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ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS 1
INSTRUCTIONAL MATERIAL FOR
ACCO 30033
ACCOUNTING FOR GOVERNMENT AND

NOT-FOR-PROFIT ORGANIZATIONS
Compiled by:
JOHN CARLO ABILLONAR

RUTH CARLOS
MA. DELIA LIZ
GRACE MANALO
ANDREA ROSE RIMORIN
ELSA RUADO
2020
2 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS
Table of Contents
Topic Pages
Course Syllabus 3
General Instructions for Students 7
Module 1 – Basic Concepts of Government Accounting 8
Module 2 – Accounting for National Government Agencies (NGAs) 20
Module 3 – Accounting for Local Government Units (LGUs) 43
Module 4 – Not-For-Profit Organizations 55
Module 5 – Cooperatives 74
GENERAL INSTRUCTIONS FOR STUDENTS
This instructional material is composed of five (5) modules that will introduce you to the
world of government accounting, not-for-profit organizations, and cooperatives. Faculty
members who prepared this instructional material purposively chose only five (5) topics which
are the most relevant topics.
FOR STUDENTS WITH INTERNET CONNECTIVITY, you are tasked to answer the
activities or performance tasks in accordance with the instruction of your instructor.
FOR STUDENTS WHO DO NOT HAVE INTERNET CONNECTIVITY AND RECEIVED

THIS INSTRUCTIONAL MATERIAL VIA COURIER SERVICES, you are tasked to accomplish
the activities or performance tasks at your own space. If the sheets provided are not enough,
use another sheet of paper for your answers. You may have your answers handwritten OR
computerized and printed.
House Rules
The following guides and house rules will help you further to be on track and to say at
the end of the module, “Yes! I conquered Accounting!”.
1. Schedule and manage your time to read and understand every part of the of the
module. Peruse it over until you decipher the undertakings.
2. Study how you can manage to do the activities of the course in consideration of
your modules from other courses. Be very conscious with the study schedule. Post
it on a conspicuous place so that you can always see. Do not ask you your course
facilitator about questions that are already answered in the guide.
3. Do not procrastinate. Remember, it is not others who will be short- changed if you
will do your work on time.
4. Before you start doing your tasks, read and understand the assessment tools
provided. Do not settle with the low standards, target the highest standards in doing
your assigned tasks. I know that you can! :)
5. You are free to browse and read the different materials even prior to doing the tasks
in each until the module. However, you need to ensure that you will not miss any
part of the module and you will submit course activities in the prescribed due date.
Module 1
BASIC CONCEPTS OF GOVERNMENT ACCOUNTING
Overview
The implementation of the Government Accounting Manual (GAM) for National

Government Agencies is another milestone in the Philippine Government insofar as public sector
of accounting is concerned. The GAM supersede the New Government Accounting System
(NGAS) Manual that national government agencies have been using since 2002 when the
Commission on Audit (COA), based on the authority granted under Sec. 2 (2), Art. IX-D of the
1987 Constitution, prescribed the use of NGAS effective January 01, 2002. The revision of the
NGAS Manual was prompted by the implementation of the Philippine Public Financial
Management Reform Roadmap, which includes the development of the Philippine Public Sector
Accounting Standards (PPSAS) that are harmonized with the International Public Sector
Accounting Standards (IPSAS). It also introduces the Revised Chart of Accounts (RCA) and
adoption of the Unified Account Code Structure (UACS) that will enable the national government
agencies to properly recognize and present their financial transactions.
Module Objectives:
After successful Completion of this module, you should be able to:
• Define various terms in government budgeting and accounting;

• Describe the government budget/process system;
• Know and understand the budgetary cycle;
• Understand the coding system in the Revised Chart of Accounts (RCA);
• Familiarize themselves with the functions of the different government agencies responsible
for the formulation and control of government funds.
Government Accounting - encompasses the process of analyzing, recording, classifying,

summarizing, and communicating all transactions involving the receipts and disposition of
government funds and property and interpreting the results thereof (Section 109, PD 1445). PD
No. 1445 (also known as Government Auditing Code of the Philippines) governs the accounting
system in the government.
Objectives of Government Accounting:

➢ To produce information concerning past and present condition;
➢ To provide a basis for guidance for future operations;
➢ To provide for control of the acts of public bodies and officers in the receipt, disposition
and utilization of funds and property; and
➢ To report on the financial position and the results of operation of government agencies
for the information of all persons concerned. (Section 110, PD 1445)
Agencies Charged with Government Accounting Responsibility

➢ Commission on Audit (COA) - a constitutional commission tasked with the accounting
and auditing functions of the national government. The 1987 Constitution provides the
legal basis for the performance of its function:
“The Commission on Audit shall have exclusive authority, subject to the limitations in this
Article, to define the scope of its audit and examination, establish the techniques and
methods required therefor, and promulgate accounting and auditing rules and
regulations, including those for the prevention and disallowance of irregular,
unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of
government funds and properties". (underscoring supplied) - Article IX-D, Section 2 par.
(2)
➢ Department of Budget and Management (DBM) - mandated to promote the sound,

efficient and effective management of government resources as instrument in the
achievement of national socio-economic and political development. It is responsible for
the formulation and implementation of the National Budget.
➢ Bureau of Treasury (BTr) - performs banking functions for the NG. It receives and
keeps government funds, controls the disbursements thereof, and maintains accounts of
financial transactions with each of the NGAs.
➢ Department of Finance – a government institution that formulates fiscal policy. Its basic
function is revenue generation to ensure adequate financing needs of the country. The
different bureaus under the supervision of DOF are the Bureau of Internal Revenue (BIR),
Bureau of Customs (BoC), & Bureau of Treasury (BTr).
The Philippine Budget Cycle / Budget Process

1. Budget Preparation and Presentation - a government budgetary process wherein the

President, through the assistance of the Department of Budget and Management (DBM),
shall prepare and submit to the Congress a budget of expenditures and sources of financing,
including receipts from existing and proposed revenue measures. It starts with the issuance
of a budget call by the DBM. Each department secretary (including state universities and
colleges) of the government submits the agency estimated budget for the next fiscal year to
DBM.
Upon receipt of DBM of all budget estimates of different agencies, the DBM bureaus then
review the agency proposals and prepare recommendations. The recommendations are then
presented to an Executive Review Board which is composed of DBM Secretary and senior
officials. Then it will be deliberated to entail a careful prioritization of program and
corresponding support, vis-à-vis the priority agenda of the national government. The
deliberation investigates, revise, examine assemble, coordinate and reduce or increase the
budget estimates prepared by each agency. Then, the DBM will consolidate all the budgets
to form the proposed government wide budget to be submitted to the President of the
Philippines and Cabinet for further refinements or prioritization. After the President and
Cabinet approve the propose National Expenditure Plan, the DBM prepares and finalizes the
budget documents to be submitted to the Congress within 30 days before the opening of the
regular session.
The budget preparation ends with the submission of the proposed national budget (The
President’s Budget) to Congress.
2. Budget Legislation or Authorization (Approval) - a government budgetary process which

involves the enactment by the Congress of the General Appropriations Act (GAA) based on
the budget submitted by the President which cannot be increased by the Congress. The
initiative for the enactment of the appropriation law shall come from the House of
Representatives.
The President’s Budget is then assigned to the House of Appropriation Committee. Then, the
Committee will advise schedules and conducts hearings on the budgets of different
departments and agencies and scrutinize their respective programs and projects. After that,
it will then craft the General Appropriation Bill (GAB).
The Appropriation Committee will then sponsor, present and defend the GAB in the plenary
session. After the GAB is approved in the second and third reading, it will forwarded to the
Senate. The Senate conducts its own committee hearings and plenary deliberations on the
GAB. After both the House of Representatives and Senate have finished their deliberations,
they will each constitute a panel of the Bicameral Conference Committee whose task is to
discuss and harmonize the conflicting provisions of the House and Senate versions of the
GAB to produce a harmonized version of the GAB.
The Harmonized version of GAB is submitted to both Houses, which will then vote to ratify
the GAB for submission to the President.
3. Budget Execution or Implementation - a government budgetary process which involves

the implementation of the General Appropriations Act (GAA) which includes the release of
revenue allotment under the supervision of Department of Budget and Management (DBM).
It commences with the issuance of DBM’s guidelines on the release and utilization of funds.
Each government agencies and departments are required to submit their Budget Execution
Documents (BEDs). The BEDs outline the agency plan and performance targets which
include physical and financial plan, monthly cash program, estimate of monthly income, and
list of obligations that are not yet due.
The DBM prepares an Allotment Release Program (ARP) to set limits for allotments issued
to an agency to ensure that releases fit the approved Fiscal Program of the government. The
DBM also issues Notice of Cash Allocation (NCA) to different agencies to cover their cash
requirements for their projects and obligations. After expending the government funds of
different agencies, they are required to account all the funds to ensure that is used properly.
4. Budget Accountability - a government budgetary process which involves the submission of

proper documentary reports by responsible officer, liquidation of expenditures and audit
conducted by Commission on Audit to ensure the public funds are spent in accordance with
the appropriation act. This procedure happens together with the Budget Execution or
Implementation. The DBM monitors the efficiency and fund utilization, assess the agencies’
performance and provide evaluation and recommendations which is used to set reforms and
new policies.
Each government agency submits Budget Accountability Reports (BARs) on a monthly and
quarterly basis to show how their funds are utilized and its corresponding physical
accomplishments of the project. The DBM then reviews the actual utilization of funds and
physical accomplishments shown in the BARs and compared it with the predetermined plans.
The Commission on Audit (COA) audits the agencies used of government funds. The DBM
then uses the COA audit reports in confirming the agencies’ performance.
The Government Accounting Manual (GAM)
The Commission on Audit (COA) revised the New Government Accounting System (NGAS)
prescribed under COA Circular No. 2002-02 dated June 18, 2002 because of the recent
developments brought about by the Philippine Public Financial Management Reforms and
significant changes in the field of accounting.
Legal Basis
The Government Accounting Manual (GAM) is prescribed by COA pursuant to Article IX-D,
Section 2 par. (2) of the 1987 Constitution of the Republic of the Philippines which provides that:
“The Commission on Audit shall have exclusive authority, subject to the limitations in this Article,
to define the scope of its audit and examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures, or uses of government funds and properties".
Coverage
This Manual presents the basic accounting policies and principles in accordance with the
Philippine Public Sector Accounting Standards (PPSAS) adopted thru COA Resolution No. 2014-
003 dated January 24, 2014 and other pertinent laws, rules and regulations. It includes the
Revised Chart of Accounts (RCA) prescribed under COA Circular No. 2013-002 dated January
30, 2013, as amended; the accounting procedures, books, registries, records, forms, reports,
and financial statements; and illustrative accounting entries. It shall be used by all National
Government Agencies (NGAs) in the:
a. preparation of the general purpose financial statements in accordance with the PPSAS
and other financial reports as may be required by laws, rules and regulations; and
b. reporting of budget, revenue and expenditure in accordance with laws, rules and
regulations.
Objective of the Manual
The Manual aims to update the following:

a. standards, policies, guidelines and procedures in accounting for government funds and
property;
b. coding structure and accounts; and
c. accounting books, registries, records, forms, reports and financial statements.
Basic Government Accounting and Budget Reporting Principles
Each entity shall recognize and present its financial transactions and operations conformably to
the following:
a. Generally accepted government accounting principles in accordance with the PPSAS
and pertinent laws, rules and regulations;
b. Accrual basis of accounting in accordance with the PPSAS;
c. Budget basis for presentation of budget information in the financial statements (FSs) in
accordance with PPSAS 24;
d. Revised Chart of Accounts prescribed by COA;
e. Double entry bookkeeping;
f. Financial Statements based on accounting and budgetary records; and
g. Fund Cluster Accounting
Comparison between NGAS and GAM
Features NGAS Manual GAM

1. Statement of Financial
1. Balance Sheet Position
2. Statement of Income 2. Statement of Financial
1. Financial Statements (FS) and Expenses Performance
Title 3. Statement of 3. Statement of Changes in
Government Equity Net Assets/Equity
4. Cash Flow Statement 4. Statement of Cash Flow
Four (4) Six (6)

In addition to the above:
5. Statement of Comparison of
2. Components of FS
Budget and Actual Amounts
6. Notes to Financial Statements
COA Circular 2013-002,

