Chapter 3. ACCOUNTING SYSTEM A. GENERAL ACCOUNTING PLAN Sec. 05. General Accounting Plan.

– The General Accounting Plan shows the overall accounting cycle in the Local Government Unit. Transactions shall emanate from the different offices/departments of the local government units (LGUs). These offices/departments will provide/produce the source documents and other accounting forms leading to the perfection of the transaction, whether it be budgetary, collections or disbursements. The source documents and accounting forms shall be the basis for the preparation of reports by the Office of the Treasurer. The Office of the Accountant shall record the transactions to the registries or to the corresponding books of original entry. Posting to the books of final entry and preparation of the financial reports shall also be undertaken by the Office of the Accountant. The General Accounting Plan (Table 1) is presented as to the following type of transactions: a. Appropriations, Allotments and Obligations b. Collections and Deposits c. Disbursements – • By cash • By check d. Miscellaneous and Other transactions B. BUDGETARY ACCOUNTS Sec. 06. Budgetary Accounts. – Budgetary accounts are composed of appropriations, allotments and obligations. Sec. 07. Accounting for Appropriations. – Appropriation refers to an authorization made by ordinance, directing the payment of goods and services from local government funds under specified conditions or for specific purposes.

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INSERT HERE TABLE 1 GENERAL ACCOUNTING PLAN (MS Excel file)

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The local sanggunian approves the annual budget thru the issuance of appropriation ordinance. On the first business day of the fiscal year, the entire annual budget of the local government unit shall be recorded in the Registry of Appropriations, Allotments and Obligations (RAAO). The appropriations, in the amounts approved by the legislative body and confirmed by the reviewing authorities, are recorded in the registries maintained by the accountant where they may be compared with the actual developments of the period.
Budgetary reserves which are stand by appropriations ready for release in case of calamities, as well as supplemental budget are similarly recorded in the RAAO. In case the LGU is operating on a re-enacted budget, said re-enacted budget shall likewise be recorded in the registry. Once current budget is approved, the necessary adjustments shall be made in the registry. Separate registries shall be maintained for the four classes of expenditures per responsibility center, to wit: a. Registry of Appropriations, Allotments and Obligations - Capital Outlays (RAAOCO) b. Registry of Appropriations, Allotments and Obligations - Maintenance and Other Operating Expenses (RAAOMO) c. Registry of Appropriations, Allotments and Obligations - Personal Services (RAAOPS) d. Registry of Appropriations, Allotments and Obligations - Financial Expenses (RAAOFE) Sec. 08. Accounting for Allotments. – Allotment is the authorization issued by the Local Chief Executive (LCE) to a department/office of the LGU, which allows it to incur obligations, for specified amounts, within the appropriation ordinance. Allotments are released quarterly based on the Work and Financial Plan and Request for Release of Allotment. The Accountant, upon receipt of the Advice of Allotment, shall enter the allotment in the RAAOs. Sec. 09. Accounting for Obligations. – Obligations refer to the amounts committed to be paid by the LGU for any lawful act
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made by an accountable officer for and in behalf of the local government unit concerned. Obligations shall be taken up in the registries as they are incurred. For each obligation, the requesting department/office shall prepare the Allotment and Obligation Slip (ALOBS) signed by the department or office head as requesting official and forward this, together with the supporting documents, to the Budget Officer. The Budget Officer shall certify to the existence of appropriation that has been legally made for the purpose by signing the appropriate box in the ALOBS and assign the ALOBS number thereto. The Accountant shall review the ALOBS and certify as to obligation of the allotment by signing the appropriate box in the ALOBS. He shall also fill up the Status of Obligation. The Accountant shall record the amount of obligation in the RAAOs. Sec. 10. Adjustment of Obligations. – The Chief Accountant shall record paid disbursement vouchers in the Status of Obligation portion (Payments) of the ALOBS. Any balance appearing in the ALOBS after full payment of obligations shall form part of unobligated allotment. The Chief Accountant shall adjust accordingly the amount of recorded obligations in the RAAO using the same ALOBS number as reference. At the end of each month, the Chief Accountant and the Budget Officer shall reconcile their records on allotments available for obligation. Sec. 11. Accounting Procedures for Budgetary Accounts. – Summarized hereunder is the process in accounting for budgetary accounts: PROCESS a. Records in the appropriate RAAOs the approved appropriation per Appropriation Ordinance. Forwards the advice of allotments to the Office of the Accountant and returns the work plan to the concerned departments/ offices.
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PERSON / UNIT RESPONSIBLE Office of the Accountant

b.

Office of the Budget Officer

Records the obligation in the appropriate column of the RAAOs and in the Status of Obligation portion (Obligation) of the ALOBS. Chief Accountant g. in the RAAOs. Records paid disbursement vouchers in the Status of Obligation portion (Payments) of the ALOBS. Assigns ALOBS number and forwards the same to the Office of the Accountant. reconcile records on allotments available for obligation. Certifies the ALOBS as to the existence of appropriations based on the appropriation ordinance. At the end of each month. Certifies the ALOBS as to the obligations of allotments. Adjust accordingly the amount of recorded obligations in the RAAOs. Enters the allotments PERSON / UNIT RESPONSIBLE Office of the Accountant Heads of departments/offices e. Budget Officer f. Forwards the same to the Office of the Budget Officer. Budget Officer and Chief Accountant 12 . Office of the Accountant h. d. Signs the appropriate box for requesting office. Any balance appearing in the ALOBS after full payment of obligations shall form part of unobligated allotment.PROCESS c. Prepares ALOBS based on disbursement vouchers/purchase requests and/or supporting documents.

g. the accounts and the financial reports. vans. motorcycles. Pumping Stations and Conduits outlay • Books outlay • Ordnance outlay • IT Equipment and Software outlay • Other Property. For this purpose. parks. Terminology and Classification. Trains and Motor Vehicles outlay (e. RAAOCO – • Investments outlay (e. bonds) • Land.g.) • Public Infrastructures outlay (e. Reservoirs. Land Improvements and Leasehold Improvements outlay • Buildings and Other Structures outlay (e. construction equipment. hospital and health centers. stocks. Plant and Equipment outlay • Reforestation Projects • Arts.g. the following specific expenditures shall be recorded in the appropriate RAAOs: a. RAAOPS – • Salaries and Wages (e. bridges etc. dump trucks. markets and slaughterhouses.g. Archeological Specimen and Other Exhibits b. cars. school buildings. overtime and night pay. etc. monuments. 12. etc.g. – A common terminology and classification shall be used consistently throughout the budget. part-time pay. holiday pay. regular pay. technical and scientific equipment.) 13 . etc.Sec. industrial machineries.) • Furniture and Fixtures outlay • Work Animals outlay • Breeding stocks • Machineries and Equipment outlay (e.g.) • Artesian Wells.) • Aircrafts. etc. plaza.

hazard pay. etc. Subsidy to LGUs. PERA.• Allowances (e. bad debts. pension. spare parts. discount on Real Property Tax and Special Education Tax. telegraph. productivity. RAAOFE – • • • • Bank Charges Interest Expenses Commitment Charges Other Financial Charges (e. etc.g. RAAOMO – • Subsidies (e. internet. office. etc.) • Extraordinary and Miscellaneous Expenses • All other expenditures in the Chart of Accounts for MOOE. etc.) • Repairs and Maintenance • Printing and Binding • Travel • Consultancy • Light. except depreciation.) • Crops • Supplies (e. guarantee fees) • Loan Amortization 14 . etc.g.) • Livestock (e. postage. d. hogs. bonus. swine. goats. obsolescence. gasoline and oil. loss on sale of assets.g.g.g.g. chicken. Subsidy to Other Funds.) • Auditing Services • Other Services (e. loss of assets.) • Government Shares on Employees’ Contributions c. dental and laboratories.g. etc. medical. underwriting fees. telephone.g. Water and Gas • Communication (e.) • Benefits (e. hauling. RATA. cash gifts. security. janitorial. etc.

