ANSWER KEY

QUIZ
AA 4102, TNCR
3/-5/2025

A. True of False. Write T only if the answer is True, and F for a False answer on the
space provided for each number.

_F__1. The Tax Remittance Advise is issued by the BIR. should be issued by NGA'S ( since it is a accoutanble documents)
_T__2. The appropriations for PS shall be valid for release and obligation until Dec. 31, 2025.
_T__3 Release and use of allotments for CO shall be continuing and available until the 2 nd year.
_T__4. Commercial accounting did not use budgetary accounts.
_F__5. The implementing agency is required to obligate the use of the transferred funds. not required
_F__ 6. No ALOBS required to adjust the overpayment of expenses during the year. should be adjusted, especially to overpayment of
expenses
_T_ 7. Government funds or property shall be spent or used solely for public purposes.
_F__8. Appropriation is the authorization issued by the DBM to the agency which allows it to
incur obligations. ALLOTMENT
_F_ 9. As member of DBCC, DOF is responsible for resource allocation and management DBM
_T_10. All budgetary accounts are to be recorded and monitored through a registry.
_F_11. NCAs are monitored and recorded in the registry. issued by DBM
_F_12. The budgetary accounts consist of appropriation, obligations and disbursements appropriation, allotment and abligation
_F_13. Budgetary accounts are recorded in the agency’s books of accounts.
_F_14. The Budget Call is prepared by the DBCC. ISSUED BY DBM
_T_15. The use of account, Subsidy from National Government, identifies the share of the
agency in the income of the national government.

B. Multiple Choice. Choose the most appropriate answer. Write the letter of your choice
beside the number. Please use CAPIAL letters only. No erasures allowed.

16. Which of the following account under the Revised Standard Government Chart of Accounts
is debited when an NCA is received by an agency?
A. Subsidy from National Government C. Cash – NT, regular
B. Cash – MDS, Regular D. Subsidy from DBM

17. Legal basis of the budget system.

A. Sec. 42 of PD 1445 B. PD No. 1177 C. PD No 1717 D. PPSAS 1

18. Expenditures of the government are classified by expense class. What expense class are
salaries and maintenance and other operating expenditures?
A. Capital Outlays C. Current Operating Expenditures
B. Personal Services D. Net Lending

19. Refers to a document showing the disaggregation of agency expenditures into components
like among others, by source of appropriation, by allotment class and by need of clearance.
A. Agency Budget Matrix C. General Appropriations Act
B. Budget proposal D. Detailed Expenditure Program

20. Its main concern is the availability and use of funds for public services.
A. Commission on Audit C. Department of Finance
B. AGDB D. National Budgetary System

21. Net advances by the national government for servicing government guaranteed corporate
debt and loans outlays by the national government to government corporations.
A. Debt amortization B. Net lending C. Program loans D. Project loans
22. The following statements pertain to accountability phase of the budget cycle. Find the correct
order:
I. Agencies submitted the budget accountability reports (BARS)
II. DBM review of agency performance.
III. Audit by the Commission on Audit.
IV. Year-end budget performance assessment review.

A. IV, II, III, I B. IV, I, II, III C. I, III, II, IV D. II, III, I, IV

23. The following statements pertain to the preparation phase of the budget cycle. Find the
correct order.
I. The agencies defend their budget proposal before a technical panel of DBM.
II. At the beginning f the budget preparation year, the DBM issues the Budget Call to
all agencies.
III. The departments and agencies are tasked to pair up with civil society organizations
during the preparation of their agency budget proposals.
IV. An Executive Review Board deliberates over the programs and projects of the
agency submitted budget proposal.

A. II, III, I, IV B. II, III. IV, I C. I, IV, III, II D. II, I, III, IV

24. The following statements pertain to the execution stage of the budget cycle. Find the correct
order:
I. DBM issues guidelines on the release and utilization of funds.
II. DBM prepares an Allotment Release Program to set a limit for allotments issued
to an agency and on the aggregate.
III. Allotments are either released by DBM to all agencies comprehensively through
the ABM and individually via SARO.
IV. DBM issues a disbursement authority in the form of NCAs and its special cases, the
Non-Cash Availment Authority (NCAA) and Cash Disbursement Ceiling (CDC).

A. II, I, III, IV B. I, II, III, IV C. I, III, II, IV D. II, III, I, IV

25. Which of the following is NOT one of the fundamental principles of fiscal operation:
A. Trust funds shall be available and may be spent or used solely for public purposes.
B. All laws and regulations applicable to financial transactions shall be faithfully adhered to.
C. Proper classification of income and expenditures should be reflected in the accounts to
give adequate support to future budget estimates.
D. Claims against government funds shall be supported with complete documentation.

B. Choose the most appropriate answer. Write the letter of your choice beside the number.
Please use CAPIAL LETTERS ONLY. No erasures allowed.
Budget Phases:
A – Budget Preparation
B - Budget Legislation
C - Budget Execution
D – Budget Accountability
Budget PROCESS
_B___ 26. Starts upon receipt of the President’s Budget by the House Appropriation Committee.
__B__ 27. Ratification of the GAB for submitted to the President
__A__ 28. This phase happens between December to July of the prior year.
__C__ 29. This is where the people’s money are actually spent.
\
__C__ 30. Agencies are required to submit their BEDs at the start of budget execution.
__D . The DBM monitors the efficiency of fund utilization and assess agency performance.
_A___32. The DBCC determines the overall expenditure levels, revenue projection, the deficit
levels, and the financing plan.
__A__33. DBM holds consultation with agencies on the allocation by sector and sub-sector
expenditure ceilings set by DBCC.
_A___34. Bottom-up budgeting.
__C__35. Covers the operational aspect of budgeting. .
__B__36. The President and DBM then review the GAB and prepare a Veto Message.
__C__37. Allotments are either released by DBM comprehensively through the ABM of AROs.
_D___38. Budget accountability reports are submitted by agencies on a monthly and quarterly
basis and identified their corresponding physical accomplishments.
D 39. The DBM regularly reviews the financial and physical performance of agencies.
_D___40. Actual utilization of funds and physical accomplishments as indicated in the BARs are
evaluated against their targets.
_B___41. Budget hearings of the departments and agencies are conducted and scrutinize their
respective programs and projects.
_C___42. The budget phase that happens alongside the budget accountability.
_C__ 43. It begins with DBM’s issuance of guidelines on the release and utilization of funds.
B____44. Involves the legislative review and approval of the budget.
__A__45. Agencies defend their proposed budgets before a technical panel of DBM, based on
performance indicators on output targets and absorptive capacity..

Transaction Analysis
(46-55). A. The approved appropriation of DOH for 2024 was P150,000,000. 90% of this
appropriation was allotted by DBM accompanied with an NCA of 70% of the allotment.
During the year, the amount of obligation incurred was equal to 80% of the allotment.
Only 80% of these obligation was paid.

What is the balance of allotment, unpaid obligation and unused NCA at year end?
a. P 135,000,000, P 81,000,000 and P 75,600,000
b. P 135,000,000, P 87,750,000 and P 64,800,000
c. P 54,000,000, P 12,000,000 and P 10,500,000
d. P 27,000,000, P 21,600,000 and P 8,100,000

B. DOST, a national government agency, received ARO for capital outlay amounting to
P5M. Of the total amount, P4,275,000 was obligated and an NCA was received
equivalent to 80% of the total obligation while 50% of the NCA was used to pay its
obligation.
(56-58). How much is the un-obligated balance of allotment?
A. P725,000 B. 1,000,000 C. 3,420,000 D. 4,275,000

(59-62). Using the same data, how much is the utilization rate of the obligation?
A. 80% B. 85.5% C. 68.4% D. not given

(63-65). How much is the unpaid obligation and unutilized cash?

A. 3,420,000 , 2,565,000 C. 2,565,000, 1,710,000
B. 1,710,000 , 3,420,000 D. 4,275,000, 1,710,000

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Good Luck xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

There is a light at the end of every tunnel. ……. Just pray it’s not a train.
A.
#46-55: Allotment (150,000,000 X 90%) = P135,000,000 NCA - 70% X 135,000,000
Obligation (135,000,000 X 80%) = 108,000,000 = 94,500,000
Unused allotment P 27,000,000

Unpaid obligation: Unused NCA:

Obligation - P108,000,000 NCA received - 94,500,000
Disbursement: Disbursement - 86,400,000
(80% X 108,000,000) - 86,400,000 Unused NCA - 8,100,000
Unpd obligation P 21,600,000

B.
Allotment P5,000,000 (46-48) Allotment - 5,000,000
Obligation 4,275,000 Oblig 4,275,000
NCA (4,275,000(80%) 3,420,000 Un-oblig
Disb (3,420,000 (50%) 1,710,000 allotment 725,000 A

49-52. Obl/Allot = P4,275,000/P5,000,000

= 85.5% B
53-55. Unpaid Oblig: Unutilized Cash:
Oblig - P4,275,000 NCA - P 3,420,000
Disb - 1,710,000 Disb, - 1,710,000
Unpd Oblig 2,565,000 Unused NCA 1,710,000 C
Midterm Exam, 3/9/23
Multiple Choice:
1. Includes the source documents, the flow of transactions and its accumulation in the books of accounts and
finally their conversion into financial information in the financial reports.
a. Government accounting c. Government budgeting
b. General accounting plan d. National budget system

2. Document used in recording obligations in the respective registries to be processed by the budge unit.
a. Disbursement voucher c. Journal Entry Voucher
b. Allotment and obligation slips d. Registry of Allotment, Obligation and Disbursement

3. Refers to a serially-numbered document prescribed by DBM that should be used by the NGAs in the
remittance of withheld taxes on funds coming from DBM. This form is being distributed by the BIR to be
accomplished by the NGAs.
a. Summary of Taxes Withheld c. Notice of Cash Allocation
b. Tax Remittance Advice d. Due to BIR

4. Refers to claim of legitimacy, the justification and the right to exercise that power.
a. Authority b. Responsibility c. Corporate Governance d. Accountability

5. ________________ recommend to the President the amount set to be allocated for capital outlay under each
development activity for various capital or infrastructure projects.
a. DBM b. COA c. DBCC d. NEDA

6. An accounting practice, procedures and techniques in recording obligations of the government.

a. Obligation accounting c. Government accounting
b. Fund accounting d. Budgetary accounting

7. DOLE record the obligation to pay the 13th month pay benefits of government employees. What registry
Will it be recorded?
a. RAPAL b. RAOD-MO c. RAOD-PS d. RANCA

8. What registry to record the obligation for the purchase of IT equipment costing P125,000?
a. RAOD-MO b. RAOD-CO c. ALOBS d. RAPAL

9. The use of account __________________ identifies the share of the agency in the income of the national
government?
a. Cash – MDS, Regular c. Subsidy from National Government
b. Miscellaneous Income d. Cash-Collecting Officer

10. This account is credited when remittance of taxes withheld is charged to the current account of the agency.
a. Cash – TRA c. Cash in Bank – LCCA
b. Cash – MDS, Trust d. Cash- MDS, Regular

11. The current Governor ng Bangko Sentral ng Pilipinas –

a. Benjamin E. Diokno c. Nestor A. Espenilla
b. Dr. Felipe Medalla d. Gamaliel A. Cordoba

12. The Secretary of DBM that give importance of identifying environment related programs and projects in the
national budget.
a. Mario G. Lipana c. Amenah F. Pangandaman
b. Arsenio M. Balisacan d. Benjamin E. Diokno

13. A service activity that provide quantitative information primarily financial in nature about the operations of
the government, both local and national, to be used solely by the administration in making decisions for a more
effective and efficient public service.
a. Budgeting c. Accounting Responsibility
b. Government accounting d. General Accounting plan
14. Which of the following statements is not one of the fundamental principles for revenue recognition?
a. No payment of any nature shall be received by a collecting officer without immediately issuing an
Official Receipt.
b. At no instance shall temporary receipts be issued to acknowledge the receipt of public funds.
c. Trust funds shall be available and may be spent only for the specific purpose of which the trust
was created.
d. Receipts shall be recorded as revenue of fiduciary or trust funds other than the general fund, only
when authorized by law.

15. The General Appropriation Act No _______ for CY2023 is –

a. RA#11963 b. RA#11936 c. RA#11396 d. RA#11639

16. Legal authorization directing payment of government funds for a special purpose and serve as a check
and balance measure so that government funds are used only for intended projects.
a. Appropriation b. Allotment c. ABM d. NCA

17. The following are objectives of government accounting except:

a. To produce information concerning present operations and past conditions.
b. To provide basis for guidance for future operations.
c. To provide control pf the acts of public bodies and officers in the receipt, disposition and
utilization of public funds and property.
d. To report on the financial position and the results of operation of government agencies for
the information of all persons concerned.

18. The total appropriation for CY 202 is_________ which is 4.9% higher than CY 2022.
a. P5.862 trillion b. P5.268 trillion c. P5.682trillion d. P5.826trillion

19. A member of the Development Budget Coordinating Committee (DBCC) responsible for revenue
generation and debt management.
A. Department of Budget and Management (DBM)
B. National Economic Development Authority (NEDA)
C. Department of Finance (DOF)
D. Bangko Sentral ng Pilipinas (BSP)

20. Given are functions of budgeting EXCEPT

A. Establishes in advance the objective or end result of the budget period.
b. To report on the financial position and results of operations of government agencies.
B. Provide means of coordination among various subdivisions and departments of the agency.
C. Serve as basis of orderly management of public finances.

21. Which among the given government entity is not a national government agency?
A. Commission on Election c. Cebu Normal University
b. National Food Authority d. Bureau of Customs

22. The following are the salient features of government accounting EXCEPT
A. Fund Accounting c. Budgetary accounting
B. Obligation accounting D. Cash Disbursement Ceiling

23. What agency that maintains RAPAL and RANCA?

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

24. A special agency undertakings which are to be carried out within a definite time frame and are
intended to result in some pre-determined measure of goods and services.
A. Program C. Activity
b. Project D. Budget

25. The following are accounting systems comprising the General Accounting Plan, EXCEPT
A. Budget Account System
B. Receipt/Income Collection and Deposit System
C. Disbursement System
d. New Government Accounting System

26. Expenditures of the government are classified by expense class. What expense class are salaries and
maintenance and other operating expenditures?
A. Capital Outlays c. Current Operating Expenditures
b. Personal Services D. Net Lending
27. An expense class with appropriations provided for the purchase of goods and services whose benefits
extend beyond the budget year and an added assets of the government including investments in the capital
stock of government-owned-or-controlled corporation.
A. Maintenance and Other Operating Expenditures C. Debt Amortization
b. Capital Outlays D. Income Revenues

28. Government budgeting is undertaken using the budget cycle that consists of four phases, namely:
A. Budget Preparation, Execution, Legislation, and Accountability
B. Budget Legislation, Accountability, Preparation and Execution
c. Budget Preparation, Legislation, Execution and Accountability
d. Budget Accountability, Authorization, Preparation, and Implementation

29. Provides the standards regarding recognition, measurement, presentation and disclosures requirements for
financial reporting in the Philippine Government as prescribed by the Commission on Audit pursuant to
Circular No. 2015-002.
a. Philippine Public Sector Accounting Standards
b. COA-DBM-DOF Joint Circular
c. Generally accepted Accounting Standards
d. Unified Accounts Code Structure

30. A political subdivision of the Philippines having substantial control over local affairs, consisting of
provinces, cities, municipalities and barangays.
A. National Government Unit
B. Government Owned-or-Controlled Corporations
c. Local Government Units
d. All of the above

31. Which of the following account under the Revised Standard Government Chart of Accounts is credited
when NCA is received by the Agency.
A. Cash – Modified Disbursement System, Regular
B. Subsidy from Central Office
c. Subsidy from National Government
d. Cash – National Treasury, Regular

32. Which government body keeps the general accounts of the government?
A. State of Accounting and Auditing Center
b. Commission on Audit
c. Department of Budget and Management
d. Department of Finance

33. This document is required to support the Agency Budget Matrix (ABM) showing the cash provision to
finance the program and the prior year’s accounts payable.
A. Tax Remittance Advice c. Annual Cash Program
B. ALOBS D. Appropriation

34. What particular period in the budget process is the issuance of Budget Call by DBM to all agencies.
a. December – January of prior budget year.
b. December – June of prior budget year.
c. December – January of the current budget year.
d. January – February of the current budget year.

35. The new Revised Chart of Accounts provide an expanded account code structure – from three (3) digits to
eight (8) mandatory digits comprising five (5) groups as follows:
0 00 00 00 0
The 2nd (2) zeroes represents what group?
A. General Ledger Accounts Group C. Major Account Group
B. Account Group/ D. Sub-Major Account Group

36. A list of account titles and codes that guide the bookkeeper in the recording government transactions.
A. General Ledger Accounts C. Public Sector Accounting Standards
B. Coding Structure d. Chart of Accounts
37. The following are sources of income and collections received by the agency, EXCEPT
A. Taxes c. Fund Transfers
B. Grants and Donations D. Borrowings

38. What account is debited upon receipt of collection by the collecting officer regardless whether the
agency is authorize to use or not of their collected income?
a. Cash – Collecting Officer
b. Taxes
c. Cash in Bank – Local Currency Current Account
d. Other Business Income

39. What is the legal basis of the current national budget system?
a. PD 1445 – Government Auditing Code of the Philippines
b. PD 1177 – Budget Reform Decree of 1977
c. Article IX – C of the 1987 Constitution – COA
d. none of the above
595
40. It provides the guidelines on the release of funds for FY 2023 –
a. NBC#509 b. NBC#590 c. NBC# 950 d. none of the above

41. For agencies which are authorized to use their collected income for the operation, the
collections shall be recorded as income in the books. What account is credited to record
collection of service income after recording the bill issued?
A. 10101010 Cash – Collecting Officers
b. 10301010 Accounts Receivable
c. 10104010 Cash – Treasury/Agency Deposit, Trust
d. 40202050 Service Income

42. What account is debited in recording a temporary deposit to the National Treasury?
A. 40202050 Rent/Lease Income
B. 10101010 Cash – Collecting Officer
c. 10104010 Cash – Treasury/Agency Deposit, Trust
d. 10301010 Accounts Receivable

43. DPWH appropriation for CY 2015 is P500M. DBM issued a SARO for Capital Outlay equivalent to 40%
of their appropriation and only 75% of the allotment was obligated to purchase the requisitioned equipments
replacing the unserviceables. A month after, DPWH received an NCA enough to pay in full the obligated
equipments. However, due to lack of manpower, the accountant managed to process only 60% of the obligated
capital expenditures and forwarded to the cashier for payment.
1. How much is the unutilized allotment and unpaid obligation at year-end?
A. P 50M, P 150M C. P150M, P60M
B. , P90M P P200M d. P 50M, P60M

2. How much is the total allotment received, total obligations, total paid obligations and NCA received?
a. P200M, P150M, P90M, and P150M
b. P200M, P150M, P60M, and P90M
c. P300M, P200M, P90M, and P60M
d. P150M, P200M, P90M, and P150M
(Choose the correct letter of your choice for each question but show your solution to get the full points)

44. DSWD appropriation for the year is P250M, the ABM prepared is for same amount but an ARO was
issued by DBM amounting to P240M, and the total obligations incurred amounted to P235M. The NCA
received is P215M, however, 15% of the NCA received was not used as of the end of the year and returned to
the BTr while 10% of the payments thru MDS checks were unclaimed at year-end. How much is the balance of
obligations not paid as of the end of the year?
A. P 18.27M B. P32.25M c. P 52.73M D. P52.25M
(Choose the correct letter of your and show your solution to get the full points)
45. COA Cicular No. 2015-002, provides that under PPSAS 1, the following are components of the
financial statements, EXCEPT
A. Statement of Financial Position
B. Statement of Financial Performance
C. Statement of Changes in Net Assets/Equity
d. Registry of Allotments, Obligations and Disbursements

46. Is the gross inflow of economic benefits or service potential during the reporting period when those
inflows result in an increase in net assets/equity, other than increases relating to contributions from owners.
a. Collections b. Revenue c. Non-exchange transactions d. none of the above

47. ______________________are transactions in which one entity receives assets or services, or has
liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash,
goods, services, or use of assets) to another entity in exchange. (Par. 11, PPSAS 9)
a. Non-exchange transactions b. Exchange transactions
c. Income collections d. taxation revenue

48. _____________________ are transactions in which an entity either receives value from another
entity without directly giving approximately equal value in exchange, or gives value to another entity
without directly receiving approximately equal value in exchange. (Par. 11, PPSAS 9)
a. Non-exchange transactions b. Exchange transactions
c. Income collections d. taxation revenue

49. Revenue from the sale of goods shall be recognized when all the following conditions have been satisfied:
1. The entity retains neither continuing managerial involvement to the degree usually associated with
ownership nor effective control over the goods sold;
2. The amount of revenue can be measured reliably;
3. It is probable that the economic benefits or service potential associated with the transaction will
flow to the entity;
4. All of the above.