January 30, 2013;
COA Circular 2004-008, COA Circular 2014-003,
3. Chart of Accounts
September 20, 2004 April 15, 2014;
COA Circular 2015-007,
October 22, 2015
4. Unified Account Code
None Compliant
Structure (UACS)
Regular Agency Book and
5. Books Maintained By Fund Cluster
National Government Book
6. Estimated Useful Lives
Management Prerogative; COA
of Property, Plant and Prescribed by COA
prescribes the ranges
Equipment (PPE)
7. PPE Threshold None P15,000.00 and above (per unit)
Moving Weighted Average; Specific
8. Inventory Costing Moving Weighted Average
Identification
Fund Clustering (prescribed in UACS
Manual)
01 – Regular Agency Fund
02 – Foreign-Assisted Projects Fund
03 – Special Account-Locally
Funded/Domestic Grants Fund
9. Fund Maintenance One Fund Concept 04 – Special Account-Foreign
Assisted/Foreign Grants Fund
05 – Internally Generated Funds/
Retained Income Fund
06 – Business Related Funds/
Revolving Fund
07 – Trust Fund
10. Cash Flow Direct Method Direct Method
11. Completed
Public Derecognized Derecognized
Infrastructure
12. Statement of Financial
Position:
Assets Without distinction With distinction (Current and

Non-Current)
Liabilities Without distinction With distinction (Current and

Non-Current)
13. Statement of
Not part of Revenue from Current
Financial Performance Form part of income
Operation
Subsidies, Transfers
14. Impairment Loss None Recognized
15. Adjustment affecting Uses Prior Years’ Adjustment Direct adjustment to Equity; no more
Government Equity (PYA) Account PYA Account
* Without Authority to
use – recognized by BTr
16. Income Collection * With Authority to Recognized by the NGAs concerned
use – recognized by NGAs
17. Accounting for

Donation
With conditionality Income Liability
Without conditionality Income Revenue
With restriction None Revenue

18. Monitoring of Section C of Obligation Request and
None
Obligation/Payment Status (ORS)
At least 5% of the cost, rates
19. Residual Value of PPE 10% of the cost
determined by Management
RAOPS, RAOMO, RAOCO, RAOD-PS, RAOD-MO, RAOD-CO,
RAOFE RAOD-FE
20. Maintenance of
Registries
RBU RAPAL, RBUD
21. New Standards PPSAS Non-compliant PPSAS Compliant

22. Registry of Revenue
None New
and Other Receipts
Unified Account Code Structure (UACS)
Purpose. The objective of the government-wide Unified Accounts Code Structure (UACS) is to
establish the accounts and codes needed in reporting the financial transactions of the National
Government of the Republic of the Philippines. The UACS provides a framework for identifying,
aggregating and reporting financial transactions in budget preparation, execution, accounting
and auditing. The key purpose of the UACS is to enable the timely and accurate reporting of
actual revenue collections and expenditures against budgeted programmed revenues and
expenditures.
Reporting requirements that will be best served by the UACS include:

1. Financial reports as required by the Department of Budget and Management (DBM) and
the Commission on Audit (COA),
2. Financial Statements as required by the Public Sector Accounting Standards Board of
the Philippines,
3. Management reports as required by the executive officials/heads of departments and
agencies, and
4. Economic statistics consistent with the Government Finance Statistics (GFS) Manual
2001.
Application. The UACS will be used by all departments and agencies of the National
Government and Government-Owned and/or Controlled Corporations with Budgetary Support
from National Government including those maintaining Special Accounts in the General Fund.
The source of account descriptions and codes in the UACS object coding elements includes the
following:
1. The codes from the COA Revised Chart of Accounts prepared for accrual basis financial
reporting,
2. The addition of some sub-object codes, and
3. Additional expenditure accounts designed for cash basis budgeting, such as those for
capital outlays.
When this object coding is combined with budget classification coding for funding source,
organization, location and program, this framework collectively provides the harmonized
budgetary and accounting classification codes known as the UACS.
Responsibilities. The DBM, Department of Finance-Bureau of the Treasury (DOF-BTr) and

COA are collectively responsible for the UACS.
✓ Validation and assignment of new codes for funding source, organization, sub-object
codes for expenditure items shall be the responsibility of DBM.
✓ Validation and assignment of new Program, Activity, Project Codes shall be decided
jointly by the proponent agency and DBM.
✓ Consistency of account classification and coding structure with the Revised Chart of
Accounts shall be the responsibility of COA.
✓ Consistency of account classification and coding standards with the Government Finance
Statistics shall be the responsibility of DOF – BTr.
Elements. The key elements of the coding framework are:
1. Funding Source Codes (6 digits)

2. Organization Codes (12 digits)
3. Location Codes (9 digits)
4. Major Final Output (MFO)/Program, Activity and Project (PAP) Codes, and (9 digits)
5. Object Code (10 digits)
Revised Chart of Accounts (RCA) – Updated 2019
The Revised Chart of Accounts (RCA) (Updated 2019), as Object Code in the Unified Accounts
Code Structure (UACS), is based primarily on the rules and regulations as stated on the
Government Accounting Manual (GAM) Volume 3 – Updated 2019 (Section 1) prescribed by the
Commission on Audit (COA). During the implementation of the GAM for NGAs, the need to
provide additional accounts for some financial transactions and to modify some existing account
titles, codes and descriptions emerged. Hence, to enable agencies to properly recognize and
present their financial transactions, the Chart of Accounts is further revised to include additional
and modified accounts.
The UACS Object Code (ten digits), which consists of the RCA Code (eight digits) and the UACS
Sub-Object Code (two digits), is used in the recognition of transactions in the books of accounts
and in the generation of financial reports which requires details by sub-object codes. Examples
are Trial Balances and Financial Accountability Reports. For financial statements presentation,
the eight-digit RCA code shall be displayed. Codes are assigned to account groups to facilitate
location of accounts in the general and subsidiary ledgers, provide systematic arrangement and
classification of accounts, and facilitate preparation of consolidated financial statements/reports.
The UACS Object Code structure consists of ten (10) mandatory digits as follows:
1. Account Group represents the accounts classification as to (1) assets, (2) liabilities, (3)
equity, (4) revenue/income, and (5) expenses.
2. Major Account Group classifies the account within an account group, e.g. for asset major
accounts: cash and cash equivalents, investments, receivables, inventories, investment
property, etc.
3. Sub-Major Account Group further classifies the account within the major account group,
e.g. for cash and cash equivalents: Cash on Hand, Cash in Bank-Local Currency, Cash in
Bank-Foreign Currency, etc.
4. General Ledger (GL) Account represents the account to be presented in the detailed
financial statements, e.g. Cash-Collecting Officers, Petty Cash, etc. This is composed of two
(2) segments. The first two digits from left is the GL account code and the last digit is reserved
to indicate whether it is a contra-account, e.g. Allowance for Impairment, Accumulated

Depreciation, etc.
5. UACS Sub-Object Code represents disaggregation of selected assets, liabilities,

revenue/income, and expenses.
Responsibility for Updating the UACS Object Code. The first eight digits of the UACS Object
Code are drawn from the Chart of Accounts prescribed by the COA. The last two digits (referred
to as UACS sub-object codes) are prescribed by the UACS Committee, composed of
representatives from the DBM, DOF and COA. Codes which are not included in the RCA and
UACS Manual may be created by the COA and UACS Committee as the case may be upon
written request of agencies concerned.
Philippine Public Sector Accounting Standards (PPSAS)

The objective of PPSAS is to set out the recognition, measurement, presentation and disclosure
requirement for financial reporting in the Philippine Government.
Bases of PPSAS:
a. Pronouncement issued by:
• International Public Sector Accounting Standards Board (IPSAB);
• International Accounting Standards Board (IASB);
• Philippine Institute of Certified Public Accountants (PICPA); and
• International Organization of Supreme Audit Institutions
b. Relevant factors, including best accounting practices and
c. Capacity of agencies to comply with PPSAS
Scope of PPSAS
a. PPSAS set out requirements dealing with transactions and other events in general
purpose financial reports
b. PPSAS are designed to apply to the general purpose financial reports of all public sector
entities other than Government Business Enterprises (GBEs),
c. Apples to all NGAs, LGUs, GOCCs not classified as GBEs
PPSAS consists of:

a. International Public Sector Accounting Standards (IPSASs) (Accrual Based IPSASs per
2012 Handbook) developed by IPSASB and published by the International Federation of
Accountants (IFAC), and
b. Philippine Application Guidance (PAG)
Watch:
• Philippine Budget Process (https://www.youtube.com/watch?v=OUbUC94oa6s)
Readings:
• Government Accounting and Accounting for Non-Profit Organizations by Zeus Vernon B.
Millan
• Government Accounting Manual (Volume 1)
• Government Accounting Manual (Volume 3 Updated 2019)
• Government websites such as www.dbm.gov.ph and www.coa.gov.ph

• https://dbm.gov.ph/images/2020-People's-Enacted-Budget.pdf
Activities/Assessments:
RESEARCH ACTIVITIES
1. Based on the 2020 General Appropriations Act, identify the appropriations for state
universities and colleges. Which of the identified state universities and colleges got the
highest appropriations?
2. What is a budget call? What are the contents of a budget call?
3. What is a supplemental budget?
4. Identify the status of the 2021 proposed budget in the Congress/Senate.
5. Compare the proposed budget with the most recently approved budget.
7. Compare cash based budgeting with obligation based budgeting.
THEORIES
1. It encompasses the process of analyzing, recording, classifying, summarizing, and

communicating all transactions involving the receipts and disposition of government
funds and property and interpreting the results thereof.
a. Government Auditing c. Government Accounting
b. Government Reporting d. Government Analyzing
2. What is the title of the Revised Government Accounting System for national government
agencies which will be effective starting January 01, 2016?
a. Government Accounting Manual (GAM)
b. New Government Accounting System (NGAS)
c. Philippine Government Accounting System (PGAS)
d. National Government Accounting Manual (NGAS)
3. The Government Accounting Manual (GAM) aims to update the following, except
a. Standards, policies, guidelines and procedures in accounting for government funds
and property
b. Scope and objectives of audit.
c. Coding structure and accounts
d. Accounting books, registries, records, forms and reports and financial statements.
4. A memorandum issued by the DBM to all government agencies which serves as the basis
in the preparation of its budget proposal.
a. Budget Call
b. Government Accounting Manual (GAM)
c. Philippine Public Sector Accounting Standards (PPSAS)
d. Notice of Cash Allocation (NCA)
5. The financial plan of the government for a given period, usually for a fiscal year, which
shows what its sources are, and how they will be generated.
a. Government Manual c. Government Accounting
b. Government Budget d. Government Framework
6. A government budgetary process which involves the enactment by the Congress of the
General Appropriation Act (GAA) based on the budget submitted by the President which
cannot be increased by the Congress. The initiative for the enactment of the appropriation
law shall come from the House of Representatives.
a. Budget Preparation and Presentation c. Budget Execution
b. Budget Authorization d. Budget Accountability
7. A phase of the government budgetary process which involves the implementation of the
general appropriation act which includes the release of revenue allotment under the
supervision of DBM.
a. Budget Preparation and Presentation c. Budget Execution
b. Budget Authorization d. Budget Accountability
8. It is defined as a good or service that a department or agency is mandated to deliver to

external clients. It should be within the department or agency’s control and be
measurable, manageable & auditable.
a. Program c. Major Final Output (MFO)
b. Activity d. Project
9. The 3rd Key Element of Unified Account Code Structure (UACS) Framework is
a. MFO/Program, Activity, Program Codes c. Location Codes
b. Funding Source Codes d. Organization Codes
10. The approved national budget for 2020 is

a. P3.35 T b. P3.757T c. P3.9T d. P4.1T
Module 2
ACCOUNTING FOR NATIONAL GOVERNMENT AGENCIES (NGAs)
Overview
Since the implementation of the Government Accounting Manual (GAM) for National
Government Agencies, the New Government Accounting System (NGAS) Manual had been
revised as prompted by the implementation of the Philippine Public Financial Management
Reform Roadmap, which includes the development of the Philippine Public Sector Accounting
Standards (PPSAS) that are harmonized with the International Public Sector Accounting
Standards (IPSAS). It also introduces the Revised Chart of Accounts (RCA) and adoption of the
Unified Account Code Structure (UACS) that will enable the national government agencies to
properly recognize financial transactions and prepare basic financial statements.
Module Objectives