17. Sec. 16. Sources of Income of LGUs. or receipts of any kind shall remit the full amount received and collected to the treasury of such local government unit which shall be credited to the particular account or accounts to which the monies in question properly belong. Separation of Books and Depository Accounts. Depository Accounts. Share from Internal Revenue Collections c. Sec. fees and charges b. for each fund in their custody or administration. g. – The main sources of income of LGUs are as follows: a. c. preferably government-owned.C. Earnings of its depository accounts shall accrue exclusively thereto. b. – Local treasurer shall maintain depository accounts in the name of their respective local government units with banks. Share from National Wealth The sources of income are further classified into general income accounts and specific income accounts. 13. h. General Income Accounts. e. located in or nearest to their respective areas of jurisdiction. Sec. Subsidy from Other LGUs Subsidy from Other Funds Subsidy from Special Accounts Sales Revenue Dividend Income Interest Income Gain on Sale of Securities Gain on Sale of Assets 15 . 14. d. Tax revenues. Sec. – Local accountants and treasurers shall maintain separate books and depository accounts. 15. f. – The following shall comprise the General Income Accounts applicable to LGUs: a. revenue. – Officers of the local government authorized to receive and collect monies arising from taxes. INCOME/COLLECTIONS AND DEPOSITS Sec. respectively. Remittance of Government Monies to the Local Treasury.

However. Real Property Tax Receivable and Special Education Tax Receivable shall be established. Share from Internal Revenue Collections shall be taken up as Due from NGAs and credited to Share from Internal Revenue Collections. Methods of Accounting for Income. 19. Modified Accrual – Modified accrual method of accounting shall be used for real property taxes. Real 16 b. Cash in Bank shall be debited upon receipt of Bank Credit Advice as to receipt of the Share from Internal Revenue Collections regardless of whether or not the Notice of Funding Check Issued has been received from DBM. 3. the same shall be credited to Deferred Real Property Taxes Income/Deferred Special Education Tax Income. Property Taxes Taxes on Goods and Services Other Taxes Other Specific Income Sec. 4. Foreign Exchange (FOREX) Gains k. . 18. Income from Grants and Donations Sec. to avoid appropriating uncollected revenues which might result to huge cash overdraft. Fines and Penalties – Government Services and Business Operations m. Sale of Confiscated Goods and Properties j.i. This is in view of the need to record in the books not mere income estimates from real property taxes but actual receivables from said taxes. Specific Income Accounts. 2. At the beginning of the year. Miscellaneous Operating and Service Income l. However. Upon receipt of the Notice of Funding Check Issued from Department of Budget and Management (DBM). – The following major classification comprise the specific income accounts for LGUs: 1. Accrual Method – Accrual method of accounting shall be used to record Share from Internal Revenue Collections in the books of accounts. – The following accounting methods shall be adopted in recording income: a.

c. The share of the Province and Barangay shall also be credited to Due to LGUs. The account Due from LGU shall be debited and Real Property Tax Income credited. Cash Basis – Cash basis of accounting shall be used for all other taxes. 20. the Municipal Accountant shall likewise prepare the Abstract of Real Property Tax to facilitate the distribution of real property tax collection. charges and other revenues. Every end of the week. Delinquencies for Real Property Tax/Special Education Tax Prior to CY 2002. for purposes of reconciliation with the weekly summary of JEVs. fees. Basis of Recording Real Property Tax/Special Education Tax. – Real Property Tax Receivables/Special Education Tax Receivables shall be established at the beginning of the year based on Real Property Tax Account Register/Taxpayer’s index card. The summary. At the beginning of the year. which shall be supported with copies of the JEVs. Sec. Upon collection of Real Property Taxes from taxpayers.Property Tax Income/Special Education Tax Income shall be recognized upon receipt of collection. At the end of the month. Based on the list. 21. A copy of the abstract shall be furnished the Provincial Accountant. the Treasurer shall furnish the Chief Accountant of a duly certified list showing the name of taxpayers and the amount due and collectible for the year. shall be the basis of the Provincial Accountant to draw the JEV taking up the RPT Income. – Payment of delinquencies for real property taxes/special education taxes prior to CY 2002 shall be 17 . thereafter the Municipal Accountant shall furnish the Provincial Accountant with a summary of the JEVs showing the breakdown of the amounts Due to LGUs. Sec. the Chief Accountant shall draw a Journal Entry Voucher (JEV) to record the debit to Real Property Tax Receivable/Special Education Tax Receivable and crediting to Deferred Real Property Tax Income/Deferred Special Education Tax Income. the account Deferred Real Property Tax Income/Deferred Special Education Tax Income shall be debited while the Real Property Tax Income due to the municipality is recognized/credited.

– Borrowings are proceeds of repayable obligations. b. All borrowings incurred shall be recorded direct to the appropriate liability accounts. c. 18 . Plant and Equipment Refund of Cash Advances Receipt of Performance/Bidders’ Bonds Sec. Borrowings Sale of Property. Sec. and private sector. the Accountant shall draw a Journal of Entry Voucher taking up the transaction. – Sale of property. Sec. another local government unit. Sec. Sale of Property. Discount on Real Property Tax/Special Education Tax. 23. 22. 24. Plant and Equipment account shall be credited upon transfer of ownership. Borrowings. Sec. buildings. The appropriate Property. Fines and Penalties arising from real property taxes shall be distributed to concerned LGUs in accordance with the sharing prescribed under the Local Government Code for Real Property Tax and the additional one percent (1%) tax for the Special Education Fund. shall be recognized as income of the year it was collected. Plant and Equipment. – Other receipts of the local government units shall be comprised of. national agency. 26. Plant and Equipment. Upon receipt of the advice from the bank or lending agency informing the release of the proceeds.recognized as a direct credit to Real Property Tax Income/Special Education Tax Income account. furniture and other similar property which are recorded in the books as Property. Other Receipts. Said discounts shall be apportioned to the concerned LGUs in accordance with the sharing prescribed for real property tax and additional one percent (1%) tax under the Local Government Code. either from tax revenue or other specific income. – Discounts for advance and prompt payment of Real Property Tax and the additional one percent (1%) tax accruing to the Special Education Fun shall be recognized in the year the taxes are due. equipment. the following: a. 25. – Fines and Penalties. generally with interest from the bank. but not limited to. Fines and Penalties. d. plant and equipment refers to the proceeds from the sale of land.

