REVIEWER

ACCTG39 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORG.

FALSE. 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.

TRUE. 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 each type
of fund held by a government entity.

Bureau of Treasury. The _ functions under the Department of Finance and is the cash
custodian of the government.

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

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

TRUE. 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.

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

PRUDENCE. An entity recognizes an estimated loss from the decline in value of a property.
Which of the following is most likely the qualitative characteristics being applied by the entity?

COA. Which of the following is tasked in keeping the general accounts of the government,
supporting vouchers, and other documents?

TRUE. Taxes are the main source of funds of the government.

Accrual Basis. According to the GAM for NGAs, the basis of accounting to be applied by
government entities is the

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

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

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

The Department of Budget and Management (DBM) is responsible for

d. the formulation and implementation of the national budget with the goal of attaining
the nation's socio-economic objectives

FALSE. A government entity can make disbursements even before it receives a disbursement
authority.

FALSE. After the budget call from the BDM, the proposed budget of various agencies are
submitted immediately to the Office of the President for review.

FALSE. Budget deliberations in the Congress start in the House of Senate.

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

FALSE. Appropriation is also called obligational authority.

FALSE. 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.

TRUE. A government entity must first receive an allotment before it can incur obligations.

TRUE. Responsibility accounting greatly enhances budget accountability because managers

are evaluated only in terms if the costs or other variables that they control, and therefore,
budget deviations can be readily attributed to the managers accountable therefor.

FALSE. 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.

TRUE. 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.

Qualitative characteristics. These refer to the attributes that make information useful to users

The Head of Entity A. Entity A (a government agency) is entrusted with government resources.
According to P.D. 1445, who is directly responsible for the efficient and effective utilization of
these resources

Government Accounting encompasses the process of analyzing, recording, classifying,

summarizing and communicating all transactions involving the receipts and disposition of
government funds and property, and interpreting the results thereof.

Prudence. An entity recognizes an estimated loss from the decline in value of a property. Which
of the following is most likely the qualitative characteristics being applied by the entity?
Which of the following is a unique requirement of government accounting that is not required in
the accounting for business entities? – the presentation of budget information in the FS

Which of the following financial statements is peculiar to a government entity? – Statement of

Comparison of Budget and Actual Amounts

To achieve a proper balance between relevance and reliability, the overriding consideration is –
how users’ needs are best satisfied

Which of the following qualitative characteristics is improved when information is reported on a

timely basis? – Relevance

How does a government accounting differ from the accounting for business entities?

d. Government accounting places greater emphasis on sources and utilization of funds

in accordance with the law and management's stewardship over government resources
entrusted to the entity.

The transfer of government funds from one officer to another requires the prior authorization of
the – Commission on Audit

Which of the following qualitative characteristics does an entity most likely would need to make
some trade-offs? – relevance and reliability

Which of the following is not one of the fund clusters of a government entity? – Petty Cash
Fund

1. A legislation approves the allocation of Php100B funds to support the operations of Entity A
(a government agency) in the current year. At the start of first quarter, Entity A receives
authorization to incur obligations for a maximum amount of Php45B in that quarter. Entity A
extends half of that authorization to its lower operating units. During the quarter, Entity A
receives monthly authorization to disburse funds not to exceed Php15B per month. Entity A
extends half of those monthly authorizations to its lower operating units. At the end of the
quarter, total obligations incurred amounted to Php40B while total disbursements amounted to
Php35B.

The allocation of the Php100B funds to Entity A is referred to as – appropriation

2. What is the correct sequence of the following steps in the budget process?

i. Budget Preparation

ii. Budget Legislation

iii. Budget Execution

iv. Budget Accountability

3. Under the approach to budgeting, several parties participate in the budget preparation - from
the lowest levels of government to the highest levels, and sometimes even citizen-stakeholders
participate in the budget preparation. – bottom-up budgeting

4. A legislation approves the allocation of Php100B funds to support the operations of Entity A
(a government agency) in the current year. At the start of first quarter, Entity A receives
authorization to incur obligations for a maximum amount of Php45B in that quarter. Entity A
extends half of that authorization to its lower operating units. During the quarter, Entity A
receives monthly authorization to disburse funds not to exceed Php15B per month. Entity A
extends half of those monthly authorizations to its lower operating units. At the end of the
quarter, total obligations incurred amounted to Php40B while total disbursements amounted to
Php35B.