• Understand the budgetary procedure for NGAs;
• Describe the Chart of Accounts used by NGAs;
• Prepare journal entries for basic government transactions and
• Prepare basic financial statements of NGAs.
Revenue and Other Receipts
Unless otherwise specifically provided by law, all revenue (income) accruing to the departments,
offices and agencies by virtue of the provisions of existing laws, orders and regulations shall be
deposited in the NT or in the duly authorized depository of the Government and shall accrue to
the General Fund of the Government: Provided, that amounts received in trust and from
business-type activities of government may be separately recorded and disbursed in accordance
with such rules and regulations as may be determined by the Permanent Committee
Revenues received by NGAs may arise from exchange and non-exchange transactions. In a
transaction where the entity may provide some consideration directly in return for the resources
received, but that consideration does not approximate the fair value of the resources received,
the entity determines whether there is a combination of exchange and non-exchange
transactions. Each component of which is recognized separately. (Par. 10, PPSAS 23)
There are transactions where it is not immediately clear whether they are an exchange or a non-
exchange transaction. In these cases, an examination of the substance of the transaction will
determine if they are on exchange or non-exchange transactions. For example, the sale of goods
is normally classified as an exchange transaction. If, however, the transaction is conducted at a
subsidized price, that is, a price that is not approximately equal to the fair value of the goods
sold, that transaction falls within the definition of a non-exchange transaction.
Agencies may receive trade discounts, quantity discounts, or other reductions in the quoted price
of assets for a variety of reasons. These reductions in price do not necessarily mean that the
transaction is a non-exchange transaction.
Revenues received by the NGAs from exchange transactions are derived from the following:
a. Sale of goods or provisions of services to third parties or to other NGAs
b. Use by other entity of assets yielding interest, royalties and dividends or similar
distributions.
Revenue from exchange transaction shall be measured at fair value of the consideration received
or receivable. When goods or services are exchanged or swapped for goods or services which
are of a similar nature and value, the exchange is not regarded as a transaction which generates
revenue. However, when goods are sold or services are rendered in exchange for dissimilar
goods or services, the exchange is regarded as a transaction which generates revenue. The
revenue is measured at the fair value of the goods or services received, adjusted by the amount
of any cash or cash equivalents transferred. When the fair value of the goods or services received
cannot be measured reliably, the revenue is measured at the fair value of the goods given up,
adjusted by the amount of any cash or cash equivalents transferred.
Other receipts of NGAs shall be composed of, but not limited to, the following:
a. Notice of Cash Allocation. The NCA shall be the authority of an agency to pay operating
expenses, purchases of supplies and materials, acquisition of PPE, accounts payable,
and other authorized disbursements through the issue of MDS checks, ADA or other
modes of disbursements.
• No MDS check/ADA shall be issued without the covering NCA. Hence, the total
MDS checks/ADA issued shall not exceed the total NCA received. To maximize
the available NCAs of the agency, the Common Fund System policy shall be
adopted whereby cash allocation balances of agencies under the Regular MDS
Account may be used to cover payment of current year’s accounts payable i.e.,
goods and services which have been delivered and accepted during the year
charged against appropriations of prior year/s, after satisfying their regular
operating requirements as reflected in their Monthly Cash Program.
• NCA issued and credited to the Special MDS Accounts of agencies for payment
of retirement gratuity/terminal leave benefits as well as prior years’ accounts
payable shall be valid within the period prescribed under existing rules and
regulations. The NCA shall be monitored through the maintenance of the Registry
of Allotments and Notice of Cash Allocation (RANCA) (Appendix 30) by the
Accounting Division/Unit.
• NCA issued and credited to the Special MDS Accounts for Trust to cover
payments of authorized claims shall be valid within the period prescribed under
existing regulations.
• For NCA issued for foreign assisted projects such as grants from foreign country
with a separate MDS account maintained by the spending agency with
Government Servicing Banks (GSBs), MDS check/ADA shall be issued only for
specific purpose until full implementation of the project, subject to pertinent DBM
issuances prescribing the validity of the NCA.
The Collecting Officer shall not issue an OR for the receipt of NCA. The accounting
entries to recognize receipt of NCA are as follows:
Account Title Account Code Debit Credit

Regular
Cash-Modified Disbursement System (MDS), Regular 10104040 P100,000
Subsidy from National Government 40301010 P100,000
To recognize receipt of NCA for Regular Agency Fund
Special Account
Cash-Modified Disbursement System (MDS), Special Account 10104050 P100,000
Cash-Treasury/Agency Deposit, Special Account 10104020 P100,000
To recognize receipt of NCA for Special Account in the General Fund
Cash-Modified Disbursement System (MDS), Trust 10104060 P100,000

Cash-Treasury/Agency Deposit, Trust 10104030 P100,000
To recognize the receipt of NCA for Trust Receipts Fund
b. Non-Cash Availment Authority. The accounting entry to recognize the receipt of NCAA
is as follows:

Accounts Payable 20101010 P950,000
To recognize the receipt of NCAA
c. Cash Disbursement Ceiling. The accounting entries for the collection of revenue of,
and the constructive receipt of disbursement authority to, Foreign Service Posts (FSPs)
of DFA and DOLE are as follows:
1. DFA and DOLE’s Books

Cash-Collecting Officers 10101010 P100,000
Passport and Visa Fees 40201120 P100,000
To recognize collection of revenue of FSPs
Cash in Bank-Foreign Currency, Current Account 10103020 P100,000

Cash-Collecting Officers 10101010 P100,000
To recognize deposit of collections to authorized servicing bank of the FSPs
Cash-Constructive Income Remittance 10104080 P80,000

To recognize receipt of CDC from DBM
Quarters Allowance-Civilian 50102070 P50,000

Rents-Buildings and Structures 50299050 30,000
Cash in Bank-Foreign Currency, Current Account 10103020 P80,000
To recognize payment of expenses charged to CDC
2. BTr Books
Subsidy to NGAs 50214010 P80,000
Cash-Constructive Income Remittance 10104080 P80,000
To recognize constructive receipt of remitted collections by FSPs and disbursements
charged to the issued CDCs to FSPs
d. Tax Remittance Advice. This shall be used to recognize: (1) in the books of national
government agencies, the constructive remittance to BIR and BOC of taxes and customs’
duties withheld, and the constructive receipt of NCA for those taxes and customs duties;
(2) in the books of the BIR and BOC, the constructive receipt of tax revenue and customs
duties; and (3) in the books of the BTr, the constructive receipt of the taxes and customs
duties remitted.
1. Tax Withheld by NGAs
NGAs’ (withholding agency) Books

Cash-Tax Remittance Advice 10104070 P100,000
To recognize constructive receipt of NCA for TRA
Due to BIR 20201010 P100,000

To recognize constructive remittance to BIR of taxes withheld through TRA
BIR Books
Income Tax 40101010 P100,000
To recognize constructive receipt of taxes remitted by NGAs through TRA
BTr Books
Subsidy to NGAs 50214010 P100,000
To recognize constructive receipt of remittance of taxes by NGAs through TRA
Reporting of Collections and Deposits

Receipts and deposits shall be reported as follows:
a. At the close of the business day, the Collecting Officers shall prepare the Report of
Collections and Deposits (RCD) for submission to Accounting Office/Unit. The report lists
all the ORs issued in numerical sequence including cancelled ones.
b. The RCD shall be supported by documentary evidence such as duplicate copies of ORs
and validated deposit slips.
c. The Collecting government entity issuing electronic Official Receipt (eOR) should
generate and submit daily to the Auditor a copy of the RCD. In case the collection system
is not integrated with the accounting system, the Accounting Division/Unit shall recognize
the collections and deposits based on the generated reports duly certified by the
Collecting Officer/Cashier/Head of Cash/Treasury Unit.
d. Field Offices (FOs)/Operating Units (OUs) without complete set of books shall record
their collections of income chronologically in the Cash Receipts Register (CRReg). The
certified copy of the CRReg together with the required supporting documents, duplicate
copies of ORs and Deposit Slip (DSs) shall be submitted within five (5) days after the end
of each month to the concerned mother unit (central/regional/division office) by the FOs
(a unit under the central/regional/ division office) for review and recording of the
transactions in the CRJ by the Chief Accountant.
Basic Requirements for Disbursements and the Required Certifications

Disbursements of government funds shall comply with the following basic requirements and
certifications:
a. Availability of allotment/budget for obligation/utilization certified by the Budget
Officer/Head of Budget Unit;
b. Obligations/Utilizations properly charged against available allotment/budget by the Chief
Accountant/Head of Accounting Unit;
c. Availability of funds certified by the Chief Accountant. The Head of the Accounting Unit
shall certify the availability of funds before an Agency Head or his duly authorized
representative enter into any contract that involves the expenditure of public funds based
on the copy of budget release documents;
d. Availability of cash certified by the Chief Accountant. The Head of the Accounting Unit
shall certify the availability of cash and completeness of the supporting documents in the
disbursement voucher and payroll based on the Registry of Allotments and Notice of
Cash Allocation/Registry of Allotment and Notice of Transfer of Allocation;
e. Legality of the transactions and conformity with existing rules and regulations. The
requesting and approving officials shall ensure that the disbursements of government
funds are legal and in conformity with applicable rules and regulations;
f. Submission of proper evidence to establish validity of the claim. The Head of the
Requesting Unit shall certify on the necessity and legality of charges to allotments under
his/her supervision as well as the validity, propriety and legality of supporting documents.
All payments of government obligations and payables shall be covered by Disbursement
Vouchers (DV)/Payrolls together with the original copy of the supporting documents
which will serve as basis in the evaluation of authenticity and authority of the claim. It
should be cleared, however, that the submission of the supporting documents does not
preclude reasonable questions on the funding, legality, regularity, necessity and/or
economy of the expenditures or transactions; and
g. Approval of the disbursement by the Head of Agency or by his duly authorized
representative. Disbursement or disposition of government funds or property shall
invariably bear the approval of the proper officials. The DVs/Payrolls shall be signed and
approved by the head of the agencies or his duly authorized representatives.
Modes of Disbursements
The different modes of disbursements are as follows: (a) checks (MDS or commercial checks),
(b) cash (out of cash advance granted to authorized Disbursing Officer), (c) advice to debit the
account, (d) tax remittance advice, (e) working Fund/CDC, and (f) direct payment method.
Disbursements by Check
Checks shall be drawn only on duly approved Disbursement Voucher (DV) or Payroll). These
shall be used for payment of regular expenses which cannot be conveniently nor practically paid
using the ADA or not authorized to be paid using the Petty Cash Fund or advances for operating
expenses. Checks issued shall be reported and recorded in the books of accounts whether
released or unreleased to the respective payees. There are two types of checks being issued by
government agencies as follows:
a. Modified Disbursement System Checks – are checks issued by government agencies
chargeable against the account of the Treasurer of the Philippines, which are maintained
with different MDS-GSBs.
b. Commercial Checks – are checks issued by NGAs chargeable against the Agency
Checking Account with GSBs. These shall be covered by income/receipts authorized to
be deposited with AGDBs.
The documentary requirements for common government transactions depending on the nature
of expenses to be paid by checks shall be complied with as prescribed in COA Circular No. 2012-
001 dated June 14, 2012, amended by COA Circular No. 2013-001 dated January 10, 2013.
All checks drawn during the day, whether released or unreleased including cancelled checks
shall be recorded chronologically in the Checks and ADA Disbursements Record (CkADADRec)
maintained by the Cash/Treasury Unit. The dates the checks were actually released shall be
indicated in the appropriate column provided for in the CkADADRec. All checks/ADA drawn
whether released or unreleased shall be included in the Report of Checks Issued (RCI) or Report
of ADA Issued (RADAI), which shall be prepared daily by the Cashier. The RCI/RADAI together
with the original copies of the supporting documents (SDs) shall be submitted to the Accounting
Division/Unit for the preparation of JEV. At the end of the year, a Schedule of Unreleased
Commercial Checks shall be prepared by the Cashier for submission to the Accounting
Division/Unit.
• Illustrative Accounting Entries for Disbursements By Check
1. Payment of the following utility bills:

Meralco Bill P 1,200
PLDT Bill 500
Maynilad Bill 200
Total P1,900
Water Expenses 50204010 P 200

Electricity Expenses 50204020 1,200
Telephone Expenses 50205020 500
Cash-Modified Disbursement System (MDS), Regular 10104040 P 1,900
To recognize payment of bills from utility companies based on individual checks
issued
2. Grant of cash advance for travel

Advances to Officers and Employees 19901040 P 1,000
To recognize granting of travel allowance to employees
3. Advance payment to Procurement Service

Due from NGAs 10303010 P 2,500
To recognize advance payment to Procurement Service for the purchase of
Office Equipment
4. Establishment of Petty Cash Fund (PCF) – P 20,000

Petty Cash Fund 10101020 P 20,000
To recognize establishment of PCF to cover petty expenses
Disbursements by Cash
Cash disbursements constitute payments out of cash advances granted to the regular and
special disbursing officers for personal services, petty expenses and MOOE for field operating
requirements. All cash payments shall be covered by duly approved DVs/payrolls/petty cash
vouchers (PCVs). The cash advances may be granted to the cashiers/disbursing officers/officials
and employees to cover the following: salaries and wages, travels, special time-bound
undertakings and petty operating expenses. The granting and liquidation of cash advances shall
be governed by the following existing COA rules and regulations and other pertinent issuances:
a. No cash advance shall be given unless for a legally authorized specific purpose;
b. A cash advance shall be reported on and liquidated as soon as the purpose for which it
was given has been served;
c. No additional cash advance shall be allowed to any official or employee unless the
previous cash advance given to him/her is first settled/liquidated or a proper accounting
thereof is made;
d. Except for cash advance for official travel, no officer or employee shall be granted cash
advance unless he/she is properly bonded in accordance with existing laws or
regulations. The amount of cash advance which may be granted shall not exceed the
maximum cash accountability covered by his/her bond;
e. Only permanently appointed officials shall be designated as disbursing officers;
f. Only duly appointed or designated disbursing officer may perform disbursing functions.
Officers and employees who are given cash advances for official travel need not be
designated as Disbursing Officers;
g. Transfer of cash advance from one accountable officer to another shall not be allowed;
and
h. The cash advance shall be used solely for specific legal purpose for which it was granted.
Under no circumstance shall it be used for encashment of checks or for liquidation of a
previous cash advance.
The specific rules and regulations on the granting, utilization and liquidation of cash advances
are provided for under COA Circular No. 97-002 dated February 10, 1997, as amended by COA
Circular No. 2006-005 dated July 13, 2006.
Disbursements through List of Due and Demandable Accounts Payable-Advice to Debit

Account (LDDAP-ADA)
The use of LDDAP-ADA as a mode of settlement of accounts payable due the creditors/payees
of all NGAs and their OUs was prescribed under DBM Circular Letter No. 2013-16 dated
December 23, 2013 which implemented the ExMDPS, amended by DBM Circular Letter Nos.
2013-16A and 2013-16B dated February 6, 2014 and February 25, 2014, respectively. The
following are excluded from the implementation of ExMDPS:
a. Payment of Terminal Leave and Retirement Gratuity (TL/RG) benefits which is governed
by Republic Act No. 10154 as implemented by CSC Resolution No.1300237 and Budget
Circular No. 2013-1;
b. Remittance of social insurance premium contributions to government corporations, such

as GSIS, PHILHEALTH, and HDMF;
c. Payment of Accounts Payable to utility companies, such as: supplier of petroleum, oil and
lubricants, water, illumination and power services, telephone, internet and other
communication services; and
d. Other payables which cannot be conveniently nor practicably paid using the ADA.
The Head of the Accounting Division/Unit shall prepare a JEV and credit the “Cash-Modified
Disbursement System (MDS), Regular” account upon receipt from the Cash/Treasury Unit of the
RADAI supported with DV and SDs. The JEV shall be recorded in the ADA Disbursements
Journal (ADADJ).
LLDAP-ADA may be invalidated due to any inconsistency of information (i.e., bank branch,
account name/number) between the bank records and LDDAP-ADA or errors stated in item 8.0
of DBM Circular Letter 2013-16 dated December 23, 2014. An invalidated ADA shall be reported
as follows:
a. New LDDAP-ADA may be issued for the replacement of invalidated LDDAP-ADA, upon
submission of the validated LDDAP-ADA indicating non-payment to creditors/payees due
to any inconsistency of information (i.e., bank branch, account name/number) to the
Accounting Division/Unit by the Cash/Treasury Unit. A certified copy of the previously
paid DVs shall be attached to the request for replacement.
b. A JEV shall be prepared to take up the cancellation of the invalidated LDDAP-ADA. The
replacement LDDAP-ADA shall be reported in the RADAI.
• Illustrative Accounting Entries for Disbursements By ADA
1. Payment for delivery of supplies and materials for consumption

Office Supplies Inventory 10404010 P 2,500
To recognize payment for the delivery of supplies and materials based on Delivery
Receipt No. 12451
2. Payment of rent
Prepaid Rent 19902020 P 1,300
To recognize payment of one year rent of photocopying machine (July, 2015–
June, 2016)
3. Advances to Contractors
Advances to Contractors 19902010 P 8,000
To recognize 15% mobilization fees to contractors to be recouped from progress
billings
4. Payment of Accounts Payable

Gross P 40,000
Less: Withholding Tax (VAT) 3,600
Net P 36,400
Accounts Payable 20101010 P40,000

Due to BIR 20201010 P 3,600
Cash-Modified Disbursement System (MDS), Regular 10104040 36,400
To recognize payment of payables based on duly approved DV and SDs
Disbursements Through electronic Modified Disbursement System as part of the Modified

Disbursement Scheme
As part of the implementation of the Treasury Single Account (TSA) system for government
disbursement, the electronic Modified Disbursement System (eMDS) has been adopted as one
of the modes of disbursement under Joint Administrative Order (JAO) No. 2015-1 dated March
12, 2015 of the DBM and DOF. This is to facilitate an efficient and prompt reconciliation of
spending agencies’ disbursements vis-à-vis the accounts of the BTr maintained at the LBP as
Authorized Government Servicing Bank (AGSB).
This JAO shall apply to all spending agencies, offices and instrumentalities under the Executive
Branch, including SUCs, together with other Executive Offices using LBP as GSB. The Judicial
Branch, the Legislative Branch, Constitutional Offices, and all other Agencies, Offices and
Instrumentalities banking with LBP and therefore maintaining MDS sub-accounts with said bank
are likewise covered by the JAO for NG to have a holistic view of the budgetary transactions of
all spending agencies.
The policy guidelines are as follows:

a. Heads of Departments, Bureaus, Offices and other instrumentalities under the Executive
Branch, maintaining MDS sub-accounts with LBP, including SUCs, together with other
Executive Offices, are enjoined to enroll and subscribe to the eMDS to perform selected
MDS transactions online; and to monitor disbursements and generate MDS reports under
the Government’s MDS;
b. Enrolment in the eMDS shall be free of charge; and
c. All other spending agencies, offices, and instrumentalities of government maintaining
MDS sub-accounts with GSBs other than LBP shall continue to observe the current
procedure of the MDS System, unless they voluntarily transfer their accounts with LBP
to avail of the latter’s eMDS facility or until after enrolment and subscription to the eMDS
upon amendment or repeal of Memorandum Order Nos. 276 (s. 1990) and/or (s. 1994).
Disbursements through Tax Remittance Advice

The Tax Remittance Advice (TRA) refers to a serially-numbered document prescribed by the
DBM that should be used by the NGAs in the remittance of withheld taxes on funds coming from
DBM. With the inclusion of all NGAs among the taxpayers who are mandated to use the
Electronic Filing and Payment System (eFPS) under the Bureau of Internal Revenue Regulations
No. 1-2013 dated January 23, 2013, the TRA is accomplished on-line which is called the
Electronic TRA (eTRA). The eTRA is certified correct by the Chief Accountant/Head of
Accounting Division/Unit and approved by the Head of Agency/Authorized Official, and used to
record the remittance of taxes withheld to the BIR. The same document shall be the basis for the
BIR and the BTr to draw a JEV to record the tax collection and deposit in their respective books
of accounts. The JEV shall be recorded in the GJ.
The eTRA shall be supported with the Summary of Taxes Withheld (STW) certified by the Chief
Accountant. The STW is the document which summarizes the type and amount of taxes withheld.
The Accounting Division/Unit shall maintain SL to monitor remittances of taxes withheld from
individual employees, suppliers and contractors.
• Illustrative Accounting Entries for Remittance of Taxes Withheld through TRA

Agency Books
1. Constructive Receipt of NCA for TRA
Cash-Tax Remittance Advice 10104070 P 5,000
Subsidy from National Government 40301010 P 5,000
To recognize constructive receipt of NCA for TRA
2. Remittance of taxes withheld through TRA

Due to BIR 20201010 P 5,000
To recognize remittance of taxes withheld through TRA
BIR Books
1. Constructive Receipt of Tax Revenue through TRA from the NGAs
Income Tax 40101010 P 5,000
To recognize constructive receipt of tax revenue based on the TRA received
from the agency
BTr Books
1. Constructive Utilization of NCA for TRA by the remitting NGAs
Subsidy to NGAs 50214010 P 5,000
To recognize remittance of taxes withheld by the agency based on the TRA
received
Disbursement for Inter-Agency Transferred Funds (IATF)

The following are the accounting policies for the transfer of funds:
a. A Memorandum of Agreement (MOA) shall be entered into by the SA and the IA for the
undertaking by the latter of the project of the former. The MOA shall provide for the
requirements for project implementation and reporting.
b. The fund to be transferred or sub-allotted to the IA shall be a) in an amount sufficient for
three months operation subject to replenishment upon submission of the reports of
disbursements by the IA, or b) the total project cost, as may be determined by the Heads
of the two agencies in either case.
c. The check shall be issued in the name of the IA for deposit to its trust account in its
authorized government depository bank. The IA shall issue its official receipt in
acknowledgment.
d. Depending on the MOA, the fund transfers may be treated as a) If the MOA provides a
condition that the fund shall be spent as specified and any excess shall be returned to
the SA, the IA shall recognize the receipt of the fund as asset at its fair value with a
corresponding liability, while the SA shall recognize a receivable corresponding to the
fund transfer; or b) If the MOA provides stipulations or no condition, the IA shall recognize
the receipt of the fund as asset at its fair value with a corresponding revenue, while the
SA shall recognize an expense corresponding to the fund transfer.
e. A separate subsidiary record for each account shall be maintained by the IA whether or
not a separate bank account is opened.
f. Within ten (10) days after the end of each month/end of the agreed period for the Project,
the IA shall submit the RCI and the RCDisb to report the utilization of the funds. Only
actual project expenses shall be reported. The reports shall be approved by the Head of
the IA.
g. The IA shall return to the SA any unused balance upon completion of the project, if
stipulated in the MOA.
h. The SA shall draw a JEV to take up the reports. The amount to take up the liquidation in
the RCI shall be net of the cash advances granted by the IA to its accountable officers.
i. The IA Auditor shall audit the disbursements out of the trust accounts in accordance with
existing COA Regulations
j. The Chief Accountant/Head of the Accounting Division/Unit of the IA shall, on the basis
of the Notice of Finality of Decision (NFD), record in the books of accounts any audit
disallowance as receivable.
k. When the IA is a Bureau/Regional Office of the SA, the procedures for centrally managed
projects shall be followed in accordance with entries herein provided.
Disbursements by Foreign-based Government Agencies

CDC is an authorization issued by the DBM to DFA and other agencies with foreign posts to
utilize their collections retained by their Foreign Service Posts (FSPs) to cover operating
requirements, but not to exceed the released allotment to the said post. (National Budget Circular
No. 535 dated December 29, 2011). The following are the accounting policies regarding
disbursements by Foreign-based Government Agencies (FBGAs):
a. Based on the proposed budget of FSP/Foreign Attaché, a Working Fund shall be
established to cover payment of PS and MOOE. The Finance Officer shall be required to
maintain CBReg and CDReg to monitor and control the Working Fund.
b. All disbursements from the Working Fund shall be covered by duly approved DV/Payroll
with the required SDs. At the end of the month, the Finance Officer of FSPs/Foreign
Attachés shall prepare and submit RCDisb together with the SDs to the Central Office
concerned for preparation of JEV to record the liquidation made by the accountable
officer. The JEV shall be recorded in the CkDJ and CDJ based on the CBReg and
CDReg, respectively.
Disbursements through Direct Payment Method