Reporting for Collections and Deposits. receipts. 29. Refund of Cash Advances. Cash advances for salaries and wages shall be recorded as debits to the account Cash – Disbursing Officer. issues and the ending balances on hand. Performance bond in cash or certified check shall be acknowledged by the issuance of official receipt and recorded in the books by the Accountant drawing a JEV for the purpose. an acknowledgment receipt shall be issued by the authorized official. – The Treasurer/Cashier shall verify the Report of Collections and Deposits. 27. Sec.00. shall be submitted to the treasurer/cashier to whom the cash collected shall be turned over. Any refund made shall be credited to this account. check the statement of accountable forms as to initial balances on hand.Sec. or cash tickets and the like. Sec. Receipt of Performance Bonds. The receipt maybe in the form of pre-numbered Official Receipts. where travel time from their places of assignment to the Treasurer’s Office is more than one day. make a physical count of the accountable forms remaining in the custody of the collector/teller and check the same against the new balances on hand column. Sec. – Cash advances for official travel shall be taken up as a receivable from the concerned official or employee. 30. Barangay Treasurers deputized to collect taxes imposed by provinces. 28. Verification of Collections and Accountable Forms. At the close of each business day. cities and municipalities shall follow the same procedures in turning over their collections to the treasurer/cashier concerned. turnover of collections shall be made at least once a week or as soon as the collections reach P5. – Performance bond posted by contractor or supplier to guaranty full and faithful performance of the their work may be in the form of cash. In the case of collectors assigned to the field. certified check or surety. The fourth copy of the RCD shall be retained by the collector/teller concerned. In case of surety bond.000. together with the duplicates of the official receipts issued. these collectors/tellers shall accomplish the Report of Collections and Deposits (RCD) in four copies. – Collectors/tellers shall issue a receipt to acknowledge collections made. He shall indicate his 19 . The original and two copies. Refunds made shall be credited to the receivable account previously set up.

b. c. – The Treasurer/Cashier shall deposit intact all his collections as well as all collections turned over to him by the collectors/tellers with the authorized depository bank daily or not later than the next banking day. The fourth copy of the RCD of the liquidating officer and RCDs of collectors/tellers shall be retained by the liquidating officer. He shall also accomplish the RCD in four copies to summarize the collections turned over to him by the collectors/tellers as well as his own collections. Sec. The RCD shall however be prepared in five copies. Sec. The Treasurer/Cashier shall acknowledge receipt of the cash and all accompanying documents by signing all copies of the RCD of liquidating officer on the certification and receipt portion of the form. He shall record all deposits made in the cashbook and prepare the RCD. Designation of Liquidating Officers.verification by affixing his signature at the back of the triplicate copy of the last official receipt issued. 31. the fifth copy to be retained by the collector/teller. He shall count the money turned over to him and sign the certification and receipt portion of all copies of RCD. The liquidating officer shall turn over intact the cash collections to the Treasurer/Cashier together with the originals and two copies of the RCDs of collectors/tellers and the duplicates of the official receipts issued. Collectors/tellers shall turn over their collections to their designated liquidating officer. a. 32. four copies to be submitted to the liquidating officer. Deposit of Collections. 20 . The liquidating officer shall perform the procedures for the receipt and verification of collections turned over to him. – The Treasurer may designate liquidating officers from among the collectors/tellers whenever necessary.

33. Check remittances and verifies accountable forms of collectors/tellers. The accountant shall also maintain the Abstract of Real Property Tax Collections to facilitate the distribution and remittance of the shares of the different government units concerned in the real property tax collections. – Collections by field collectors shall be remitted to the Cashier or designated liquidating officer of the field office of the LGU. Prepare Report of Collections and Deposits.The barangay treasurer shall deposit all collections intact with the city/municipal treasurer. within five (5) days from receipt thereof. the Cashier or designated liquidating officer. Receipts and Collection Process. Sec. Receive payment from taxpayers/ creditors and issue Official Receipt (OR). Remit to the Liquidating Officer (if one is designated) or Treasurer. – The Accountant shall determine the account classification of the collections covered by the RCD and the supporting papers submitted by the Treasurer/Cashier and shall accomplish the Journal Entry Voucher. may deposit the collections in the authorized depository bank near the field office of the LGU. Liquidating Officer . Sec. upon authorization by the Treasurer. The procedures in reporting collections and deposits prescribed in this Chapter shall be observed. or in a depository bank account maintained in the name of the barangay. 35. Consolidates collections and remits to the Treasurer/Cashier. Sec. Deposit of Field Collections. When travel distance of the field office to the local treasury may expose government funds to the risk of loss while in transit. – The following is a summary of the receipt and collection process in the LGU: PROCESS a. 34. Prepares RCD. 21 PERSON / UNIT RESPONSIBLE Collector/Teller b. Accounting for Collections and Deposits.

000 Account Title Acct. – The following are pro-forma accounting entries for income.40% Province .000 1.25% b. Records in the Cashbook – Cash in Treasury. Pro–forma Accounting Entries.PROCESS c. Real Property Tax – Basic A. Treasurer e. Setting-up of RPT Receivable RPT = P1. 36. PERSON / UNIT RESPONSIBLE Treasurer d. Forward RCD to Accounting Unit with copies of ORs and validated deposit slips. collection and deposit: Particulars INCOME 1. Deposit collections in the appropriate bank account per authorized depository bank. Records deposit in the Cashbook – Cash in Bank. Prepare Journal of Entry Voucher and record in the Cash Receipt Journal. Receipt of Payment Real Property Tax Receivable Deferred Real Property Tax Income 124 448 1. Receive remitted collections. consolidates the same and prepares RCD. Code Debit Credit Cash in Treasury Real Property Tax Receivable 101 124 100 100 22 . Treasurer f. Books of the Municipality a.000 RPT Sharing: Municipal .35% Barangay . Accountant Sec.

Deposit of Collections e. Receipt of Notice of Funding Check Issued from the DBM and credit memo from the bank for Share from Internal Revenue Collections b.35% Barangay .25% d.000 1. Receipt of Notice of Cash in Bank –LCCA Share from Internal Revenue Collections 110 746 1. Receipt of Income Cash in Treasury Receipts from Markets Garbage Fees Cash in Bank – LCCA Cash in Treasury 101 783 772 110 101 100 90 10 100 100 b. Books of the Province Account Title Deferred Real Property Tax Income Real Property Tax Due to LGUs Acct.000 23 . Remittance of Share (Barangay) B.Particulars c.000 Due from NGAs 130 1.40% Province . Upon receipt of share Due from LGUs Real Property Tax 131 711 35 35 Cash in Bank – LCCA Due from LGUs 110 131 35 35 2. Upon receipt of the Summary of the JEV from the Municipal Accountant b. Operating and Service Income a. Share from Internal Revenue Collections a. Code 448 711 431 Debit 100 Credit 40 60 Cash in Bank – LCCA Cash in Treasury Due to LGUs Cash in Bank – LCCA Due to LGUs Cash in Bank – LCCA 110 101 431 110 431 110 100 100 35 35 25 25 a. Distribution of Collection RPT Sharing: Municipal . Deposit of Collections 3. Remittance of Share (Province) f.

domestic Interest Expenses Cash in Bank – LCCA Loans Payable – Current. Code 746 Debit Credit 1.000 Less: Acc. Receipt of borrowed funds from bank Principal . Grants and Donations a. 200 Book Value P 800 5.P1.10 Interest Expense. Domestic Cash in Bank .Particulars Funding Check Issued from the DBM for Share from Internal Revenue Collections 4. Receipt of grants and donations in cash (Donations in kind shall be booked-up using the appropriate asset account) b.000 Interest Expense . Receipt of borrowed funds from other agency Principal P1.6 c. BORROWINGS a.000 1. Depn.000 6 6 200 200 6.000 Bank Charges . Receipt of grants and donations in kind Motor Vehicle: Original Cost P1. SUBSIDIES a. Subsidy from Other Funds (General Fund to Special Education Fund) GENERAL FUND BOOKS Transfer of subsidy Subsidy to Other Funds 897 500 24 . Payment of loan amortization Account Title Share from Internal Revenue Collections Acct. Domestic Bank Charges Interest Expenses Cash in Bank –LCCA Cash in Treasury Loans Payable – Current.000 1.000 Cash in Treasury Income from Grants and Donations 101 651 100 100 Motor Vehicles Invested Equity (At the end of Year) Invested Equity Government Equity 218 537 537 501 800 800 800 800 Cash in Bank –LCCA Loans Payable – Current.000 10 12 22 1.12 b.LCCA 110 403 951 952 110 101 403 952 110 403 110 1.

