MULTIPLE CHOICE THEORIES

Choose the BEST answer from the given choices.

S1: Cash overage shall be taken up as Miscellaneous Income. T

S2: Cash overage that cannot be satisfactorily explained by the collecting officer shall be
forfeited in favor of the collecting officer. T
A. Only statement 1 is true
B. Only statement 2 is true
C. Both statements are true
D. Both statements are false

The following statements relate to the recognition of revenue arising from the use by others of entity
assets yielding interest, royalties and dividends or similar distributions except
A. Interest shall be recognized on a time proportion basis that takes into account the effective yield on the asset
B. Royalties shall be recognized as they are earned in accordance with the substance of the relevant agreement
C. Dividends shall be recognized when profit is earned by the investee company
D. Dividends or similar distributions shall be recognized when the shareholder’s or the entity’s right to receive
payment is established

These are benefits or service potential compulsory paid or payable to public sector agencies, in
accordance with laws and or regulations, established to provide revenue to the government.
A. Fines and other penalties
B. Shares, grants and donations
C. Tax revenues
D. Service income

The following are supporting documents for payment through cash advance for foreign travel
except
A. For plane fare, quotations of three travel agencies or its equivalent
B. Document to show the dollar to peso exchange rate at the date of grant of the cash advance
C. Hotel room bills with official receipts
D. Authority from the DILG

It refers to the undertaking, whether construction work, research or training program, computer
engagement or other authorized activities which an agency shall prosecute or implement in favor or
in behalf of another agency.
A. Program
B. Project
C. Activity
D. Major Final Output

Property, plant and equipment (PPE) acquired on account is initially recorded at

A. Cost
B. Cash price equivalent
C. Purchase price, net of trade discount and rebates
D. Fair value

The following are rules and regulations on the granting, utilization and liquidation of cash advances
except:
A. Only permanently appointed officials shall be designated as disbursing officer s
B. Transfer of cash advance from one accountable officer to another is allowed
C. A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been
served
D. No cash advance shall be given unless for legally authorized specific purpose

These are economic benefits or service potential compulsory paid or payable to public sector
agencies in accordance with laws and regulation, established to provide revenue to the
government.
A. Royalties
B. Fines
C. Taxes
D. Bequest

S1: The purchase cost of PPE purchased at lump-sum is distributed based on the revalued
amount the assets acquired. F
S2: The cost of several PPE purchased at lump-sum price per set/group/lot shall be allocated to
each PPE based on the breakdown of cost reflected in the invoice, if any. T
Only statement 1 is true
Only statement 2 is true
Both statements are true
Both statements are false

These are granted to government units without complete set of books of account for PS and MOOE.
A. Advances for travel
B. Advances for payroll
C. Advances for operating expenses
D. Advances for special purpose

Who among the following is not a signatory of LDDAP-ADA?

A. Payee
B. Budget officer
C. Head of Agency
D. Chief accountant

Document issued by the bank informing then an increase in the depositor’s account for reasons
such as collection directly deposited to the depositor’s bank account.
A. Credit memorandum
B. Debit memorandum
C. Cancelled checks
D. Returned checks

This refers to the limit established by the Program Administrator and approved by the Steering
Committee for the total value of purchases that a cardholder can make in one month.
A. Maximum Purchase Card Limit
B. Cardholder Single Purchase Limit
C. Cardholder Monthly Purchase Limit
D. Purchase Card Limit

The following costs are not qualified for recognition as PPE except
Administration and other general overhead costs
Costs of introducing a new product or service
Cost to purchase PPE
Costs of conducting business in a new location or with a new class of customers
S1: Entities recognized revenue in respect of debt forgiveness when the former debt no longer
meets the definition of a liability or satisfies the criteria for recognition as a liability, provided that the
debt forgiveness satisfies the definition of a contribution from owners. F
S2: According to PPSAS 23, par.87, revenue arising from the debt forgiveness is measured at the
fair value of the debt forgiven. F
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false

Which is not true regarding cash advances for payroll?