50. Which of the following statements is not one of the fundamental principles relating to the financial
transactions and operations of the government.
1. Government funds and property shall be spent or used solely for public purposes.
2. No money shall be paid out of any public treasury or depository except in pursuance of an
Appropriation law or other specific statutory authority.
3. Use of government funds in violation of law or regulations shall be a personal liability of the
official or employee found to be directly responsible thereof.
4. Claims against government funds shall be supported with complete documentation.

51. Adjustments of obligations caused by overpayment of representation and transportation allowance shall
be effected thru a negative entry in the obligation incurred column of what Registry of Allotments,
Obligations and Disbursements (RAOD)?
a. RAOD-CO b. RAOD-MO c. RAOD-PS d. none of the above

52. What phase in the budget process where the people’s money is actually spent?
a. Budget preparation b. Budget legislation c. Budget execution d. Budget accountability

53. What phase in the budget process that happens alongside the budget execution?
a. Budget preparation b. Budget legislation c. Budget execution d. Budget accountability

54. This starts upon the House Speaker’s receipt of the President’s Budget, and ends with the President’s
Approval of the General Appropriation’s Act?
a. Budget preparation b. Budget legislation c. Budget execution d. Budget accountability

55. What phase in the budget process which happens between December to July of the prior FY?
a. Budget preparation b. Budget legislation c. Budget execution d. Budget accountability

56. What phase in the budget process when DBM regularly reviews the financial and physical performance
of agencies?
a. Budget preparation b. Budget legislation c. Budget execution d. Budget accountability

57. A registry maintained to monitor the balance of unreleased appropriation –

a. RAPAL b. RAOD c. RANCA d. RBUD
58. What account is debited in recording the deposit of collection with limited authority and used
immediately used to pay expenditures?
1. Cash in Bank – LCCA 10102030 xxxxx
2. Cash – Treasury/Agency deposit, Regular 10104010 xxxxx
3. Cash – Treasury/Agency Deposit, Trust 10104030 xxxxx
4. Cash – Collecting Officer 10101010 xxxxx

59. What account is debited by the Source Agency in recording the funds transferred to the
Implementing Agency?
1. Cash – Collecting Officer 10101010 xxx
2. Due to NGA 20201050 xxx
3. Due from NGA 10303010 xxx
4. Cash – MDS, Regular 10104010 xxx

60. The following are the basic features of GAM, EXCEPT

1. Chart of accounts and account codes 3. Two-money column trial balance
2. Notice of Cash Allocation 4. Organizations

61. If B in DBCC is Budget, what is the last C mean?

a. Council b. Coordinating c. Committee d. Commission
(4 pts)
17. The following statements pertain to the preparation stage of the budget cycle. Find the correct order.
I. The agencies defend their proposed budgets before a technical panel of DBM.
II. At the beginning of the budget preparation year, the DBM issues the National Budget Call to all agencies.
III. The departments and agencies are tasked to pair up with civil society organizations during the
preparation of their agency budget proposals.
IV. An Executive Review Board deliberates over the programs and projects of the agency as per the
submitted budget proposal.
a. II, III, I, IV C. I, IV, III, II
A. II, III, IV, I D. II, I, III, IV
(4pts)
18. The following statements pertain to the execution stage of the budget cycle. Find the correct order.
I. DBM issues guidelines on the release and utilization of funds.
II. DBM prepares an Allotment Release Program to set a limit for allotments issued to an agency and
on the aggregate.
III. Allotments are either released by DBM to all agencies comprehensively through the ABM
and individually via SARO.
IV. DBM issues a disbursement authority in the form of NCAs and in special cases, the Non-Cash
Availment Authority (NCAA) and Cash Disbursement Ceiling (CDC).
A. II, I, III, IV C. I, III, II, IV
b. I, II, III, IV D. II, III, I, IV
(5pts)
The following are stages of the receipt and collection process. Find the correct order:
I. The collecting officer records deposit in Cash Receipt Record.
II. The collecting officer deposits collection. receive, record, deposit, record deposit,
prepares.
III. The collecting officer receives payment and issues Official Receipt.
IV. The collecting officer records collections in Cash Receipts Record.
V. The collecting officer prepares the Report of Collections and Deposits and forwards
to the accounting unit with copies of Official Receipts and validated Deposit Slips.
A. I, II, III, IV, V B. II, I, III, IV, V C. III, IV, II, I, V D. IV, I, II, III, V

Agency Z, a National Government Agency, received an ARO for MOOE from DBM amounting to
P5,000,000. The total obligations amounted to P4,275,000 , and only 80% was paid. The remaining
20% was recognized as accounts payable.
A) How much is the un-obligated balance that should be shown in the Registry for MOOE?
a. 725,000 C. 1,000,000
b. 825,000 D. 855,000

B) Using the same transaction, how much is the utilization rate of the total obligation?
A. 20% C. 68.4%
B. 85.5% D. 80%
(Choose the correct letter of your choice for each question but show your solution to get the full points)
In answering the succeeding questions, please refer to the following choices corresponding to the
letter of your choice.
A. The first statement is true but the second statement is false.
B. The first statement is false but the second statement is true.
C. Both statements are true.
D. Neither of the statements is true.

1. SI: The Head of the agency is immediately and primarily responsible for all government funds
and property pertaining to his agency.
SII: Persons entrusted with the actual possession or custody of the funds or property are accountable
officers and immediately responsible to the agency head.
C
2. S1: DBM is mandated to recommend measures necessary to improve efficiency and effectiveness.
SII: The Executive Office reviewed and approved the Agency Budget Matrix..
D
3. SI: Liability shall be recognized once a purchase order is signed by a supplier..
SII: Government funds or property shall be spent or used solely for public purposes.
B
4. SI: The Allotment Release Program (ARP) shall serve as the ceiling for the aggregate allotment
releases during the year from all sources.
SII: The Accountant shall be held personally liable for any payment of expenditures not in
accordance with the guidelines on the releases of funds for FY 2016.
A
5. SI: DBM approves the Agency Budget Matrix.
SII: The BTr performs the banking function for the national government.
C
6. SI: Valuation of inventories shall be computed using moving average method.
SII: Petty Cash utilization is under the imprest system.
C
7. SI: For assets under construction, the Construction Period Theory shall be applied for costing
purposes.
SII: Bonus paid to the contractor for completing the work ahead of time shall be added to the
total cost of the project.
C
8. SI: Depreciation shall start on the first month of purchase of the property, plant and equipment.
SII: Serviceable assets can be reclassified to “Other Assets” and shall be subject to depreciation.
D
9. SI: Government Accounting serve as basis for orderly management of public finances.
SII: Government Budgeting provide a basis for guidance for future operations.
D
10 SI: The basis of accounting for commercial accounting use a combination of both cash and accrual
method.
SII: Government accounting maintains one set of books and registry for budgetary accounts.
B
11. SI: The NCA is the share of the agency in the income of the national government.
SII: When a government agency decides to purchase supplies from outside suppliers, the entity
to record the receipt of the supplies will most likely include a credit to Cash-MDS, Regular.
C
12. SI: All accountable officer need to post a bond.
SII: For additional claim of travelling expenses maybe due to an official extended stay, can be
requested for reimbursement and need not require obligation.
A
13. S1: Public infrastructures are already subjected to depreciation pursuant to PPSAS 31.
S2: The estimated residual value of the cost is at 5% in computing the depreciation.
C
14. S1: Allotment refers to an authorization made by law or other legislative enactment, directing
the payment of goods and services out of government funds under specified conditions or
for special purposes.
S2: Appropriation is the authorization issued by the DBM to the agency which allows it to
incur obligations.
D
15. SI: Government Owned/Controlled Corporation is the largest financial organization in terms of assets,
liabilities, capital sources of income and items of expenditures.
SII: SSS is a government owned/controlled corporation.
B.
16. SI: Revenue from exchange transaction shall be measured at fair value of the consideration received
or receivable.
SII: Revenue from the sale of goods shall be recognized when the entity has transferred to the purchaser
the significant risks and rewards of ownership of the goods;
C
17. SI: All accountants are accountable officers.
SII: The national government includes state colleges and universities.
B
18. SI: DBM exercises technical supervision over the accounting function of each agency.
SII: The BTr performs banking function for the GOCCs and National Government agencies.
D
19. SI: In commercial accounting, modified accrual basis of accounting is used while government
accounting, either cash or accrual method is used.
SII: Accounting responsibility is entrusted to the chief accountant of the agency.
D
20. SI: The COA promulgates accounting rules and regulations.
SII: The COA shall be responsible for the design, preparation and approval of accounting
systems of government agencies.
A
21. SI: The Authorized Government Depository Banks are the principal custodian of all national
government funds.
SII: Notice of Cash Allocation is issued by DBM.
B
22. SI: When the outcome of the transaction involving the rendering of services cannot be estimated
reliably, revenue should be recognized only to the extent of the expenses recognized that are
recoverable. (Par. 25, PPSAS 9).
SII: Asset and the corresponding revenue or liability that arises from non-exchange transaction shall
be recognized when collected or when these are measurable and legally collectible
C
23. SI: Taxation revenue shall be determined at a gross amount. It can be reduced by the expenses paid
through the tax system.
SII: Gifts and donations, other than services in kind shall be recognized as assets and revenue when it is
probable that the future economic benefits or service potential will flow to the entity and shall be
measured at fair value.
B
24. SI: Goods in-kind received without conditions shall be recognized as revenue immediately.
SII:. Donation in cash or in kind shall be recognized as revenue.
C
25. SI: Due from NGAs is the account debited when the source agency transferred funds to other
NGA for specified purpose.
SII: Cash – MDS, Trust is an account debited when the accountant record the receipt of requested
NCA intended for remittance of taxes withheld.
A
26. SI: Pre-numbered ORs shall be issued in strict numerical sequence.
SII: Accrual basis means a basis of accounting under which transactions and other events are recognized
when they occur (and not only when cash or its equivalent is received or paid).
C
27. SI: Under the depreciation accounting, depreciation will be taken up starting on the month of
purchase and uses straight line method.
SII: Any expenditures not obligated in the current year can be obligated and paid in succeeding year.
D
Sec. 9. Impairment Losses and Allowance for Impairment Losses. When an
uncertainty arises about the collectibility of an amount already included in revenue, the
uncollectible amount, or the amount in respect of which recovery has ceased to be probable, is
recognized as an expense (impairment losses), rather than as an adjustment of the amount of
revenue originally recognized.

Entities shall evaluate the collectibility of accounts receivable on an ongoing basis based
on historical bad debts, customer/recipient credit-worthiness, current economic trends and
changes in payment activity. An allowance is provided for known and estimated bad debts.

Sec. 12. Recognition of Revenue from Non-Exchange Transactions. The cash basis
of accounting shall be applied by all government agencies in the recognition of revenue from
non exchange transaction until a reliable model of measurement of this revenue is developed.
Therefore, asset and the corresponding revenue or liability that arises from non-exchange
transaction shall be recognized when collected or when these are measurable and legally
collectible.

Non-exhange transactions – are transactions in which an entity either receives value

from another entity without directly giving approximately equal value in exchange, or
gives value to another entity without directly receiving approximately equal value in
exchange. (Par. 11, PPSAS 9)

______________________are transactions in which one entity receives assets or services, or has liabilities
extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or
use of assets) to another entity in exchange. (Par. 11, PPSAS 9)
a. Non-exchange transactions b. Exchange transactions
c. Income collections d. taxation revenue

Refers to a document the showing the disaggregation of agency, expenditures into components like among
others, by source appropriation, by allotment class and by need of clearance.
1. Budget proposal 2. General Appropriations Act 3. Agency Budget Matrix
4. Detailed Expenditure Program

To provide for responsibility accounting, NGAS uses a standard chart of accounts with –
1. 9 digits 2. 3 digits 3. 6 digits 4. 8 digits

The journal entry when an NCA is received by the agency from DBM.
1. Cash- Collecting Officer 10101010 XXX
Cash – MDS, Regular 10104040 XXX

2. Cash – Collecting Officer 10101010 XXX

Subsidy from NG 40301010 XXX

3. Cash – MDS, Regular 10104040 XXX

Subsidy from NG 40301010 XXX

4. Cash – Treasury/Agency Deposit, Regular 10104010 XXX

Cash – Collecting Officer 10101010 XXX

The following statements pertain to the accountability phase of the budget cycle. Find the correct order:
I. Agencies submitted budget accountability reports (BARS).
II. DBM review of agency performance.
III. Audit by the COA.
IV. Year-end budget performance assessment review
A. IV, II, III, I B. IV, I, II, III C. I, III, II, IV D. II, III, I, IV
 University of San Carlos
School of Business and Economics
Department of Accountancy

IRC 2 – Advanced Financial Accounting and Reporting

September 30, 2019
Government Accounting
J.M.DENILA

Government Accounting - encompasses the processes of analyzing, recording,

classifying, summarizing and communicating all transactions involving the receipt,
disposition and utilization of government funds and property and interpreting the
results thereof. This includes the following:
 Bookkeeping referred to as analysis, recording and journalizing.
 Posting or grouping or classifying of similar items
 Preparation of periodic financial reports
 Analysis of reports to determine their accuracy and adequacy as well as the
efficiency of agency operations.

Objectives of Government Accounting:

 To provide information concerning past operations and present conditions.
 To provide as a basis for guidance for future operations
 To provide or control the acts of public bodies and offices regarding the receipt,
disposition, and utilization of government funds and property.
 To report on the financial condition and the results of operations of government
agencies for the information of all persons concerned

The New Government Accounting System (NGAS)

NGAS is a simplified set of accounting concepts, guidelines and procedures designed to
ensure correctness, completeness, and timeliness in the recording of government
financial transactions, and production of financial reports.

Objectives:
1. Simplify government accounting;
2. Conform to international accounting standards; and
3. Generate periodic and relevant financial reports for better monitoring of
performance.

Components of the New Government Accounting System (NGAS)

The new accounting system is composed of the following:
1. Basic Features 5. Accounting Records
2. Coding Structure a. Registries
3. Chart of Accounts b. Accountable Officer’s Records
4. Books of Accounts 6. Accounting Reports
a. Journals 7. Accounting Forms
b. Ledgers

Basic Features
 Accrual Accounting
A modified accrual basis of accounting is used. Under this method, all expenses
shall be recognized when incurred. Income shall be on accrual basis except for
transactions where accrual basis is impractical or when other methods may be required
by law.

 One-Fund Concept
This system adopts the one-fund concept. 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 prior approval of the Commission.

 Books of Accounts – Regular Agency Books

The regular agency books shall consist of journals and ledgers, as follows:

Journals

Government Accounting (1 of 25)

  Cash Receipts Journal  Check Disbursements
Journal
 Cash Disbursements Journal  General Journal

Ledgers
 General Ledger
 Subsidiary Ledgers, where applicable for:

a. Cash e. Fixed Assets

b. Receivables f. Construction in Progress
c. Inventories g. Liabilities
d. Investment

All the above records shall be maintained by the accounting unit of the agency
concerned. However, collecting and disbursing officers shall also maintain their
respective appropriate records, as follows:

Records
 Cash Receipts Record  Check Disbursements Record
 Cash Disbursements Record

 New Chart of Accounts and Account Codes

A new coding structure and a new chart of accounts with an eight-digit account
numbering system have been adopted (COA Circular No. 2013-002).

 Accounting Reports
Report Frequency
 Trial Balance Monthly
 Statement of Financial Position Quarterly
 Statement of Financial Quarterly
Performance
 Cash Flow Statement Quarterly
a. Balance Sheet Approach
b. Income Statement
Approach

 Financial Expenses
Financial expenses such as bank charges, interest expense, commitment fees and
other related expenses shall be separately classified from Maintenance and Other
Operating Expenses (MOOE).