To take up refund of cash advance Due from Officers & Employees Cash in Bank – LCCA Cash in Treasury Due from Officers & Employees 128 110 101 128 10 10 10 10 b. Code 110 Debit Credit 500 SPECIAL EDUCATION FUND BOOKS Receipt of subsidy funds from Other funds Cash in Treasury Subsidy from Other Funds 101 605 500 500 b. To take up the cash advance b.Particulars to Special Education Fund (Aid to SEF to finance its projects) Account Title Cash in Bank – LCCA Acct. Cash Advance by a Disbursing Officer for Salaries and Wages a. Cash Advance by an Officer for Local Travel a. Special Accounts (subsidy from General Fund proper to Operation of Public Market) BOOKS OF GENERAL FUND PROPER Transfer of subsidy to Special Account Subsidy to Special Accounts Cash in Bank – LCCA 898 110 500 500 BOOKS OF SPECIAL ACCOUNT (OPERATION OF PUBLIC MARKET) Receipt of subsidy from General Fund Proper Cash in Bank – LCCA Subsidy from Special Accounts 110 606 500 500 7. REFUND OF CASH ADVANCES a. To take up the cash advance Cash – Disbursing Officers Cash in Bank – LCCA 107 110 10 10 25 .

Particulars Account Title Acct. Disbursements. 3. 37. 38. Typical transactions for which disbursements are made are as follows: 1. 4. The Allotment and Obligation Slip (ALOBS) shall be an integral part of the DV. Code Debit Credit b. Personal Services Maintenance and Other Operating Expenses Capital Outlay Financial Expenses Disbursements shall be covered by Disbursement Vouchers (DV) or payrolls and paid either by check or in cash. Certification and approval of vouchers and payrolls as to validity. – Disbursements refer to the settlement of government payables/obligations by cash or by check. RECEIPT OF CASH BONDS a. Certification on Disbursements. To take up deposit of performance bond c. To take up refund of performance bond Cash in Treasury Performance/ Bidders/ Bail Bonds Payable Cash in Bank – LCCA Cash in Treasury Performance/ Bidders/ Bail Bonds Payable Cash in Bank – LCCA 101 414 110 101 414 110 50 50 50 50 50 50 D. 2. To take up receipt of performance bond in cash b. DISBURSEMENTS Sec. propriety and legality of the claim (Box A of 26 . Sec. – Disbursements from the general fund shall require the following certifications on the DV: 1. To take up refund of cash advance Cash in Treasury Cash – Disbursing Officers 101 107 10 10 8.

Payments by Check. where the authority to approve may be delegated. LBP. 2. expenses for light. checks shall be countersigned by the municipal Mayor. checks drawn shall be countersigned by the provincial Vice Governor. – Approval of disbursements by the Local Chief Executive (LCE) himself shall be required whenever local funds are disbursed. Certification that funds are available for the purpose by the Local Treasurer. except for regularly recurring administrative expenses such as: payrolls for regular or permanent employees. – Checks shall be drawn only on duly approved disbursement vouchers. PHILHEALTH. 27 . the officer next-in-rank shall automatically perform his function and shall be fully responsible therefor. however. the city Vice Mayor. In case. telephone and telegraph services. In case of temporary absence or incapacity of the aforesaid officials. remittances to government creditor agencies such as GSIS. water. 39. the city Vice Mayor or the municipal Vice Mayor. 41. In the case of municipalities where no Administrator has been appointed. DBP. as the case may be. (Box B of DV) 3. or the municipal Vice Mayor. PS of the DBM and others. Disbursement vouchers for expenditures appropriated for the operation of the Sanggunian shall be approved by the provincial Vice Governor. BIR. as the case may be. Recording Check Disbursements in the Cashbooks. NPO. of expenditures appropriated for the operation of the Sanggunian. It shall be drawn by the local Treasurer and countersigned by the local Administrator. (Box C of DV) Sec. – All checks issued including cancelled checks shall be recorded chronologically in the Cashbook – Cash in Bank. Necessary documents supporting the disbursement vouchers and payrolls as certified to and reviewed by the Accountant. Approval of Disbursements. these duties shall devolve upon their immediate assistants. Sec.DV) by the head of the department or office who has administrative control of the fund concerned. 40. In case of temporary absence or incapacity of the department head or chief of office. Sec.

the Treasurer shall maintain a Check Register where all checks issued shall be recorded chronologically and where the claimants shall be required to acknowledge receipt thereof. Supervisor/Head of Department Accounting Unit d. 44. It shall be submitted to the Accountant for preparation of Journal of Entry Voucher based on individual checks issued and recording in the Check Disbursements Journal. For purposes of releasing checks. Sec. Treasurer Note: If funds are not available. Sec. Gather supporting documents. Release of Checks. certify cash availability (Box C) and forward to approving officer. – The checks released to claimants shall be reported in the Report of Checks Issued (RCI) which shall be prepared daily by the Treasurer for each fund. and approved ALOBS. sign Box B and forward to Treasurer. b. Check completeness of documents. – The Treasurer shall release the check only to the payee or his duly authorized representative. prepare DV and forward to Head of Department. – The steps in disbursements through issuance of check is shown below: PROCESS PERSON / UNIT RESPONSI BLE Concerned Office a. Check Disbursement Process . Reporting of Checks Issued. 42. Verify claim.Sec. 43. assign number to DV. Sign Box A of DV and submit to the Accounting Unit. return to Accountant for recording in the 28 . c.

check and supporting documents to Cashier/Treasurer. Forward RCI with DV and supporting documents to Accounting Unit. Record disbursement in Cashbook – Cash in Bank. Record check in the Check Register and release check to claimant. For AP. Accountant retains copy of DV and forwards to Treasurer. sign check and forward check with DV to countersigning officer. Administrator/ Vice-Mayor for the Local Sanggunian Disbursements Accountant h. Treasurer j. Prepare the 29 Local Chief Executive or authorized approving officer Treasurer f. Prepare Report of Checks Issued. e. Prepare. JEV Accounting Unit .PROCESS PERSON / UNIT RESPONSI BLE books as Accounts Payable (AP). JEV shall be prepared by Accounting Unit and JEV number reflected in the DV. Return DV. i. g. JEV for AP is recorded in General Journal. Countersign check and forward to Accountant for preparation of the Accountant’s Advice of Local Check Disbursements. Approve transaction (Box D) and forward DV to Cashier. Prepare Accountant’s Advice of Local Check Disbursements and submit to bank.

supporting documents and JEV to the Office of the Auditor. sign “Prepared By” portion (approved by Chief Accountant). from regular and special cash advances. Accountant Sec. are properly acknowledged by the Accountant. DV. Sec. Current Account. He shall ensure that receipt of the report and supporting documents. Reporting of Cash Disbursements. – Cash advances for travel shall be recorded as debit to the account Due from Officers and Employees and a credit to Cash in Bank – Local Currency. Sec. Payments in Cash. Cash advances. by regular and special disbursing officers shall be recorded through a debit to Cash – Disbursing Officers and a credit to Cash in Bank – Local Currency. 47. the Accountable/Disbursing Officer shall prepare the Report of Disbursements and submit the original and duplicate copy with vouchers/payrolls/petty cash vouchers to the Accountant. 45. prepare the Journal of Entry Voucher (JEV) and record the transaction in the Cash Disbursements Journal. Cash payments shall be made only on duly approved payrolls/disbursement vouchers. Forward RCI. 46. – To account for cash disbursements.PROCESS PERSON / UNIT RESPONSI BLE based on individual checks/voucher. Cash Advances for Travel. and record JEV in the Check Disbursements Journal. Post monthly to the General Ledger/Subsidiary Ledgers. k. The Accountant shall verify the report including the completeness of the supporting documents. Current Account (LCCA). 30 . – Disbursements by cash shall be made from a cash advance drawn and maintained in accordance with COA rules and regulations.

