Lecture Notes: Advanced Financial Accounting and Reporting G/N/E de Leon AFAR.3014 - NGAS
Lecture Notes: Advanced Financial Accounting and Reporting G/N/E de Leon AFAR.3014 - NGAS
Lecture Notes: Advanced Financial Accounting and Reporting G/N/E de Leon AFAR.3014 - NGAS
LECTURE NOTES
Summary of Critical Points 13. Closing entries are as follows:
1. Budgetary accounts of appropriations and allotments 1. Reversion of the unused or unutilized Subsidy
are entered in the registry maintained by DBM. Income from National Government at the end of
Allotments and obligations are also entered in the year.
appropriate registries maintained by the agency.
Under NGAS budgetary accounts are no longer Subsidy Income from National Government X
journalized. Cash-National Treasury, MDS X
2. The notice of cash allocation (NCA) received by the
agency from DBM is journalized in the regular agency 2. Close the balance of the Subsidy Income from
books. (The other set of books of an agency is the National Government to Income & Expense
National Government books (NG). Summary Account.
3. The obligations incurred by the agency are not
journalized, but posted to the appropriate registry, Subsidy Income from National Government X
as follows: Income & Expense Summary X
For capital outlay - RAOCO
Personal Services - RAOPS 3. Close the balance of all revenue accounts to
Maintenance & Others - RAOMO Income & Expense Summary Account.
Financial expenses - RAOFE
4. Generally, withheld taxes by the agency are no Income from Government Services X
longer remitted to BIR, but retained and credited to Operations X
Subsidy Income from NG under the Tax Remittance Income from Government Business
Operations X
Advice (TRA) System. The NCA released to the
Income & Expense Summary X
agency is reduced by the amount of estimated
withholding taxes pertinent to the allotment covered
4. Close the balance of all expense accounts to
by the cash allocation.
Income & Expense Summary account.
5. Asset/perpetual inventory method will be followed in
the recording of expenditures if it applies to more
Income & Expense Summary X
than one period or when payment is for materials for Salaries & Wages-Regular Pay X
stock. The expense is taken up when the items are
consumed. 5. Close the balance of the Income & Expense
6. Cost of ending inventory of supplies and materials Summary account to the Retained Operating
shall be computed using the Moving Average method. Surplus account.
7. Costs of assets being constructed are debited to
construction in progress account (using construction Income & Expense Summary X
period theory). This CIP account is closed to the Retained Operating Surplus X
appropriate asset account upon completion.
8. Constructed Public Infrastructures are not shown 6. Close the balance of the Prior Year’s Adjustments
among the fixed assets on the balance sheet, rather account to Retained Operating Surplus account.
they are deducted from government equity (as part
of closing entries) and transferred out to an Prior Year’s Adjustments X
appropriate registry. They are not subject to Retained Operating Surplus X
depreciation charges.
9. Depreciation on fixed assets are taken up on the 7. Close the balance of the Retained Operating
month following the month of purchase or completion Surplus to Government Equity account.
of construction. A 10% scrap value on the asset is
always assumed and the estimated life is prescribed Retained Operating Surplus X
by COA. Government Equity X
10. Income for which the agency is authorized to use for
its operation is recorded in the regular agency books. 8. Close Public Infrastructures or Reforestation
If the authority is with limitations, such as any Projects accounts to Government Equity account
excess is to be remitted to the National Treasury the and transfer the corresponding amounts to the
collections shall first be recorded in the regular respective registries.
agency books, the expenses journalized, and the Government Equity X
excess is to be remitted to the National Treasury and Public Infrastructures X
recorded in the agency’s NG books. Reforestation Projects X
11. Two trial balance are prepared:
a) Pre-closing TB – which is also the adjusted TB. 14. Summary of Coding structures
From this is prepared the statement of income Accounts
and expense. Account Codes
b) Post-closing TB – from this is prepared the Assets 100 – 299
balance sheet. Contra assets 300 – 399
12. Adjusting entries at end of period are the same as Liabilities 400 – 499
those recorded in commercial accounting. Equity 500 – 599
Revenue / Income 600 – 799
______________________________________
Financial Expense Personal Services Agency Name
(5) (6)
Sheet No. _____________
allotment Appropriate allotment Appropriate
balance balance Date Ref. P.P.A Account Allotment Obligation Balance
Code Received incurred
Eaxmple 2:
Step 1. Memo entry in RAOMO
The formats presented here are only suggested ones. 2. Journal Entry
The DBM and the BTr may formulate their own formats., Travel expenses 10
which they deem will serve their purposes better. Cash – National Treasury - MDS 10
MULTIPLE CHOICE
DRILL
1. The Gensan Agency Unit in Southern Mindanao payable on the 30th of September, 2016. The entry to
received the following allotment for its approved record this transaction would be
budget matrix from DBM: a. No entry
Capital Outlay P25,000,000 b. Memorandum entry in RAOPS
Misc Other Operating Expenses 5,000,000 c. Debit, Cash – Disbursing Officer, P190,000;
Personal Services 2,500,000 Credit, Cash – NT-MDS, P190,000.