 Allotments, Obligations and Disbursements

The receipt of budgetary allotments from the Department of Budget and
Management, as well as the incurrence of obligations shall not be recorded in the
regular books of accounts. Instead they shall be separately recorded in the Registry of
Allotments, Obligations and Disbursements (RAOD). Separate registries shall be
maintained for each of the four classes of expenditures, namely:

Registries
RAODCO Registry of Allotments, Obligations and Disbursements – Capital
Outlays
RAODMO Registry of Allotments, Obligations and Disbursements –
Maintenance and Other Operating Expenses
RAODPS Registry of Allotments, Obligations and Disbursements – Personnel
Services
RAODFE Registry of Allotments, Obligations and Disbursements – Financial
Expenses

 Notice of Cash allocations (NCA)

The receipt of NCAs by an agency shall be recorded by a journal entry in the
regular books of accounts, thus:
Debit: Cash – MDS, Regular xxx

Government Accounting (2 of 25)

 Credit: Subsidy from National Government xxx

 Construction of Assets
For assets under construction, liability shall be recognized as bills are received,
based on percentage of completion and/or contract. The construction period theory shall
be applied for costing purposes. Bonus paid to the contractor for completing the work
ahead of time shall be added to the total cost of the project. Liquidated damages
charged and paid for by the contractor shall be deducted from the total cost of the
project. Any related expenses incurred during the construction of the project, such as
taxes, interest, license fees, permit fees, clearance fee, etc. shall be capitalized, and
those incurred after the construction shall form part of operating costs.

 Depreciation
A feature of the accrual accounting system is the recognition of depreciation for
the depreciable assets of an agency. The straight-line method of depreciation shall be
used. Depreciation shall start on the second month after purchase of the property, plant
and equipment, and a residual value equivalent to 5% percent of the purchase cost shall
be set-up.

In case of leasehold improvement, it shall be depreciated over the period of the

lease or the life of the improvement whichever is shorter.

 Reclassification of Assets
Serviceable assets no longer being used shall be reclassified to "Other Assets"
account and shall not be subject to depreciation.

 Perpetual Inventory of Supplies and Materials

Supplies and materials purchased for inventory purpose shall be recorded using
the perpetual inventory system. Regular purchases shall be coursed thru the inventory
account and issuances thereof shall be recorded as the take place except those
purchased out of Petty Cash Fund which shall be charged directly to the appropriate
expense accounts.

 Valuation of Inventory
Cost of ending inventory of supplies and materials shall be computed the moving
average method.

 Registry of Public Infrastructure

For agencies that construct public infrastructures, such as roads, bridges,
plazas, monuments, etc., a separate Registry of Public Infrastructures (RPI) shall be
maintained for each category of infrastructure. Maintenance of RPI and RRP shall be
discontinued (PPSAS 17).

 Allowance for Doubtful accounts

An Allowance for Doubtful Accounts shall be set up for estimated uncollectible
receivables. This will allow for a fair valuation of receivables prior to write-off.

 Recognition of Liability
Liability shall be recognized at the time goods and services are accepted or
rendered and supplier/creditor bills are received in accordance with international
accounting standards.

 Interest Accrual
Whenever applicable and appropriate, interest income and/or expense shall be
accrued and recognized in the books of accounts.

 Contingent Accounts
Contingent assets and/or liabilities are off-book items and shall be shown only in
the notes to financial statements. However, if any amount of a contingent liability has a
reasonable assurance of maturing into an actual liability, such amount shall be
recognized in the books and the appropriate journal entry shall be made.

 Corollary/ Negative Journal Entries

Government Accounting (3 of 25)

 Corollary and/or negative journal entries shall no longer be used in the new
accounting system. Acquisition of inventory, fixed assets and other assets shall be
recognized as capital expenditures in the regular books of accounts, negating the need
for corollary journal entries. Corrections of erroneous journal entries shall not be
effected by negative journal entries but by making the necessary reversing or other
adjusting entries, all in the positive amounts.

Responsibility, Accountability and Liability over Government Funds and Property

A. Responsibility over Government Funds and Property

1. It is the declared policy of the State that all resources of the government shall be
managed, expended or utilized in accordance with laws and regulations, and
safeguarded against loss or wastage through illegal or improper disposition, with a view
to ensuring efficiency, economy and effectiveness in the operations of government. The
responsibility to take care that such policy is faithfully adhered to rests directly with the
chief or head of the government agency concerned. (Sec. 2, P.D. No. 1445)

2. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency. (Sec. 4(4), P.D. No. 1445)

3. The head of any agency of the government is immediately and primarily responsible
for all government funds and property pertaining to his agency. Persons entrusted with
the possession or custody of the funds or property under the agency head shall be
immediately responsible to him, without prejudice to the liability of either party to the
government. (Sec. 102, P.D. No. 1445)

B. Accountability over Government Funds and Property

1. Every officer of any government agency whose duties permit or require the
possession or custody of government funds or property shall be accountable therefore
and for the safekeeping thereof in conformity with law. Every AO shall be properly
bonded in accordance with law. (Sec. 101, P.D. No.1445; Section 50, Chapter 9, Subtitle
B, Book V, Executive Order (E.O.) No. 292)

2. Transfer of government funds from one officer to another shall, except as allowed by
law or regulation, be made only upon prior direction or authorization of the Commission
or its representative. (Sec. 75, P.D. No. 1445)

3. When government funds or property are transferred from one AO to another, or from
an outgoing officer to his successor, it shall be done upon properly itemized invoice and
receipt which shall invariably support the clearance to be issued to the relieved or
outgoing officer, subject to regulations of the Commission. (Sec. 77, P.D. No. 1445)

C. Liability over Government Funds and Property

1. Expenditures of government funds or uses of government property in violation of law
or regulations shall be a personal liability of the official or employee found to be directly
responsible therefore. (Sec. 103, P.D. No. 1445)

2. Every officer accountable for government funds shall be liable for all losses resulting
from the unlawful deposit, use, or application thereof and for all losses attributable to
negligence in the keeping of the funds. (Sec. 105(2), P.D. No. 1445)

3. No AO shall be relieved from liability by reason of his having acted under the
direction of a superior officer in paying out, applying, or disposing of the funds or
property with which he is chargeable, unless prior to that act, he notified the superior
officer in writing of the illegality of the payment, application, or disposition. The officer
directing any illegal payment or disposition of the funds or property shall be primarily
liable for the loss, while the AO who fails to serve the required notice shall be
secondarily liable. (Sec. 106, P.D. No. 1445)

4. When a loss of government funds or property occurs while they are in transit or the
loss is caused by fire, theft, or other casualty or force majeure, the officer accountable
therefore or having custody thereof shall immediately notify the Commission or the

Government Accounting (4 of 25)

auditor concerned and, within 30 days or such longer period as the Commission or
auditor may in the particular case allow, shall present his application for relief, with the
available supporting evidence. Whenever warranted by the evidence, credit for the loss
shall be allowed. An officer who fails to comply with this requirement shall not be
relieved of liability or allowed credit for any loss in the settlement of his accounts. ( Sec.
73, PD.1445).

Accounting for Budgetary accounts

Budgetary Accounts System encompasses the processes of:

1. Recording of appropriations
2. Preparing Agency Budget Matrix (ABM)
3. Monitoring and recording of allotments received by the agency from the DBM
4. Releasing of Sub-Allotment Release Order to Regional Offices by the Central
Office
5. Issuance of Sub-SARO to Operating units by the RO; and
6. Recording and monitoring obligations.

The Budgetary Process

1. Budget Preparation – concerned with the estimation of government revenues
and determination of budgetary priorities and activities within the constraints
imposed by available revenue and borrowing limits, and the inclusion of
amount needed for approved priorities and activities into the expenditure
levels
2. Budget Authorization – pertains to the legislative consideration of budget
proposals and the enactment of the budget into law
3. Budget Execution – Covers the operational aspects of budgeting composed of:
 Submission, evaluation and approval of Agency Budget Matrix and
subsequent issuance of NCA based on the Agency’s Annual Cash
Program
 Continuous monitoring and review of the government fiscal policies
 Cash management and monitoring and generally seeing to it that fund
are available to support the approved agency functions and projects
4. Budget Accountability – Involves comparing actual expenditure and
performance with the planned expenditure and performance levels and
making corrective action when indicated
 Reporting by the agencies of performance under the approved budgets
 Top management review of government activities and the fiscal policy
implications thereof
 Action of COA in assessing the fidelity of the officials and employees by
carrying out the intent of the Congress in response to their handling of
receipts and expenditure

Budgetary Accounts consist of the following

1. Appropriations
2. Allotments
3. Obligations

Appropriation refers to an authorization made by law or other legislative enactment for

payments to be made with funds of the government under specified conditions and/or
for specified purposes.

“No money shall be paid out of the treasury except in pursuance of an appropriation
made by law”
- Sec 29 (1) Art VI of the 1987 Constitution

Allotment - is an authorization issued by the DBM to an agency, which allows it to incur

obligations within specified amount that is within a legislative appropriation.

ABM (Agency Budget Matrix- refers the document that shows the desegregation of
agency expenditures into components like, among others, by Source of Appropriation,
by Allotment class, and by need of Clearance.

Government Accounting (5 of 25)

Obligations are commitments by a government agency arising from an act of a duly
authorized official which bind the government to the immediate or eventual payment of
a sum of money.

NCA (Notice of Cash Allocation) - is an authorization issued by the DBM to an agency

to withdraw cash from Bureau of Treasury to pay expenses incurred; purchase of
materials, property plant and equipment, payment of payables, and other authorized
disbursements thru the issuance of MDS checks and other modes of disbursements.

The agency is authorized to incur obligations only in the performance of activities which
are in pursuits of its functions and programs authorized in appropriations acts/laws
within the limit of the ARO (Allotment Release Order).

Treatment of Obligations and Actual Liability

 Obligation Accounting is modified such that obligations are now recorded in the
appropriate Registry of Allotments, Obligations and Disbursements (RAOD)
maintained by allotment class.

 The actual liability of government arising from financial transaction is

recognized by a direct credit to the payable account

Accounting Records to be Maintained

Department of Budget and Management (DBM)

 The Registry of Appropriations and Allotments (RAPAL) shall be maintained for

each agency/bureau to monitor the balance of appropriations at any given time.

 The total appropriation of the agency appearing in the GAA or other

appropriations act shall be posted in the RAPAL at the beginning of each year or
upon approval of the appropriation act by allotment class (PS, MOOE, CO and FE)

 Registry of Allotments and NCA issued (RANCA) will also be maintained to ensure
that the NCA issued for current year’s operations will not exceed the allotments
released.

National Government Agencies (NGAs):

 The Registry of Allotments, Obligations and Disbursements (RAOD) shall be
maintained by national government agencies by allotment class, particularly by
the Budget unit to monitor allotments available for obligations. The NGAs shall
also maintain RAPAL.

Registries to be maintained by the agency are as follows:

RAODPS Registry of Allotments, Obligations and Disbursements – Personal

Services
RAODMO Registry of Allotments, Obligations and Disbursements –
Maintenance and Other Operating Expenses
RAODCO Registry of Allotments, Obligations and Disbursements – Capital
Outlay
RAODFE Registry of Allotments, Obligations and Disbursements – Financial
Expenses

Accounting for Income, Collections, Deposits and Related Transactions

Revenues/Income – refer to the annual or periodic yield of taxes, fines and penalties,
charges for services, charges for use of money and property and other charges which
the government collects or receives into its treasury for public use.
 Taxes
 Fines/Penalties
 Income form Government Service
 Income form Government Business Operation

Government Accounting (6 of 25)

  Rent income

Receipts - include all cash actually received from all sources/accounts during a
given fiscal period.

Note (1) Proceeds of loans/borrowings are no longer recorded as INCOME but

directly credited to LONG-TERM liabilities such as:
 Loans Payable – Long term, domestic
 Loan Payable – Foreign
 Bonds payable – Long-term, domestic
 Bonds payable – Foreign

Note (2) Trust receipts are now presented as Payables

 Due to BIR
 Due to GSIS
 Due to Pag-ibig
 Due to Philhealth
 Due to NGAs

Maintenance of 1 set of Books of Accounts ( To record receipts )

 Regulatory Agency Books – to record the regular transactions of the agency like the
receipt and utilization of the Notice of Cash Allocation; collection of income and
other receipts which can be used by the agency; and collections or income which
the agency cannot use and are required to be remitted to the Bureau of the
Treasury

Receipt and Collection Process

1. The Collecting Officer (CO) receives payment and issues Official Receipt.
2. The CO records collections in Cash Receipt Record.
3. The CO deposits collections.
4. The CO records deposit in Cash Receipt Record.
5. The CO prepares the Report of Collections and Deposits and forwards to
accounting unit with copies of official receipts and validated Deposit Slips.
6. The accounting unit prepares Journal Entry Voucher (JEV) and records in the
Cash Receipts Journal.

Accounting Policies – Regular Agency Books

1. Without authority to use – As a general rule, all revenues regardless of amount and
frequency of collection are to be remitted to the National Treasury.
2. With authority to use – the collections shall be deposited either to AGDB or National
Treasury.
3. Authority with limitations – any excess of collection shall be remitted to the National
Treasury, such as collections for seminar and convention fees.
4. Income from sale of equipment – proceeds are deemed automatically appropriated
for the purchase of new ones and/or for the repair of existing equipment. Collections
however shall be first remitted to BTr and upon receipt of SARO and NCAs, maybe
used to purchase another one.
5. Grants and donations – shall be remitted to the National Treasury. In case with
authority to use, a special budget shall be approved by DBM to be covered by NCA.

Accounting for Disbursements and Related Transactions

Disbursements
- constitute all cash paid out during a given period
- represent the movement of cash either from the BTr or AGDB or form an
authorized disbursing officer to the final recipient
- refer to the settlement of government payables/obligations by cash or by check

Expenditures – include the amount actually expended for goods delivered or services
rendered whether paid or not.

Fundamental Principles for Disbursement of Public Funds

Government Accounting (7 of 25)

 Section 4 of P.D. No. 1445, the Government Auditing Code of the Philippines,
provides that all financial transactions and operations of any government entity shall be
governed by the following fundamental principles:
a. No money shall be paid out of any public treasury or depository except in pursuance
of an appropriation law or other specific statutory authority.
b. Government funds or property shall be spent or used solely for public purposes.
c. Trust funds shall be available and may be spent only for the specific purpose for
which the trust was created or the funds received.
d. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency.
e. Disbursement or disposition of government funds or property shall invariably bear the
approval of the proper officials.
f. Claims against government funds shall be supported with complete documentation.
g. All laws and regulations applicable to financial transactions shall be faithfully
adhered to.
h. Generally accepted principles and practices of accounting as well as of sound
management and fiscal administration shall be observed, provided that they do not
contravene existing laws and regulations.

Basic Requirements for Disbursements and the Required Certifications

Disbursements of government funds shall comply with the following basic
requirements and certifications:
1. Availability of allotment/budget for obligation/utilization certified by the Budget
Officer/Head of Budget Unit;
2. Obligations/Utilizations properly charged against available allotment/budget by the
Chief Accountant/Head of accounting Unit;
3. Availability of funds certified by the Chief Accountant. The Head of the Accounting
Unit shall certify the availability of funds before an Agency Head or his duly authorized
representative enter into any contract that involves the expenditure of public funds
based on the copy of budget release documents;
4. Availability of cash certified by the Chief Accountant. The Head of the Accounting
Unit shall certify the availability of cash and completeness of the supporting documents
in the disbursement voucher and payroll based on the Registry of Allotments and Notice
of Cash Allocation/Registry of Allotment and Notice of Transfer of Allocation;
5. Legality of the transactions and conformity with existing rules and regulations. The
requesting and approving officials shall ensure that the disbursements of government
funds are legal and in conformity with applicable rules and regulations;
6. Submission of proper evidence to establish validity of the claim. The Head of the
Requesting Unit shall certify on the necessity and legality of charges to allotments
under his/her supervision as well as the validity, propriety and legality of supporting
documents. All payments of government obligations and payables shall be covered by
Disbursement Vouchers (DV)/Payrolls together with the original copy of the supporting
documents which will serve as basis in the evaluation of authenticity and authority of
the claim. It should be cleared, however, that the submission of the supporting
documents does not preclude reasonable questions on the funding, legality, regularity,
necessity and/or economy of the expenditures or transactions; and
7. Approval of the disbursement by the Head of Agency or by his duly authorized
representative. Disbursement or disposition of government funds or property shall
invariably bear the approval of the proper officials. The DVs/Payrolls shall be signed and
approved by the head of the agencies or his duly authorized representatives.

Certification of Availability of Funds

No funds shall be disbursed, and no expenditures or obligations chargeable
against any authorized allotment shall be incurred or authorized in any department,
office or agency without first securing the certification of its Chief Accountant or head
of accounting unit as to the availability of funds and the allotment to which the
expenditure or obligation may be properly charged.

No obligation shall be certified to accounts payable unless the obligation is

founded on a valid claim that is properly supported by sufficient evidence and unless
there is proper authority for its incurrence. Any certification for a non-existent or
fictitious obligation and/or creditor shall be considered void. The certifying official shall

Government Accounting (8 of 25)

be dismissed from the service, without prejudice to criminal prosecution under the
provisions of the Revised Penal Code.

Any payment made under such certification shall be illegal and every official
authorizing or making such payment, or taking part therein or receiving such payment,
shall be jointly and severally liable to the government for the full amount so paid or
received. (Book VI, Section 41 of EO No. 292)

Prohibition against the Incurrence of Overdraft

Heads of departments, bureaus, offices and agencies shall not incur nor authorize
the incurrence of expenditures or obligations in excess of allotments released by the
DBM Secretary for their respective departments, offices and agencies. Parties
responsible for the incurrence of overdrafts shall be held personally liable therefore.
(Book VI, Chapter 5, Section 41 of EO No. 292)

Modes of Disbursements

 By Check
a. MDS checks for disbursements covered by NCA
MDS Checks – issued by national government agencies chargeable against
the account of the Treasurer of the Philippines maintained with different
MDS – Government Servicing Banks (GSBs).
b. Commercial checks for disbursements covered by income/receipt authorized
to be deposited with AGDBs; for ROs/OUs disbursements out of Funding
checks received form COs/ROs.

 By Cash (thru disbursing Officers)

Cash – Disbursements out of cash advances of regular and special disbursing
officers for personal services, petty expenses and MOOE for field operating
requirements.

 NCAA Disbursements – non-cash disbursements through JEV by

availing/implementing agency
Non-Cash Availment Authority Disbursements– adopted to account for the cash
equivalent of the loan proceeds availed of through supplier’s credit/constructive
cash.

 By Advice to Debit the Account (ADA)

Advice to Debit Account – issued by national government agencies which serves
as notice to the bank to debit the agency’s MDS account for payments made for
accounts payable and retirement gratuity/terminal leave benefits.

 By Tax Remittance Advice (TRA)

Tax Remittance Advice – refers to the accountable document issued by NGA to
record the remittance of all taxes withed to the BIR. The same document shall be
the basis for the BIR and the BTr to record the tax collection and deposit in their
respective books of accounts.

Personnel Services
 Payroll Fund in the hands of a disbursing officer as cash advance. Payments are
made by the DO in cash to the employees
 Payroll Fund deposited in an authorized depository bank. Withdrawal by the
employees is through the automated teller machine (ATM).
 Direct payments to employees by individual check.