At the end of the year.00. In case the amount of cash advance is less than the travel expenses incurred. Sec. the petty cash fund shall be fully liquidated by preparing a Report of Disbursement supported by the list/summary of PCVs. recorded in the RAAO and obligated as Other Expenses. the PCVs and its supporting documents. An ALOBS shall be prepared for the fund. Payments out of the Petty Cash Fund.000. Petty cash fund shall be set up at the beginning of the year. the PCVs and its supporting documents. Unused cash shall be returned to the Treasurer who shall issue an Official Receipt to acknowledge the amount returned. emergency and petty expenses of the LGU for one month. The official receipt shall be attached to the PCV. 48. Another ALOBS shall be prepared taking up the liquidation and recorded in the RAAO based on the actual expenses incurred. The fund shall be sufficient for the non-recurring. Payments out of the fund shall be made through the use of PCVs duly supported by official receipts and other required documents. Each PCV shall not exceed Php1. a Disbursement Voucher shall be prepared to liquidate the previous cash advance and serve as a claim for reimbursement of the deficiency in amount. A Disbursement Voucher shall be prepared for replenishments of the petty cash fund during the year duly supported by a list/summary of PCVs. – Petty cash fund shall be maintained under the imprest system. The ALOBS setting up the fund at the beginning of the year shall be cancelled. the Liquidation Report form shall be prepared by the officers/employees concerned and submitted to the accounting unit as basis for preparation of the JEV to record liquidation. Disbursements from the fund shall be through the Petty Cash Voucher (PCV) which shall be signed by the payee to acknowledge the amount received.For liquidation of travel where the amount of cash advance is equal to or more than the travel expenses incurred. ALOBS shall be prepared for each replenishment and recorded in the RAAO based on actual expenses incurred. A new 31 .

Prepare Accountant’s Advice of Local Check Disbursements and 32 Accountant . Prepare and sign check. Processing of Payrolls to be paid by cash is the same as that of steps (a) to (e) for check disbursements. d. Check completeness of documents/ previous cash advance liquidated. Cash Disbursement Process. sign Box B and forward to Approving Officer. Office of the Treasurer Accounting Unit Local Chief Executive e. assign number to DV. Approves DV and forward to Treasurer for preparation of checks. c. – Disbursement process for payment of salaries and wages out of cash advances is as follows: PROCESS PERSON / UNIT RESPONSI BLE Concerned offices a. Sec. Treasurer Administrator g. Prepare DV for cash advance corresponding to the net amount of payroll/s. Gather duly certified and approved payrolls to be paid out of cash advance. b. f. and forward check with DV to countersigning officer. 49. Countersign check and forward to Accountant for preparation of Advice. Sign Box A of DV and submit to the Accounting Unit.Cash Advance for Petty Cash Fund shall be set up in the ensuing year.

Post monthly to the General Ledger/ Subsidiary Ledger.PROCESS PERSON / UNIT RESPONSI BLE return DV. Encash check and pay claimants. l. Forward Report of Disbursement and supporting documents including JEV to the Office of the Auditor. attach paid payrolls/ supporting documents and copy of OR for unused cash advance returned to Treasurer/Cashier. Accountant Accountant 33 . i. Record JEV in the Cash Disbursements Journal (CDJ). check and supporting documents to Cashier/Treasurer. Disbursing Officer k. Treasurer/ Disbursing Officer Disbursing Officer j. of cash advance granted on the face of OR. Prepare Report of Disbursement. h. Return unused cash to the Treasurer/ Cashier. Prepare JEV to record the liquidation of cash advance. An official receipt (OR) shall be issued by the Treasurer/Cashier to acknowledge the return of unused cash and indicate check no. Record disbursement in Cashbook – Cash Advances. Record the refund as credit to cash advance and attach OR to the Cashbook – Cash Advances. Sign "Certified Correct” portion of Report of Disbursement and submit to Accounting Unit.

As soon as the project is completed. liquidated damages charged to the contractor for delayed completion should be deducted from the total cost. machineries. the latter account is closed to the Government Equity and the asset is recorded in the Registry of Public Infrastructures (RPI). while public infrastructures are those to be used by the general public. the Construction in Progress for agency asset is closed to the appropriate asset account. agency assets and public infrastructures shall be taken up in the books as "Construction in Progress” with the appropriate asset classification. the Construction in Progress account is transferred to the Public Infrastructures account upon completion. completed public infrastructures funded out of a loan shall be closed to the Government Equity account only upon full payment of the loan. during the construction period shall be added to the total cost of the project. plant and equipment to be constructed may be classified as agency assets and public infrastructures. 50. books. plant and equipment acquired through purchase shall include all costs incurred to bring it to the location necessary for its intended use. However. For public infrastructures funded out of regular income. and public infrastructure. ordnance. However. plant and equipment include land and land improvements. Property. etc. Agency assets are those to be used by the LGU concerned. like buildings. The construction period theory shall be used in recording both types of assets. – Property. etc. the purchase is immediately recorded as asset. like transportation. etc. buildings. equipment. This means that expenses such as license fees and bonus paid to contractor for completing the work ahead of schedule. Purchase or Construction of Property. These are charged against appropriations/allotments for capital outlay when obligated. Property. Plant and Equipment.Sec. At the end of the year. freight. A disclosure of public infrastructures completed 34 . During the construction period. installation costs. motor vehicles. In the books of accounts.

Payment through Cash Advances a.000 Personnel Economic Relief Allowance (PERA). However. supplies and materials purchased out of the Petty Cash Fund for immediate use or for emergency shall be taken up as expenses.000 21. Code Debit Credit 1.500 1. Liquidation of cash advance for payroll 801 804 805 410 411 412 107 18.000 2.000 1. Sec. – Pro-forma accounting entries for disbursement transactions are shown below: Particulars Account Title Acct.000 2.000 Enter obligation in RAAOPS for P1. Sec.000 Salaries and Wages. 1. Cash advance for personal services Enter obligation in RAAOPS for P18. and P3. 52. Government share for Life and Retirement 35 .000 Additional Compensation.000 5.funded from loans shall be made in the Notes to Financial Statements. 3.500 21. Grant of cash advance for payroll Cash – Disbursing Officers Cash in Bank – LCCA Salaries and Wages – Regular Pay PERA Additional Compensation Withholding Taxes Payable GSIS Payable PAG-IBIG Payable Cash – Disbursing Officers 107 110 21.500 Life and Retirement Insurance Contributions and P1. Purchase of Supplies. 51.500 PAG-IBIG Contributions. – Purchase of supplies and materials for stock regardless of whether or not they are consumed within the accounting period shall be recorded as assets using the Inventory account following the Perpetual Inventory Method (refer to Chapter 7 – Supplies or Property). P5. Pro-forma Accounting Entries.000 3.

