The Government

Accounting Process
Chapter 3 Part 2
Learning Objectives

 Record the basic transactions of a government entity

 Preparation of Worksheet.
Government Accounting Cycle

 Appropriation
 Allotment
 Incurrence of Obligation
 Disbursement Authority – NCA
 Disbursements
 Billing, Collections, and Remittances
 Unadjusted Trial Balance
 Adjusting Entries
 Closing Entries
 Preparation of Financial Statement
Government Accounting Cycle
 To illustrate:
The trial balance of Government Agency A at the beginning of the period is shown
below:
Accounts Debit Credit
Cash-Collecting Officers 5,000.00
Accounts Receivable 45,000.00
Buildings 500,000.00
Acc. Dept. – Bldgs. 150,000.00
Office Equipment 150,000.00
Acc. Dept. – O.E. 60,000.00
Accounts Payable 20,000.00
Accumulated Surplus 470,000.00
(Deficit)
Totals 700,000.00 700,000.00
Government Accounting Cycle
 To illustrate (cont.):
Notes:
(1) The P20,000.00 Accounts Payable pertains to office supplies purchased in the
prior year that were already delivered but not yet paid.
(2) An additional purchase of office supplies worth P5,000.00 is not yet recorded
in the accounting books because they were not yet delivered. This prior year
obligation is described in the registries as not yet due and demandable
obligation.
Government Accounting Cycle
 To illustrate (cont.):
1. Appropriation. Government Agency A receives its GAA amounting to P1M.
This is posted in the RAPAL.
2. Allotment. Government Agency A receives it allotment from DBM amounting to
P960,000.00 in total. This is posted in the RAPAL and RAOD-PS, RAOD-MOOE, and RAOD-
CO (based from each allotment by class of expenditure).
3. Incurrence of Obligation. Government Agency A incurs obligation because of entering
to contracts amounting to P700,000.00. This is recorded in the ORS and posted in the
respective RAOD-PS, RAOD-MOOE, and RAOD-CO (based from each ORS by class of
expenditure).
4. Disbursement Authority. Government Agency A receives NCA, net of tax:
For CY’s Appropriation P600,000.00
For PY’s Accounts Payable and Not Yet Due and Demandable Obligations 25,000.00
Total P625,000.00
Government Accounting Cycle
 To illustrate (cont.):
Cont. of Item 4. Disbursement Authority. Government Agency A receives NCA, net of tax:
For CY’s Appropriation P600,000.00
For PY’s Accounts Payable and Not Yet Due and Demandable Obligations 25,000.00
Total P625,000.00
JEV No. 1 Cash-Modified Disbursement System (MDS), Regular 600,000.00
Subsidy from National Government 600,000.00
To recognize receipt of NCA from DBM
JEV No. 2 Cash-Modified Disbursement System (MDS), Regular 25,000.00
Subsidy from National Government 25,000.00
To recognize receipt of NCA from DBM
*NCAs are posted in separate RANCAs to monitor its balances.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For PS
a. To set up of payable to officers and employees upon approval of payroll/services were
already rendered.
JEV No. 3
Salaries and Wages, Regular 200,000.00
Personal Economic Relief Assistance (PERA) 50,000.00
Due to BIR 20,000.00
Due to GSIS 9,000.00
Due to Pag-IBIG 2,000.00
Due to PhilHealth 1,000.00
Due to Officers and Employees 218,000.00
To recognize payable to officers and employees upon approval of payroll
b. The payable is recorded in the ORS and RAOD-PS.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For PS
c. Grant of Cash Advance for Payroll.
JEV No. 4
Advances for Payroll 218,000.00
Cash-Modified Disbursement System (MDS), Regular 218,000.00
To recognize the grant of cash advance for payroll
d. The disbursement is recorded in the ORS and RAOD-PS.
e. Liquidation of Payroll.
JEV No. 5
Due to Officers and Employees 218,000.00
Advances for Payroll 218,000.00
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Purchase of Office Supplies)
a. Receipt of delivery of purchased office supplies from prior year’s obligation (note 2).
JEV No. 6
Office Supplies Inventory 5,000.00
Accounts Payable 5,000.00
To record delivery of office supplies
-The payable is recorded in the ORS and RAOD-MOOE.
b. Receipt of delivery of purchased office supplies worth P70,000.00 from current year’s obligation.
JEV No. 7
Office Supplies Inventory 70,000.00
Accounts Payable 70,000.00
To recognize delivery of office supplies
-The payable is recorded in the ORS and RAOD-MOOE.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Purchase of Office Supplies)
Payment of Accounts Payable

