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Miscellaneous Transactions, Trial Balance and FS

Miscellaneous Transactions, Trial Balance and FS

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Published by Calvin Cempron

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Published by: Calvin Cempron on Oct 05, 2012
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Miscellaneous Transactions
These are the transactions that are unique and not recurring in the ordinarycourse of government operations. These seldom take place or should not happen at all.
Accounting for loss of cash and property 
. This may be due to malversation,theft, robbery, fortuitous event or other causes. Cash shortage discovered during cashexamination conducted by auditors is reported through the Report of Cash Examination.The Auditor issues and audit report in case of shortage in property accountability. Assoon as a shortage is definitely established, the auditor shall issue a memorandumpertaining thereto and the accountant shall draw a JEV to record the shortage as areceivable from the accountable officer concerned.In case of loss of property due to other causes like theft, force majeure , etc., areport thereon shall be prepared by the accountable Officer concerned for purposes of requesting relief from accountability. No accounting entry shall be made but the lossshall be disclosed in the notes to financial statements pending result or request for relief from accountability.
Grant of Relief from Accountability 
. When a request for relief fromaccountability for shortage or loss of funds is granted, a copy of the decision shall beforwarded to the Chief Accountant who shall draw a JEV to record the transaction. Theloss shall be debited to the Loss of Assets account and credited to the appropriatereceivable account. In case the request for relief is denied, immediate payment of theshortage shall be demanded from the AO. Retitution shall be acknowledged by theissuance of an official receipt.In case the request for relief from accountability for loss of property caused byfire, theft, etc, is granted a copy of the decision shall likewise be forwarded to the Chief  Accountant for the preparation of the JEV. The loss shall be debited to the Loss of  Assets account and credited to the appropriate asset account. If request for relief isdenied, the loss shall be taken as receivable from the accountable officer and shall becredited to the appropriate asset account.
Accounting for Cash Overage 
. In case the cash examination of the auditor disclosed an overage, the amount shall be forfeited in favor of the government and anofficial receipt shall be issued by the cashier. The cash overage shall be taken up as
Miscellaneous Income.
Accounting for stale checks 
. Checks may be cancelled when it becomestale. The depository bank considers a check stale, if it has been outstanding for over six months from date of issue or as prescribed. A stale check shall be marked cancelled on its face and reported as follows:1. Unclaimed stale checks which are still with Cashier shall be cancelled andreported in the List of Unreleased Checks as cancelled. The List of Unreleased Checks is attached to the RCI.2. For stale checks which are in the hands of the payees or holders in duecourse and requested for replacements, new checks maybe issued upon
submission of stale checks to the accounting unit. A certified copy of thepreviously paid DVs shall be attached to the request for replacement. A JEV shallbe prepared to take up the cancellation. The replacement check shall be reportedin the RCI.
Accounting for Disallowance 
. Disallowances shall be taken up in the booksof accounts only when they become final and executory. The accountant shall preparethe JEV to take up the Receivable-Disallowance/Charges and credit the appropriateexpense account for the
current year or Prior Year’s Adjustment account if pertaining to
expenses of previous years.Cash settlement for disallowances shall be acknowledged through the issuanceof an official receipt and reported by the cashier in the RCD.
Accounting for overpayments.
Sometimes overpayments or even doublepayments of expenditures do happen in agencies. These could be avoided with theinstitution of peroper controls but some could not be avoided because of built-inprocedures. One example is the payment of payrolls. Payrolls are prepared in advanceand some agencies pay their employees through the banking system. All these aredone before reports of attendance are submitted, making it impossible to know theexact amount to be paid in case there are absences without pay during the pay periods.In case of overpayments, refunds shall be demanded of the employees concerned.
Financial Reporting System. This financial Reporting System (FRS) includes thepreparation and submission of trial balances, financial statements and other reportsneeded by fiscal and regulatory agencies. The sub-systems are as follows:1. Preparation and Submission of Trial Balances and Other Reports2. Preparation and Submission of Financial StatementsThe
Trial Balance 
shows the equality of debit and credit balances of all generalledger accounts as of a given period. It is prepared and submitted monthly, quarterly andannually. At the end of the fiscal year, the pre-closing and the post-closing trial balancesshall be prepared.Purposes of the Trial Balance. The trial balance is prepared to:1. prove the mathematical equality of the debits ad credits after posting;2. uncover errors in journalizing and posting; and3. serve as basis for the preparation of the financial statements
The Pre-closing trial balance 
shall be prepared after recording the adjusting journalentries in the General Journal and posting the same to the General Ledger. It shows theadjusted balances of all accounts as of a given period. This is also described as theadjusted trial balance.
Adjusting or Correcting Journal Entries 
. Under the matching principle, adjustmentsshall be made for economic activities that have taken place but are not yet recorded atthe time when the financial statements are prepared. Such adjusting journal entries are
made to ensure that revenues and expenses are recorded in the period when they areearned or incurred. Adjustments are two main types: accrued items and deferred items.
Adjustment for Accrued Item 
. It is an adjusting entry for an economic activity alreadyundertaken but not yet recorded into an asset and revenue accounts or a liability andexpense accounts. It requires asset/revenue adjustments and liability/expenseadjustments.
Asset/Revenue Adjustment 
. It involves earned revenues not yet recorded as assetsand income at the end of the accounting period. Examples are receivables for revenuesalready earned but not yet collected nor billed as of the year end. Account Title Account Code Debit Credit------------- ------------ ----- -----Interest Receivables 117 500Interest Income 612 500
Liability/Expense Adjustment 
. It involves expenses, which exist already butremain unpaid at the end of the accounting period. Examples are salaries, wages andother expenses already incurred but not yet paid. Account Title Account Code Debit Credit------------- ------------ ----- ------Salaries and Wages-Regular 701 1,000Due to Officers andEmployees 423 1,000
Adjustment for Deferred Items 
. These are adjusting entries transferring datapreviously recorded in an asset account to an expense account, or datapreviously recorded in a liability account to a revenue account. It also requiresasset/expense adjustments and liability/revenue adjustments.
Asset/Expense Adjustments 
. These pertains to assets, portion of which shallbe recorded as expense of the agency at the end of the accounting period.Examples are prepaid expenses, bad debts and depreciation. Account Title Account Code Debit Credit------------- ------------ ----- ------Original Entry:Prepaid Rent 171 1,000Cash-National Treasury,MDS 107 1,000 Adjusting Entry:Rent Expenses 786 900Prepaid Rent 171 900
Bad Debts 
. Trade receivables shall be valued at their face amounts minus,whenever appropriate, allowance for doubtful accounts. Bad debts expenseand/or any anticipated adjustments, which in the normal course of events will

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