Maintenance and Other Operating Expenses

Asset Method will be followed in recording disbursements when expenditures apply to
more than just the accounting period.

Examples of these disbursements:

--- insurance --- rent
--- interest --- supplies & materials

Government Accounting (9 of 25)

 Perpetual Inventory Method
 Purchase of supplies and materials for stock, regardless of whether or not they
are consumed within the accounting period, shall be recorded as Inventory
following the Perpetual Inventory Method.
 Supplies and materials purchased for immediate use or on emergency shall be
taken up as expense.
 Petty cash shall not be used to purchase supplies for stock.

Financial Expenses
These are the expenses which are not used in the actual operation of the agency.
Bank Charge
Interest Expense
Commitment fees and
Other related expenses

Purchase/Construction of Fixed Assets

Fixed assets are charged against allotment for capital outlay. The purchase is
immediately recorded as asset.

TYPICAL GOVERNMENT TRANSACTIONS AND THEIR PRO-FORMA ENTRIES

UNDER NGAS

1. Receipt of Notice of Cash Allocation

Cash – MDS, Regular xxx
Subsidy from National Government xxx

2. Recording of Personal Expenses

Salaries and Wages-Regular xxx
PERA xxx
Due to Officers and Employees xxx
Due to BIR xxx
Due to GSIS xxx
Due to Pag-ibig xxx
Due to Philhealth xxx

3. Grant of Cash Advance for Payroll

Advances for Payroll xxx
Cash – MDS, Regular xxx

4. Liquidation of Cash Advance

Due to Officers and Employees xxx
Advances for Payroll xxx

5. Remittance of Salary Deductions

Due to GSIS xxx
Due to Pag-ibig xxx
Due to Philhealth xxx
Cash – MDS, Regular xxx

6. Establishment of Petty Cash Fund

Petty Cash xxx
Cash – MDS, Regular xxx

7. Replenishment of Petty Cash Fund

Office Supplies Expense xxx
Postage and Deliveries xxx
Cash – MDS, Regular xxx

8. Payment of one year advance rent

Prepaid Rent xxx
Cash – MDS, Regular xxx

9. Remittance of Withholding Tax (thru TRA)

Government Accounting (10 of 25)

 Due to BIR xxx
Subsidy from National Government xxx

10.Purchase of Equipment with charge invoice

Office Equipment xxx
Accounts Payable xxx

11.Payment of Charge invoice in no. 10

Accounts Payable xxx
Cash – MDS, Regular xxx

12.Issuance of bill for the rent of an office space (income with authority to use)
Accounts Receivable xxx
Rent Income xxx

13.Receipt of rent in no. 12

Cash-Collecting Officers xxx
Accounts Receivable xxx

14.Deposit in the bank of collection in no. 13

Cash in Bank-Local Currency, Current Account xxx
Cash-Collecting Officers xxx

- Nothing Follows -

I. Open – ended Problems

A. The Department of Budget and Management, upon approval and issuance of the
Agency Budget Matrix (ABM) and the Special Allotment Release Order (SARO), released
the following for Agency Y, including the Notice of Cash Allocations:

General Total Allotment NCA issued

Appropriation Appropriation released
Personnel Services 300,000 250,000 230,000
(PS)
Maintenance & Other 250,000 170,000 140,000
Operating Expenses
(MOOE)
Capital Outlay (CO) 800,000 700,000 580,000
Financial Expenses 88,000 72,000 61,000
(FE)

Special Purpose Fund

Personnel Services 160,000 120,000 105,000
(PS)

1) After recording the appropriations in the RAPAL, but before the release of the ABM
and SARO, the appropriation balance for PS in the RAPAL is
2) After recording the appropriations in the RAPAL, but before the release of the ABM
and SARO, the appropriation balance for MOOE in the RAPAL is
Government Accounting (11 of 25)
3) After recording the appropriations in the RAPAL and after the release of the ABM
and SARO, the appropriation balance for CO in the RAPAL is
4) After recording the appropriations in the RAPAL and after the release of the ABM
and SARO, the appropriation balance for FE in the RAPAL is
5) The total amount to be recorded in the RESPFA is
6) After the release of the ABM and SARO, but before the release of the NCA, allotments
for PS in the RANCA will be
7) After the release of the ABM and SARO, but before the release of the NCA, allotments
for CO in the RANCA will be
8) After the release of the ABM and SARO and the release of the NCA, allotments for
MOOE in the RANCA will be
9) After the release of the ABM and SARO and the release of the NCA, allotments for FE
in the RANCA will be
10) The RANCA should have total unfunded allotments equal to

B. The following information relates to the funds of the Department of Health:

Total Appropriat Allotmen NCA Obligation Disburseme

Appropriation ion t s nts
Personnel 2,000,000 1,700,000 1,300,000 900,000 650,000
Services
MOOE 1,150,000 1,040,000 1,000,000 790,000 720,000
Capital Outlay 2,800,000 2,600,000 2,100,000 1,200,000 1,010,000
Financial 100,000 80,000 50,000 45,000 32,000
Expenses

1) The RAPAL should show an appropriation balance for PS of

2) The RAPAL should show an appropriation balance for CO of
3) The RANCA should have an unfunded allotment balance of
4) The RAODMO should have an unobligated allotment balance of
5) The RAODMO should have an unpaid obligation balance of
6) The RAODFE should have an unobligated allotment balance of
7) The RAODFE should have an unpaid obligation balance of
8) The RAODPS should have an unobligated allotment balance of
9) The RAODPS should have an unpaid obligation balance of
10) The RAODCO should have an unobligated allotment balance of
11) The RAODCO should have an unpaid obligation balance of
12) The Budget Programming Rate is
13) The Budget Utilization (Obligation) Rate is
14) The Disbursement Rate is

C. Collecting Officer of Cebu State College, an agency authorized to use income,

registered total cash receipts for the first quarter of 2016 in the amount of P
1,575,000 broken down as follows:
Tuition fees P 800,000 Publication fees 300,000
Library fees 100,000 Diploma 75,000
Affiliation fees 250,000 Miscellaneous income
50,000

All collections were deposited in the college’s current account. The following were the
transactions during the period:
Procurement of IT Equipment: P 100,000 (withholding tax – P 5,000)
Payment of services: Janitorial P 30,000 (withholding tax - P 2,750)
Security 50,000 (withholding tax - P 1,550)
Purchase of Office Supplies from P 100,000 (withholding tax - P 5,000)
local suppliers

D. The Collecting Officer of Department of Environment and Natural Resources, an

agency not authorized to use income, reported total cash receipts for the first half
of 2016 in the amount of P 750,000 broken down as follows:

Government Accounting (12 of 25)

 Clearance and Certification fees P 200,000 Processing fees
150,000
Inspection fees 100,000 Other Service Income
50,000
Permit fees 250,000

All collections were remitted to the National Treasury.

E. On April 15, 2019, the Department of Education (DepEd) received allotment

amounting to P 750,000 with the corresponding Notice of Cash Allocation. On
April 25, 2016, a check was issued by DepEd in favor of the Department of
Science and Technology (DOST) for the procurement of various equipments in the
amount of P 500,000. The amount received was remitted to the National Treasury
and subsequently a NCA was requested/ received from the Department of Budget
and Management.

DOST purchased the following equipment for a total amount of P 465,000.

Communication Equipment P 190,000
Medical, Dental and Laboratory Equipment 230,000
IT Equipment 45,000

Subsequently, DOST liquidated the amount received and turned over the purchased
equipment and the remaining cash to DepEd. DepEd issued an official receipt for the
cash received and the same was promptly remitted to the Treasury.

F. Civil Service Commission (CSC) was given limited authority to use income. The
following were the transactions relative to the conduct of seminar which CSC
collected seminar fees to defray the expenses to be incurred during said activity:

1) Total collections and deposits P 125,000

2) Expenses incurred:
Supplies and Materials Expenses P 27,500 (w/tax P
1,230)
Catering Services 45,000 (w/tax 2,800)
Postage and Delivery 5,000
Professional fees 35,000
3) Remittance to BIR
4) Remittance of balance to National Treasury

G. Vicente Sotto Memorial Medical Center (VSMMC) received an inter-fund transfer

from Department of Health (DOH) to implement medical mission program in the amount
of P 200,000. The funds were intended to purchase the needed equipments. The project
ended with a fund balance of P 15,000 and was return to the source agency together
with the liquidation report and turn-over of equipments.

H. Leila de Lima Memorial Medical Center sold laboratory equipment with the following
information:

Cost P500,000
Accumulated depreciation 250,000
Sales Price 200,000

The proceeds from sale were accordingly remitted to the National Treasury
through the bank. The agency received Special Allotment Release Order (SARO) in the
amount of P500,000 for the purchase of a new laboratory equipment with Notice of
Cash Allocation (NCA) in the amount of P450,000, net of withholding tax of P50,000.
After approval of the purchase order issued, the laboratory equipment was delivered
Government Accounting (13 of 25)
and accordingly, paid in full, net of withholding tax. The said tax was afterwards
remitted to the Bureau of Internal Revenue through a Tax Remittance Advice (TRA).

I. The agency EF of the national government received grant from JD in the amount of
P70,000 and remitted the same to the National Treasury through the bank. Eventually,
the agency prepared and submitted special budget for the acquisition of machinery to
the DBM. Upon approval of the special budget, the DBM released the SARO of P70,000
and NCA of P61,000.

J. State Auditor IV Floielan Daarol of Sulu was called for a conference to be held in
Busan City, South Korea. A cash advance was granted for a total amount of P13,000.
Upon return from said trip, a statement of liquidation was prepared and showed the
following:

Plane fare P 7,250

Taxi fare 1,400
Porterage 100
Per diem 3,200
Terminal fee 400

K. The Agency VAL established a payroll fund, which is composed of salaries and wages
– regular pay, P200,000 and PERA, P50,000; and deductions, such as: withholding taxes,
P70,000, Pag-IBIG, P15,000, PhilHealth, P20,000, GSIS, P15,000 and employees’
association, P10,000. Accordingly, the net pay was advanced by the agency’s disbursing
officer.

L. The Department of Agriculture signed a contract for the construction of a building.

The contract price is P5,000,000. The agency received cash from the contractor paid as
performance bond (5%). The agency paid 15% of the contract price as advances to the
contractor. After three months of construction the agency received the first billing of
50% of the contract price. Accordingly, the accounts payable was recorded and
eventually paid, net of 10% retention fee and the mandatory withholding tax of
P156,250. When the project was completed, a final billing was received by the agency
after inspection of the project. However, the agency encountered some difficulties on
the remaining completion works that caused delay in the construction and a penalty was
imposed. Accordingly, a liquidating damages of P300,000 was deducted from the
contract price, net of withholding tax of P137,500. Finally, the performance bond and
retention fee were refunded by the agency to the contractor, while the withholding tax
was remitted to the BIR.

M. The resident auditor of Agency AAA disallowed payments made by the disbursing
officer of Agency AAA in the amount of P10,000, which pertains to overstatement of
transportation expenses in current year. Accordingly, the disbursing officer settled the
disallowance.

N. During an audit, the resident auditor of Agency BBB discovered that a cash of
P20,000 was lost due to theft. The custodian requested for relief from accountability
and after a thorough investigation, relief from accountability was granted.

II. Multiple Choice

1. What is government accounting?

a. Government accounting is an art of recording, classifying, summarizing in a

significant manner and in terms of money, transactions and events involving the receipt
and disposition of government funds and property, which are, in part at least, of a
financial character, and interpreting the results thereof.
b. Government accounting encompasses the processes of identifying, measuring, and
communicating economic information involving the receipt and disposition of
government funds and property to permit informed judgments and decisions by users of
information.

Government Accounting (14 of 25)

c. Government accounting encompasses the processes of analyzing, recording,
classifying, summarizing and communicating all transactions involving the receipt and
disposition of government funds and property and interpreting the results thereof.
d. Government accounting is a service activity, which function is to provide quantitative
information involving the receipt and disposition of government funds and property,
primarily financial in nature, about economic entities that is intended to be useful in
making economic decisions.

2. What is the residual value assigned to depreciable assets of the government?

a. Five percent of fair market value c. Five percent of net realizable
value
b. Five percent of purchase price d. No residual value

3. According to COA Circular No. 2013-002, the account code structure consists of how
many mandatory digits?
a. Six digits b. Four digits c. Five digits d. Eight digits

4. Which of the following statements is/are true?

I: Under PD 1445, accounting responsibility for all government funds and property is
entrusted, immediately and primarily, to the head of the government agency or office.
II: The New Government Accounting System took effect on January 1, 2003.
a. I only b. II only c. Both I and II d. Neither I
nor II

5. It is a budget release document that serves as the obligational authority replacing the
Agency Budget Matrix (ABM) for the comprehensive release of budgetary items
appropriated in the GAA, categorized as “For Comprehensive Release”.
a. General Allotment Release Order c. Disbursement Authority
b. Special Allotment Release Order d. General Appropriation Act

6. What is the proper classification of small tangible assets with estimated useful life of
more than one year not included in the list per Annex A of COA Circular No. 2005-002?
a. Property, Plant and Equipment c. Inventory or PPE, at the option of
the accounting unit head
b. Inventory d. Inventory or PPE, at the option of the agency
head

7. Which of the following statements is/are false?

I: Budgetary accounts are recorded in the agency’s books of accounts.
II: The budget call is prepared by the COA.
a. I only b. II only c. Both I and II d. Neither I
nor II

8. Which government body keeps the general accounts of government and promulgates
accounting rules and regulation?
a. Commission on Audit c. Bureau of Treasury
b. Department of Finance d. Department of Budget and Management

9. Which government body is responsible for the design, preparation and approval of
the accounting system of government agencies?
a. Commision on Audit c. Department of Budget and Management
b. Bureau of Treasury d. Department of Finance

10. What is the legal basis of COA’s constitutional office and mandate?
a. PD 1445 c. Section 2(2), Art. IX-D of the 1987 Constitution
b. COA Circular No. 2002-003 d. Section 2(2), Art. IX-B of the 1987
Constitution

11. Which of the following statements is/are true?

I: Only one set of books of accounts is kept in government accounting.
II: Notice of Cash Allocations are sent to the government agencies and the Department
of Finance. treasury

Government Accounting (15 of 25)

a. I only b. II only c. Both I and II d. Neither I
nor II

12. Which of the following refers to modified accrual basis of accounting?

a. All revenues shall be recognized when earned and reported in the financial
statements in the period to which they relate. Expenses shall be on accrual basis except
for transactions where accrual basis is impractical or when other methods required by
law.
b. All revenues shall be recognized when cash is received and reported in the financial
statements in the period to which they relate. Expenses shall be on accrual basis except
for transactions where accrual basis is impractical or when other methods required by
law.
c. All expenses shall be recognized when incurred and reported in the financial
statements in the period to which they relate. Income shall be on accrual basis except
for transactions where accrual basis is impractical or when other methods required by
law.
d. All expenses shall be recognized when cash is paid and reported in the financial
statements in the period to which they relate. Income shall be on accrual basis except
for transactions where accrual basis is impractical or when other methods required by
law.

13. 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 for any public
purpose.
c. Discretionary funds appropriated for particular officials shall be disbursed only for
public purpose.
d. No money shall be appropriated for any sect, church or religious denomination.

14. Funds are established in accordance with either of the following requirements,
except one:
a. Constitution b. Statutes c. Legislative enactment d. GAAP

15. The following are the objectives of the NGAS, which is NOT
a. Simplify government accounting.
b. Conform to International Accounting Standards.
c. Comply with the requirements of International Monetary Board.
d. Generate periodic and relevant financial reports for better monitoring or
performance.

16. What is the title of Presidential Decree No. 1445?

a. The Government Accounting Code of the Philippines c. The State Accounting
Code of the Philippines
b. The Government Auditing Code of the Philippines d. The Philippine
Auditing Code

17. It is the method used in costing the inventory in the government:

a. First-in, First-out (FIFO) c. Simple average method
b. Weighted average method d. Moving average method

18. Separate fund accounting shall be done only in the following, except
a. when specifically required by law
b. when specifically required by a donor agency
c. when specifically required by the COA
d. when otherwise necessitated by circumstances subject to prior approval of the COA

19. A plan of financial operation embodying an estimate or proposed expenditures for a

given period and the proposed means of financing them is a:
a. Budget b. Master Plan c. Financial Plan d. Fund
Plan

20. It refers to a claim of legitimacy, the justification and right to exercise that power.

Government Accounting (16 of 25)

a. authority b. power c. accountability d. responsibility

21. When does the government recognize a liability?

a. at the time goods and services are accepted or rendered
b. when supplier/creditor bills are received.
c. A or B
d. A and B

22. It is the method used by government agencies in recording purchase of supplies and
materials for stock regardless of whether or not they are consumed within the
accounting period:
a. Asset method c. Period inventory method
b. Perpetual inventory method d. Expense method

23. The following are financial expenses, except

a. bank charges b. interest expenses c. bond expenses d.
commitment charges

24. It is the annual documents required at the onset of the budget execution phase,
which contain the agencies’ targets and plans for the current year.
a. Annual Cash Program c. Budget Execution Document
b. Financial Accountability Report d. Budget Accountability Report

25. Which of the following is not a feature of government accounting?

a. Accounting is done by fund. c. Preparation of income statement is a
must.
b. Budgetary accounts are used. d. Periodic inventory system.