Particulars Prior Year (TB) Prior Year (Note Current Year

2) (JEV No. 7)
AP Gross 20,000.00 5,000.00 70,000.00
AP Paid 20,000.00 5,000.00 60,000.00
Withholding Taxes (2,000.00) (1,000.00) (3,000.00)
Net 18,000.00 4,000.00 57,000.00
Paid in: Full Full Partial
*Computation of taxes do not necessarily reflect the provision of relevant
tax laws for simplification.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Purchase of Office Supplies)
Payment of Accounts Payable
JEV No. 8 (Prior year; please see the trial balance)
Accounts Payable 20,000.00
Due to BIR 2,000.00
Cash-Modified Disbursement System (MDS), Regular 18,000.00
To recognize payment of Accounts Payable
* The disbursement is recorded in the ORS and RAOD-MOOE.
JEV No. 9 (Prior year; please see note 2)
Accounts Payable 5,000.00
Due to BIR 1,000.00
Cash-Modified Disbursement System (MDS), Regular 4,000.00
To recognize payment of Accounts Payable
* The disbursement is recorded in the ORS and RAOD-MOOE.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Purchase of Office Supplies)
Payment of Accounts Payable
JEV No. 10 (Current year; please see JEV No. 7)
Accounts Payable 60,000.00
Due to BIR 3,000.00
Cash-Modified Disbursement System (MDS), Regular 57,000.00
To recognize payment of Accounts Payable
* The disbursement is recorded in the ORS and RAOD-MOOE.
*Under the Common Fund System, balances from NCAs that comes from prior year’s
appropriations can be used to pay for Accounts Payable recognized in the Current Year
(Please see JEV No. 2 vs. JEV No. 10) because NCAs coming from prior or current year’s
appropriation are recorded under the same Cash-Modified Disbursement System (MDS),
Regular account which is an account used to pay for their regular operations.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Payment of Operating Expenses)
Operating Expenses of Government Agency A:
Water 1,000.00
Electricity 5,000.00
Telephone 2,000.00
Janitorial 10,000.00
Security 12,000.00
Total 30,000.00
Withholding Taxes (2,000.00)
Net 28,000.00
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Payment of Operating Expenses)
Operating Expenses of Government Agency A:
JEV No. 11
Water Expenses 1,000.00
Electricity Expenses 5,000.00
Telephone Expenses 2,000.00
Janitorial Expenses 10,000.00
Security Expenses 12,000.00
Due to BIR 2,000.00
Cash-Modified Disbursement System (MDS), Regular 28,000.00
To recognize issuance of MDS Checks as payment for expenses
* The disbursement is recorded in the ORS and RAOD-MOOE. These expenses were not
recognized as payables. These were directly paid as soon as Statement of Accounts (SOA)
were received.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Cash Advance for Travel)
Government Agency A grants a cash advance of P2,000.00 for the travelling expenses of
an officer for local travel.
JEV No. 12
Advances to Officers and Employees 2,000.00
Cash-Modified Disbursement System (MDS), Regular 2,000.00
To recognize grant of cash advance for travel
* The disbursement is recorded in the ORS and RAOD-MOOE. This cash advance was
directly deposited in the account of the officer as soon as the cash advance was
approved.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Cash Advance for Travel)
Liquidation of previously granted cash advance for local travel amounting to P1,800.00.
JEV No. 13
Traveling Expenses-local 1,800.00
Advances to Officers and Employees 1,800.00
To recognize the liquidation of cash advance for travel
Receipt and deposit of refund of excess cash advance of Government Agency A from the officer.
JEV No. 14
Cash-Collecting Officer 200.00
Advances to Officers and Employees 200.00
To recognize the return of the excess CA of the officer
JEV No. 15
Cash-Treasury/Agency Deposit, Regular 200.00
Cash-Collecting Officer 200.00
To recognize the remittance of the excess CA to BTr
*Adjustments shall be made in the ORS and RAOD-MOOE through the issuance of NORSA.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For MOOE (Issuance of Office Supplies to End Users)
Government Agency A issues office supplies worth P63,000.00 to end users.
JEV No. 16
Office Supplies Expense 63,000.00
Office Supplies Inventory 63,000.00
To recognize issuance of office supplies to end users.
For Capital Outlay (CO)
Government Agency A received the purchased office equipment worth P300,000.00 from
Current Year’s Appropriation.
JEV No. 17
Office Equipment 300,000.00
Accounts Payable 300,000.00
To recognize delivery of office equipment
* The payable is recorded in the ORS and RAOD-CO.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
For Capital Outlay (CO)
Government Agency A paid the delivered office equipment.
Accounts Payable 300,000.00
Withholding Taxes (20,000.00)
Net 280,000.00
JEV No. 18
Accounts Payable 300,000.00
Due to BIR 20,000.00
Cash-Modified Disbursement System (MDS), Regular 280,000.00
To recognize payment of accounts payable
* The disbursement is recorded in the ORS and RAOD-CO.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
Remittance of amounts withheld (for BIR):
Government Agency A remits the taxes withheld through TRA.
Due to BIR