This type of disbursement should be covered by an NCAA. This mode of disbursement is made
through the JEV issued by the BTr to the availing/implementing agency to record payment of
goods and services made directly by the lending institution to the supplier or contractor. The JEV
shall be recorded in the GJ.
Property, Plant and Equipment (PPE)

PPE includes land; land improvements; buildings and other structures; machinery and
equipment; transportation equipment; furniture, fixtures and books; leasehold improvements;
and other PPE including specialist military equipment, infrastructure assets, and heritage assets.
The cost of an item of PPE shall be recognized as assets if, and only if:
a. it is probable that the future economic benefits or service potential associated with the
item will flow to the entity;
b. the cost or fair value of the item can be measured reliably;
c. beneficial ownership and control clearly rest with the government;
d. the asset is used to achieve government objectives; and
e. it meets the capitalization threshold of P15,000.
PPE that qualifies for recognition as an asset shall be measured at cost. However, where the
PPE is acquired through a non-exchange transaction, its cost shall be measured at its fair value
as at the date of acquisition.
For consistency and uniformity, the cost model shall be applied to an entire class of PPE. Cost
model means that PPE are carried at cost, less any accumulated depreciation and any
accumulated impairment losses.
Subsequent costs are costs of the day-to-day servicing of an item of PPE which are recognized
as an expense when incurred. Costs of day-to-day servicing are primarily the costs of labor and
consumables, and may include the cost of small parts. The purpose of these expenditures is
often described as “repairs and maintenance” of an item of PPE.
PPE gradually loses its ability to provide service over the course of time. Because of this, its cost
needs to be distributed on a systematic basis over its useful life. The allocated cost is referred to
as depreciation. The depreciation charge for each period shall be recognized as expense unless
it is included in the carrying amount of another asset. For example, the depreciation of
manufacturing plant and equipment is included in the costs of conversion of inventories.
Similarly, depreciation of PPE used for development activities may be included in the cost of an
intangible asset recognized. The following are policies regarding depreciation of PPE:
a. There are three factors an entity must consider in determining depreciation:
1. Initial cost,
2. Useful life, and
3. Expected residual value at the end of its useful life.
b. Except for land and not recognized heritage assets, all PPE shall be depreciated.
c. Depreciation of an asset begins when it is available for use such as when it is in the
location and condition necessary for it to be capable of operating in the manner intended
by management. For simplicity and to avoid proportionate computation, depreciation shall
be for one month if the PPE is available for use on or before the 15th of the month.
However, if the PPE is available for use after the 15th of the month, depreciation shall be
for the succeeding month.
d. Depreciation of an asset ceases when the asset is derecognized. Therefore, depreciation
does not cease when the asset becomes idle or is retired from active use and held for
disposal unless the asset is fully depreciated.
e. The straight line method of depreciation shall be adopted unless another method is more
appropriate for entity operation. That method is applied consistently from period to period
unless there is a change in the expected pattern of consumption of those future economic
benefits or service potential.
f. The estimation of the useful life of the asset is a matter of judgment based on the
experience of the entity with similar assets. The agency/entity is in the best position to
estimate the expected useful life of its PPE.
g. Based on the above life spans, the entity shall prepare the specific estimated useful life
for each asset based on its experience on the life of its PPE, copy furnished the Resident
Auditor and the Government Accountancy Sector of COA.
h. The estimated useful life of the undepreciated portion of a PPE shall be reviewed on a
regular basis and revised when the appropriateness of a change can be clearly
demonstrated.
i. A residual value equivalent to at least five percent (5%) of the cost shall be adopted
unless a more appropriate percentage is determined by the entity based on its operation
subject to the approval of COA.
j. The residual value and the useful life of an asset shall be reviewed at least at each annual
reporting date and, if expectations differ from previous estimates, the change(s) shall be
accounted for as a change in an accounting estimate.
k. The computation of monthly depreciation expense shall be as follows:
Depreciation Expense = Cost – Residual Value
Estimated Useful Life (in months)
l. Depreciation shall be recognized as a debit to the “Depreciation Expense” account and
a credit to the “Accumulated Depreciation” account. Accumulated Depreciation is a
contra-asset account presented in the FS as deduction from the related asset account.
m. Each part of an item of PPE with a cost that is significant in relation to the total cost of
the item shall be recorded and depreciated separately.
Basic Government Accounting and Budget Reporting Principles

Each NGA shall recognize and present its financial transactions and operations conformably to
the following:
a. generally accepted government accounting principles in accordance with the PPSAS and
pertinent laws, rules and regulations;
b. accrual basis of accounting in accordance with the PPSAS;
c. budget basis for presentation of budget information in the financial statements (FSs) in
accordance with PPSAS 24;
d. RCA prescribed by COA;
e. double entry bookkeeping;
f. financial statements based on accounting and budgetary records; and
g. fund cluster accounting.
The COA shall keep the general accounts of the Government and, for such period as may be
provided by law, preserve the vouchers and other supporting papers pertaining thereto,
pursuant to Section 2, par. (1), Article IX-D of the 1987 Philippine Constitution.
Financial Reporting System for the National Government

The financial reporting system of the Philippine government consists of accounting system on
accrual basis and budget reporting system on budget basis under the statutory responsibility of
the NGAs, Bureau of the Treasury (BTr), Department of Budget and Management (DBM), and
the COA, as follows:
a. Each entity of the National Government (NG) maintains complete set of accounting books
by fund cluster which is reconciled with the records of cash transactions maintained by
the BTr.
b. The BTr accounts for the cash, public debt and related transactions of the NG.
c. Each entity maintains budget registries which are reconciled with the budget records
maintained by the DBM and the Government Accountancy Sector (GAS), COA.
d. The COA, through the GAS:
1. maintains budget records showing the overall approved budget of the NG and its
execution/implementation;
2. consolidates the FSs and budget accountability reports of all NGAs and the BTr
with COA’s records to come up with an Annual Financial Report (AFR) for the NG
as required in Section 4, Article IX-D of the 1987 Philippine Constitution; and
3. prepares other financial reports required by law for submission to oversight
agencies.
Financial statements shall present fairly the financial position, financial performance and cash
flows of an entity. Fair presentation requires the faithful representation of the effects of
transactions, other events, and conditions in accordance with the definitions and recognition
criteria for assets, liabilities, revenue, and expenses set out in PPSASs. The application of
PPSASs, with additional disclosures when necessary, is presumed to result in financial
statements that achieve a fair presentation.
Objectives of General Purpose Financial Statements

The objectives of general purpose financial statements (GPFSs) are to provide information about
the financial position, financial performance, and cash flows of an entity that is useful to a wide
range of users in making and evaluating decisions about the allocation of resources. Specifically,
the objectives of general purpose financial reporting in the public sector are to provide
information useful for decision-making, and to demonstrate the accountability of the entity for the
resources entrusted to it.
Responsibility for Financial Statements.

The responsibility for the preparation of the FSs rests with the following:
a. for individual entity/department FSs – the head of the entity/department central office
(COf) or regional office (RO) or operating unit (OU) or his/her authorized representative
jointly with the head of the finance/accounting division/unit; and
b. for department/entity FSs as a single entity – the head of the entity/department COf jointly
with the head of the finance unit.
Components of General Purpose Financial Statements

The complete set of GPFSs consists of:
a. Statement of Financial Position (SFP) - An entity shall present current and non-current
assets, as well as current and non-current liabilities, as separate classifications on the
face of SFP
b. Statement of Financial Performance (SFPer) - The SFPer shall include line items that
present the revenue, expenses and net surplus or deficit for the period.
c. Statement of Changes in Net Assets/Equity - (SCNA/E). An entity shall present in the

SCNA/E the following:
1. Net Income or Deficit for the period;
2. Each item of revenue and expenses for the period that, as required by Standards,
is recognized directly in net assets/equity, and the total of these items;
3. Total revenue and expenses for the period; and
4. For each component of net assets/equity separately disclosed, the effects of
changes in accounting policies and corrections of errors recognized in
accordance with PPSAS on Accounting Policies, Changes in Accounting
Estimates and Errors.
d. Statement of Cash Flows - Cash flow information provides users of financial statements
with a basis to assess the ability of the entity to generate cash and cash equivalents for
remittance to the NG and to determine the entity’s utilization of funds provided by the NG.
This also provides information on how the entity generates income authorized to be used
in their operation and its utilization.
e. Statement of Comparison of Budget and Actual Amounts - A comparison of budget and
actual expenditures will enhance the transparency of financial reporting in government.
This shall be presented by government agencies as a separate additional financial
statement referred in this Manual as the Statement of Comparison of Budget and Actual
Amounts (SCBAA).
f. Notes to the Financial Statements, comprising a summary of significant accounting
policies and other explanatory notes - Contain information in addition to that presented
in the SPF, SFPer, SCNA/E and SCF. Notes provide narrative descriptions or
disaggregation of items disclosed in those statements and information about items that
do not qualify for recognition in those statements.
Books of Accounts and Registries. The books of accounts and registries of the NG entities
consist of:
a. Journals
1. General Journal
2. Cash Receipts Journal
3. Cash Disbursements Journal
4. Check Disbursements Journal
b. Ledgers
1. General Ledgers
2. Subsidiary Ledgers
c. Registries
1. Registries of Revenue and Other Receipts
2. Registry of Appropriations and Allotments
3. Registries of Allotments, Obligations and Disbursements
4. Registries of Budget, Utilization and Disbursements
Preparation and Submission of Other Reports

In addition to the set of financial statements enumerated in Section 5 of this Chapter, the
following reports/ schedules/statements shall be submitted to GAS, COA:
a. Pre-Closing Trial Balances
b. Post-Closing
c. Other schedules
1. Regional Breakdown of Income

2. Regional Breakdown of Expenses
Trial Balance
Trial Balance (TB) is a list of all the GL accounts and their balances at a given time. The accounts
are listed in the order in which they appear in the RCA, with the debit balances in the left column
and the credit balances in the right column.
a. The TB shows the equality of debit and credit balances of all GL accounts as at a given
period. It is prepared and submitted monthly, quarterly and annually. At the end of the
fiscal year, the pre-closing and the post-closing trial balances shall be prepared.
b. The TB is prepared to:
1. Prove the mathematical equality of the debits and credits after posting;
2. Check the accuracy of the postings;
3. Uncover errors in journalizing and posting; and
4. Serve as basis for the preparation of the financial statements.
Pre-Closing Trial Balance

The Pre-Closing Trial Balance shall be prepared after posting the AJE in the GJ and the same
to the GL. It shows the adjusted balances of all accounts as at a given period. This is also
described/termed as the Adjusted Trial Balance. The TB shall be supported with the schedule of
SL balances of the controlling accounts.
Adjusting Journal Entries

