Name: Ramos, Rosemarie C.

Date: May 22, 2021 Score:

Program/Year/ Section: SBAC3C Professor: Manuel Lim
TEST 1 - TRUE OR FALSE

FALSE 1. The GAM for NGAs is promulgated primarily to harmonize government accounting
standards with the U.S. GAAP

FALSE 2. An item is recognized as an asset if it meets both the “probable future economic
benefit’ and reliable measurement” criteria, regardless of whether the item is a resource
controlled arising from past events.

TRUE 3. Compared to the accounting for business entities, government accounting places
greater emphasis on the sources and utilization of government funds and the management’s
stewardship over government resources.

TRUE 4. The principles in GAM for NGAs are similar to the principles in the PFRS.

TRUE 5. A unique financial reporting requirement of government entities is the use of fund
cluster accounting. Under fund cluster accounting, separate books and reports are prepared
for each type of fund held by the government entity.

FALSE 6. The principles used in the financial reporting of government entities are very
unique that only a very few of these principles are similar to those that are applied to
business entities.

FALSE 7. Currently, the financial reporting of government entities is based on NGAS.

TRUE 8. Taxes are the main sources of funds of the government.

FALSE 9. The GAM for NGAs is promulgated by the Philippine Congress under the authority
conferred to it under the Philippine Constitution.

TRUE 10. Other sources of funds of the government include fees, borrowings, and grants
from other governments and international bodies.

FALSE 11. The budget preparation in the Philippines uses a”bottom-up” approach Under this
approach, the budget preparation starts from the highest levels of the government down to
the lowest levels.

FALSE 12. An entity prepares its budget by simply rolling-over the budget in the previous
year and adjusting each line item by 10% increment to reflect inflation. This process is
described as zero-based budgeting.

FALSE 13. An entity can incur obligations after receiving notice of its appropriation but
before receiving the allotment.

FALSE 14. Appropriation is also called obligational authority.

TRUE 15. The Notice of Cash Allocation (NCA) is an authority issued by the DBM to central,
regional and provincial offices and operating units to cover their cash requirements.

TEST II - MULTIPLE CHOICE

D 1. An entity recognizes an estimated loss from the decline in value of a property.
Which of the following is most likely the qualitative characteristic being applied by
the entity?
a) Reliability c) Faithful representation
b) Substance over form d) Prudence
D 2. Which one of the following is not one of the fund clusters of a government entity?
a) Regular agency fund d) Petty Cash Fund
b) Foreign assisted projects fund e) Business related fund
c) Special account-locally funded/Domestic Grants fund
A 3. To achieve a proper balance between relevance and reliability, the overriding
consideration is
a) How user’s needs are best satisfied.
b) Relevance is always more important than reliability
c) Reliability is always more important than relevance.
d) Greater weight shall be given to relevance compared to reliability
D 4. Which of the following is a unique requirement of government accounting that is
not required in the accounting for business entities?
a) The use of double entry recording system.
b) The use of single entry recording system
c) The use of accrual basis of accounting
d) The presentation of budget information in the financial statements.
B 5. What is the legal basis of the COA in promulgating the GAM for NGAs?
a) P.D. No. 1445, State Audit Code of the Philippines
b) The Philippine Constitution
c) R.A.9298. The Philippine Accountancy Act of 2004
d) Philippine Public Sector Accounting Standards (PPSAS)
A 6. Which of the following is tasked in keeping the general accounts of the
government, supporting vouchers, and other documents?
a) COA
b) DBM
c) NGAs
d) Congress
C 7. The Bureau of Treasury is responsible
a) Promulgating accounting and auditing rules and regulations
b) The formulation and implementation of the national budget with the goal of
attaining the nation’s socio-economic objectives.
c) Receiving and keeping national funds and managing and controlling the
disbursements thereof.
d) Directly implementing the projects of the government.
B 8. According to the GAM for NGA’s, the basis of accounting to be applied by
government entities is the
a) Cash basis c) Modified accrual basis
b) Accrual basis d) Any of these as a policy choice
B 9. Government resources must be utilized efficiently and effectively in accordance
with the law. According to PD No.1445 who is directly responsible in implementing this
policy?
a) All employees who are entrusted with the possession of government resources.
b) The head of the government agency
c) The COA
d) All elected officials
A 10. The transfer of government funds from one officer to another requires the
prior authorization of the
a) COA
b) Head of the Agency
c) The President of the Republic of the Philippines
d) Bureau of Treasury
TEST III - PROBLEM -