26. Which of the following statements is/are false?

I: For agencies which are authorized to use income for their operations, the collections
shall be recorded as income in the National Government books.
II: If the authority of the agency is subject to the limitation that any excess shall be
remitted to the National Treasury, the collections shall be recorded in the Regular
Agency books.
a. I only b. II only c. Both I and II d. Neither I
nor II

27. Under the Construction Period Theory, bonus paid to the contractor for completing
the work ____ shall be ______ the total cost of the project.
a. on time; added to c. on time; deducted from
b. ahead of time; added to d. ahead of time; deducted from

28. Which of the following statements is/are true?

I: Serviceable assets no longer being used are reclassified to Other Assets.
II: The Budgetary accounts consist of appropriations, obligations and disbursements.
a. I only b. II only c. Both I and II d. Neither I
nor II

29. The legal basis of the current national budget system is the Budget Reform Decree
of 1977 or also known as
a. PD 1376 b. PD 1346 c. PD 1445 d. PD 1177

30. The following are members of the Development Budget Coordination Committee,
except
a. BSP Governor c. NEDA Secretary
b. DOF Secretary d. Chairman of the COA

31. The books of accounts in the government are composed of the following:
a. Regular Agency books and books of original entry
b. National Government books and books of original entry
c. Regular Agency books and National Government books
d. Regular Agency books and maintain Registries for budget accounts

Government Accounting (17 of 25)

32. A control mechanism of government accounting system that provides the ceiling of
the maximum extent by which an agency can incur obligations or commit the resources
of the government in the performance of its functions.
a. Fund Accounting c. Responsibility Accounting
b. CDC Accounting d. Obligation Accounting

33. Which is NOT one of the features of NGAS?

a. Depreciation c. Construction of Assets
b. Consistency d. Allowance for Doubtful Accounts

34. Which of the following statements is/are false?

I: Only the members of the House Committee on Appropriations can participate during
the house deliberations.
II: The COA requires agencies to submit quarterly physical reports of operation.
a. I only b. II only c. Both I and II d. Neither I
nor II

35. To control the allotments, obligations and disbursements of the four classes of
allotments, the following registries shall be maintained by government agencies/ units.
a. RAOPS, RAOME, RAOCO and RAOFE c. RAOPS, RAOMO, RAOCO and
RAOFE
b. RAODPS, RAODME, RAODCO and RAODFE d. RAODPS, RAODMO, RAODCO and
RAODFE

36. Which of the following statements is/are false?

I: The NCA is the share of the Agency in the income of the National Government.
II: The Notice of Cash Allocation received by the agency is net of the 5% tax for
Personnel Services and 8% tax for Maintenance and Other Operating Expenses, Capital
Outlays and Financial Expenses to be withheld by the agency. 8%ps rest 5%
a. I only b. II only c. Both I and II d. Neither I
nor II

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

a. Commission on Audit c. National Government Agencies
b. Department of Budget and Management d. Legislative Department

38. The following are the distinct components of the baseline budget, except
a. Agency Baseline c. Foreign Assisted Programs Baseline
b. Government-wide Baseline d. Foreign Assisted Projects Baseline

39. The following are the books of original entries utilized in the Regular Agency books,
except
a. Cash Receipts Journal c. Check Disbursement Journal
b. Cash Disbursement Journal d. Check Receipts Journal

40. The following are the financial statements under Government Accounting, except
a. Statement of Financial Position c. Statement of Government’s Net
Assets/Equity
b. Statement of Financial Performance d. Statement of Cash Flows

41. The following are the documents that form part of the proposed national budget of
the president, except
a. President’s Budget Message c. Budget of Expenditures and Sources of
Financing
b. National Expenditure Program d. Financial Risks Statement

42. It shows the overall accounting system of a government agency/ unit.

a. Government Accounting System c. Government Accounting Plan
b. General Accounting System d. General Accounting Plan

43. Which of the following statements is/are true?

I:The Bureau of Treasury ensures that government resources are generated and
managed judiciously and in a manner supportive of development activities.

Government Accounting (18 of 25)

II: Government funds or property shall be spent or used solely for public purpose.
a. I only b. II only c. Both I and II d. Neither I
nor II

44. A budget the bases of which are the objects of expenditures.

a. Performance budget c. Line item budget
b. Special budget d. Zero based budget

45. It is the transfer of cash from another agency to implement the project of another
agency.
a. Intra-agency transferred funds c. Subsidy to national government
agencies
b. Inter-agency transferred funds d. Subsidy from national government

46. Which of the following statements is/are false?

I: Congress can increase the president’s budget.
II: Appropriations are journalized by an agency in the records that it keeps.
a. I only b. II only c. Both I and II d. Neither I
nor II

47. The deadline set by the 1987 Constitution for the submission of the President’s
Budget to Congress.
a. 45 days from the opening of regular session of Congress
b. 90 days from the opening of regular session of Congress
c. 60 days from the opening of regular session of Congress
d. 30 days from the opening of regular session of Congress

48. It is the preparation of the national budget where the total estimated revenues must
be more than the total estimated expenditures.
a. Zero base budget b. Balanced budget c. Supplemental budget
d. Line item budget

49. The following are kinds of budget according to nature, except

a. Annual budget b. Supplemental budget c. Special budget d. Line
item budget

50. Which of the following maintains the registries of each agency?

a. Accounting unit b. Budget unit c. Requesting unit d. Head of
the agency

51. An Allowance for Doubtful Accounts shall be set up for estimated uncollectible trade
receivables to allow for their
a. net realizable valuation c. net fair valuation
b. realizable valuation d. fair valuation

52. This account is used to record in the Regular agency (RA) books the receipt of NCA
from the Department of Budget and Management and the corresponding withdrawal of
national government agencies.
a. Cash -National Treasury, MDS c. Cash in Bank - Local Currency -
Savings account
b. Cash - MDS, Regular d. Cash in Bank - Local Currency - Current
Account

53. Which is not an accounting responsibility of department agencies?

a. To maintain and keep current the account 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.

54. The basis of accounting used in the government is

a. Cash basis c. Modified accrual basis
b. Accrual basis d. Installment basis

Government Accounting (19 of 25)

55. Which of the following account under the NGAS is credited when Notice of Cash
Allocation is received by the
agency?
a. National Clearing Account c. Subsidy Income from National
Government
b. Obligations Incurred d. Subsidy from National Government

56. This is the method of depreciation used by the national government agencies:
a. Output method c. Straight line method
b. Sum of years digits’ method d. Double declining balance method

57. The primary source of generally accepted government accounting principle are
pronouncements by
a. Philippine Institute of Certified Public Accountants (PICPA)
b. Commission On Audit (COA)
c. Department of Budget and Management (DBM)
d. Government Association of Certified Public Accountants (GACPA)

58. Accounting error in the government is corrected by

a. Debiting the wrong credit and crediting the wrong debit
b. Memorandum entry
c. Negative or red entry
d. None of the above
NEW GENERAL APPROPRIATIONS
CONTINUING APPROPRIATION
59. The following are components of the National Budget, except AUTOMATIC
a. New General Appropriations c. General Appropriation Act
b. Continuing Appropriation d. Automatic Appropriation

60. This account is debited upon the receipt of collections by the collecting officer
a. Cash – National Treasury, MDS c. Cash in Bank – Local Currency
b. Cash – Collecting Officers d. Cash in Bank – Disbursing Officers

61. The term used to designate the authority to incur obligations

a. Allotment c. Appropriations
b. Executive order d. Obligation

62. The standard chart of accounts is prescribed by

a. Commission on Audit c. Department of Finance
b. Department of Budget and Management d. National Government agencies

63. It is the amount committed or contracted by an administrative official and for

which the government is liable.
Obligation Appropriation
a. Yes Yes
b. No No
c. Yes No
d. No Yes

64. These are the accounts which are closed to the government equity at the end of an
accounting period
a. Income and expense summary c. Contra accounts
b. Revenue and expense summary d. Adjunct accounts

65. Which of the following is not a personal service expense?

a. Cash gift c. Transportation allowance
b. Representation allowance d. Traveling expense - Local

66. What account is credited in recording the remittance of withholding taxes with
TRA?
a. Due to National Government Agencies

Government Accounting (20 of 25)

b. Cash - National Treasury, MDS
c. Subsidy Income from National Government
d. Subsidy from National Government

67. All disbursement shall be supported by

a. Disbursement voucher.
b. Disbursement voucher and its supporting documents
c. Disbursement voucher duly certified and approved and its supporting documents
d. Checks

68. These are the checks issued by government agencies chargeable against the agency
checking account with government servicing banks.
a. Post-dated checks c. Modified Disbursement system checks
b. Commercial checks d. Treasury warrant checks

69. This account is used to record the cost/appraised value of government assets which
are still under construction including software development.
a. Construction in progress
b. Construction in progress - Agency assets
c. Public infrastructures
d. Registry of public infrastructures

70. It represents checks collected by government agency but not accepted by bank
upon deposit.
a. Stale checks c. Outstanding checks
b. Dishonored checks d. MDS checks

71. It is the financial statement prepared directly from the post-closing trial balance.
Statement of
Financial Statement of
Performance Financial Position
a. Yes No
b. No Yes
c. Yes Yes
d. No No

72. Under the New Government Accounting System, Financial Reporting System
includes the
a. Preparation and submission of financial statements.
b. Preparation of ABM, monitoring and recording of allotments received by the agency
from DBM.
c. Reporting income/collections, deposits of collections with AGDB.
d. Preparation and processing of disbursement voucher, and liquidation of obligation.

73. The document prepared to evidence the incurrence and recording of obligations to
the appropriate registries.
a. Journal Entry Voucher c. Obligational Request
b. Allotment and Obligation Slip d. Disbursement Voucher

In answering numbers 74-83, refer to the following choices:

A – Budget Execution C – Budget Legislation
B – Budget Accountability D – Budget Preparation

74. Involves the legislative review and approval of the budget. C

75. Allotment and cash release programming. A
76. Budget accountability reports are submitted by each agencies showing how the
funds are utilized and identifying their corresponding accomplishments. B
77. Construction of roads and bridges. A
78. Determination of budgetary priorities. D
79. The House Appropriations Committee asks the various agencies to explain their
respective budgets contained in the budget bill. C

Government Accounting (21 of 25)

80. Concerned with the tracking and monitoring of actual expenditures, revenues,
assets and liabilities of the government and carried out through the accounting
function. B
81. Concern with the release of funds in the form of obligatory authority. A
82. Technical Budget Hearings. D
83. Ends when the General Appropriations Act (GAA) is signed by the President as a law.
C

84. Collection of P645,000 representing motor vehicles registration fees was recorded
by Land Transportation Office as P654,000. What is the correcting entry?
a. Cash – Collecting Officer (9,000)
Registration Fees (9,000)
b. Cash – Collecting Officer 9,000
Registration Fees 9,000
c. Registration Fees (9,000)
Cash – Collecting Officer (9,000)
d. Registration Fees 9,000
Cash – Collecting Officer 9,000

Numbers 85 & 86 are based on the following:

Out of its total appropriation for 2016, the Department of Energy received its allotments
broken down as follows:

Capital Outlay P 20,000,000

Maintenance & Other Operating Expenses 10,000,000
Personnel Services 5,000,000
Financial Expenses 1,000,000
Total P 36,000,000

DBM issued Notice of Cash Allocation to the Department Energy in the amount of P
20,000,000.

85. Department of Energy records the allotment by a:

a. Memo entry in the Registry of Allotment, Obligations and Disbursements (RAOD).
b. Memo entry in the Registry of Appropriations and Allotment (RAPAL).
c. Memo entry in the Registry of Appropriations and Allotment (RAPAL) and Registry of
Allotment, Obligations and Disbursements (RAOD).
d. Memo entry in the Registry of Appropriations and Allotment (RAPAL), Registry of
Allotment, Obligations and Disbursements (RAOD) and Registry of Allotment and Notice
of Cash Allocation (RANCA).

86. What is the journal entry of the Department of Energy to record the receipt of NCA?
a. Cash-National Treasury MDS, Regular 20,000,000
Subsidy Income from National Government 20,000,000
b. Cash-MDS, Regular 20,000,000
Subsidy Income from National Government 20,000,000
c. Cash-National Treasury MDS, Regular 20,000,000
Subsidy from National Government 20,000,000
d. Cash-MDS, Regular 20,000,000
Subsidy from National Government 20,000,000

Numbers 87 & 88 are based on the following:

Agency C is a National Government Agency with an allotment from the DBM for MOOE
amounting to P5,500,000. Of the total amount, P4,675,000 was obligated and 80% was
paid. The remaining 20% was recognized as accounts payable.

87. How much is the unobligated allotment balance that should be shown in Registry of
Allotment, Obligations and Disbursements-MOOE?
a. P825,000 b. P935,000 c. P1,760,000 d. P3,740,000 5.5-4.675

88. How much is the unpaid obligation balance that should be shown in Registry of
Allotment, Obligations and Disbursements-MOOE?
4675x.20
a. P825,000 b. P935,000 c. P1,760,000 d. P3,740,000

Government Accounting (22 of 25)

Numbers 89 to 91 are based on the following:
The Department of Budget and Management, upon approval and issuance of the Agency
Budget Matrix (ABM) and the Special Allotment Release Order (SARO), released the
following for Agency J, including the Notice of Cash Allocations:

General Total Allotment NCA issued

Appropriation Appropriation released
Personnel Services 500,000 350,000 330,000 20
(PS)
Maintenance & Other 250,000 170,000 140,000 30

Operating Expenses
(MOOE)
Capital Outlay (CO) 800,000 700,000 580,000 120

Financial Expenses 98,000 82,000 71,000 11

(FE)

Special Purpose Fund

Personnel Services 260,000 220,000 206,000 14
(PS)

89. After recording the appropriations in the RAPAL, but before the release of the ABM 195
and SARO, the unreleased appropriation balance for PS in the RAPAL is
a. P150,000 b. 190,000 c. P500,000 d. 760,000

90. After recording the appropriations in the RAPAL and after the release of the ABM
and SARO, the unreleased appropriation balance for FE in the RAPAL is
a. P98,000 b. P16,000 c. P82,000 d. P11,000
98-82
91. The RANCA should have total unfunded allotments equal to
a. P196,000 b. P1,522,000 c. P1,327,000 d. P195,000

Numbers 92 to 95 are based on the following:

The following information relates to the funds of Agency FiveOneEight:

Total Appropriat Allotmen NCA Obligation Disburseme

Appropriation ion t s nts
Personnel 3,000,000 2,700,000 2,300,000 1,900,000 1,650,000
Services
MOOE 1,250,000 1,140,000 1,100,000 890,000 820,000
Capital Outlay 2,810,000 2,610,000 2,110,000 1,210,000 1,020,000
Financial 108,000 88,000 56,000 44,000 31,000
Expenses 7168
6538 5566 4044 3521

92. The RAPAL should show an unreleased appropriation balance for CO of

a. P2,810,000 b. P500,000 c. P200,000 d.
2810-2610
P900,000
93. The RAODMO should have an unobligated allotment balance of
a. P40,000 b. P250,000 c. P210,000 d.
1140-890
P70,0

94. The RAODCO should have an unpaid obligation balance of

a. P90,000 b. P190,000 c. P1,400,000
d. P900,000 1210-1020

95. The Disbursement Rate is

a. 87.07 b. 72.66 c. 61.85
d. 63.26 6538

Numbers 96 to 98 are based on the following:

The Department of Interior and Local Government, an agency authorized to use income,
owns an office building with commercial spaces available for rent. On August 31, 2016,

Government Accounting (23 of 25)

DILG received rental payments of P130,000 covering rental for August. The amount was
deposited in the agency’s depository bank.

96. The entry to record the receipt of the P130,000 should be journalized in the National
Government books as
a. Cash – Collecting Officers 130,000
Rent/ Lease Income 130,000
b. Cash – MDS, Trust 130,000
Rent/ Lease Income 130,000
c. Cash – Collecting Officers 130,000
Accumulated Surplus/ (Deficit) 130,000
d. Cash – MDS, Trust 130,000
Accumulated Surplus/ (Deficit) 130,000
e. No entry

97. The entry to record the deposit of the rental payment is

a. Cash – Treasury/Agency Deposit – Trust 130,000
Cash – Collecting Officers 130,000
b. Cash – Treasury/Agency Deposit – Trust 130,000
Cash – MDS, Trust 130,000
c. Cash in Bank – Local Currency Current Account 130,000
Cash – Collecting Officers 130,000
d. Cash in Bank – Local Currency Current Account 130,000
Cash – MDS, Trust 130,000

98. The entry to record an acquisition of asset or payment of expense by the agency
includes a credit to
a. Cash – MDS, Trust c. Cash – Treasury/ Agency Deposit - Trust
b. Cash – MDS, Regular d. Cash in Bank – Local Currency Current
Account

Numbers 99 to 101 are based on the following:

Camagayan City Medical Center (CCMC) received an inter-fund transfer from
Department of Health (DOH) to implement medical mission program in the amount of
P200,000. The funds were intended to purchase the needed equipments. The project
ended with a fund balance of P15,000 and was return to DOH together with the
liquidation report and turn-over of equipments.

99. What entry was made by CCMC upon the receipt of funds?
a. Cash – MDS, Regular 200,000
Due from NGAs 200,000
b. Cash – MDS, Regular 200,000
Due to NGAs 200,000
c. Cash – Collecting Officers 200,000
Due from NGAs 200,000
d. Cash – Collecting Officers 200,000
Due to NGAs 200,000

100. What entry was made by DOH in the transfer of its funds to CCMC?
a. Due from NGAs 200,000
Cash – MDS, Regular 200,000
b. Due from NGAs 200,000
Cash – Collecting Officers 200,000
c. Due to NGAs 200,000
Cash – MDS, Regular 200,000
d. Due to NGAs 200,000
Cash – Collecting Officers 200,000

101. The entry to record the turn-over of the equipments and the return of fund balance
in the books of CCMC includes a debit to “Due to Other NGAs” in the amount of
a. P 185,000 b. P 200,000 c. P 15,000 d. P 0

Numbers 102 & 103 are based on the following:

Government Accounting (24 of 25)

The Collecting Officer of Department of Environment and Natural Resources, an agency
not authorized to use income, reported total cash receipts for the first half of 2016 in
the amount of P750,000 broken down as follows:
Clearance and Certification fees P 200,000 Processing fees
150,000
Inspection fees 100,000 Other Service Income
50,000
Permit fees 250,000

All collections were remitted to the National Treasury.

102. What is the entry to record the receipt of cash?

a. Cash – Collecting Officers 750,000
Due to National Treasury 750,000
b. Cash – Collecting Officers 750,000
Government Equity 750,000
c. Cash – Collecting Officers 750,000
Accumulated Surplus/ (Deficit) 750,000
d. Cash – Collecting Officers 750,000
Clearance and Certification Fees 200,000
Inspection Fees 100,000
Permit Fees 250,000
Processing Fees 150,000
Other Service Income 50,000

103. What is the entry to record the remittance to the National Treasury?
a. Due to National Treasury 750,000
Cash – Collecting Officers 750,000
b. Government Equity 750,000
Cash – Collecting Officers 750,000
c. Accumulated Surplus/ (Deficit) 750,000
Cash – Collecting Officers 750,000
d. Clearance & Certification Fees 200,000
Inspection Fees 100,000
Permit Fees 250,000
Processing Fees 150,000
Other Service Income 50,000
Cash – Collecting Officers 750,000

104. On December 31, 2019, the pre-closing trial balance of JMD shows the following
totals (in Millions):

Current Assets P50,000

Fixed Assets 120,000
Current Liabilities 38,000
Subsidy Income from National
Govt. 15,000
Expenses 12,500

What is the accumulated surplus/ (deficit) as of December 31, 2019?

a. P 132,000,000 c. P 12,000,000
b. P 117,000,000 d. P 129,500,000

- Nothing Follows -

Government Accounting (25 of 25)

 FINAL EXAMINATION
AC 518
(First Semester, SY 2018-2019)

INSTRUCTIONS: Select the best answer by shading the box corresponding to the letter of your
choice. (N x 1)
1.A service activity that provide quantitative information primarily financial in nature about the operations
of the government, both local and national, to be used solely by the administration in making decisions
for a more effective and efficient public service.
A. Budgeting B.. Government Accounting C.. Planning D. all of the above

2. An accounting practice, procedures and techniques in recording obligations in the government.

A. Fund Accounting C. Government accounting B. Obligation Accounting D. none of the
above

3. The obligation of a public officer/employee to answer for the responsibility conferred on him/her.
A. Accountability C. Authority C. Responsibility D. Corporate Governance

4. Refers to claim of legitimacy, the justification and the right to exercise that power.
A. Accountability B. Authority C. Responsibility D. Corporate Governance

Items 5-8 are based on the transaction below:

On December 15, 2021, the Regional Director of DSWD, Region VII, was granted a cash
advance totaling P20,600 for a 5 days seminar in Manila. His itinerary showed a total traveling expenses
of P2,000 in transportation and other incidental expenses, rd. trip plane fare, P7,000 and a seminar fee of
P5,000.,. The per diem allowed was P1,200/day. Upon return, he liquidated his cash advance.