The allocation of the Php100B funds to Entity A is authorized by – Congress

5. This summarizes an agency's fiscal year plans and performance targets. It shows the
agency's physical and financial plan, monthly cash program, estimate of monthly income, and
list of obligations that are not yet due and demandable. – Budget Execution Documents
(BEDs)

6. This is necessary before government entities can enter into contracts that bind the
government for the eventual disbursement of government funds – Allotment

7. Under responsibility accounting, a manager's performance is evaluated – only in terms of

the costs, or other variables, that he controls

8. Disbursements by government entities are most commonly made through – MDS Checks

9. Responsibility accounting requires all of the following except – b. separate books of

accounts to segregate controllable and non-controllable
10. Arrange the following steps according to the sequence that they appear in the budget cycle.

i. Appropriation

ii. Allotment

iii. Incurrence of Obligation

iv. Disbursement Authority

v. Disbursement

PRELIM EXAMINATION

1. Which of the following is not one of the objectives of the GAM for NGAs?

- to update government accounting standards to be consistent with the provisions of US

GAAP

.2. Which of the following is not one of the necessary closing entries of a government entity?

-Closing of the balance of "Revenue and Expense Summary" account to the "Subsidy
from National Government" account.

3. A legislation approves the allocation of Php100B funds to support the operations of Entity A
(a government agency) in the current year. At the start of first quarter, Entity A receives
authorization to incur obligations for a maximum amount of Php45B in that quarter. Entity A
extends half of that authorization to its lower operating units. During the quarter, Entity A
receives monthly authorization to disburse funds not to exceed Php15B per month. Entity A
extends half of those monthly authorizations to its lower operating units. At the end of the
quarter, total obligations incurred amounted to Php40B while total disbursements amounted to
Php35B.

In Entity A's first quarter Statement of Appropriations, Allotments, Obligations, Disbursements

and Balances, how much is shown as "unpaid obligations"?

- Php 5B

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

- A debit to the "Subsidy from National Government" account

5. The various registries maintained by government entities are considered, technically, as

- budget records
6. A journal entry with e credit to the "Cash-Modified Disbursement System (MDS)-Regular"
account will most likely be recorded in the

- Check Disbursement Journal

7. This is necessary before government entities can enter into contracts that bind the
government for the eventual disbursement of government funds

- Allotment

8. Entity A, a government entity, made disbursements for the traveling expenses of its
personnel. These expenditures are most likely classified as

- MOOE Maintenance and Other Operating Expenses

9. Which of the following best describes the Notice of Cash Allocation (NCA)?

- It is a form of authorization to a government agency to make disbursements out of

government funds.

10. Which of the following qualitative characteristics is improved when information is reported on
a timely basis?

- Relevance

11. Obligations recorded in the strategies but not yet in the accounting books are referred to as

- Not yet Due and Demandable

12. According to the Revised Chart of Accounts (RCA) issued by the COA, the "Subsidy from
National Government" account is a (an)

- Revenue account

13. The 8-digit Revised Chart of Accounts (RCA) Code for expenses starts with number

-5

14. Which of the following is recorded in the Obligation Request and Status (ORS)?

- entering into employment contracts with employed

15. Arrange the following steps according to the sequence that they appear in the budget cycle.

I. Budget hearings with the DBM

II. Bicameral deliberations

III. President's enactment of the GAA

IV. Allotment

V. Budget accountability reports

16. The entry to record the receipt of Notice of Cash Allocation (NCA) by a government entity is:

- (Debit) Cash-MDS, Regular

(Credit) Subsidy from National Government

17. An item is recognized as an asset if it meets both the "probable future economic benefits"
and "reliable measurement" criteria, regardless of whether the item is a resource controlled
arising from past events.

- False

18. A legislation approves the allocation of Php100B funds to support the operations of Entity A
(a government agency) in the current year. At the start of first quarter, Entity A receives
authorization to incur obligations for a maximum amount of Php45B in that quarter. Entity A
extends half of that authorization to its lower operating units. During the quarter, Entity A
receives monthly authorization to disburse funds not to exceed Php15B per month. Entity A
extends half of those monthly authorizations to its lower operating units. At the end of the
quarter, total obligations incurred amounted to Php40B while total disbursements amounted to
Php35B.

In Entity A's first quarter Statement of Appropriations, Allotments, Obligations, Disbursements

and Balances, how much is shown as "unreleased appropriations"?