Adjusting journal entries are made at the end of an accounting period to allocate revenue and
expenses to the period in which they actually occurred. AJEs are required every time a financial
statement is prepared to make the statement truly reflective of the financial condition of the entity
at a given period. Adjustments are of two main types:
a. Accrued items - adjusting entry for an economic activity already undertaken but not yet
recognized into asset and revenue accounts or liability and expense accounts. It requires
asset/revenue adjustments and liability/expense adjustments.
1. Asset/Revenue Adjustment. It involves earned revenues not yet recognized as
assets and income at the end of the accounting period. Examples are receivables
for revenues already earned but not yet collected nor billed as at the year-end.
2. Liability/Expense Adjustment. It involves expenses, which have already been
incurred but remained unpaid at the end of the accounting period. Examples are
salaries and wages, water, electricity and other expenses which are already
incurred but not yet paid.
b. Deferred items - adjusting entries transferring data previously recognized in an asset
account to an expense account, or data previously recognized in a liability account to a
revenue account.
1. Asset/Expense Adjustments. These pertain to assets, portion of which are
consumed/used/incurred at the end of the accounting period. Examples of these
adjustments are prepayments. Prepayments are expenses paid before they are
incurred. At the end of the accounting period, the expired portion shall be
determined and an adjusting journal entry shall be prepared to recognize the
expense applicable to the period being reported.
2. Liability/Revenue Adjustments. For accounting purposes, the cash received does

not represent revenue until it has been earned. Thus, the recognition of revenue
must be deferred until it is earned. Advance income collections are recognized by
debiting Cash and by crediting a liability account for unearned revenue. As
unearned revenue is earned, an adjusting journal entry is made at the end of each
period to transfer the appropriate amount from the liability account to revenue
account. This adjustment reflects the fact that all or part of the entity's obligation
to its customers has been fulfilled and that revenue has been realized.
Other Adjustments
The following adjustments shall also be made (if applicable) for fair presentation of the results
of operation of the entity in the financial statements:
a. Unused NCA (National) - For NGAs receiving subsidies from the national government in
the form of NCA, adjusting journal entry shall be made for the reversion of the unused or
unutilized NCA at the end of the accounting period.
b. Petty Cash Fund - At the end of the year, all unreplenished Petty Cash Fund expenses
shall be reported and supporting papers submitted to the Accounting Division/Unit, to
recognize the expenses incurred to the period to which they relate. In case no
replenishment could be made for lack of fund, a JEV shall be prepared to recognize all
the expenses paid under the Petty Cash with a credit to the account “Petty Cash”. If
replenishment is made, the credit shall be the appropriate cash account.
c. Unreleased Commercial Checks - A Schedule of Unreleased Commercial Checks shall
be prepared by the Cashier for submission to the Accounting Division/Unit. All unreleased
checks at the end of the year shall be reverted back to the cash accounts. A JEV shall
be prepared to recognize the restoration of the cash equivalent to the unreleased checks
and the recognition of the appropriate liability/payable account.
d. Allowance for/Accumulated Impairment Losses of asset accounts
e. Write-down of Inventories
f. Correction/Reclassification Entries
g. Adjustment for reversal of Impairment Losses
h. Depreciation Expense
i. Exchange differences on foreign currency
j. Other adjustments
Closing Journal Entries

Closing journal entries are entries which close out the balances of all nominal/temporary and
intermediate accounts at the end of the year. The closure will reduce the balance of those
accounts to zero. The nominal and intermediate accounts that shall be closed at the end of the
year are as follows:
a. Balance of all revenue accounts to the “Revenue and Expense Summary” account;
b. Balance of all expense accounts to the “Revenue and Expense Summary” account;
c. Balance of the “Revenue and Expense Summary” to the “Accumulated Surplus/ (Deficit)”
account;
d. Balance of all “Cash-Treasury/Agency Deposit, Regular” to the “Accumulated
Surplus/(Deficit)” account; and
e. Other Closing Entries.
For the purpose of preparing the financial statements for the first, second and third quarters, the
closing entries shall be prepared, but shall not be recorded in the books of accounts.
Post-Closing Trial Balance

The Post-Closing Trial Balance shall be prepared at the end of the year after preparing and
posting the closing journal entries in the GJ and posting to the GL. Since revenue and expense
accounts have been closed out, the only accounts with balances are balance sheet or real
accounts.
Components of Budget and Financial Accountability Reports.

The budget reports consist of the following:
a. Financial Accountability Reports (COA-DBM-DOF Joint Circular No. 2013-1, as amended
by COA and DBM Joint Circular No. 2014-1 dated July 2, 2014)
1. Quarterly Physical Report of Operation (QPRO) – Budget Accountability Report
(BAR) No. 1. This report shall reflect the Department’s/Agency’s actual physical
accomplishments as at a given quarter, in terms of the performance measures
indicated in its Physical Plan.
2. Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
(SAAODB) – Financial Accountability Report (FAR) No. 1 (SAAODB). This report
shall reflect the authorized appropriations and adjustments, total allotments received
including transfers, total obligations, total disbursements and the balances of
unreleased appropriations, unobligated allotments, and unpaid obligations of a
department/office/entity by source and by allotment class. It shall be presented by:
i. Fund Authorization;
ii. Major Final Output;
iii. Program/Activity/Project; and
iv. Major Programs/Projects - identified by Key Result area (KRA)
3. Summary of Appropriations, Allotments, Obligations, Disbursements and Balances
by Object of Expenditures (SAAODBOE) – FAR No. 1.A (SAAODBOE). This report
shall be prepared by Funding Source Code (FSC) as clustered and shall reflect the
summary of appropriations, allotments, obligations, disbursements and balances
detailed by object of expenditures consistent with the COA Revised Chart of Accounts
per COA Circular No. 2013-002 dated January 30, 2013 and the Adoption of the
PPSAS per COA Resolution No. 2014-003 dated January 24, 2014.
4. List of Allotments and Sub-Allotments (LASA) – FAR No. 1.B. This report shall reflect
the allotments released by the DBM and the sub-allotments issued by the Entity
Central Office/RO, their corresponding numbers, date of issuance, and amounts by
allotment class and FSC. The total allotments per this report should be equal to the
total allotments appearing in the SAAODB (FAR No. 1).
5. Statement of Approved Budget, Utilizations, Disbursements and Balances
(SABUDB)– FAR No. 2 (for Off-Budget Fund). This report shall reflect the approved
budget, the utilizations, disbursements and balance of the entity’s income authorized
by law to use, such as OWWA/SUCs, duly approved by their Board of
Trustee/Regents and shall be prepared by FSC as clustered.
6. Summary of Approved Budget, Utilizations, Disbursements and Balances by Object
of Expenditures (SABUDBOE) – FAR No. 2-A (for Off-Budget Fund). This report shall
reflect the details of the approved budget, utilizations, disbursements and balance of
the entity’s income authorized by law to use presented by object of expenditures
consistent with the COA Revised Chart of Accounts and shall be prepared by Funding
Source Code as clustered.
7. Aging of Due and Demandable Obligations (ADDO) – FAR No. 3. This report shall be
prepared by FSC as clustered and shall reflect the balance of unpaid obligations as
indicated in the Obligation Request (ObR) and the ADDOs as at year-end.
8. Monthly Report of Disbursements (MRD) – FAR No. 4. The report shall reflect the
total disbursements made by department, office or entity and operating unit from the
following disbursement authorities:
i. Notice of Cash Allocation;
ii. NCA for Working Fund issued to BTr as an advance funding from loan/grant
proceeds in favor of an entity;
iii. Tax Remittance Advice issued;
iv. CDC issued by departments with foreign-based agencies or units;
v. Non-Cash Availment Authority; and
vi. Others, e.g. Customs, Duties and Taxes (CDT), BTr Documentary Stamps.
The report shall track the actual disbursement of the departments/agencies against
their Disbursement Program. The reasons for over or under spending shall be
indicated.
9. Quarterly Report of Revenue and Other Receipts (QRROR) – FAR No. 5. This report
shall reflect the actual revenue and other receipts/collections from all sources
remitted with the BTr and deposited in other AGDB for the current year presented by
quarter, and by specific sources consistent with the COA Revised Chart of Accounts.
Watch:
• Philippine Budget Process (https://www.youtube.com/watch?v=OUbUC94oa6s)
Readings:
• Government Accounting and Accounting for Non-Profit Organizations by Zeus Vernon B.
Millan
• Government Accounting Manual (Volume 1)
• Government Accounting Manual (Volume 3 Updated 2019)
• Government websites such as www.dbm.gov.ph and www.coa.gov.ph
• https://dbm.gov.ph/images/2020-People's-Enacted-Budget.pdf
Activities/Assessments:
Exercise 1: A government agency had the following transactions during the month:
1) Established petty cash fund, P100,000.

2) Replenishment of the petty cash fund:
Office Supplies Expense, P40,000
Travelling Expenses-Local, 30,000
Representation Expenses, P10,000
3) Bill received from MERALCO, P112,000.
4) PLDT bill, P44,800.
5) Payment of PLDT bill, net of appropriate government tax.
6) Payment of MERALCO bill, net of appropriate of government tax.
7) Signing of the contract for the rental of office space with 6 months advance payment of
P134,400.
8) Issued special order for the attendance to seminar, fee of P5,000.
9) Payment of the seminar fee.
10) Receipt of liquidation report with Certificate of Attendance for advances to seminar.
11) Approval of itinerary of local travel, P30,000.
12) Payment of per diems and allowances related with the local travel, P30,000.
13) Liquidation of cash advance for travel.
14) Issuance of PO to dealer of office equipment, P35,000
15) Receipt of office equipment with charge invoice.
16) Payment of the delivered equipment, net of appropriate government tax.
17) Obligation for ICT Equipment per Purchase order, P100,000.
18) Payment to Procurement Service for IT equipment.
19) Receipt of IT Equipment based on Invoice/Delivery Receipt.
Required: Journalize the above transactions.
Exercise 2: A national government agency had the following transactions relating with
inventories and fixed assets:
1) Issued PO for spare parts, P20,000.
2) Receipt of spare parts.
3) Payment of liability for spare parts, net of appropriate government tax.
4) Signed a contract for construction of building, P5,600,000.
5) Payment of 15% mobilization fee to contractor of buildings.
6) Receipt of 1st progress billing-50% completion.
7) Payment of 1st progress billing, net of advances and tax.
8) Receipt of final billing100% completion.
9) Final payment for building, net of tax.
10) Turnover and acceptance of building.
11) Depreciation for the building, 20 years estimated life. (6 months)
Required: Journalize the above transactions.

Exercise 3: The following are the transactions of a national government agency:
1. Receipt of allotment for:

CO 2,000,000
MOOE 1,400,000
PS 1,400,000
FE 200,000
TOTAL 5,000,000
2. Receipt of Notice of Cash Allocation from DBM- P4,000,000

3. Obligation for PS, P1,000,000.
4. Recording of expenses
Salaries 800,000
PERA 100,000
Representation Allowance 50,000
Transportation Allowance 50,000 1,000,000
Less: Wtax 240,000

Ret. And Life Ins. 90,000
Pag-ibig premiums 12,000
Philhealth premiums 20,000 362,000
Net amount 638,000
5. Grant of cash advance for payroll-P638,000.
6. Liquidation of cash advance.
7. Remittance of salary deductions, excluding withholding tax.
8. Obligation for government share:
Ret. And Life Ins. P120,000
Pag-ibig Contributions 12,000
Philhealth contributions 20,000
9. Remittance of Government share.
10. Payment of one year rent, P134,400, less tax.
11. Payment of Meralco bill, P112,000, less tax.
12. Payment of PLDT bill, P67,200, less tax.
13. Granting of cash advance for travel, P50,000.
14. Liquidation of cash advance for travel, P40,000.
15. Refund of excess cash advance.
16. Deposit of cash collection to BTr.
17. Establishment of Petty cash fund, P60,000.
18. Replenishment of petty cash fund.
Office supplies , P40,000
Postage & courier P16,000
19. Purchase of Office equipment on account, P336,000.
20. Purchase of ICT Equipment P560,000, on account.
21. Payment of all accounts payable, net of tax.
22. Remittance of withholding taxes thru TRA.
23. Advance payment to Procurement Service for office supplies, P50,000.
24. Receipt of office supplies and invoice from procurement service.
25. Received report of supplies issued from the Property/supplies unit,
Office supplies used, P45,000.
26. Depreciation for the following:
Office equipment, (est. life 5 years;, 9 months in use)
ICT Equipment, (est. life 4 years; 6 months in use)

27. Rent expense for the year, 6 months.
Required: Journalize all transactions.
THEORIES
True or False
1. Transfer of government funds from one officer to another shall, except as allowed by law
or regulation, be made only upon prior direction or authorization of the Commission or its
representative.
2. When government funds or property are transferred from one Administrative Officer to
another, or from an outgoing officer to his successor, it shall be done upon properly
itemized invoice and receipt which shall invariably support the clearance to be issued to
the relieved or outgoing officer, subject to regulations of the Commission.
3. Expenditures of government funds or uses of government property in violation of law or
regulations shall be a personal liability of the official or employee found to be directly
responsible therefore.
4. Only the head of the agency shall be liable for all losses resulting from the unlawful
deposit, use, or application thereof and for all losses attributable to negligence in the
keeping of the funds.
5. The Government shall keep the general accounts of the Government and, for such period
as may be provided by law, preserve the vouchers and other supporting papers pertaining
thereto
6. The financial reporting system of the Philippine government consists of accounting
system on accrual basis and budget reporting system on budget basis under the statutory
responsibility of the NGAs, Bureau of the Treasury (BTr), Department of Budget and
Management (DBM), and the COA.
7. The COA accounts for the cash, public debt and related transactions of the NG.
8. Each entity of the National Government (NG) maintains complete set of accounting books
by fund cluster which is reconciled with the records of cash transactions maintained by
the BTr.
Multiple Choice
1. The entry to record the payment of P300,000 (inclusive of VAT) accounts payable for the
services rendered in government accounting is:
A. Accounts Payable 300,000
Due to BIR 5,357
Cash-Modified Disbursement System, Regular 294,643
B. Accounts Payable 300,000
Due to BIR 18,750
C. Obligations Liquidated 300,000
D. Accounts Payable 300,000
Cash in Bank-Local Currency, Current Account 300,000
2. A national government agency received the following allotment for the year 2020:
Personal Services (PS) P 50,000,000

Maintenance and Other Operating Expenses (MOOE) 60,000,000
Financial Expenses (FE) 200,000
Capital Outlay (CO) 100,000,000
The proper recording of the allotment for the year is:
A. No entry
B. Cash-Modified Disbursement System, Regular 210,200,000
Subsidy Income from National Government 210,200,000
C. Posting to appropriate RAPAL and RAOD
D. Appropriations Allotted 210,200,000
Obligations Incurred 210,200,000
3. It refers the authorization issued by the DBM to NGAs to incur obligations for specified
amounts contained in a legislative appropriation in the form of budget release documents.
A. Allotment
B. Approved Budget
C. Appropriation
D. Final Budget
4. Which of the following is used as the basis of recording in the journals?