On February 15, 2021, the director’s liquidation was post-audited and the auditor issued a
Management Letter requiring him to refund the 5 days per diem since the seminar fee covers lodging and
meals. Hence, disallowed. The director immediately refunded and was receipted. The refund was
immediately remitted to the National Treasury.
5. What account was debited when cash advance was granted? 2
A. Cash – National Treasury, MDS P 6,000 7
5
B.. Advances to Officers and Employees 20,000 1.2x5=6
=20
C. Travelling Expenses-Local 13,000
D. Cash – Disbursing Officer 20,600

6. What account was debited when the per diem was refunded due to disallowance notice by the auditor?
A. Travelling Expenses - local 6,000.00
B. Due from Officers and Employees 5,000.00
C. Accumulated Surplus/Deficit 6,000.00
D. Cash – Collecting Officer 6,000.00

7. What was the journal entry when the liquidation of cash advance was recorded?
A Advances to Officers and employees 20,600
Travelling expenses – local 20,600
B. Travelling expenses - local 15,600
Training expenses 5,000
Advances to Officers and employees 20,600
C. Travelling expenses - local 20,600
Due from Officers and employees 20,600
D. Travelling expenses – local 20,600
Advances to Officers and employees 20,600

8. What account was debited when the collection was remitted to the National Treasury?
A. Cash – collecting officers C. Cash – Treasury/Agency Deposit, Reg
B Cash – Tax Remittance Advise D. Subsidy from NG
Items 9- 13: The following are budgetary processes:
A –Budget Preparation C. Budget Execution
B- Budget Legislation D. Budget Accountability

Determine which of the above-mentioned budgetary processes the following budgetary activities relates:
__A__ 9. Covers the estimation of government revenues, the determination of budgetary priorities and
translate into budgetary estimates.
__C__ 10. Covers the operational aspect of budgeting.
__D__ 11. Involved in the evaluation of expenditures and performance.
__D__ 12. Obligations incurred is compared with the plans and targets submitted by the agency.
__B__ 13. Involves the legislative review and approval of the budget.

14. SI: T The Head of the agency is immediately and primarily responsible for all government funds and
property pertaining to his agency.
SII: T Persons entrusted with the actual possession or custody of the funds or property are accountable
officers and immediately responsible to the agency head.
A. Statement I is true, Statement II is false. C. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false
MDS
15. S I: FThe commercial checks can be issued by government agencies chargeable against the account of
the Treasurer of the Philippines. gout treasury
S II:TThe receipt of NCA by NGAs shall be recorded in the RA books.
A. Statement I is true, Statement II is false. B. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false.

16. SI: TNo payment of any nature shall be received by a collecting officer without immediately issuing an official
receipt in acknowledgement thereof.
SII: TAllcollecting officers shall deposit intact all their collections with AGDB daily or not later than the next
banking day and shall record all the deposits made in the Cash Receipts Record.
A. Statement I is true, Statement II is false. C. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false

:
17. S1: MDS checks are issued by government agencies chargeable against the account of the Treasurer of
the Philippines which are maintained with commercial banks.
T
SII: All unreleased and cancelled checks shall be reported and enumerated in the “List of Unreleased
checks” to be attached to the Report of Checks Issued.
A. Statement I is true, Statement II is false. C. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false

18. S1:TPerformance Bond shall be returned to the contractor after the completion of the construction and
turned-over to the agency.
T
SII: For additional claim of travelling expenses maybe due to an official extended stay, can be
requested for reimbursement and need not require obligation.
A. Statement I is true, Statement II is false. C. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false

19. S1: The cash advances for personal services shall be equal to the gross amount of salaries and wages.
SII: The PCF shall not be used to purchase regular inventory items for stock.
A. Statement I is true, Statement II is false. C. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false

20. S1:FPayment for Representation and Transportation Expenses (RATA) for heads of office were
obligated and recorded in RAOD-MO.
T
SII No need for obligation if the purchase was charged to a trust account and not come from an NCA,
A. Statement I is true, Statement II is false. C. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false
21. SI:T Responsibility for the presentation and reliability of financial statements rests with the
management
of the reporting agency.
SII: #A Trial Balance is a tool for accumulating and sorting information needed for the preparation of
the
financial statements.
A. Statement I is true, Statement II is false. C. Statement I is false, Statement II is true.
B. Statement I is true, Statement II is true. D. Statement I is false, Statement II is false

Items 22-25 are based on the following data:

Department of Tourism prepares the payroll for the month of January, 2021:
Salaries and wages P 180,000
Additional Compensation(ADCOM) 25,000
Personnel Economic Relief Allowance(PERA) 25,000
Gross Payroll P230,000
Less: Withholding taxes P 16,000
GSIS life & ret premium 12,700
Pag-ibig premium 8,000
Philhealth premium 4,300 41,000
Net Payroll P189,000
=======
The net payroll was advanced to a Disbursing Officer.

22. The agency enters the obligation of the payroll in:

A RAOD-CO B. RAOD-PS C. RAOD-MO D. RAOD-FE

23. The entry to record the advances to the disbursing officer:

A. Advances to Special Disbursing Officer 189,000
Cash – MDS, Regular 189,000
B. Advances to Special Disbursing Officer 230,000
Cash – MDS, Regular 230,000
C. Cash- MDS, Regular 189,000
Advances to Special Disbursing Officer 189,000
D. Cash – MDS, Regular 230,000
Cash – Disbursing Officer 230,000

24. The entry to record liquidation of cash advance by the disbursing officer:
A. Due to Officers and employees 230,000
Advances to Special Disbursing Officer 230,000
B. Due to Officers and Employees 189,000
Advances to Special Disbursing Officers 189,000
C. Advances to Special Disbursing Officers 189,000
Due to Officers and Employees 189,000
D. Salaries and wages 180,000
PERA 25,000
ADCOM 25,000
Due to BIR 16,000
Due to GSIS 12,700
Due to Pag-ibig 8,000
Due to PhilHealth 4,300
Advances to Special Disbursing Officers 189,000

25. The entry to record remittance of withholding tax to BIR upon receipt of NCA for TRA from DBM:
A. Cash - Tax Remittance Advise 6,000
Due to BIR 6,000
B. Due to BIR 16,000
Cash – National Treasury, MDS 16,000
C. Due to BIR 16,000
Cash – Tax Remittance Advise 16,000
D. Subsidy from NG 16,000
Due to BIR 16,000
Items 26 & 27:On December 31, 2021, the pre-closing trial balance of ABC Agency shows the
following (In thousands):
Subsidy Income from NG P 125,000
Miscellaneous Income 7,500
Salaries and wages – regular pay 35,000
Life and Retirement Insurance Contribution 8,400
Pag-ibig Contribution 4,200
Philhealth Contribution 1,800
Travelling Expense – local 15,050
Electricity 14,550
Telephone/Internet 5,700
Rent Expense 24,000
Office Supplies Expense 2,500
Depreciation – Office Equipment 12,000

26. What is the closing entry to close the excess of revenue over expenses (in thousands)?
A. Accumulated Surplus 9,300
Revcnue and Expense Summary 9,300
B. Revenue and Expense Summary 9,300
Subsidy from NG 9,300
C. Revenue and Expense Summary 9,300
Accumulated Surplus 9,300
D. Accumulated Surplus 9,300
Government Equity 9,300

27. What account is debited in the reversion of unused NCA at year-end?

A. Government Equity C. Revenue and Expense Summary
B. Cash – MDS, Regular D. Subsidy from National Government

28. With the implementation of PPSA, Account “Reforestration Projects” are recognized in the books as
A. Property, Plant and Equipment account C. Government Equity
B. Land Improvement, Reforestration Projects D. Accumulated Surplus account

29. Collection of P245,000 representing motor vehicles registration fees was recorded by LTO as
P254,000. What is the correcting entry to be made?
A. Cash –MDS, Regular 9,000
Cash – collecting officer 9,000
B. Cash – collecting officer 9,000
Registration fees 9,000
C. Cash – collecting officer (9,000)
Registration fees (9,000)
D. Registration fees 9,000
Cash – collecting officer 9,000

30. Which of the following is NOT one of the purposes in the preparation of a trial balance?
A. To prove the mathematical equality of the debits and credits after posting.
B. To serve as basis for the preparation of financial statements.
C. To prove that no errors of any kind have been made in the accounts during the accounting period.
D. To uncover errors in journalizing and posting.

31. Cebu Normal University (CNU) transfers cash of P250,000 to Abellana High School for a
project. What is the journal entry made by CNU to record the transfer?
A. Accounts Receivable – Abellana 250,000
Cash – MDS, Regular 250,000
B. Due from NGA-Abellana 250,000
Cash – MDS, Regular 250,000
C. Accounts Receivable – Abellana 250,000
Cash, MDS, Regular 250,000
D. Due from NGA-Abellana 250,000
Cash – Treasury/Agency Deposit, Reg 250,000
 32. Which is NOT a cash outflow transaction from operating activities:
A. Payment of accounts payable C. Return of unused NCA
B. Inter-agency transfer (due from) D. Receipt of payment for liquidated damages

33. Which is NOT a cash inflow transaction from operating activities:

A. Cash advances granted for travel. C. Receipt of refunds of travel cash advance.
B. Collection of receivables. D, Cash receipts from sale of goods or rendition of services.
.
34. The following are cash outflows from investing activities EXCEPT
A. Purchase of land. C. Cash payment for interest
B. Purchase of PPE. D. Investment of stocks/bonds.

35. To achieve fair presentation and reliable information of the financial statements, the following
standards shall be observed, EXCEPT
A. Compliance B. Transparency C. Fairness of presentation D. Timeliness

36. During the year 2021, a national government agency received a Notice of Cash Allocation,
equivalent to 75% of its total allotment amounting to P12,000,000. Only 80% of its NCA received
was utilized to pay current obligations.
What adjustment is made for the return of unused NCA at year-end?
A. Cash – MDS, Regular 3,000,000
Subsidy from NG 3,000,000
B. Subsidy from NG 3,000,000
Revenue and Expense Summary 3,000,000
C. Subsidy from NG 1,800,000
Cash - MDS, Regular 1,800,000
D. Subsidy from NG 1,800,000
Revenue and Expense Summary 1,800,000

37. The approved appropriation of DOH for 2021 was P150,000,000. 90% of this appropriation was
allotted by DBM accompanied with an NCA of 70% of the allotment. During the year, the amount of
obligation incurred was equal to 80% of the allotment. Only 80% of these obligation was paid.
What is the balance of allotment, unpaid obligation and unused NCA at year end?
A. P 135,000,000, P 81,000,000 and P 75,600,000 allotment NCH obligation incorrect paid
135M 108 M 4M
B. P 135,000,000, P 87,750,000 and P 64,800,000 94 5 M .

56 .

C. P 54,000,000, P 12,000,000 and P 10,500,000 unpaid obligation unused NCA allotment balance
135M 94 5 40 530
D. P 54,000,000, P 21,600,000 and P 8,100,000
-

%
94 4
-

5
-

86
.

108 M 86 4 M
-
-
.

.
.

= 54M
=
21 , 600 , 000 = 8 ,
100 ,
000

38. The unadjusted balance of accounts payable account at year-end is P2,500,000. Determine the
adjusted balance of the account after the following transactions are adjusted:
A. Delivery of office supplies were recorded twice totaling13P450,000.
B. An MDS check issued as payment for the final billing of the contractor in the
amount of P750,000 was not claimed at year-end.
A. P2,050,000 B. P1,300,000 C. P1,750,000 D. P2,500,000

Items number 39-40 are based on the following data:

On July 1, 2021, the DPWH need to buy crusher equipment. Since this equipment is not available
at the PS, purchase was made locally. A purchase order (PO) was sent to the lowest bidder for the
acquisition of 20 units crushers for a total of P500,000. Delivery was made 60 days after the PO was
served. Subsequently, payment was made and the withholding tax amounted to P 27,321.40.
39. What is the journal entry to record delivery of equipment ordered?
A. Machineries 500,000
Accounts Payable 472,678.60
Due to BIR 27,321.40
B. Machineries 500,000
Accounts Payable 500,000
C. Accounts Payable 472,678.60
Machineries 472,678.60
D. Accounts Payable 472,678.60
Cash – MDS, Regular 472,678.60
40. The journal entry to record payment of machineries is –
A. Machineries 500,000
Accounts Payable 472,678.60
Due to BIR 27,321.40
B. Accounts Payable 472,678.60
Cash – MDS, Regular 472,678.60
C. Accounts Payable 472,678.40
Cash – MDS, Regular 472,678.40
D. Accounts Payable 472,678.60
Due to BIR 27,321.40
Cash – MDS, Regular 500,000

For items 41 & 43 -

An office equipment was acquired at P20,000 on Feb. 5, 2021. The estimated useful life is 4 years
with a salvage value provided at 10%. No depreciation was recorded in the previous years.
2 ,
000

41. How much is the depreciation expense for the year ending December 31, 2021?
A. P 3,958 B. P 8,708.33 C. P 10,200

42. How much depreciation was charged to Accumulated Surplus?

D. P 4,750

4 750 10/11
-0
A. P 3,300 B P300.00 C. P 3,958 D. P 3,600
x
,

= 3 , 958

43. If this office equipment is transferred to other national government agency on January
2, 2022, what amount and account is debited in the transferee books?
A. Government Equity P 8,708 20 000 ,
C. Government Equity P 6,200
4 750]
B. Office Equipment P 11,292 Ye 958) D. Office Equipment P 12,800
,

Item 44 –47.
Allotment in the amount of P10,000,000 was released by DBM to DEPED with the corresponding NCA of
70%. The release was for the construction of a school building. The agency awarded the contract to ABC
Construction Co. for a contract cost of P7,000,000. ABC paid the required performance cash bond of 5%
while DEPED issued a check to cover the mobilization fee. The billings are shown below:
35% completed>advance contractors
-
1st billing - to

2nd billing - 80% completion

3rd billing - 100% completion
The retention fee was deducted until 100% completion.

44. How much should be posted in the obligation column of RAOD-CO?

A. P 7,000,000 B. P10,000,000 C. P5,600,000 D. P 8,000,000
10MX90 %
45. What is the journal entry to record the mobilization fee?
A. Advances to contractor P1,500,000
Cash – MD, Regular P 1,500,000
B. Advances to contractor P 1,050,000
Cash – MD, Regular 7Mx 15 % P 1,050,000
C. Cash – MDS, Regular P 1,050,000
Guaranty/Security Deposit Payable P1,050,000
D. Cash – MDS, Regular P1,500,000
Advances to contractor P1,500,000

46. For the 1st, 2nd and 3rd billing, how much should be credited to Guaranty/Security Deposit
Payable (Ret. Fee)?
A. 2,450,000, 5,650,000, 1,400,000 C. 245,000, 565,000, 140,000
B. 245,000, 315,000, 140,000 D. 315,000, 140,000, 245,000

47. How much should be debited to the Construction-in-Progress account on the 1st , 2nd and 3rd billing?
A. 2,450,000, 5,650,000, 1,400,000 C. 3,500,000, 5,500,000, 2,000,000
B. 2,450,000, 3,150,000, 1,400,000 D. 2,450,000, 1,400,000, 3,150,000
48. The petty cash custodian is scheduled to retire on Dec. 20, 2021. He still has cash on hand and
receipted emergency purchase. What account is credited in closing the petty cash fund?
A. Cash – collecting officer C. Petty Cash account
B. Cash-Treasury/Agency Deposit, Regular D. The various expenses receipted

49. DOH received their electricity bill amounting to P16,000 for the month of December, 2021. The bill
was received on January 25, 2022 and no obligation was made as of December 31, 2021. What is the
entry for payment of electricity expense upon receipt of the bill?
A. Electricity expense P16,000
Accounts Payable P16,000
B. Electricity expense P16,000
Cash – MDS, Regular P16,000
C. Accounts Payable P16,000
Cash – MDS, Regular P16,000
D. No Entry

50. The following are the cash transactions of DTI for CY 2021:
- 1. Receipt of NCA from DBM, P500,000

-2. Cash receipt of grants and donations, P75,000

3. Collection of receivables, P 250,000

= 4. Receipt of refund of overpayments, P10,500
5. Cash advance granted for travel,-3
P30,000
6. Cash proceeds from sale/disposal of equipment, P450,000.
7. Purchase of land, P500,000
8. Cash received from domestic and foreign loans, P700,000
9. Payment of cash dividend.- P250,000
10. Return of unused NCA, 2100,000 &
-11.Cash receipts from hospital fees, P15,000.
12. Payments of accounts Payable,[ P600,000 Y
Cash balance beginning is P175,000 while cash balance end is P695,000.

How much is Cash from Operating, Investing and Financing activities?