- Php 55B

19. A government entity pays an accounts payable. The entry to record the payment will most
likely include a

- credit to the “Due to BIR” account

20. A legislation approves the allocation of Php100B funds to support the operations of Entity A
(a government agency) in the current year. At the start of first quarter, Entity A receives
authorization to incur obligations for a maximum amount of Php45B in that quarter. Entity A
extends half of that authorization to its lower operating units. During the quarter, Entity A
receives monthly authorization to disburse funds not to exceed Php15B per month. Entity A
extends half of those monthly authorizations to its lower operating units. At the end of the
quarter, total obligations incurred amounted to Php40B while total disbursements amounted to
Php35B.

Which of the following best describes the Php15B monthly authorizations?

- Disbursement authority (e.g., Notice of Cash Allocation “NCA”)

21. The Bureau of Treasury (BTR) is responsible for

- receiving and keeping national funds and managing and controlling the disbursements
thereof.

22. Which of the following accounts is debited when a government entity remits its collections to
the National Treasury?

- Cash – Treasury / Agency Deposit, Regular

1. The Chief Accountant shall charge obligations incurred against available allotment to ensure
that - no overdraft is incurred

2. A certification on the availability of allotment is required before a disbursement of government

funds is made. According to the GAM for NGAS, who shall issue this certification?

- budget officer

3. Entity A purchases office supplies from an authorized merchant using an electronic card. The
entry to record the settlement of the transaction is

- Office Supplies Inventory

Accounts Payable

4. Which of the following modes of disbursement would result to the recognition of a loan
payable in books of the BTr? - NCAA

5. Which of the following results to the recognition, in the books of accounts, of expenses
classified as Personnel Services? - set up of payable for payroll

6. Which of the following results to the recognition of expense? - liquidation of cash advance
for travel

7. Entity A has a foreign service post. During the period, Entity A receives authorization from the
DBM allowing it to use the collections of its foreign service post to defray for the necessary
operating expenses of the foreign service post. This authorization is called - Cash
Disbursement Authority (CDC)

8. The entry in the books of a government agency with foreign service post to record the receipt
of disbursement authority called the Cash Disbursement Ceiling (CDC) includes a - Credit to
Subsidy from National Government
9. Entity A sends an employee to an official travel and gives him cash to cover his travelling
expenses. Which of the following is most likely the entry to record the cash disbursement?

- Advances to Officers and Employees xx

Cash - MDS, Regular xx

10. A certification on the availability of funds and completeness of supporting documents is

required before a disbursement of government funds is made. According to the GAM for NGAs,
who shall issue this certification? - Chief Accountant

11. Entity A acquires an equipment on account and settles the account through Non-Cash
Availment Authority (NCAA). The entry to settle the account is

- Accounts Payable xx

Subsidy from National Government xx

12. According to the GAM for NGAS, disbursements for salaries and wages shall be supported
by - PAYROLL

13. This is used to recognize in the books of national government agencies, the constructive
remittance to BIR and BOC of taxes and customs duties withheld. - Tax remittance Advice

14. According to the GAM for NGAS, cash disbursement are made through -

- Cash Advances to Authorized Personnel

15. Which of the following is not used in processing disbursement? - ORs

16. Entity A, a government entity, receives notice that for the current year, the

maximum amount it can spend on maintenance and other operating expenses is

P10B. This event can be described as

- APPROPRIATION

17. Entity A, a government entity, receives notice that OUT OF ITS P10B approved

budget for the year, Entity A can incur obligations up to P4B in then first quarter.

This event can be described as

- ALLOTMENT

18. After receiving its obligational authority amounting 4B, Entity A enters into binding

agreements for the eventual payments of a total sum of P3B. The P3B event can

describe as

- OBLIGATION
19. Entity A, government entity, receives authorization to disburse funds not to

exceed P1B in a specified period. This event can describe as

- NOTICE OF ALLOCATION

20. Government entities and business entities use the same accounting treatment for

all of the following except

- Remittance of taxes withheld to the BIR

21. According to the GAM for NGAs, cash disbursement is made through

- Cash advances to authorized personnel

22. Payments of checks that are chargeable against the Treasury Account are

credited to the

- Cash-Modified Disbursement System (MDS) account

23. Which of the following is not one of the modes of disbursements by a

government entity

- Payment through Short Messaging System (SMS)