory

(NTRA)
the incurrence of an obligation for 1/1
future delivery or performance by
the obligee is recorded by a
government entity in the

RAOD

ORS

RAPAL

a and b
Which of the following statement 1/1
is incorrect?

The Notice of Cash Allocation (NCA) is

an authority issued by the DBM to
central, regional and provincial oXces
and operating units to cover their cash
requirements.

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.

Technically, only the Journals and

Ledgers are considered accounting
records because Registries are budget
records.

Appropriation is called obligatory

authority.

Separate accounting records and

budget registries are maintained for
each fund cluster.
The receipt of Notice of Cash 1/1
Allocation is recorded in the

Books of accounts (Journal and

Ledger)

Registry of Allotments and Notice of

Cash Allocation (RANCA)

a and b

None of these

All of these are included.

The receipt of an appropriation is 1/1

recorded by a government entity
in the

RAOD

ORS

RAPAL

a and b
Which of the following is charged 1/1
with the responsibility of keeping
the general accounts, and related
documents, of the Government?

COA

BTr

NGAs

DBM

Which of the following accounts 1/1

is debited when a government
entity remits its collections to the
National Treasury?

Cash-Tax Remittance Advice

Cash-ModiVed Disbursement System

(MDS), Regular

Cash-Treasury/Agency Deposit,
Regular

Cash-Collecting OXcers
Entity A, a government entity, 1/1
made disbursements for the
travelling expenses of its
personnel. These expenditures
are most likely classified as

Personnel Services (PS)

Maintenance and Other Operating

Expenses (MOOE)

Financial Expenses (FE)

Capital Outlays (CO)

Which of the following statement 1/1
is incorrect?

The various registries maintained by

the government entities primarily serve
as internal control for controlling and
monitoring the conformance of actual
results with the approved budget.

The GAM for NGAs require the

collecting oXcer to issue an
oXcial receipt to acknowledge the
receipt of the Notice of Cash
Allocation

A check disbursement is normally

recorded as a credit to "Cash -
ModiVed Disbursement System (MDS),
Regular" account

Both the ORS and the RAOD are

updated each time an obligation is
incurred, a payable is recorded for the
obligation incurred, and disbursement
are made to settle the recorded
payables.

At the end of each year, an adjustment

is made to revert any unused NCA of
an government entity.
The 8-digit Revised Chart of 1/1
Accounts (RCA) Code for
expenses starts with number

None of these
 Which of the following is not one 1/1
of the necessary closing entries
of a government entity?

Closing of the “Cash-Treasury/Agency

Deposit, Regular” account to the
“Accumulated Surplus/(DeVcit)”
account

Closing of the “Subsidy from National

Government” account to the “Revenue
and Expense Summary” account

Closing of income and expense

accounts to the “Revenue and Expense
Summary” account

Closing of the net balance of

“Revenue and Expense Summary”
account to the “Subsidy from
National Government” account

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