A. P100,000, P 50,000, P 450,000 C. P120,000, P150,000, P400,000
B. P 120,000, ( P50,000), P450,000 D. P 90,000, P50,000, P 400,000

****************************************END*****************************************
GOOD LUCK
Additional review questions
True/False:

1. All replenishment shall be directly charged to the expenses account and at all times, the PCF shall
be equal to the total cash on hand and the un-replenished expenses. (True)
2. The PCF shall not be used to purchase regular inventory items for stock nor for liquidation of
outstanding cash advances not unless there is approval from the head of office. (False)
3. The gross amount of the payroll is the amount advanced to a Disbursing Officer to pay salaries and
wages. (False)
4. If the purchase was charged to a trust account and not come from an NCA when paid, still it needs to
be obligated for monitoring purposes. (False)
5. Under GAM 1, the Asset Method will be used in recording disbursements when expenditures apply to
more than the accounting period. (True)
6. Equipments that are expected to be used for a longer period of time need CO allotment. (True)
7. Any expenditures not obligated in the current year can be obligated and paid in succeeding year. (F))
8. MDS checks were issued by government agencies chargeable against the account of the Treasurer of
the Philippines. (True)
9. The NCA is the share of the agency in the income of the national government. (True)
10. Expenditures constitute all cash paid out during a given period either in currency (cash) or by check.
(False)
11. All unreleased and cancelled checks shall be reported and to be attached to the Report of
Disbursement. (False)
12. Payment for Representation and Transportation Allowance for heads of office are obligated and
recorded in RAOD-MO. (False)
13. The gross amount of the payroll is the amount obligated to RAOD-PS. (True)
14. For additional claim of travelling expenses due to an official extended stay, can be requested for
reimbursement and need not require obligation. (False)
15. A JEV shall be prepared to record all transaction from the check disbursements report to the Journal
of Check Issued. (True)
16. The Budget Officer certifies the existence of a lawful and sufficient allotment and validity of
obligation. (True)
17. Through fund transfer is one of the modes of disbursement of the government.
18. Standard Chart of Accounts is the systematic arrangement of number, letters or other symbols to
distinguish items within a given classification from each other and facilitate location of accounts in the
general and subsidiary ledger. (False) coding
19. Travelling expenses are obligated and recorded under RAOD-PS. (False) RAOD MO
20. Training fees included in the cash advance granted is recorded once liquidated separately from
travelling expenses. (True)
Multiple Choice:

21. The following are modes of disbursement, EXCEPT

a. MDS/Commercial check c. Advice to Debit Account
b. Cash d. Promissory Notes
22. The following are existing COA rules and regulations in the granting and liquidation of cash
advances, EXCEPT
a. No cash advance shall be given unless for a legally authorized specific purpose.
b. No additional cash advance shall be allowed to any official or employee unless the previous cash
advance given to him/her is first settled/liquidated.
c. Refund of excess cash advance for a specific purpose need not be returned but can be used for
other maintenance and other operating expenses used in regular operation requirement
d. A cash advance shall be reported and liquidated as soon as the purpose for which it was given has
been served.
23. Which of the given expenditures does not belong to the same class?
a. Office supplies expense
b. Representation and Transportation allowance (RATA)
c. Salaries and wages – Regular
d. 13th month pay/Bonus
24. Which of the following is not one of the basic requirements for disbursement?
a. Existence of a lawful and sufficient allotment certified as available by the Accountant.
b. Legality of transactions and conformity with laws, rules and regulations
c. Approval of the expense by the Chief of Office or his duly authorized representative.
d. Submission of proper evidence to establish the claim.
25. The petty cash custodian is scheduled to retire effective September 30, 2021. He wanted to be
relieved from his accountabilities and informed management to designate a new petty cash
custodian. He still has a cash on hand amounting to P11,500 while P13,500 were all receipts from
emergency purchase, (P7,800 – office supplies, P2,600 – transportation expenses incurred by the
messenger, and P4,100 for repairs and maintenance of office equipment). What account is credited
in closing the petty cash fund?
a. All expenses paid out of Petty Cash totaling P13,500.
b. Cash – Collecting Officer
c. Petty Cash
d. Cash –Treasury Agency Deposit- Regular
26. What account is credited in recording net of salaries and wages due for the employees?
a. Accounts Payable
b. Due from officers and employees
c. Due to officers and employees
d. Cash – MDS, Regular
True or False:
28. The agency record in RAOD-MO the obligation for payment of clothing allowance to all
employees. ( False)
29. Petty Cash account is credited in recording the expenses paid out of PCF at the end of the
accounting period which were not requested for replenishment by the PCF Custodian. (True)
30. For claim of reimbursement for additional travelling expenses need not be obligated but any
refunds made from the cash advance for travel , obligation need adjustment in order to reflect the
correct amount of the travel expenses. (False)
31. An MDS check is considered stale if not presented to the bank beyond 3 months. (F)
32. Disbursements are payments made for government obligations by check only. (F)
33. Cash advances for travel shall be accounted for as Advances to Officers and Employees. (T)
34. Training fees is recorded separately from travelling expenses if the purpose of the travel is to attend
a training and the fees is included in the cash advance. (T)
35. A travel reimbursement was requested in succeeding year. It was not obligated in the current year
when the expenses were incurred and the reason is with a justifiable cause, hence, the
reimbursement was approved and paid. (F)
36. All replenishment shall be directly charged to an expense account and at all times, the PCF shall be
equal to the total cash on hand and the un-replenished expenses. (T)

Multiple Choice
37. This shall be prepared by the officers/employees concerned in liquidating his cash advance for travel
and submitted to the accounting unit as basis for JEV preparation.
a. Itinerary of travel d. none of the above
b. Liquidation report
c. Report of disbursement

38. What account is debited in recording the granting of petty cash advance to a custodian for PCFund?
a) Cash-MDS, Regular
b) Petty Cash
c. Petty Cash Fund
d. Due to Officers and Employees
Review questions:

1. For numbers 1-3 refer to the following information:

The duly approved ABM for the FY 2019 showed the following:
Allotment Class Appropriation Not Needing Clearance Needing Clearance
PS 21,000,000 18,000,000 3,000,000
MOOE 15,000,000 10,000,000 5,000,000
Capital Outlay 13,000,000 10,000,000 3,000,000
Total P 49,000,000 P 38,000,000 P 11,000,000
The corresponding Notice of Cash Allocation (NCA) was issued by the Department of Budget and
Management.

One of the transactions during the first quarter of the year included the payment of salaries and
allowances thru cash advances:

Salaries and Wages 4,850,000

PERA 500,000
Withholding Tax 670,000
Retirement and Life Insurance 452,750
Pag-IBIG 150,000
PhilHealth 250,000
Credit Union 150,000

1. How much allotment should be posted in the allotment column for PS?
A. 18,000,000 C. 3,000,000
B. 5,350,000 D. 21,000,000
2. How much should be posted in the allotment column of registry for MOOE and CO?
A. 20,580,000 ; 12,350,000
B. 10,000,000 ; 5,000,000
C. 10,000,000 ; 10,000,000
D. 17,100,000 ; 9,500,000
3. How much should be posted in the obligation column of the registry for payment of salaries and
Allowances.
A. 11,040,000 C. 12,000,000
B. 3,677,250 D. 5,350,000

4. The government agency remitted its counterpart in the salary contributions. What is the proforma entry
to record such transaction?
A. Retirement and Life Insurance Contribution xx
Pag-IBIG Contribution xx
Philhealth Contribution xx
ECC Contribution xx
Cash –MDS, Regular xx
B. Retirement and Life Insurance Contribution xx
Pag-IBIG Contribution xx
Philhealth Contribution xx
ECC Contribution xx
Cash – Disbursing Officer xx
C. Due to GSIS xx
Due to Pag-IBIG xx
Due to Philhealth xx
Other Payables xx
Cash – NT, MDS xx
D. Due to GSIS xx
Due to Pag-IBIG xx
Due to Philhealth xx
Other Payables xx
Cash – Disbursing Officer xx

5. The Agency paid a VECO bill amounting to P40,000, including tax of 3,000. The entry to record this
transaction would be:
A. Electricity 40,000
Cash – NT, MDS 40,000
 B. Accounts Payable 40,000
Cash – NT, MDS 37,000
Due to BIR 3,000
C. Memo entry only.
D. No entry required.

6. In what registry should allotment for purchases of IT equipment be recorded?

A. RAOD-PS
B. RAOD-MO
C. RAOD-CO
D. RAOD-FE

For questions 7-11, refer to the following problem:

Allotment in the amount of P5,500,000 was released by the DBM with the corresponding NCA. The release
was for the construction of an office building. The DOST awarded the contract to ABC Construction Company
for a contract price of P5,000,000. ABC paid the required cash bond while DOST issued a check to cover the
mobilization fee. The billings are shown as follows:
1st Billing 35% completed (10% retention fee)
nd
2 Billing 80% completed (10% retention fee)
Final Billing 100% completed (10% retention fee)
7. How much should be posted in the obligation column of RAOD-CO?
A. 5,000,000 C. 4,750,000
B. 5,500,000 D. 5,225,000

8. What is the journal entry to record the mobilization fee?

A. Advances to Contractors 250,000
Cash – MDS, Regular 250,000
B. Advances to Contractors 750,000
Cash – MDS, Regular 750,000
C. Advances to Contractors 250,000
Perf/Bid/BBP 250,000
D. Advances to Contractors 750,000
Perf/Bid/BBP 750,000

9. For the first billing, how much should be credited to Guarantee Security/Deposits Payable?
A. 500,000 C. 192,500
B. 175,000 D. 262,500

10. How much should be debited to the Construction in Progress account on the second billing?
A. 2,475,000 C. 2,250,000
B. 1,750,000 D. 2,150,000

11. How much should be credited to Advances to Contractor in the second billing?
A. P337,500 C. P600,000
B. P262,500 D. P 150,000

12. Agency AC sold a 60% depreciated motor vehicle which had an original cost of P300,000 for P200,000.
The proceeds shall be deemed automatically appropriated for the purchase of replacement higher
capacity vehicle worth P500,000, net of applicable tax. The agency subsequently received an NCA of
P500,000 for the purchase of the said vehicle. What is the entry to record the receipt from the disposal of
the motor vehicle?
A. Cash – Collecting Officer 200,000
Due to BTr 200,000
B. Cash – Collecting Officer 200,000
Gain on Sale of Disposed Assets 200,000
C. Cash – Collecting Officer 200,000
Accumulated Dep’n. – Vehicles 150,000
Motor Vehicles 300,000
Due to BTr 50,000
D. Cash – Collecting Officer 200,000
Accumulated Dep’n. – Vehicles 150,000
Motor Vehicles 300,000
Gain on Sale of Disposed Assets 50,000
13. Agency X have an obligation for equipment per purchase order amounting to P800,000. Subsequently, the
agency liquidates the equipment acquired in full. The acquisition was provided from the Procurement
Sercice. The entry to record this transaction would be:
a. Memorandum entry in RAOCO
b. Office Equipment 800,000
Due from NGA 800,000
c. Subsidy from National Gov’t 800,000
Cash – MDS, Regular 800,000
d. Accounts Payable 800,000
Cash – MDS, Regular 800,000
14. The agency obligates the purchase of equipment per purchase order amounting to P200,000. The entry
for this transaction would be:
A. Memo entry only
B. Office Equipment 200,000
Accounts Payable 200,000
C. Office Equipment 200,000
Cash-National Treasury, MDS 200,000
D. Office Equipment 200,000
SING 200,000
15. What is the proforma entry to record the cancellation of a stale MDS check?
A. Cash – MDS xx
Accounts Payable xx
B. Cash – MDS, Regular xx
Cash – Collecting Officer xx
C. Cash – MDS, Regular xx
Accumulated Surplus xx
D. Cash – Collecting Officer xx
Accumulated Surplus xx

For items 16 and 17

A cash advance was set up to cover the payment of salaries of employees in the amount of P80,000. The cash
advance was liquidated during the year. A week after the payment, the bookkeeper found out that the
employees were overpaid by P2,000. Subsequently, the bookkeeper notified the concerned employees of said
overpayment and requested for the refund.
16. What is the journal entry to record the remittance of the overpayment to the National Treasury?
a. Subsidy from National Government 2,000
Cash – MDS, Regular 2,000
b. Subsidy from National Government 2,000
Cash – Collecting Officer 2,000
c. Cash – MDS, Regular 2,000
Due from Officers and Employees 2,000
d. Subsidy from National Government 2,000
Due from Officers and Employees 2,000

17. What is the journal entry to record the overpayment?

a. Due from Officers and Employees 2,000
Hazard Pay 2,000
b. Due from Officers and Employees 2,000
Salaries and Wages - Regular 2,000
c. Cash – Collecting Officer 2,000
Hazard Pay 2,000
d. Cash – Collecting Officer 2,000
Salaries and Wages – Regular 2,000
18. If an agency does not have the authority to use the income earned, what entry must be prepared to
record the collection of hospital fees?
A. Cash – Collecting Officer xx
Accounts Receivable xx
B. Cash – Collecting Officer xx
Accumulated Surplus xx
C. Cash – Collecting Officer xx
Due to BIR xx
D. Cash – Collecting Officer xx
SNG xx
19. The following entry was recorded as an adjustment for the prepayment of rent::
Rent Expenses xx
Prepaid Rent xx
What was the original entry prepared?
A. Rent Expense xx
Cash – MDS, Regular xx
B. Prepaid Rent xx
Asset Method
Cash – MDS, Regular xx
C. Prepaid Rent xx
Cash – Disbursing Officer xx
D. Rent Expense xx
Cash – Disbursing Officer xx

20. Agency Z is a National Government Agency with an NCA from the DBM for MOOE amounting to
P5,000,000. Of the total amount, P4,275,000 was obligated and 80% was paid. The remaining 20% was
recognized as accounts payable. How much is the un-obligated balance that should be shown in the
Registry for MOOE?
A. 725,000 C. 1,000,000
B. 825,000 D. 855,000
21. Using the data in number 20, how much is the utilization rate of the obligation?
A. 20% C. 68.4%
B. 86% D. 80%

22. Agency A had the following account balances for the year 2019:
Current Assets 10,000,000
Investment and Fixed
90,000,000
Assets
Other Assets 5,000,000
Liabilities 18,000,000
Contingent Liabilities 5,000,000
Contingent Assets 3,000,000
Determine the Accumulated Surplus for the year 2019:
A. 105,000,000 C. 87,000,000
B. 85,000,000 D. 82,000,000

23. The following data were taken from the accounting records of Agency YY on December 31, 2019 (in
million pesos):
NCA received 150 125M
Refund of excess cash advance 5
Salaries and wages – Regular Pay 55
ADCOM 2
PERA 10
Traveling expense – Local 1
Electricity 20
Rent Expense 8
Office Supplies Expense 4
The unutilized portion of the Notice of Cash Allocation amounted to 25,000,000. What is the net income
over expense on December 31, 2019?
a. 15,000,000
b. 50,000,000
c. 45,000,000
d. 20,000,000

24. The following data were taken from the Statement of Income and Expenses and the Comparative Balance
sheet as well as various cash transactions for the year ended December 31, 2019: (amount in million
pesos)
Net Income over expenses 500
Increase in Withholding Tax 6
Payable
Decrease in Due from NGA 58
Depreciation – Office Equipment 5
Decrease in Accounts Payable 30
Decrease in Supplies Inventory 23
How much cash is received from operating activities?
A. 460,000,000 C.562,000,000
B. 552,000,000 D. 490,000,000

25. The movement in cash of Agency A is shown below:

Proceeds from sale of marketable stocks and 12,000,000
bonds
Investment in GOCC 7,000,000
Remittance of Taxes withheld not covered by 2,100,000
TRA
Inter-agency transfers (Due From) 570,000
Receipt of NCA from DBM 18,500,000
Cash receipts from sale of goods or rendition 3,400,000
of services
How much is the cash is derived from operating activities?
A. 19,230,000 C. 18,500,000
B. 24,230,000 D. 13,370,000

26. Which of the following are commonly required to be disclosed?

I. Consolidation principles
II. Accounting for long-term investments
III. Adoption of policy on increasing benefit entitlements of the program members
IV. All changes in classification of accounts
a. I, II, III only C. I and III only
b. I and II only D. All must be disclosed in the Notes to FS

In answering numbers 1-10, refer to the following choices:

a. The first statement is true but the second statement is false.
b. The first statement is false but the second statement is true.
c. Both statements are true.
d. Neither of the statements is true.

1. S1: General income accounts of the government encompass all taxes imposed on income, properties and
use or sale of goods and services, taxes on international trade and transactions and other taxes including
fines and penalties.
S2: Specific income accounts of the government include all types of revenue or income generated by
agencies in the exercise of their administrative and regulatory function, income from public entities or
income from investments and income from grants and donations.

2. S1: A preclosing trial balance is prepared after adjusting entries are recorded in the general journal and
posted to the general ledger and shows the adjusted balances of all accounts.
S2: The statement of financial position is prepared from information taken directly from the preclosing
trial balance.

3. S1: The Budgetary accounts consist of appropriations, obligations and disbursements.

S2: Budgetary accounts are recorded in the agency’s books of accounts.

4. S1: The NCA is the share of the Agency in the income of the National Government.
S2: The Notice of Cash Allocation received by the agency is net of the 5% tax for Personal Services and
8% tax for Maintenance and Other Operating Expenses and Capital Outlays to be withheld by the agency.

5. S1: The entry to record the acquisition of a fixed asset using the procurement arm of the DBM will include
a debit to the corresponding fixed asset acquired.
S2: When a government agency decides to purchase supplies from outside suppliers, the entry to record
the receipt of the supplies will most likely include a credit to Cash-National Treasury, MDS.

6. S1: According to Administrative Order No. 119, the responsibility for the fiscal operations of offices and
agencies of government is hereby declared to reside primarily with the respective Heads of each office,
agency, government-owned or controlled corporation and local government unit.
S2: In accordance with said Administrative Order, each and every office is mandated to strengthen its
internal control system in coordination with the Department of Finance.
7. S1: Plan of Organization, an element of internal control, comprises the organizational structure and the
staffing complement that enable an organization to carry out its functions.
S2: Another element, Coordinate Methods and Measures refer to the systems of authorization, policies,
standards, accounting systems and procedures and reports used by the agency to control its operations
and resources and enable the various units to meet its objectives.

8. S1: Allotment refers to an authorization made by law or other legislative enactment, directing the
payment of goods and services out of government funds under specified conditions or for special
purposes.
S2: Appropriation is the authorization issued by the DBM to the agency which allows it to incur
obligations.

9. S1: Financial expenses such as bank charges, interest expenses, commitment charges and other related
expenses are included in the Maintenance and Other Operating Expenses.
S2: Cost of ending inventory of supplies and materials shall be computed using the moving average
method.

10. S1: The entry to record the acquisition of a fixed asset using the procurement arm of the DBM will include
a debit to the corresponding fixed asset acquired and a credit to Due from NGAs.
S2: When a government agency decides to purchase supplies from outside suppliers, the entry to record
the receipt of the supplies will most likely include a credit to Cash-National Treasury, MDS.