20,000.00 JEV No. 3

2,000.00 JEV No. 8
1,000.00 JEV No. 9
3,000.00 JEV No. 10
2,000.00 JEV No. 11
JEV No. 19 20,000.00 JEV No. 18
Cash-Tax Remittance Advice 48,000.00 48,000.00
Subsidy from National Government 48,000.00
To recognize the constructive receipt of NCA for TRA
JEV No. 20
Due to BIR 48,000.00
Cash-Tax Remittance Advice 48,000.00
To recognize the constructive remittance of taxes withheld to the BIR through TRA
* The remittance is recorded in the ORS and respective RAODs.
Government Accounting Cycle
 To illustrate (cont.):
5. Disbursements:
Remittance of amounts withheld (for GSIS, Pag-IBIG, and PhilHealth):
JEV No. 21
Due to GSIS 9,000.00
Due to Pag-IBIG 2,000.00
Due to PhilHealth 1,000.00
Cash-Modified Disbursement System (MDS), Regular 12,000.00
To recognize the remittance of amounts withheld for GSIS, Pag-IBIG, and
PhilHealth
* The remittance is recorded in the ORS and RAOD-PS.
Government Accounting Cycle
 To illustrate (cont.):
6. Billings Collections, and Remittances
Government Agency A receives the following revenue/income:
Power Supply Fees 100,000.00
Landing and Parking Fees 80,000.00
Total 180,000.00
JEV No. 22
Accounts Receivable 180,000.00
Power Supply System Fees 100,000.00
Landing and Parking Fees 80,000.00
To recognize billing of income
Government Accounting Cycle
 To illustrate (cont.):
6. Billings Collections, and Remittances
Government Agency A collected P100,000.00 accounts receivable and remits the
P90,000.00 of the collection to BTr.
JEV No. 23
Cash-Collecting Officers 100,000.00
Accounts Receivable 100,000.00
To recognize the collection of Accounts Receivable
JEV No. 24
Cash-Treasury/Agency Deposit, Regular 90,000.00
Cash-Collecting Officers 90,000.00
To recognize the remittance of income to BTr
Government Accounting Cycle
 To illustrate (cont.):
6. Billings Collections, and Remittances
Government Agency A collects the P45,000.00 Accounts Receivable from prior year’s
billing (please see the trial balance) and remits the total amount to BTr.
JEV No. 25
Cash-Collecting Officer 45,000.00
Accounts Receivable 45,000.00
To record the collection of prior year’s accounts receivable
JEV No. 26
Cash-Treasury/Agency Deposit, Regular 45,000.00
Cash-Collecting Officers 45,000.00
To record the remittance of income to the BTr
Government Accounting Cycle
 To illustrate (cont.):
6. Billings Collections, and Remittances
Government Agency A collects the unbilled service income of P370,000.00 and remits the
P340,000.00 to BTr.
Permit Fees 200,000.00
Registration Fees 160,000.00
Other Service Income 10,000.00
Total 370,000.00
JEV No. 27
Cash-Collecting Officers 370,000.00
Permit Fees 200,000.00
Registration Fees 160,000.00
Other Service Income 10,000.00
To record collection of unbilled service income
*Unbilled Service Income is a kind of income that automatically becomes income upon
receipt.
Government Accounting Cycle
 To illustrate (cont.):
6. Billings Collections, and Remittances
JEV No. 28
Cash-Treasury/Agency, Regular 340,000.00
Cash-Collecting Officers 340,000.00
To recognize remittance of income to BTr
Government Agency A collects the unbilled tax revenue amounting to P100,000.00 and
directly remits it to BTr.
JEV No. 29
Cash-Treasury/Agency Deposit, Regular 100,000.00
Immigration Tax 100,000.00
To recognize the collection and direct remittance of income to BTr through
AGDB
*Entry on JEV No. 29 only applies to agencies that has an immigration tax income
account.
Government Accounting Cycle
 To illustrate (cont.):
7. Posting of JEVs to its respective General Ledgers.
Government Accounting Cycle
 To illustrate (cont.):
7. Posting of JEVs to its respective General Ledgers.
Government Accounting Cycle
 To illustrate (cont.):
7. Posting of JEVs to its respective General Ledgers.
Government Accounting Cycle
 To illustrate (cont.):
7. Posting of JEVs to its respective General Ledgers.
Government Accounting Cycle
 To illustrate (cont.):
8. Unadjusted Trial Balance – It is a list of accounts in the General Ledger together with