Release of cash advance for petty cash fund miscellaneous expenses Petty Cash Fund Cash in Bank – LCCA 105 110 6.000 and Traveling Expenses of P1. 2.000 4. Code Debit 1. 3. 4.000 6.000 Enter obligation in RAAOMO for Office Supplies P2. Replenishment of petty cash fund during the year Traveling Expenses – Local Office Supplies Expenses Office Equipment Maintenance Other Expenses Cash in Bank – LCCA 831 849 882 950 110 500 2.500 Credit 817 818 411 412 1.500.000 1. Liquidation at year end Traveling Expenses – Local Office Supplies Expenses Petty Cash Fund 831 849 105 1. Office Equipment Maintenance P1.Particulars life and retirement insurance and PAGIBIG Contributions Account Title Insurance Contributions PAG-IBIG Contributions GSIS Payable PAG-IBIG Payable Acct.000 Cancel RAAOMO for setting up of petty cash fund at the start of the year and refund for a total of P6.000 800 4.000 5.800 Enter obligation in RAAOMO for Office Supplies P4. Return of unused Petty Cash Fund. Petty Cash Fund For establishment of fund.500 b.500 1.000.500 1. Enter obligation in RAAOMO as Other Expenses for P6.000 1. Travelling Expenses P500.000 36 .500 1.000 and Other Expenses of P800.000. Cash in Treasury Petty Cash Fund 101 105 1.

500 and telephone/internet of P2. Payment of utilities (MERALCO and PLDT) Electricity Telephone/Telegraph and Internet Cash in Bank – LCCA 835 837 110 1.000 1. Liquidation of cash advance during the current year (assuming only P900 was utilized and P100 was refunded) Adjust RAAOMO for refund of cash advance of P100 3.500 Enter obligation in RAAOMO for training and seminar expenses of P1. Payment of seminar fee Training and Seminar Expenses Cash in Bank – LCCA 833 110 1.000 3.500 2. Grant of cash advance Due from Officers and Employees Cash in Bank – LCCA Traveling Expenses – Local Due from Officers and Employees 128 110 831 128 1. Maintenance and Other Operating Expenses Enter obligation in RAAOMO for rent P3.000 900 900 2.000 2.Particulars c.000 Cash in Bank – LCCA Due from Officers and Employees 110 128 100 100 Enter obligation in RAAOMO for electricity of P1.000 37 . For amount refunded where official receipt was issued 2.000 3. Code Debit Credit Enter obligation in RAAOMO for Travel of P1. Payment by Check a. Cash advance for travel Account Title Acct. Payment of rent Rent Expense Cash in Bank – LCCA 841 110 3.000 3.000 1.000 1.000 1.

000 6. Highways and Bridges Withholding Taxes Payable Cash in Bank – LCCA Withholding Taxes Payable Cash in Bank – LCCA 232 410 110 410 110 400.000 d.000 3. Remittance of taxes withheld 38 . Payment of second billing 100% accomplishment Construction in Progress – Roads. Receipt of office equipment Office Equipment Cash in Bank – LCCA 222 110 No entry 6. Office Equipment – Enter obligation in RAAOCO for P6.000 Cash in Bank – LCCA 110 360.000 360. Payment of first Construction in billing for 50% Progress – Roads.000 for purchase of equipment 1.000 80. Financial Expenses Account Title Acct.000 2. Code Debit Credit Enter obligation in RAAOFE for bank charges of P300 1. Interest Expense Interest Expenses Cash in Bank – LCCA 952 110 400 400 c.000 for construction of road. accomplishment Highways and Bridges 232 400. Issuance of PO to dealer 2. Construction of Roads by Contract – Enter obligation in RAAOCO for P800.000 80.Particulars b. Bank charges upon receipt of bank statement Bank Charges Cash in Bank – LCCA 951 110 300 300 Enter obligation in RAAOFE for interest expense of P400 2. 1.000 40.000 Withholding Taxes Payable 410 40.

000 800. Approval of the project P1M No entry Enter obligation in RAAOCO for P600.000 540.000 for construction materials 2.000 39 . Highways and Bridges Government Equity Public Infrastructures 243 800. Payment for construction materials received Construction Materials Inventory Withholding Taxes Payable Cash in Bank – LCCA No Entry 156 410 110 600.000 At year end.upon full payment of laon – e.000 3.000 5. paints.000 232 501 243 800. If funded from a loan – 6 To record completed roads Public Infrastructures Construction in Progress – Roads. the public infrastructures shall be recorded in the Registry of Public Infrastructures. cement. General Repair/Construction of Building by Administration 1. = P600.000 800. etc.Particulars Account Title If funded from regular agency income – 4. sand and gravel. Highways and Bridges Government Equity Public Infrastructures Acct. To transfer completed roads to Registry of Public Infra.000 Credit 243 232 501 243 800.structures at the end of the year Note: Using the JEV for the above transactions.000 800.000 60. Issue PO for building materials: Lumber.000 800. nails. Code Debit 800. To take up roads completed Public Infrastructure Construction in Progress – Roads.

Particulars 4.000 30.000 350.000 970.000 40 . Remittance of withholding tax Withholding taxes Payable Cash in Bank – LCCA 410 110 200.000 1. Payment made for land purchased Land Withholding Taxes Payable Cash in Bank – LCCA 201 410 110 2M 200. Remittance of withholding tax 8.000 7. Accomplishment Report approved by the LCE f.000 200.000 30.000 230 410 107 410 110 204 230 380.000 590.8M 2. Acquisition of Land Enter obligation in RAAOCO for P2million for purchase of land 1. Code Debit Credit 230 156 590.000 for labor 5.000 970.000 Account Title Construction in Progress – Agency Assets Construction Materials Inventory Acct.000 30.000 350. Issuance of materials P590. Liquidation by Disbursing Officer of paid payroll Cash – Disbursing Officers Cash in Bank – LCCA Construction in Progress – Agency Assets Withholding Taxes Payable Cash – Disbursing Officers Withholding Taxes Payable Cash in Bank – LCCA Buildings Construction in Progress – Agency Assets 107 110 350. Cash advance granted to Disbursing Officer for payroll 6.000 Enter obligation in RAAOCO for P380.

000 30.000 400.500 250 2.000.000 k.000 41 .000 100.000 300 2.000 900. Enter obligation in RAAOMO for subsidy to SEF 1.500 worth of spare arts 1. Payment of office supplies delivered Office Supplies Inventory Withholding Taxes Payable Cash in Bank – LCCA 149 410 110 3. Purchase of Inventories Enter obligation in RAAOMO for purchase of P2. Code Debit Credit Enter obligation in RAAOCO for P600.000 10. Enter obligation in RAAOMO for purchase of office supplies 1.000 2.000 for building 1. Cash transfer to SEF as subsidy Subsidy to Other Funds Cash in Bank – LCCA 897 110 10.000 600.000 100. Cash assistance to LGU –XYZ Subsidy to Local Government Units Cash in Bank – LCCA 895 110 30.Particulars g.700 j. Remittance of withholding tax Land Building Withholding Taxes Payable Cash in Bank – LCCA Withholding Taxes Payable Cash in Bank – LCCA 201 204 410 110 410 110 100.250 i. Payment of delivered spare parts Spare Parts Inventory Withholding Taxes Payable Cash in Bank – LCCA 155 410 110 2. Payment of the land and building (assessed value of land is P600.000 for land and P400. Land and Building Account Title Acct.000 h.000) for P1. Fund Transfers Enter obligation in RAAOMO for subsidy to LGU – XYZ 1.