11. The following statements pertain to the preparation stage of the budget cycle. Find the correct order.
I. The agencies defend their proposed budgets before a technical panel of DBM.
II. At the beginning of the budget preparation year, the DBM issues the National Budget Call to all
agencies.
III. The departments and agencies are tasked to pair up with civil society organizations during the
preparation of their agency budget proposals.
IV. An Executive Review Board deliberates over the programs and projects of the agency as per the
submitted budget proposal.
A. II, III, I, IV C. I, IV, III, II
B. II, III, IV, I D. II, I, III, IV
12. The following statements pertain to the execution stage of the budget cycle. Find the correct order.
I. DBM issues guidelines on the release and utilization of funds.
II. DBM prepares an Allotment Release Program to set a limit for allotments issued to an agency and
on the aggregate.
III. Allotments are either released by DBM to all agencies comprehensively through the ABM and
individually via SARO.
IV. DBM issues a disbursement authority in the form of NCAs and in special cases, the Non-Cash
Availment Authority (NCAA) and Cash Disbursement Ceiling (CDC).
A. II, I, III, IV C. I, III, II, IV
B. I, II, III, IV D. II, III, I, IV
13. That public office is a public trust demands that a higher set of general objectives be established; a step
beyond the internal control practices that prevail in private sector organizations. Hence, the internal
control in the public sector must conform to five general objectives. Which of the following is not one?
A. Ensure economical, efficient and effective operations
B. Comply with laws and regulations
C. Adhere to managerial policies
D. Safeguard assets and limit liabilities
14. If the Zobel Museum, a not-for-profit organization, received a contribution of historical artifacts, it need
not recognize the contribution if the artifacts are to be sold and the proceeds are used to
A. Purchase buildings to house collections
B. Repair existing collections
C. Acquire other items for collections.
D. Support general museum activities
15. Save Philippine Wildlife, a research organization created to protect nearly extinct species of fauna,
received a P500,000 contribution from Ms. Lee. Ms. Lee stipulated that her donation be used to purchase
new computer equipment for Save Philippine Wildlife research staff. The contribution was received in
August of 2018, and the computers were acquired in January 2019. For the year ended December 31,
2018, the P500,000 contribution should be reported by Save Philippine Wildlife on its
A. Statement of financial position as deferred revenue
B. Statement of activities as temporarily restricted revenue
C. Statement of activities as deferred revenue
D. Statement of activities as unrestricted revenue
16. Take Care, a voluntary health and welfare organization, received the following contributions in 2018:
I. P500 from donors who stipulated that the money not be spent until 2019.
II. P1,000 from donors who stipulated that the contributions be used for the acquisition of
equipment, none of which was acquired in 2015.
Which of the above events increased temporarily restricted net assets for the year ending December 31,
2018?
A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.

17. A hospital should report earnings from endowment funds that are restricted to a specific operating
purpose as
A. General fund revenues, when expended.
B. Endowment fund revenues, when expended.
C. General fund revenues, when received.
D. Endowment fund revenues, when received.

18. Which of the following statements pertaining to Not-for-profit organization is true?

A. In preparing the statement of cash flows for a not-for-profit organization, cash contributions that are
restricted for long-term purpose are classified as investing activities.
B. In Hospital accounting, restricted funds are not available unless the Board of Directors remove the
restrictions.
C. A not-for-profit organization’s statement of financial position should report the net changes for the
net assets that are unrestricted, temporarily restricted and permanently restricted.
D. Medical center received an unrestricted bequest of P150,000 in 2010. This bequest should be
recorded as non-operating revenue.

19. The following agencies control the release of allotments and notice of cash allocations, except one:
A. Department of Budget and Management
B. Bureau of Treasury
C. Commission on Audit
D. All of the abovementioned agencies control allotments and NCAs

20. The following are DBMs responsibilities, except one:

A. Design, prepare, and approve the accounting systems of government agencies.
B. Keep the general accounts of the national government. COA
C. Prescribe the forms, schedules of submission and other component of reporting system needed to
accomplish and submit the required information
D. Approve the ABM and issue allotments to agencies

21. The functions of COA include which of the following?

I. To examine, audit and settle all accounts pertaining to the receipts and expenditures of the national
government and its subdivisions, constitutional bodies, government-owned and controlled
corporations, and nongovernmental entities receiving subsidy from the government.
II. To serve as an instrument for the meeting of national socio-economic and political development
goals.
III. To keep the general accounts of the government.
A. I, II, III C. I and III only
B. I and II only D. II and III only

22. The objectives of NGAS include which of the following?

I. To simplify government accounting toward eventual computerization.
II. To conform to IFRS.
III. To provide relevant periodic financial statements.
IV. To serve as tool for managers and executives for effective and efficient monitoring of government
agency performance.
A. I and II only
B. I, II, III only
C. I, II, III, IV
D. I, III, IV only

************************************************************************************
 AA4102
NON PROFIT ORGANIZATION

MULTIPLE CHOICE:
1. The following are features of nonprofit organizations, EXCEPT
a. render service for the benefit to the many rather than the few.
b. Not organize for profit and exempt from income taxes and business taxes.
c. Finances depend on the voluntary contributions of the citizenry.
d. Must account for the resources on a stewardship basis like the government entities.

2. SI: Nonprofit organizations are governed by elected or appointed directors.

SII: Nonprofit organizations adopt the modified accrual basis of accounting used by government
entities.
a. SI is true, SII is true.
b. SI is false, SII is false.
c. SI is true, SII is false.
d. SI is false, SII is true.

3. These are funds that includes all the assets of a nonprofit organization that are available for use as
authorized by the board of directors and not restricted for specific purposes.
a. Unrestricted funds
b. Special funds
c. Endowment funds
d. Temporarily restricted funds

4. These are funds in which the principal must be maintained indefinitely in revenue-producing
investments.
a. Unrestricted funds
b. Plant fund
c. Endowment fund
d. Temporarily restricted funds

5. The financial statement not required of a nonprofit organization is:

a. Statement of Financial Position
b. Statement of Activities
c. Statement of Cash Flows
d. Statement of current fund revenues and expenses.

6. Transactions of what fund only affect asset and liability accounts and do not result in revenues
and expenditures.
a. Unrestricted fund
b. Restricted Fund
c. Agency fund
d. Plant fund

7. The Plant fund is composed of the following, EXCEPT

a. unexpended funds to be used in the acquisition of physical properties,
b. renewal and replacement funds,
c. retirement of indebtedness funds,
d. restricted income from endowment funds.

8. Which of the following should be used in accounting for nonprofit organization?

a. Fund accounting and accrual accounting.
b. Fund accounting but not accrual accounting.
c. Accrual accounting but not fund accounting.
d. Neither accrual accounting and fund accounting.
9. One characteristic of nonprofit organizations that is comparable with that of government entities is:
a. Stewardship of resources
b. Governance by board of directors
c. Measurement of cost expirations
d. None of the foregoing

10. A gift to nonprofit organization that is not restricted by the donor is credited in the unrestricted
(general) fund to:
a. Fund balance
b. Contribution revenues
c. Deferred revenues
d. Nonoperating revenues

11. The Statement of Financial Position of a nonprofit organization displays the organization’s assets,
liabilities, and
a. Fund balance
b. Excess of assets over liabilities
c. Net Assets
d. Equity

12. The current fair value of contributed material is recognized in a nonprofit organization’s
unrestricted fund with a debit to Inventories and a credit to:
a. Undesignated Fund Balance
b. Payable to Restricted Fund
c. Contributions Revenues
d. Designated Fund Balance – Merchandise

13. Which of the following is not a source of resources of a nonprofit organization’s restricted fund?
a. .Operations of the nonprofit organization
b. Contributions of individual or government entities
c. Gains on disposals of investments
d. Revenues from endowment

14. A nonprofit private elementary school occupies its school building rent-free as permitted by the
building owner. The existence of rent-free facilities is recognized in the school’s Unrestricted
Fund as
. a. Rent expense and contibution revenue.
b. Rent expenses and an increase in fund balance.
c. An item requiring disclosure in the notes to the financial statements.
d. Financial aid expenses and other operating support

15. During the year ended December 31, 2021, Cultural Center of the Philippines, a nonprofit
organization, received the following donor restricted contributions and investment income:
a. Cash contribution of P100,000 to be permanently invested.
b. Cash dividends and interest of P5,000 to be used for the acquisition of theater equipment.

As a result of these cash receipts, the statement of cash flows for the year ended December 31,
2021, would report an increase of :
a. P105,000 from financing activities
. b. P5,000 from operating activities and an increase of P100,000 from
financing activities.
c. P105,000 from operating activities
d. P100,000 from operating activities and an increase of P5,000 from
financing activities.

16. A prominent collector donated an art collection to a private nonprofit museum with the stipulation
that the art collection be shown to the public, that it should be preserved and not be sold. On the
date of donation, what was the effect of the donation on the museum’s financial statements?
 a. Unrestricted net assets increased.
b. Temporarily restricted net assets increased.
c. Permanently restricted net assets increased.
d. No effect on net assets.

17. On January 2, 2021, a nonprofit botanical society received a gift of an exhaustible fixed asset with
an estimated useful life of 10 years and no salvage value. The donor’s cost of this asset was
P20,000, and its fair market value at the date of the gift was P30,000. What amount of depreciation
of this asset should the society recognize in its 2021 financial statements?
a. P 0 c. P2,500
b. P2,000 d. P3,000

18. On July 31, 2021, St. Vincent’s College showed the following amounts to be used for
Renewal and replacement of college properties P 200,000
Retirement of indebtedness on college properties 300,000
Purchase of physical properties for college purposes but
unexpended at 7/31/2021 400,000
What total amount should be included in St. Vincent’s plant funds at July 31, 2021?
a. P 600,000 c. P 200,000
b. P 400,000 d. P 900,000

19. Seniors Association is a non-for-profit organization that provides services to senior citizens. Senior
employees a full-time staff of 10 people at an annual cost of P150,000. In addition, two volunteers
work as par-time secretaries replacing last year’s full-time secretary who earned P10,000. Services
performed by other volunteers for special events had an estimated value of P15,000. These
volunteers were employees of local businesses and they received small-value items for their
participation. What amount should Seniors report for salary and wages expense related to the items
above?
a. P160,000 c. P165,000
b. P175,000 d. P150,000

20. St. Charles Hospital has a marketable equity securities portfolio that is appropriately included in the
noncurrent assets in unrestricted funds. The portfolio has an aggregate cost of P300.000. It had an
aggregate fair market value of P250,000 at the end of 2021 and P290,000 at the end of 2020. If the
portfolio was properly reported in the balance sheet at the end of 2021, the change in the valuation
allowance at the end of 2021 would be
a. A decrease of P40,000 c. An increase of P 40,000
b. An increase of P50,000 d. P 0

21. The cost of charity care of a nonprofit hospital is presented in the statement of activities as
a. deduction from gross patient service revenue to get the net patient service revenue.
b. notes to financial statements
c. component of program services
d. component of supporting services

22. A nonprofit hospital received a cash donation from a generous benefactor on November 5, 2021.
The donor requested that the donation be used to acquire equipment for the hospital. The hospital
used the donation to acquire equipment in January 2022. For the year ended December 31, 2022,
the hospital should report the cash donation on its
a. Statement of financial position as unrestricted deferred revenue.
b. Statement of activities as unrestricted revenue
c. Statement of activities as temporarily restricted.
d. Statement of financial position as temporarily restricted revenue.

23. Bantay Bata Foundation, a nonprofit organization, receives revenue from various sources during the
year to support its child care center. The following cash contributions were received during 2021:
a. P40,000 restricted by the donor to be used for meals of children.
b. P15,000 received by subscriptions to a monthly child care magazine with a fair value to
subscribe of P10,000,
 c. P10,000 to be used only upon completion of a new playroom that was 75% complete at
December 31, 2021.
What amount should Bantay Bata Foundation record as contribution revenues in its 2021 Statement
of Activities?
a. P20,000 c. P 25,000
b. P 10,000 d. P 11,000

24. Bohol University, a private nonprofit university, had the following inflows during the year ended
December 31, 2021;
I. P400,000 from students tuition fees
II. P200,000 from a donor who stipulated that the money be invested indefinitely.
III. P50,000 from a donor who stipulated that the money be spent in accordance with the
wishes of the University’s Board of Directors.
On its Statement of Cash Flows for the year ended December 31, 2021, what amount of these
cash flows should be reported as operating activities:
a. P 450,000 c. P 650,000
b. P 400,000 d. P 600,000

25. UDMC hospital, a nonprofit hospital, earned P250,000 revenues from its gift shop located at the
lobby and spent P50,000 on research during the year ended December 31, 2022. The P50,000
spent on research was part of a P75,000 contribution received during December of 2022 from a
donor who stipulated that the donation be used for medical research. Assume none of the gift shop
revenues were spent in 2022. For the year ended December 31, 2022, what was the increase in
unrestricted net assets from the events occurring during 2022?
a. P 300,000 c. P 250,000
b. P 200,000 d. P 275,000

26. Lihok Filipina, a nonprofit organization, received contributions restricted for research totaling
P50,000 in 2022. Assume the P50,000 was not expended in 2022. These contributions were used
to purchase P35,000 of research equipment in 2022. As a result of these transactions, for the year
ended December 31, 2022, the organization will report on its financial statements, a
a. P 15,000 increase in temporarily restricted net assets.
b. P50,000 increase in temporarily restricted net assets.
c. P35,000 increase in unrestricted net assets.
d. P15,000 increase in unrestricted net assets.

27. San Jose Clinic, a nonprofit clinic, affiliated with San Jose College, had the following cash receipts
for the year ended December 31, 2022:
Patient service revenue P750,000
Contribution from donor to be invested
Indefinitely (endowment fund) 250,000
Tuition fees from nursing school 50,000
Dividends received from permanent investments 80,000
The dividends received are restricted by the donor for hospital building improvements. No
improvements were made during 2022. On the hospital’s statement of cash flows for the year
ended December 31, 2022, what amount of these cash receipts would be included in the amount
reported for net cash provided (used) by operating activities?
a. P 880,000 c. P 1,050,000
b. P800,000 d. P 750,000

28. A nonprofit hospital affiliated with a private university, reported the following data for the year
ended Dec. 31, 2022:
Cash contributions received from donors for acquisitioned
computer equipment on 2023 P 150,000
Proceeds from sales of hospital gift shop and snack bar 75,000
Dividend income not restricted by donor 25,000
 Using the information provided, what amount should be reported as “other revenue and gains”
on the hospital’s statement of activities for the year ended December 31, 2022?
a. P 25,000 c. P100,000
b. P75,000 d. P250,000

29. On December 31, 2022, St. Luke hospital, a nonprofit organization, received a P7,000,000
donation of BMW shares of stock with donor stipulated requirements as follows:
Shares valued at P5,000,000 are to be sold, with the proceeds used to erect a building.
Shares valued at P2,000,000 are to be retained, with the dividends used to support current
operations.
As a result of the receipt of the BMW shares, how much should St. Luke hospital report as
temporarily restricted net assets on its 2022 statement of financial position?
a. P 0 c. P 5,000,000
b. P 2,000,000 d. P7,000,000

30. NCR Foundation, Inc., a nonprofit organization) accounting records disclosed the following
information:
Cost of property and equipment net of accumulated depreciation P 19,000,000
Board designated funds 6,000,000

What amount should be included as part of the Unrestricted net Assets?

a. P25,000,000 c. P 6,000,000
b. P 19,000,000 d. P 0

31. Napoles Foundation , a not-for-profit organization, receives revenue from various sources during
the year to support its day care center. The following cash amounts were received during 2022:
- P2,000 restricted by the donor to be used for meals for the children.
- P1,500 received for subscriptions to a monthly child care magazine with a fair market value
to subscribes of P1,000.
- P10,000 to be used only upon completion of a new playroom that was 75% complete at
December 31, 2022.
What amount should Napoles record as contribution revenue in its 2022 Statement of Activities?
a. P2,000 b. P2,500 c. P10,000 d. P11,000

32. The property, plant and equipment of a not-for-profit hospital should be accounted for as part of
a. Unrestricted funds c. Specific purpose funds
b. Restricted funds d. Other non-operating funds

33. Revenue from the parking lot operated by a hospital would normally be included in:
a. Patient service revenue.
b. Ancillary service revenue.
c. Other operating revenue.
d. Other non-operating revenue

34. A non-government, not-for-profit entity gives donors a sweatshirt imprinted with its logo when
they pay P15 dues. The value of the sweatshirt is approximately P15. This transaction is most
likely reported as:
a. An exchange transaction
b. An agency transaction.
c. A Contribution
d. A gift in kind.
35. Net assets that are restricted by the governing board of a non-government, not-for-profit
organization are reported as a part of:
a. Permanently restricted net assets
b. Temporarily restricted net assets
c. Unrestricted net assets
d. Either permanently restricted or temporarily restricted net assets, depending on
the term of the restriction.
35. If the Zobel Museum, a not-for-profit organization, received a contribution of historical artifacts, it
need not recognize the contribution if the artifacts are to be sold and the proceeds are used to
A. Purchase buildings to house collections
B. Repair existing collections
C. Acquire other items for collections.
D. Support general museum activities

36. Save Philippine Wildlife, a research organization created to protect nearly extinct species of
fauna, received a P500,000 contribution from Ms. Lee. Ms. Lee stipulated that her donation be used
to purchase new computer equipment for Save Philippine Wildlife research staff. The contribution
was received in August of 2022, and the computers were acquired in January 2023. For the year ended
December 31, 2022, the P500,000 contribution should be reported by Save Philippine Wildlife on its
A. Statement of financial position as deferred revenue
B. Statement of activities as temporarily restricted revenue
C. Statement of activities as deferred revenue
D. Statement of activities as unrestricted revenue

37. Take Care, a voluntary health and welfare organization, received the following contributions in 2022:
I. P500 from donors who stipulated that the money not be spent until 2022.
II. P1,000 from donors who stipulated that the contributions be used for the acquisition of equipment,
none of which was acquired in 2022.

Which of the above events increased temporarily restricted net assets for the year ending
December 31, 2022?
A. I only. C. Both I and II
B. II only. D. Neither I nor II

38. A hospital should report earnings from endowment funds that are restricted to a specific operating
purpose as
A. General fund revenues, when expended.
B. Endowment fund revenues, when expended.
C. General fund revenues, when received.
D. Endowment fund revenues, when received.

39. Which of the following statements pertaining to Not-for-profit organization is true?

A. In preparing the statement of cash flows for a not-for-profit organization, cash contributions that are
restricted for long-term purpose are classified as investing activities.
B. In Hospital accounting, restricted funds are not available unless the Board of Directors remove the
restrictions.
C. A not-for-profit organization’s statement of financial position should report the net changes for the
net assets that are unrestricted, temporarily restricted and permanently restricted.
D. Medical center received an unrestricted bequest of P150,000 in 2020. This bequest should be
recorded as non-operating revenue.