Entity A is a government agency. The following transactions and events during the calendar
year 20x1 for Entity A are as follows:

a) Received appropriation of P500,000

b) Received allotment of P450,000
c) Incurred obligations amounting to PP440,000
d) Received Notice of Cash Allocation of P430,000
e) Accrued P80,000 salaries through granting , and liquidation, of cash advance. The
Breakdown of salaries is as follows:
Salaries and wages 70,000
Personal Economic Relief Allowance (PERA) Gross 10,000
compensation 80,000
Withholding Tax 18,000
GSIS 4,000
Pag-IBIG 1,000
PhilHealth 2,000
Total Salary Deduction 25,000
f) Received delivery of purchased office equipment worth P200,000. The equipment has
an estimated useful life of 5 years and a 5% residual value. Entity recognizes monthly
depreciation every end of the month using the straight line method. The equipment is
acquired on January 01, 20x1.
g) Paid the accounts payable from the purchase of equipment in (f) above. Taxes withheld
amount to P12,000
h) Received delivery of purchased office supplies worth P100,000. The office supplies were
purchased through check. Taxes withheld amount to P5,000.
i) Issued office supplies worth P90,000 to end users.
j) Granted P20,000 cash advance to an employee for travelling expenses on an official
local travel. The employee liquidated P17,000 and remitted the excess cash advance.
k) Collected unbilled service income for service fees of P40,000 and remitted P30,000 of
the total collection.
l) Paid water and electricity expenses amounting to P5,000 and P10,000, respectively.
Taxes withheld amount to P2,000.
m) Remitted the taxes withheld to the BIR.
n) Remitted contribution to GSIS, Phil-health and Pag-IBIG

REQUIREMENTS: (ANSWERS)
1. Record the transactions and events above. If no journal entry is need, state the
registry or other document where the transaction or even is recorded.

A. The appropriation is posted (recorded) in the Appropriations and Allotments (RAPAL).

B. The allotment is posted (recorded) in the Appropriations and Allotments (RAPAL)

Allotments, Obligations and Disbursements (RAOD) Registry of Registry of and Registries
of The obligations are recorded in the Obligation Request and

C. Status (ORS) and Registries of Allotments, Obligations and Disbursements (RAOD)

D. Cash Modified Disbursement System (MDS), Regular P430,000

Subsidy from National Government P430,000
To recognize receipt of NCA from DBM

E. Salaries and Wages, Regular P70,000

Personal Economic Relief Allowance (PERA) 10,000
Due to BIR P18,000
Due to GSIS 4,000
Due to Pag-IBIG 1,000
Due to Phil-health 2,000
Due to Officers and Employees 55,000
To recognize payable to officers and employees upon approval of payroll

Advances for Payroll P55,000

Cash-Modified Disbursement System (MDS), Regular P55,000
To recognize grant of cash advance for payroll

Due to Officers and Employees P55,000

Advances for Payroll P55,000
To recognize liquidation of Payroll Fund

F. Office Equipment P200,000

Accounts Payable P200,000
To recognize delivery of office equipment

Depreciation-Machinery and Equipment P38,000

Accumulated Depreciation - O.E. P38,000
To recognize depreciation of office equipment

G. Accounts Payable P200,000

Due to BIR P12,000
Cash-Modified Disbursement System (MDS), Regular 188,000
To recognize payment of accounts payable
H. Office Supplies Inventory P100,000
Due to BIR P5,000
Cash-Modified Disbursement System (MDS), Regular 95,000
To recognize delivery of office supplies