Enter obligation in RAAOMO for grants and donation to Trust Fund 1. 84-373A. 54. – Loss of cash and property may be due to malversation.000 E. Code Debit Credit l. a report thereon shall be prepared by the accountable officer concerned for purposes of requesting relief from accountability. Loss of Cash and Property Accountability Cash Overage Dishonored Check Lost/Destroyed/Stale/Obsolete and Fraudulently Encashed Check 5. No accounting entry shall be made but the loss shall 42 . In case of loss of property due to other causes (theft. Settlement of Suspensions/Disallowances/Charges 6.). These transaction types seldom take place or ideally should not happen at all. Cash transfer to Trust Fund as counterpart LGU funds. Loss of Cash and Property. etc. 4. The auditor issues an audit report in case of shortage in property accountability. the Auditor shall issue a memorandum pertaining thereto and the Accountant shall draw a Journal of Entry Voucher to take up the shortage as a receivable from the accountable officer concerned. 53. robbery or other causes. Cash shortage discovered during cash examination conducted by auditors is reported through the Report of Cash Examination within ten (10) working days from the completion of examination pursuant to COA Memorandum No. fire. force majeure. MISCELLANEOUS TRANSACTIONS Sec. 3. The following maybe considered miscellaneous transactions: 1. Grants and Donations Cash in Bank – LCCA 889 110 500. Miscellaneous Transactions. 2.Particulars Account Title Acct. theft. – Miscellaneous transactions refer to transactions that are unique and not recurring in the ordinary course of operations of the government.000 500. Refund of Overpayments Sec. As soon as a shortage is definitely established.

– A check is said to be dishonored when upon its being duly presented for payment. If request for relief from accountability is denied. Dishonored Checks. In case the request for relief from accountability for loss of property caused by fire. The Treasurer shall immediately photocopy the dishonored checks and record as credit in the Cashbook–Cash in Bank and cancel payment in the taxpayer’s index card. a copy of the decision shall be forwarded to the Chief Accountant who shall draw a JEV to record the transaction. 55. constructive cancellation of the official receipt covering the dishonored check shall be immediately effected by the Treasurer on the copy in his possession. – When a request for relief for shortages or loss of funds is granted. Restitution shall be acknowledged by the issuance of an official receipt. the amount shall be forfeited in favor of the government and an official receipt shall be issued by the collector/teller. In case the request for relief is denied. Sec. a copy of the decision shall likewise be forwarded to the Chief Accountant for the preparation of the JEV. Sec. Cash Overage. theft. The collector/teller shall note the cancellation in the triplicate copies of the receipt . The cash overage shall be taken up as Other Specific Income. force majeure or other causes is granted. such payment is refused or cannot be obtained. as determined by the auditor. Sec. The loss shall be debited to the Loss of Assets account and credited to the appropriate receivable account. Grant of Relief from Accountability. – In case the cash examination disclosed cash overage. the loss shall be taken up as a receivable from the accountable officer/persons liable and shall be credited to the appropriate asset account. immediate payment of the shortage shall be demanded from the accountable officer. 56. The 43 .be disclosed in the notes to financial statements pending result of request for relief from accountability. The loss shall be debited to the Loss of Assets account and credited to the appropriate asset account. Upon receipt of the debit memo and the dishonored check(s) from the bank. 57. He shall also notify the collector/teller of the dishonor and the cancellation of the official receipt.

Sec. He shall prepare the Journal of Entry Voucher (JEV) taking up the dishonored check by crediting the Cash in Bank account and debiting the appropriate income account. The Accountant shall cancel the official receipt if still in his possession. RPT Income. Copy of the JEV shall be furnished the treasurer as basis for him to debit the amount in the Cashbook – Cash in Bank. mutilated. in case the same has already been submitted for audit. A check is considered spoil when.Treasurer shall then inform the Auditor who shall effect the cancellation in the duplicate copy of official receipt. or when it is lost due to fortuitous event. The Treasurer shall record the JEV number in the Cashbook-Cash in Bank as reference in the entry effecting the cancellation of the dishonored check. theft or robbery. Cancellation of Lost Check Issued. 59. 44 . Upon submission of sworn statement from the payee that a check issued by the LGU is lost. waylaid or left behind inadvertently/negligently by the payee or holder in due course or by the custodian/carrier thereof and after diligent search cannot be found or located. He shall forward the sworn statement to the accountant who shall prepare the JEV to cancel the payment made. 58. He shall furnish the Treasurer with a copy of the duly approved JEV. The Treasurer shall forward the debit memo and the photocopy of the dishonored checks to the Accountant. the treasurer shall immediately notify the bank concerned for the stoppage of payment. In case of dishonor of check payments for Real Property Tax (RPT) or Special Education Tax (SET). Cash in Bank and RPT Discount shall be adjusted accordingly. The accounts Due to LGUs. the RPT/SET Receivables and corresponding Deferred RPT/SET Income shall be restored. Sec. – A check is considered lost when it is misplaced. Spoiled and Stale Checks. defaced or with erasures/errors affecting the genuineness of any material information contained therein. – Checks may be cancelled when they become spoiled or stale. it is torn.

Sec. At least one month before a check becomes stale. – Disallowances and charges shall be taken up in the books of accounts only when they become final and executory. The Accountant shall prepare the Journal of Entry Voucher (JEV) to take up the Receivable – Disallowances and Charges and credit the appropriate 45 . the cancelled check shall be attached to the RCI and reported chronologically with the other checks issued and the word “Cancelled” shall be indicated on the report.It is stale. 60. the original DV and supporting documents are still with the Treasurer. The original DV and supporting documents shall be returned to the Accountant who shall prepare a JEV to record the transaction as Accounts Payable. For spoiled checks which are immediately cancelled and for which the Report of Checks Issued (RCI) has not yet been prepared. the Treasurer shall send a written notice to the payee of the existence of the check. Suspensions. 3. 2. a new check may be issued upon submission of the spoiled or stale check to the Treasurer. For checks which became spoiled or stale in the hands of the payee and which require replacement. if it has been outstanding for over six months from date of issue or as prescribed by the depository bank. For stale checks which have been unclaimed and thus. the cancelled check shall be presented in the RCI after the last check issued for the period indicated in the report. A certified copy of the DV shall be requested from the Auditor for presentation to the Administrator/Local Chief Executive who shall countersign the check. The cancelled check shall be reported and attached to the RCI prepared at the period of cancellation. Disallowances and Charges. A spoiled or stale check shall be marked cancelled on its face and reported as follows: 1. The replacement check shall also be reported chronologically in the RCI.

Code Debit Credit b. Cash Shortage a. Cash shortage of the of the Disbursing Officer To take up cash shortage Due from Officers and Employees Cash – Disbursing Officers 128 107 50 50 Account Title Acct. Cash settlement of disallowances shall be recorded thru the JEV by debiting Cash in Treasury and crediting the Receivable – Disallowances and Charges account. Cash Shortage of the Treasurer To take up cash shortage Due from Officers and Employees Cash in Treasury 128 101 50 50 2. Pro-forma Accounting Entries.expense account for the current year or prior years’ adjustment if pertaining to expenses of previous years. – The following the are pro-forma accounting entries for miscellaneous transactions: Particulars 1. 61. Sec. Grant of Relief from Accountability for Loss of Government Funds To record the loss of fund by a Disbursing Officer (allegedly thru theft ) = P50 To take up relief from accountability Due from Officers and Employees Cash – Disbursing Officers Loss of Assets (current year) or Prior Years’ adjustments (prior years) Due from Officers and Employees 128 107 50 50 948 128 50 50 46 . Suspensions in audit and settlement thereof shall not be recorded in the books of accounts.