their balances. It tests the equality of debits and credits of accounts. It is arranged
according to their sequence in the Revised Chart of Accounts (RCA, GAM for NGAS
Chapter 19, Section 48).
Chapter 3 Part 2 The Government Accounting Process Final for Illustrative
Problem.pptx.xlsx
9. Adjusting Entries
a. Reversion of unused Notice of Cash Allocation (NCA).
b. Recognition of Depreciation Expenses of PPE.
-Buildings P50,000.00
-Equipment P30,000.00
c. Recognition of Allowance for Impairment on Accounts Receivable amounting to
P2,000.00
Government Accounting Cycle
 To illustrate (cont.):
9. Adjusting Entries
a. Reversion of unused Notice of Cash Allocation (NCA).
For a. JEV No. 30
Subsidy from National Government 6,000.00
Cash-Modified Disbursement System (MDS), Regular 6,000.00
To recognize the reversion of unused Notice of Cash Allocation
*Please see the GL/Unadjusted Trial Balance for Cash-MDS, Regular account for its
ending balance.
Government Accounting Cycle
 To illustrate (cont.):
9. Adjusting Entries
b. Recognition of Depreciation Expenses of PPE.
-Buildings P50,000.00
-Equipment P30,000.00
For b. JEV No. 31
Depreciation-Building and Other Structures 50,000.00
Accumulated Depreciation – Buildings 50,000.00
To recognize depreciation expense of buildings
For b. JEV No. 32
Depreciation-Machinery and Equipment 30,000.00
Accumulated Depreciation – Office Equipment 50,000.00
To recognize depreciation expense of office equipment
Government Accounting Cycle
 To illustrate (cont.):
9. Adjusting Entries
c. Recognition of Allowance for Impairment on Accounts Receivable amounting to
P2,000.00
For c. JEV No. 33
Impairment Loss – Accounts Receivables 2,000.00
Allowance for Impairment – Accounts Receivable 2,000.00
To recognize loss allowance on accounts receivable
Government Agency A - WP Impairment of Receivables.xlsx
10. Preparation of Adjusted Trial Balance
Chapter 3 Part 2 The Government Accounting Process Final for Illustrative
Problem.pptx.xlsx
Government Accounting Cycle
 To illustrate (cont.):
11. Closing Entries (only performed for the preparation of year-end financial
statements/Not for interim FS).
A. Closing of Cash-Treasury/Agency Deposit, Regular to Accumulated Surplus/(Deficit).
B. Closing of Subsidy from National Government to Revenue and Expense Summary.
C. Closing of Income and Expense accounts to Revenue and Expense Summary.
D. Closing of the Net Balance of Revenue and Expense Summary to Accumulated
Surplus/(Deficit).
Government Accounting Cycle
 To illustrate (cont.):
11. Closing Entries (only performed for the preparation of year-end financial
statements/Not for interim FS).
A. Closing of Cash-Treasury/Agency Deposit, Regular to Accumulated Surplus/(Deficit).
JEV No. 44 (Please see the Adjusted Trial Balance of Cash-Treasury/Agency Deposit,
Regular account for its balance).
Accumulated Surplus/(Deficit) 575,200.00
Cash-Treasury/Agency Deposit, Regular 575,200.00
To recognize closing of cash deposit account
* Cash-Treasury/Agency Deposit, Regular is considered as an intermediate account that
needs to be closed to Accumulated Surplus/(Deficit) because all the cash under this
account were already deposited to the National Treasury (BTr). It is not closed to
Revenue and Expense Summary Account because Cash-Treasury/Agency Deposit, Regular
is not a nominal account but an account under Asset which is directly closed to
Accumulated Surplus/(Deficit) account.
Government Accounting Cycle
 To illustrate (cont.):
11. Closing Entries (only performed for the preparation of year-end financial
statements/Not for interim FS).
B. Closing of Subsidy from National Government to Revenue and Expense Summary.
JEV No. 45 (Please see the Adjusted Trial Balance of Subsidy from National Government
account for its balance).
Subsidy from National Government 667,000.00
Revenue and Expense Summary 667,000.00
To recognize closing of subsidy account
Government Accounting Cycle
 To illustrate (cont.):