I. Office Supplies Expense P90,000

Office Supplies Inventory P90,000
To record the issuance of office supplies to end users

J. Advances to Officers and Employees P20,000

Cash - Modified Disbursement System (MDS), Regular P20,000
To recognize grant of cash advance for travel

Traveling Expenses - Local P17,000

Advances to Officers and Employees P17,000
To recognize liquidation of cash advance for travel

Cash-Collecting Officers P3,000

Advances to Officers and Employees P3,000
To recognize refund of excess cash advance for travel

Cash-Treasury/Agency Deposit, Regular P3,000

Cash - Collecting Officers P3,000
To recognize remittance of the refund of excess cash advance for travel

K. Cash-Collecting Officers P40,000

Permit fees P40,000
To recognize collection of unbilled service income

Cash-Treasury/Agency Deposit, Regular P30,000

Cash - Collecting Officers P30,000
To recognize remittance of income to the BTr

L. Water Expenses P5,000

Electricity Expenses 10,000
Due to BIR P2,000
Cash - Modified Disbursement System (MDS), Regular 13,000
To recognize issuance of MDS checks as payment for expenses

M. Cash-Tax Remittance Advice P37,000

Subsidy from National Government P37,000
To recognize the constructive receipt of NCA for TRA

Due to BIR P37,000

Cash-Tax Remittance Advice P37,000
To recognize constructive remittance to BIR of taxes withheld through
TRA
 N. Due to GSIS P4,000
Due to Pag-IBIG 1,000
Due to PhilHealth 2,000
Cash-Modified Disbursement System (MDS), Regular P7,000
To recognize remittance to GSIS, Pag-IBIG and PhilHealth

2. Post the transaction in the ledger. Use T-accounts

(YELLOW PAPER)
3. Prepare the unadjusted Trial Balance.

ACCOUNTS DEBIT CREDIT

Cash-Collecting Officers P10,000
Cash-Treasury/Agency Dep., Reg. 33,000
Cash-MDS, Regular 52,000
Cash-Tax Remittance Advice -
Office Supplies Inventory 10,000
Office Equipment 200,000
Accumulated Depreciation - Equipment P38,000
Advances for Payroll -
Advances to Officers and Employees -
Accounts Payable -
Due to Officers and Employees -
Due to BIR -
Due to GSIS -
Due to Pag-IBIG -
Due to PhilHealth -
Accumulated Surplus (Deficit) -
Permit Fees 40,000
Subsidy from NG 467,000
Salaries and Wages, Regular 70,000
PERA 10,000
Travelling Expenses - Local 17,000
Office Supplies Expense 90,000
Water Expenses 5,000
Electricity Expenses 10,000
Depreciation-Machinery & Equipment 38,000
TOTALS P545,000 P545,000

4. Prepare the adjustments, if any

Subsidy from National Government P52,000

Cash-Modified Disbursement System (MDS), Regular P52,000
To recognize reversion of unused NCA
5. Prepare a complete worksheet showing columns for post-closing trial balance.

Statement of
Financial Position
Unadjusted Trial
ADJUSTMENTS ATB
Balance
ACCOUNTS DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
Cash -
Collecting 10,000 10,000 10,000
Officers
Cash-
Treasury/Agency 33,000 33,000 33,000
Dep., Reg.
Cash-MDS,
Regular
52,000 52,000 52,000 52,000
Cash-Tax
Remittance
Advice
Office Supplies
Inventory
10,000 10,000 10,000
Office
Equipment
200,000 200,000 200,000
Accumulated
Depreciation - 38,000 38,000 38,000
Equipment
Accumulated
Surplus (Deficit)
Permit Fees 40,000 40,000 40,000
Subsidy from
467,000 52,000 415,000 415,000
NG
Salaries and
Wages, Regular
70,000 70,000
PERA 10,000 10,000
Travelling
Expenses - Local
17,000 17,000
Office Supplies
Expense
90,000 90,000
Water Expenses 5,000 5,000
Electricity
Expenses
10,000 10,000
Depreciation-
Machinery & 38,000 38,000
Equipment
Totals 545,000 545,000 52,000 52,000 493,000 493,000 253,000 38,000
215,000
253,000 253,000
6. Prepare the closing entries.