A. Any unclaimed salaries/allowances shall be refunded and issued official receipt to close account
B. Advances for payroll may be used for encashment of checks or for liquidation of previous types of
cash advances
C. Liquidation of the advances shall be made within five (5) days after the end of the pay period
D. Advances for payroll shall be equal to the net amount processed

General purpose financial statements can have a predictive or prospective role, providing
information useful in predicting the level of resources required for:
I. Continued operations
II. Discontinued operations
III. Resources that may be generated by continued and discontinued operations
IV. Associated risks and uncertainties
I, II, III and IV
I, III and IV
I and IV
I and II

This constitutes all cash paid out during a given period in currency (cash) or by check/ADA. It may
also mean the settlement of government payables/obligations by cash, check or ADA
A. Commercial check
B. Disbursements
C. Special cash advance
D. Regular cash advance

These are economic benefits or service potential received or receivable by National Government
Agencies from an individual or other entity, as determined by a court or other law enforcement body
as a consequence of the individual or other entity breaching the requirements of laws or
regulations.
A. Legal fees
B. Losses
C. Fines
D. Compensation

These are unenforceable undertakings to transfer assets to the recipient entity.

A. Exchange transactions
B. Grants
C. Pledges
D. Gifts
S1: Taxation revenue shall be determined at a net amount. F
S2: 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. T
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false

Cost of inventories include the following except

Purchase Price
Cost of Direct Materials and Labor
Abnormal amounts of wasted materials
Delivery cost to bring the inventory to its present location

This is the method used for costing inventories in accordance with the Government Accounting
Manual.
A. First in, First Out
B. Average Method
C. Weighted Average Method
D. Moving Average Method

S1: An entity obtains control of transferred resources either when the resources have been
transferred to the entity, or the entity has an enforceable claim against the transferor. T
S2: Transfers of resources that satisfy the definition of contributions from owners will not give
rise to revenue. T
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false

The Bank Reconciliation Statement (BRS) shall be prepared to:

I. Check correctness of both the bank’s and agency’s records
II. Serve as a determent to fraud
III. Help the COA auditor
IV. Enable an agency or bank to take up charges or credits recognized by the bank or agency but
not yet known by the other party.
A. I, II, III and IV
B. I, II and III only
C. I, II and IV only
D. I and IV only

Semi-expendable properties:
I. Recognized as PPE shall be depreciated as PPE
II. Are expensed upon issue to end-users
III. Are monitored with the use of the Inventory Custodian Slip
I, II and III
II and III
I and III
I and II
S1: Revenue from non-exchange transaction shall be measured at the amount of the increase in
net assets recognized by the entity, unless it is also required to recognized a liability. T
S2: An asset acquired through a non-exchange transaction shall initially be measured at cost. F
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false

These are checks issued by government agencies chargeable against the account of the Treasurer
of the Philippines which are maintained with different MDS-GSBs.
A. Commercial Checks
B. Personal Checks
C. Modified Disbursement System Checks
D. Agency Checking Account Checks

Checks the agency has issued and recognized but which have not yet been presented to the bank
for payment.
A. Credit memorandum
B. Returned checks
C. Cancelled checks
D. Outstanding checks

The following statements are true regarding petty cash fund except
A. The petty cash fund should be replenished when disbursements reach at least 75% or as needed
B. Payments out of the petty cash fund shall be allowed only for amounts not exceeding P20,000 for
each transaction
C. Splitting of transactions to avoid exceeding the ceiling shall not be allowed
D. All disbursements out of the petty cash fund should be supported by approved petty cash vouchers

S1: When an asset is acquired on account subject to a cash discount, the discount is deducted
only when taken. F
S2: Trade discounts are not recognized in the preparation of journal entries. T
Only statement 1 is true
Only statement 2 is true
Both statements are true
Both statements are false

This is the account debited when recording the grant of advances for payment of salaries and
wages of employees
A. Due to Officers and employees
B. Advances to officers and employees
C. Advances for Payroll
D. Salaries and wages expense

S1: Expenditure incurred on purchasing, developing, and operating hardware, like web servers, staging
servers, production servers and internet connections of a website is accounted for as PPE if the total
value of the primary assets and these items is within the threshold of P15,000 and above. T
S2: The capitalization threshold of P15,000 represents the minimum cost of an individual asset
recognized as a PPE on the Statement of Financial Position. T
Statement 1 is true
Statement 2 is true
Both statements are true
Both statements are false