A. Journal Entry Voucher
B. Allotment and Obligation Slip
C. Obligation Request and Status
D. General Journal
5. The entry to record receipt of grants and donation from foreign entities/institution deposited
to the Bureau of the Treasury (BTr)? (BTr Books)
A. Dr Cash-Modified Disbursement System, Regular, Cr Income from Grants and
Donation in Cash
B. Dr Cash-Treasury/Agency Deposit, Regular, Cr Income from Grants and Donation in
Cash
C. Dr Cash-Cash in Bank, Foreign Currency, Savings Account, Cr Income from Grants
and Donation in Cash
D. Dr Cash-Collecting Officer, Cr Income from Grants and Donation in Cash
Module 3
ACCOUNTING FOR LGUS
Overview
The New Government Accounting System Manual presents the basic policies and
procedures; the new coding system and chart of accounts; the accounting books, reports/forms
and financial statements, and illustrative accounting entries to be adopted by all local government
units effective January 1, 2002.
Module Objectives
• Define various terms in government budgeting and accounting;

• Describe the government budget/process system;
• Know and understand the budgetary cycle;
• Understand the coding system in the Revised Chart of Accounts (RCA);
• Familiarize themselves with the functions of the different government agencies
responsible for the formulation and control of government funds.
• Journalize the receipt and revenues earned for real property tax, special education tax,
business income, service income and miscellaneous income
• Prepare simple trial balance.
• Prepare financial statements.
• Compute depreciation and other problems related with PPE
• Solve other problem related with accounting for LGUs
The objective of the New Government Accounting Manual for LGUs are to prescribe the
following:
a. Uniform guidelines and procedures in accounting for government funds and property;
b. New coding structure and new chart of accounts; and
c. New accounting books, reports/forms, financial statements and accounting entries.
The new government accounting system has the following basic features and policies, to wit:
❖ Accrual Accounting. A modified accrual basis of accounting is used. Under this

method, all expenses shall be recognized when incurred. Income shall be on accrual
basis (e.g. Share from Internal Revenue Collections) except for transactions where
accrual basis is impractical (e.g. Market Fees) or when other methods may be required
by law.
❖ One Fund Concept. This system adopts the one fund concept. Separate fund accounting
shall be done only when specifically required by law or by a donor agency or when
otherwise necessitated by circumstances subject to prior approval of the Commission.

As required under Sections 308, 309 and 310 of the Local Government Code, separate
books shall be maintained for the General Fund, Special Education Fund and Trust Fund.
❖ Special Accounts in the General Fund. Special accounts in the General Fund
complete with subsidiary ledgers, shall be maintained for the following:
➢ Public utilities and other economic enterprises;

➢ Loans, interests, bonds issued, and other contributions for specific purposes;
➢ Development projects funded from the Share in the Internal Revenue Collections; &
➢ Such other special accounts which may be created by law or ordinance.
❖ Chart of Accounts and Account Codes. A new coding structure and a new chart of
accounts was prescribed on COA Circular 2015-009 dated December 01, 2015 and
adopted the Unified Account Code Structure (UACS).
❖ Books of Accounts. The Books of Accounts are as follows:
Journals
➢ Cash Receipts Journal (CRJ)
➢ Cash Disbursements Journal (CDJ)
➢ Check Disbursements Journal (CKDJ)
➢ General Journal (GJ)
Ledgers
➢ General Ledger (GL)
➢ Subsidiary Ledgers, where applicable for:
• Cash
• Receivables
• Inventories
• Investments
• Property, Plant and Equipment
• Liabilities
• Income
• Expenses
All the above records shall be maintained by the accounting unit of the LGUs. However,
treasurers and disbursing officers shall also maintain their respective cash records such
as:
• Cashbook - Cash in Treasury

• Cashbook - Cash in Bank
• Cashbook - Cash Advances
The Treasurers/Collectors shall prepare the Report of Collections and Deposits (RCD)
daily and the Report of Accountability for Accountable Forms (RAAF) monthly.
❖ Financial Statements. The following statements shall be prepared:
➢ Balance Sheet
➢ Statement of Income and Expenses
➢ Statement of Cash Flows
➢ Notes to Financial Statements shall accompany the above statements.
❖ Trial Balance. The two money-column trial balance shall be used.
❖ Appropriations, Allotments and Obligations. Journal entry shall no longer be

prepared to record the appropriations, receipt of allotments and incurrence of obligations.
In lieu of this, separate registries shall be maintained by the Accounting Unit to control
the appropriations, allotments and obligations for each of the four classes of
expenditures, namely:
➢ Registry of Appropriations, Allotments and Obligations - Capital Outlay (RAAOCO)

➢ Registry of Appropriations, Allotments and Obligations - Maintenance and Other
Operating Expenses (RAAOMO)
➢ Registry of Appropriations, Allotments and Obligations - Personal Services
(RAAOPS)
➢ Registry of Appropriations, Allotments and Obligations - Financial Expenses
(RAAOFE).
❖ Financial Expenses. Financial expenses such as bank charges, interest expenses,

commitment fees and other related expenses shall be separately classified from
Maintenance and Other Operating Expenses (MOOE).
❖ Perpetual Inventory of Supplies and Materials. Supplies and materials purchased for
inventory purpose shall be recorded using the perpetual inventory system. Regular
purchases shall be coursed thru the inventory account and issuances thereof shall be
recorded as they take place except those purchased out of petty cash fund which shall
be for immediate use and not for stock. Such case shall be charged immediately to the
appropriate expense accounts.
❖ Valuation of Inventory. Cost of ending inventory of supplies and materials shall be

computed using the moving average method.
❖ Maintenance of Supplies and Property, Plant and Equipment Ledger Cards. The
Accounting Unit shall maintain Supplies Ledger Cards by stock number and Property,
Plant and Equipment Ledger Cards by category of assets.
❖ Construction of Assets. For assets under construction, the Construction Period Theory
shall be applied for costing purposes. Bonus paid to the contractor for completing the
work ahead of time shall be added to the total cost of the project. Liquidated damages
charged and paid for by the contractor shall be deducted from the total cost of the asset.
Any related expenses incurred during the construction of the project, such as, license
fees, permit fees, clearance fees, etc. shall be capitalized.
❖ Public Infrastructures. Public infrastructures are assets for use of the general public,
such as roads, bridges, waterways, railways, plazas, monuments, etc. A Registry of
Public Infrastructures (RPI) shall be maintained according to classification to record all
infrastructures for use of the general public. The following are the Registries to be
maintained, classified by category of property, plant and equipment:
➢ Registry of Public Infrastructure - Bridges (RPIB)

➢ Registry of Public Infrastructure - Roads (RPIR)
➢ Registry of Public Infrastructure - Plazas, Monuments, etc. (RPIP)
During construction these infrastructures shall be recorded in the books under the
account "Construction in Progress". Upon completion, the completed asset shall be
transferred to the account "Public Infrastructure". At the end of the year, completed
assets under "Public Infrastructure" shall be transferred to the respective registry.
Completed public infrastructures funded out of a loan shall, however, be retained in the
books of accounts until the loan is fully paid. A Summary of all Public Infrastructures
(based on the different registries) shall be prepared annually and included in the Notes
to Financial Statements.
❖ Depreciation. The straight-line method of depreciation shall be used. A residual value

equivalent to ten percent (10%) of the cost shall be set-up and depreciation shall start on
the second month after purchase/completion of the property, plant and equipment. Public
infrastructures shall not be charged any depreciation.
❖ Reclassification of Obsolete and Unserviceable Assets, as well as Assets No

Longer Used by the Agency to "Other Assets" Account. Assets declared by proper
authorities as obsolete and unserviceable, including assets of the agency no longer used,
shall be reclassified to "Other Assets" account from the corresponding inventory and
property, plant and equipment accounts.
❖ Allowance for Doubtful Accounts. An Allowance for Doubtful Accounts shall be set up
for estimated uncollectible receivables. This will allow for a fair valuation of receivables.
Allowance for Doubtful Accounts shall be provided only for trade receivables.
❖ Elimination of Contingent Accounts. Contingent accounts shall no longer be used. All

financial transactions shall be recorded using the appropriate accounts. Cash shortages
and disallowed payments shall be recorded under receivable accounts "Due From
Officers and Employees" and "Receivables- Disallowances/Charges", as the case may
be.
❖ Recognition of Liability. Liability shall be recognized at the time goods and services
are accepted or rendered and supplier/creditor bills are received.
❖ Interest Accrual. Whenever applicable and appropriate, interest income and/or expense
shall be accrued and recognized in the books of accounts.
❖ Accounting for Borrowings and Loans. All borrowings and loans incurred shall be
recorded direct to the appropriate liability accounts.
❖ Elimination of corollary and negative entries. The use of corollary and negative
entries shall be stopped. Acquisition/Disposition of assets shall be debited/credited direct
to the appropriate asset accounts. If an error is committed, a correcting entry shall be
prepared to adjust the original entry.
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 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
BUDGETARY ACCOUNTS
Budgetary accounts are composed of appropriations, allotments and obligations.
Appropriation. It 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.
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)
Allotment. It 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.
Obligation. It refers to the amounts committed to be paid by the LGU for any lawful act made
by an accountable officer for and in behalf of the local government unit concerned.
INCOME/COLLECTIONS AND DEPOSITS
Local accountants and treasurers shall maintain separate books and depository accounts,
respectively, for each fund in their custody or administration. Local treasurer shall maintain
depository accounts in the name of their respective local government units with banks,
preferably government-owned, located in or nearest to their respective areas of jurisdiction.
Earnings of its depository accounts shall accrue exclusively thereto. Officers of the local
government authorized to receive and collect monies arising from taxes, revenue, 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.
Sources of Income for LGUs