Cash Settlement in case of denial of Request for Relief from Accountability To take up payment/settlement Cash in Treasury Due from Officers and Employees 101 128 50 Acct. Disallowances and Charges 47 . Credit 50 4.Particulars Account Title Debit Code 3. Cash Overage To take up cash overage discovered during cash examination 5. Dishonored Checks From payment of real property tax in the current year or prior year Upon receipt of advice of dishonored check and cancellation of Official Receipt Real Property Tax Receivable Deferred Real Property Tax Income Due to LGUs Real Property Tax Income Cash in Bank – LCCA Receipt of refund/settlement Cash in Treasury Real Property Tax Receivable 124 448 431 711 110 101 124 30 20 50 50 50 50 50 Cash in Treasury Other Specific Income of LGU 101 792 50 50 6. Lost/Destroyed/Stale/Obsolete Checks Check issued in the current/prior year for replacement Check cancellation Replacement Cash in Bank – LCCA Accounts Payable Accounts Payable Cash in Bank – LCCA 110 401 401 110 50 50 50 50 7.

Particulars Account Title Acct.P100 Should be .90 Difference . Recording of disallowance for prior year’s transaction When the disallowance becomes final and executory Receivables – Disallowances/ Charges Prior Years’ Adjustments Cash in Treasury Receivables – Disallowances/ Charges 138 533 101 138 10 10 10 10 Settlement of disallowance c.10 Receivables – Disallowances/ Charges Franchise Tax 138 724 10 10 Settlement Cash in Treasury 101 10 48 . Recording of disallowance for current year’s transaction When the disallowance becomes final and executory – Overpayment of Office Supplies Amount paid . Settlement of Charges c.10 Settlement of Disallowance Receivables – Disallowances/ Charges Office Supplies Expense 138 849 10 10 Cash in Treasury Receivables – Disallowances/ Charges 101 138 10 10 b.P 100 Should be . Code Debit Credit a.1 Recording of charges which collection were made in the current year When the charge becomes final and executory – Underpayment of Franchise Tax Amount Paid .110 Charge .

Overpayment taken up as receivable To record overpayment of salaries and wages (When overpayment is ascertained) To record refund of overpayment Due from Officers and Employees Salaries and Wages – Regular Pay Cash in Treasury Due from Officers and Employees 128 801 101 128 10 10 10 10 b. Code Debit Credit 10 138 c.Particulars Account Title Receivables – Disallowances/ Charges Acct.2 Recording of charges which collection were made in the prior year When the charge becomes final and executory Receivables – Disallowances/ Charges Prior Years’ Adjustments Cash in Treasury Receivables – Disallowances/ Charges 138 533 101 138 10 10 10 10 Settlement 8. ADJUSTING AND CLOSING ENTRIES 49 . Refund of overpayment not taken up as receivable Refund of overpayment of Salaries and Wages – Regular Pay during the current year To take up refund of over – payment in the ensuing year Cash in Treasury Salaries and Wages – Regular Pay 101 801 10 10 Cash in Treasury Prior Years’ Adjustments 101 533 10 10 F. Refund of Overpayment a.

The use of the adjusting entries makes it possible to report on the Balance Sheet the appropriate assets.Sec. Adjusting Entries.g. – There are two types of adjusting entries: a. 62. The adjusting entry for unearned revenues is a debit to a liability account and a credit to revenue account. Adjusting entries are required every time financial statements are prepared. Sec. liabilities and equity accounts at the statement date and the Statement of Income and Expenses the net income/(loss) for the period. Acquisition of productive facilities is viewed essentially as long term prepayments. Adjusting entries for prepayments are required at the statement date to record the portion of the prepayment that represents the expense incurred or the revenue earned in the current accounting period. Prepayments.g. Accruals Sec. advance payment of real property taxes). rent) or through use and consumption (e. 64. 50 . Prepaid expenses are expenses paid in cash and recorded as assets before they are used or consumed. Prepaid expenses expire either with the passage of time (e. The adjusting entry for prepaid expenses is a debit to the expense account and a credit to the asset account. supplies. Sub-categories of prepayments are prepaid expenses and unearned revenues. the entry is a debit to depreciation expense and a credit to accumulated depreciation . Prepayments.g.g. etc. Types of Adjusting Entries. 63. – Adjusting entries are accounting journal entries made in order to ensure that revenues and expenses are recorded in the period when they are earned or incurred following the revenue recognition and the matching principles. periodic adjusting entries for depreciation are included in this category. supplies). and b. hence. Examples are rent. The depreciable or estimated life for different types of agency assets are presented in Table 2 (Annex 7). Unearned revenues are recorded as a liability when received and considered earned upon rendition of service (e. tuition fees) or the passage of time (e. – Prepayments are expenses paid or revenues received before they are incurred or earned. For depreciation.

For bad debts.000 Credit 130 746 20.000 Credit 849 149 2. Examples are accrued salaries. Accruals.500 2.500. Illustrative accounting entries: Particulars 1. Receipt of the Notice of Funding Check Issued for the December Share from Internal Revenue Collections for P20. share from internal revenue collections covered by notice of funding checks issued. – Accruals are revenues earned and expenses incurred in the current accounting period that have not yet been recorded.500 Sec.000 2. Code Debit 20. Salaries and Wages – Regular Pay 801 50. Adjusting entry for accrued expenses is a debit to the appropriate expense account and a credit to a payable account. Code Debit 2. bad debts. Examples are interest. Report of supplies utilized for P2. Account Title Due from NGAs Share from Internal Revenue Collections Acct. Account Title Office Supplies Expense Office Supplies Inventory Deferred Credits to Income Real Property Tax Acct.000 2. Adjusting entries for accruals are required to record revenues earned and expenses incurred in the accounting period. etc. 440 711 2.Illustrative accounting entries: Particulars 1.000. 65. the entry is a debit to Bad Debts Expense and a credit to Allowance for Doubtful Accounts. Application of advance RPT for P2.000.000 51 . Unpaid salaries and wages of employees. Adjusting entry for accrued revenues is a debit to a receivable account and a credit to an income account. etc.

Credit all debit balances of the intermediate accounts and credit the total to the Government Equity account. 6. Debit all revenue accounts balances and credit the total to the Income and Expense Summary account. Debit the credit balance of the Income and Expense Summary account and credit the amount in the Retained Operating Surplus account. 4. Debit all credit balances of the intermediate accounts and debit the total to the Government Equity account. Account Title Due to Officers & Employees Acct.000. The closing process is as follows: 1. Credit the debit balance of the Income and Expense Summary account and debit the amount in the Retained Operating Surplus account. in case of a net loss.000 Credit 711 746 Business Taxes & Licenses 723 50 52 . Account Title Real Property Tax Share from Internal Revenue Collections Acct. The procedure followed in the reduction of the balances is called the closing process. Closing Journal Entries. 3. 2. in case of a net income. – Closing journal entries are the accounting entries prepared to reduce all balances of the nominal accounts to zero at the end of the accounting period in order to prepare the accounts for the next accounting period. P50. Code Debit Credit 50. To close the Revenue accounts to the Income and Expense Summary account. Illustrative accounting entries: Particulars 1. Code Debit 100 10. 66. 5. Credit all expense accounts balances and cost of goods sold and debit the total to the Income and Expense Summary account.000 428 Sec.Particulars at end of accounting period.

Code 761 532 Debit 20 Credit 10.670 3.Particulars Account Title Registration Fees Income and Expense Summary Acct. To close the Income and Expense Summary to Retained Operating Surplus account. To close the Retained Operating Surplus to Government Equity account. Retained Operating Surplus Government Equity 534 501 5.670 5.170 2. Income and Expense Summary Retained Operating Surplus 532 534 5.670 5.670 53 .