The following are costs not qualified for recognition as Property, plant and equipment except
A. Administration and other general overhead costs.
B. Costs of introducing a new product or service
C. Installation and assembly cost
D. Costs of conducting business in a new location

The following are classified as inventories in the public sector except

A. Maintenance materials
B. Postal service supplies held for sale
C. Land/property held for sale
D. Land/property held to earn rentals

These are excluded from payment through ADA except

A. Payment of Accounts Payable to utility companies
B. Payment of employees’ salaries
C. Remittance of social insurance premium contributions to government corporations;
D. Terminal Leave and Retirement Gratuity (TL/RG) benefits

It is the account debited when recording the grant of cash advance for travel abroad
A. Advances for travel
B. Advances to officers and employees
C. Travelling expense – foreign
D. Cash – MDS, Regular

This refers to cash or money transferred to an implementing Agency for the undertaking of a project
by a Source Agency in which the allotment was released.
A. Project Fund
B. Transferred Fund
C. Inter-agency Transferred Fund
D. Intra-agency Transferred Fund

S1: The cost of interchangeable items of inventory is determined using either the weighted average
cost formula or specific identification. F
S2: Specific identification is appropriate treatment for items that are segregated for a specific
project, regardless of whether they have been bought or produced. T

Only statement 1 is true

Only statement 2 is true
Both statements are true
Both statements are false

S1: Interest shall be recognized as they are earned in accordance with the substance of the
relevant agreement. F
S2: Dividends or similar distribution shall be recognized when the shareholder’s or the entity’s right
to receive payment is established. T
A. Only Statement 1 is true
B. Only Statement 2 is true
C. Both statements are true
D. Both statements are false
Checks issued and chargeable to the agency bank account but was later voided due to expiration of
validity, and other valid reasons.
A. Credit memorandum
B. Returned checks
C. Cancelled checks
D. Outstanding checks

These are revenue from exchange transactions except

A. School fees
B. Registration fees
C. Fines and Penalties
D. Rent/Lease income

These are transaction in which one entity receives assets or service, or has liabilities extinguished,
and directly gives approximately equal value to another entity in exchange.
A. Exchange transactions
B. Non-exchange transactions
C. Economic transactions
D. Financial transactions

MULTIPLE CHOICE - ENTRIES

For the following items, select the MOST APPROPRIATE transaction to which the entry refers to from the given choices.

1. Dr: Cash – Treasury/Agency Deposit, Regular; Cr: Cash – Collecting Officer

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

2. Dr: Cash – Constructive Income Remittance; Cr: Subsidy from National Government
A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

3. Dr: Other deferred credits; Cr: Income from grants and Donations in cash
A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant
agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

4. Dr: Due to BIR; Cr: Cash – TRA

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

5. Dr: Subsidy to NGAs; Cr: Cash – Constructive Income Remittance

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

6. Dr: Advances to Special Disbursing Officer; Cr: Cash – MDS, Regular

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

7. Dr: Cash – Collecting Officer; Cr: Expense Account

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

8. Dr: Petty Cash; Cr: Cash – MDS, Regular

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

9. Dr: Accounts Payable; Cr: Subsidy from National Government

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

10. Dr: Cash – Collecting Officer; Cr: Miscellaneous Income

A. Replenishment of Petty Cash Fund before year-end
B. Receipt of NCAA and payment of payables by a National Government Agency
C. Advances for Petty Expenses
D. Constructive Receipt of remitted collections by the BTr from DOLE
E. Receipt of Cash Disbursement Ceiling from DBM
F. Income from grants and donations representing payment for expenses in connection with the grant agreement
G. Remittance of Withholding Tax to BIR
H. Receipt by BIR of withholding tax remitted by agency through TRA
I. Establishment of Petty Cash Fund
J. Liquidation of cash advance given to special disbursing officer
K. Granting of cash advance for the agency’s anniversary celebration
L. Receipt of grant directly credited to the account of the National Government Agency maintained by BSP
M. Forfeiture of cash overage of the Collecting Officer
N. Collection of refund for overpayment of expenses
O. Remittance of collections to the BTr

PROBLEM SOLVING
Solve the following problems completely and in good accounting form. Write your solutions in a clean sheet of paper and attac h
in the google classroom. Encircle and double rule your final answers.