11. Closing Entries (only performed for the preparation of year-end financial statements/Not for interim FS).

C. Closing of Income and Expense accounts to Revenue and Expense Summary (Please see the Adjusted Trial Balance for the balances of all income and expense accounts).

JEV No. 46

Immigration Tax 100,000.00

Permit Fees 200,000.00

Registration Fees 160,000.00

Other Service Income 10,000.00

Power Supply System Fees 100,000.00

Land and Parking Fees 80,000.00

Salaries and Wages, Regular 200,000.00

Personal Economic Relief Assistance 50,000.00

Traveling Expense -Local 1,800.00

Office Supplies Expense 63,000.00

Water Expenses 1,000.00

Electricity Expenses 5,000.00

Telephone Expenses 2,000.00

Janitorial Expenses 10,000.00

Security Expenses 12,000.00

Depreciation Expense – Buildings 50,000.00

Depreciation Expense – Machinery and Equipment 30,000.00

Impairment Loss – Accounts Receivable 2,000.00

Revenue and Expense Summary 223,200.00

To recognize the closing of income and expense accounts

Government Accounting Cycle
 To illustrate (cont.):
11. Closing Entries (only performed for the preparation of year-end financial
statements/Not for interim FS).
D. Closing of the Net Balance of Revenue and Expense Summary to Accumulated
Surplus/(Deficit).
JEV No. 47 (Please see JEV No. 45 and 46 for the balance of Revenue and Expense
Summary Account).
Revenue and Expense Summary 890,200.00
Accumulated Surplus/(Deficit) 890,200.00
To recognize closing of revenue and expense summary
Chapter 3 Part 2 The Government Accounting Process Final for Illustrative
Problem.pptx.xlsx
Government Accounting Cycle
 To illustrate (cont.):
11. Preparation of Financial Statements:
a. Statement of Financial Performance
b. Statement of Financial Position
c. Statement of Cash Flows
d. Statement of Changes in Net Asset/Equity
e. Statement of Comparison of Budget and Actual Amounts; and
f. Notes to Financial Statements
References:

 GAM Volumes 1, 2, and 3

 Actual Government Documents of National Government Agencies
 Materials provided by Sir Roy