Accumulated Surplus/(Deficit) P33,000

Cash-Treasury/Agency Deposit, Regular P33,000
To recognize closing of cash deposit account

Permit Fees P40,000

Subsidy from National Government 415,000
Salaries and Wages, Regular P70,000
PERA 10,000
Travelling Expenses - Local 17,000
Office Supplies Expense 90,000
Water Expenses 5,000
Electricity Expenses 10,000
Depreciation-Mac. & Equipment 38,000
Revenue and Expense Summary 215,000
To recognize closing of income and expense accounts

Revenue and Expense Summary P215,000

Accumulated Surplus/(Deficit) P215,000
To recognize closing of revenue and expense summary

ESSAY QUESTIONS: (Total = 20 points)

1. Differentiate the Government Accounting system and Business Entity’s Accounting

System.

Government Accounting System is a simplified set of accounting concepts,

guidelines and procedures designed to ensure correct, complete and timely
recording of government financial transactions, and productions of accurate and
relevant financial reports while Business Entity’s Accounting System are concept of
states that the transactions associated with a business must be separately recorded
from those of its owners or other businesses. Doing so requires the use of separate
accounting records for the organization that completely exclude the assets and
liabilities of any other entity or the owner.

2. Discuss briefly the different functions of COA, DBM and BTr.

> Commission on Audit has the exclusive authority auditing rules and regulations
and keeps the general accounts of the government, supporting vouchers, and other
documents and also submits the financial reports to the President and Congress.
> Department of Budget and Management (DBM) the annual budget is responsible
for the formulation and implementation of the national budget with the goal of
attaining the nation's socioeconomic objectives.
> Bureau of Treasury (BTr) functions under the Department of Finance and is the
cash custodian of the government. The BTr is authorized to receive and keep
 national funds and manage and control the disbursements thereof and maintain
accounts of financial transactions of all national government offices, agencies and
instrumentalities.

3. Enumerate the different phases in the Budget Cycle and explain briefly

 Budget preparation this phase involves the formulation of estimates of revenues

and expenditures by the Executive Departments and Agencies. In preparing the
annual budget proposal; the said department makes an estimation of government
revenues. It then determines the budget priorities within available revenues and
borrowing limits. Finally, it translates these approved priorities into expenditures.
> It includes Budget call, Budget Hearings and Presentation to the Office of the
president

 Budget Legislation this pertains to the whole range of legislative action on the
budget, leading to the enactment of a General Appropriations Law for the year.
The Philippine House of Representatives first conducts hearings/debates on the
budget. The House then approves the budget, for submission to the Senate. Senate
hearings and debates are conducted on the budget, which is finally approved. A
Bicameral Conference Committee composed of representatives of the Philippine
House of Representatives and the Senate is convened. After approval by the
Bicameral Conference Committee, the President enacts the budget which is known
as the General Appropriations Act.
> It includes House Deliberation, Senate Deliberations, Bicameral Deliberations and
Presidents Enactment

 Budget Executions covers the allotment of appropriations by the central budget

authority to and the incurrence of obligations by, the spending departments and
agencies of government.
> It includes Disbursement Authority, Incurrence of Obligations, Allotment and
Release Guidelines and BED’s

 Budget Accountability involved the reporting of actual performance against plans

or targets, and it involves the Monitoring of agency budgetary performance,
Comparison and evaluation of actual performance with the initially-approved work
targets, A summary list of checks issued is submitted on a monthly basis and the
Physical & Financial Report of operations is submitted on a quarterly basis in the
form of a trial balance.
> It includes Audit, Performance Reviews and Budget Accountability Reports