Final answers should be written in the space provided in this form after each requirement with no spaces in between. Drop
decimal points, if any. For example, if your answer is P897,543.21, write 897543.

Final answer - 1 point

Solution - 4 points

The following allotments were received by Agency ABC from DBM:

Personal services – P20 million;
Maintenance and operating expenses – P10 million; and
Capital outlay – P25 million.
1. During the year, Agency ABC entered into a contract with a third party for the construction of a
new building. The contract price was P18 million. The new building was not finished on the agreed
deadline due to lack of equipment needed for the construction. The contractor was charged for
liquidation damages worth P1,000,000,000. The agency director also wanted its old building to be
connected to the new building for the convenience of its employees and also of the public. Letters
were sent out to interested third parties for this project and a date was set up for the bidding.
Estimated cost of the project is P5 million. How much is the balance of RAOCO at the end of the
period? NOT SAME
37,000,000
Your answer
The Treasury Accounts-MDS, Regular account of Agency ABC as of December 31, 2020, had the
following transactions:
 Outstanding Check P25,850 – BANK 2 LESS
 Bank Charges P4,750 – BOOK 2 LESS
 Overstatement of MDS Account due to erroneous recording of NCA (with ARO) received
P150,000 – BOOK 3 LESS
 Overstatement of MDS Account due to erroneous recording of the amount of check issues
issued P20,000 – BOOK 4 LESS
 Understatement of NCA for regular recorded by bank P800,000 – BANK 3 ADD
 Lapsed NCA for regular account with ARO P420,000 – BOOK 5 LESS
 Understatement of MDS Account due to erroneous recording of the amount of checks issued
P8,000 – BOOK 6 ADD
 NCA received by bank but not recognized by the Agency P543,210 – BOOK 7 ADD
 Agency Book Balance P11,043,540 – BOOK 1
 Balance per Bank P10,225,850 – BANK 1
How much is the Adjusted balance per book and bank? SAME
11,000,000
Your answer
Agency DEF collected the following income during the month:
Income Taxes – Individual, P1,500,000;
Income Taxes – Corporation, P1,800,000;
Permit Fee, P1,400,000,
Processing Fee 108,000,
Rent Income 115,000 and
Import Duties 1,400,000.
The salary of the employees collecting these income amounts to P48,000.
How much is the Total Service and Business Income collected? SILA WALA GMA (PG 403)
1,623,000 add all highlighted
Your answer

Refer to the given in the problem below. How much is the cash advance that will be released to the
disbursing officer for the month of June? SAME (GMA PG 416)

571,500
Your answer
On December 31, 2020, the pre-closing trial balance of Agency GHI shows the following totals:
Current Assets P500,000,
Property, Plant and Equipment, P1,000,000,
Current Liabilities 400,000,
Subsidy Income from NG 1,500,000
Expenses 940,000.

What is the Accumulated Surplus/Deficit balance at December 31, 2020? SAME

1,100,000 yellow less red
Your answer

The following allotment and NCA were received by Agency LMN from DBM:
P10 million for capital outlay;
P12 million for maintenance and other operating expenses;
P13 million for personal services.

The agency is using an old building for its office. The left wing of this building is no longer being
used due to an earthquake that happened years ago which made it unsafe for use. However,
engineers and architect were hired to fix the left wing in order for it to be safe for use once again.
The engineers and architects are predicting that the left wing is safe for use for the next 10 years
assuming that no more strong earthquakes will be experienced.

Cost of materials for this project amounted to P14.762 million while labor cost amounted to P12.5
million. The right wing also needs to be repainted. The agency bought paints totaling P3,800,000.
Once the renovation was done, all offices were refurnished. New furniture and fixtures and
equipment were purchased amounting to P4 million. Office supplies were also re-stocked costing
the agency P1.5 million. Assume taxes withheld for all gov’t transaction is 10%.

How much is the balance of cash at the end of the period? SAME

2,094,200
Your answer

Add all allotements = 35,000,000

Less: all cost and tax = 32,905,800

Total 2,094,200

All cost = 36,562,000

36,562,000 - 3,656,200 = 32,905,800

Tax (36,562,000 * 10%) = 3,656,200