Financial Expenses 150,000
d. Debit, Cash – Disbursing Officer, P190,000; Credit,
P32,650,000
Subsidy Income from the National Government,
The entry to record the aforementioned allotment in P190,000.
GENSAN AGENCY records would be
a. No entry 5. Assume the cash advance granted to the Disbursing
b. Memo entry in Registry of Allotment and Officer is in relation to the following details of the
Obligations (RALOBs) Lucena’s bi-monthly payroll
c. Debit, National Clearing Account, P32,650,000; Salaries P200,000
Credit, Appropriation allotted, P32,650,000. PERA (Personnel Economic 30,000
d. Debit, Cash-National Treasury, MDS, P32,650,000; Relief Allowance)
Credit, Subsidy Income from NG, P33,650,000. Total P230,000
Less: Withholding Taxes (TRA) P24,000
Life and Retirement 10,000
2. The Gensan Agency received a Notice of Cash Pag-ibig 2,000
Allocation for the above allotment items for a total Philhealth 4,000 40,000
amount of P19,600,000, approximately 60% of the Net amount P190,000
approved allotment.
The entry to be recorded for the payment of salaries
The entry to be recorded for this transaction would be would be.
a. No entry a. Obligations liquidated P230,000
b. Debit, Appropriations allotted, P19,600,000; Cash – Disbursing Officer P190,000
Due to BIR 24,000
Credit, National Clearing Account, P19,600,000.
Due to GSIS 12,000
c. Debit, National Clearing Account, P19,600,000; Due to Philhealth 4,000
Credit, Appropriations allotted, P19,600,000. b. Salaries, etc. 230,000
d. Debit, Cash-National Treasury-Modified Due to BIR 24,000
Disbursement System, P19,600,000; Credit, Cash – Disbursing Officer 206,000
Subsidy Income from the National c. Salaries and Wages 200,000
Government, P19,600,000. PERA 30,000
Cash – Disbursing Officer 190,000
3. The Vigan Agency in Northern Luzon incurred an Due to BIR 24,000
Due to GSIS 10,000
obligation for the salaries of its employees amounting
Due to Pag-ibig 2,000
to P350,000 for the ensuing month of October, 2016. Due to Philhealth 4,000
The entry to record this obligation would be d. No entry is required.
a. No entry
b. Memo entry in Register of Allotments and 6. Using the same information in Item #5, what entry
Obligations for Personal Services, RAOPS for would be recorded for the remittance of the tax due to
P350,000. BIR?
c. Debit, Appropriations allotted, P350,000; Credit, a. Due to BIR P24,000
Obligations incurred, P350,000. Cash-NT-MDS P24,000
d. Debit, Cash – Disbursing Officer. P350,000; Credit,
b. Due to BIR P24,000
Cash-National Treasury-Mds, P350,000. Cash-Disb Officer P24,000
Subsidy Income from NG P24,000 12. Tagum Agency of Central Mindanao received spare
parts amounting to P30,000 for the major overhaul of
7. Using the same information in Item #6, what entry its equipment and sets up a liability for that amount.
would be recorded for the remittance of the other
Tagum Agency would prepare the following entry
deductions from the bi-monthly payroll? a. Spare part expense P30,000
a. Due to GSIS P10,000 Accounts payable P30,000
Due to Pag-ibig 2,000
Due to Philhealth 4,000 b. Spare parts Inventory P30,000
SI from the NG P16,000 Accounts payable P30,000
d. Buildings P2,181,200 29. Albay Agency in Central Bicol had the following account
Cash – NT – MDS P2,181,200 balances for the fiscal year ended June 30, 2016:
25. Using the information in Item 25, the entry to record Current Assets P10,000,000
Plant assets 90,000,000
the liquidated damages would be
Other assets 5,000,000
a. No entry
Liabilities 18,000,000
b. Memo entry in RAOCO Contingent liabilities 5,000,000
Contingent Assets 3,000,000
c. Cash-Collecting Officer 10,000
Buildings 10,000 Determine the balance of Government Equity at June
30, 2015
d. Cash Disbursing Officer 10,000 a. P105,000,000 c. P87,000,000
Buildings 10,000
b. P 85,000,000 d. P82,000,000
26. Using all relevant information given for Sarangani
Agency, the entry to record the turnover and 30. What is the entry to record the collection of
acceptance of the building would be P15,000,000 corporate income tax by the BIR in its
a. Buildings P10,000,000 Agency Books?
CIP – Agency Assets P10,000,000 a. Memo entry
b. Public P9,990,000
Infrastructure
CIP – People’s Park P9,990,000