The main sources of income of LGUs are as follows:
a. Tax revenues, fees and charges

b. Share from Internal Revenue Collections
c. Share from National Wealth
The sources of income are further classified into general income accounts and specific income
accounts.
The following shall comprise the General Income Accounts applicable to LGUs:
• 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
• Sale of Confiscated Goods and Properties
• Foreign Exchange (FOREX) Gains
• Miscellaneous Operating and Service Income
• Fines and Penalties – Government Services and Business Operations
• Income from Grants and Donations
The following major classification comprise the specific income accounts for LGUs:
• Property Taxes
• Taxes on Goods and Services
• Other Taxes
• Other Specific Income
The following accounting methods shall be adopted in recording income:
a. Accrual Method – Accrual method of accounting shall be used to record Share from
Internal Revenue Collections in the books of accounts. Upon receipt of the Notice of
Funding Check Issued from Department of Budget and Management (DBM), Share from
Internal Revenue Collections shall be taken up as Due from NGAs and credited to Share
from Internal Revenue Collections. However, 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.
b. Modified Accrual – Modified accrual method of accounting shall be used for real
property taxes. At the beginning of the year, Real Property Tax Receivable and Special
Education Tax Receivable shall be established. 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. However, to avoid appropriating uncollected revenues which might
result to huge cash overdraft, the same shall be credited to Deferred Real Property Taxes
Income/Deferred Special Education Tax Income. Real Property Tax Income/Special
Education Tax Income shall be recognized upon receipt of collection.
c. Cash Basis – Cash basis of accounting shall be used for all other taxes, fees, charges
and other revenues.
BASIS OF RECORDING REAL PROPERTY TAX AND 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. At
the beginning of the year, 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. Based on the
list, 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.
Upon collection of Real Property Taxes from taxpayers, 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. The share of the Province and
Barangay shall also be credited to Due to LGUs.
Every end of the week, thereafter the Municipal Accountant shall furnish the Provincial
Accountant with a summary of the JEVs showing the breakdown of the amounts Due to LGUs.
The summary, which shall be supported with copies of the JEVs, shall be the basis of the
Provincial Accountant to draw the JEV taking up the RPT Income. The account Due from LGU
shall be debited and Real Property Tax Income credited.
At the end of the month, the Municipal Accountant shall likewise prepare the Abstract of Real
Property Tax to facilitate the distribution of real property tax collection. A copy of the abstract
shall be furnished the Provincial Accountant, for purposes of reconciliation with the weekly
summary of JEVs.
PRO-FORMA ACCOUNTING ENTRIES
Real Property Tax –Basic
A. Books of Municipality
1. Setting-up of receivable
Real Property Tax Receivable xxx
Deferred Real Property Tax xxx
2. Receipt of payment
Cash Local Treasury xxx
Real Property Tax Receivable xxx
3. Distribution of Collection, Municipal-40%,Province-35%, Barangay-25%

Deferred Real Property Tax xxx
Real Property Tax xxx
Due to LGUs xxx
4. Deposit of Collections
Cash in Bank-LCCA xxx
5. Remittance of Share
Due to LGUs xxx
B. Books of the Province

1. Upon receipt of the Summary of the JEV from the Municipal Accountant
Due from LGUs xxx
Real Property Tax xxx
2. Upon receipt of share

Due from LGUs xxx
Business and Service Income

1. Receipt of income
Cash-in Treasury xxx
Garbage Fees xxx
Receipts from Market Operations xxx
2. Deposits of collections
Share from Internal Revenue Collections

1. Receipt of Notice of funding Check Issued from the DBM and credit
memo from the bank for Share from Internal Revenue Collections
Share from Internal Revenue Collections(IRA) xxx
2. Receipt of Notice of Funding Check Issued

Due from NGAs xxx
Share from Internal Revenue Collections(IRA) xxx
Borrowings
1. Receipt of Borrowed Funds from Bank
Loans Payable-Domestic xxx
Interest Expenses xxx

Bank Charges xxx
(Enter the obligation for Interest Expenses and Bank Charges in the RAAOFE)
2. Payment of loan amortization

Loans Payable-Domestic xxx
DISBURSEMENTS- refer to the settlement of government payables/obligations by cash or by

check.
Typical transactions for which disbursements are made as follows:
1. Personal Services
2. Maintenance and Other Operating Expenses

3. Capital Outlay
4. Financial Expenses
Disbursements shall be covered by Disbursement Vouchers (DV) or payrolls and paid

either by check or in cash.
PRO-FORMA ACCOUNTING ENTRIES
PERSONAL SERVICES
1. Cash advance for personal services
Enter obligation in RAAOPS
Advances for Payroll xxx

Cash in bank-LCCA xxx
2. Liquidation of cash advance for payroll

Salaries and Wages-Regular xxx
PERA xxx
Due to BIR xxx
Due to GSIS xxx
Due to PAG-IBIG xxx
Due to PHILHEALTH xxx
Advances for Payroll xxx
3. Government Share for GSIS and PAG-IBIG

Enter obligation in the RAAOMO
Life and Retirement Insurance Contributions xxx

PAG-IBIG Contributions xxx
PHILHEALTH Contributions xxx
ECC Contributions xxx
Due to GSIS xxx
Due to PAG-IBIG xxx
Due to PHILHEALTH xxx
MAINTENANCE AND OTHER OPERATING EXPENSES
Payment of rent/utilities
Enter obligation in RAAOMO
Rent Expenses xxx

Electricity Expenses xxx
Telephone Expenses-landline xxx
Cash in bank-LCCA xxx
Due to BIR xxx
CAPITAL OUTLAY
EQUIPMENT
1. Issuance of PO for office equipment to dealer

Enter obligation in RAAOCO
2. Receipt of office equipment

Office Equipment xxx
Due to BIR xxx
Readings:
• https://www.coa.gov.ph/index.php/2013-06-19-13-06-41/manuals/category/163-for-
local-government-units
• https://www.coa.gov.ph/phocadownload/userupload/Issuances/Circulars/Circ2015/anne
x_a_charts_of_account.pdf
QUESTIONS
1. What registries are maintained by the local government accounting units to control the
appropriations, allotments and obligations?
2. What are the different classifications of funds in the local government?
3. Enumerate the sources of funds in the local government.
4. Briefly explain the basic features and policies relating to local government units.
RESEARCH ACTIVITIES
A. Select one specific local government accounting unit: municipality, city or a

province; and then do the following classroom activities:
1. Discuss the budgetary process.
2. Analyze the most recent financial statements.
3. Compare the accounting system with the published accounting manual on local
government units.
B. Select one specific Barangay in your locality. Discuss the following:
1. Budgetary procedures
2. Accounting system
3. Financial statements
Exercises
Exercise 1 Journalize the following selected transactions of a municipality:
1. Received the Notice of Funding Check Issued from DBM for the share of the
municipality for internal revenue collections, P50,000,000.
2. Collected receivables for real property taxes , P10,000,000 and special education tax,
P10,000,000 from various taxpayers. (Real property tax and special education tax are
both based on 2% of the assessed values of real property.)
3. Deposited the total collections to LANDBANK.
4. Paid MERALCO bill of P67,200, less tax.
5. Purchased office supplies on account from National Company, a VAT registered
supplier, P20,000.
6. Paid the bills for the following: PLDT landline -P33,600; GLOBE cel-P22,400.
7. Collected real property tax and special education tax, assessed value of real property is
P150,000,000, from new taxpayers.
8. Deposited the total collections to LANDBANK.
9. Paid the account with National Company, net of tax.
10. Received the credit memo from the bank for its share of internal revenue collections,
P30,000,000.
11. Collected P200,000 from Income from market operations.
12. Collected permit fees, P150,000, and garbage fees, P50,000.
13. Deposited the total collections from above receipts to LANDBANK.
14. Distributed the total amount of real property tax collected based on the following
sharing:
Municipality-40%; Province-35%; Barangay-25%
15. Remitted the share due to Province and Barangays for real property tax.
Exercise 2
Journalize the following selected transactions of a municipality (local government unit):
a. Setting up of the estimated receivables on real property tax, P10,000,000 and special
education tax.
b. Collection of receivable on real property tax, P1,000,000 and P1,000,000 special
education tax.
c. Distribution of real property tax: Municipality-40%, Province-35%, Barangay-25%.
d. Deposited total collections for real property and special education tax.
e. Remittance of Share due to Provinces and Barangays for real property tax collected.
f. Garbage fees collected, P150,000.
g. Received income from the operations of the following utilities:
Markets, P100,000
Hospitals, P200,000
Cemeteries, P50,000
Slaughterhouses, P30,000
h. Collected permit fees, P50,000; registration fees, P20,000 and other local taxes,
P30,000.
i. Deposited receipts and collections amounting to P630,000.
j. Receipt of Notice of Funding Check Issued from the DBM for Internal Revenue
Allotment, P5,000,000
Module 4
NOT-FOR-PROFIT ORGANIZATIONS
Overview
A non-profit organization is a group or institution organized for purposes other than generating
profit. Non-profit organization (NPO) is also called Non- Government Organizations (NGO) or
Nor-for-Profit Organizations (NFPO). A non-governmental organization (NGO) is a non-for-profit,
voluntary citizens’ group, which is organized on a local, national or international level to address
issues in support of the public good. (UNDP definition) Nonprofit organizations exist to pursue
missions that address the needs of society. This institutions depends on funds from
contributions, membership dues, program revenues, fundraising events, public and private
grants. The contributions or investments does not form income and do not have commercial
owners.
NPO’s can take the form of a corporation, an individual enterprise (for example, individual
charitable contributions), unincorporated association, partnership, foundation (distinguished by
its endowment by a founder, it takes the form of a trusteeship), or condominium (joint ownership
of common areas by owners of adjacent individual units incorporated under state condominium
acts).
Non-profit organizations must be designated as nonprofit when created and may only pursue
purposes permitted by statutes for non-profit organizations. Non-profit organizations include
churches, public schools, public charities, public clinics and hospitals, political organizations,
legal aid societies, volunteer services organizations, labor unions, professional associations,
research institutes, museums, and some governmental agencies.
In the Philippines, not-for-profit organizations (NPOs) are typically organized as "non-stock

corporations" registered under the Corporation Code. This non-stock corporations are in the
form of charitable, religious, educational, professional, cultural, fraternal, literary, scientific,
social, civic service, or similar purposes, such as trade, industry, agricultural and similar
chambers, or any combination thereof
Securities and Exchange Commission (SEC) of the Philippines is the government regulatory
body for this organizations which serves as the registration authority. Other non-stock
corporations register as foundations. (Revised Corporation Code Section 87).
The basic concepts to nonprofit organizations for accounting and reporting are required by the
Financial Accounting Standards Board (FASB).
Businesses are organized to generate profits , nonprofits are organized to address he needs
of the society. With this, nonprofit organization prepares and issue a Statements of
Activities instead of the income statement normally prepared by for-profit businesses.
Since nonprofits do not have owners, there is no owner's equity or stockholders' equity and
there cannot be distributions to owners.
The World Bank also describes non-government organizations (NPOs) as:

“…include many groups and institutions that are entirely or largely independent of government
and that have primarily humanitarian or cooperative rather than commercial objectives. They are
private agencies in industrial countries that support international development; indigenous
groups organized regionally or nationally; and member-groups in villages. NPOs include
charitable and religious associations that mobilize private funds for development, distribute food
and family planning services and promote community organization. They also include
independent cooperatives, community associations, water-user societies, women’s groups and
pastoral associations. Citizen groups that raise awareness and influence policy are also NPOs”
Module Objectives:
After thorough discussion of the topics, the learner will be able to:
• Define and cite the characteristics of a not-for-profit organization
• Compare government agencies with not-for-profit organizations
• Define the different classification of funds.
• Identify the accounts used in an NPO
• Identify the different classification of net assets
• Journalize typical transactions of an NPO
• Prepare financial statements for not-for profit organizations
• Present actual financial statements and compare with the concepts learned during the
classroom discussion
There are five structural-operational features that defined organizations within the NPO sector
as follows:
• Organized - they have some structure and regularity to their operations, whether or not they
are formally constituted or legally registered. More than legal or formal recognition, this
qualification stresses organizational permanence and regularity, reflected in regular meetings, a
membership, and legitimate decision-making structures and procedures.
• Private, - they are not part of the apparatus of the state, even though they may receive support
from governmental sources.
• Not profit-distributing - they are not primarily commercial in purpose and do not distribute profits
to a set of directors, stockholders, or managers. While NPOs may generate a surplus from time
to time, they must reinvest these resources back into the objectives of their respective
organizations.
• Self-governing - they have their own mechanisms for internal governance, are able to cease
operations on their own authority, and are fundamentally in control of their own affairs.
• Voluntary - membership or participation in them is not legally required or otherwise compulsory.

The structural-operational features that defined the NPO
This fivefold definition encompasses organizations both formal and informal, religious and
secular, those with paid staff and those staffed entirely by volunteers and organizations
performing expressive functions (i.e., advocacy, cultural expression, community organizing,
environmental protection, human rights, religion, representation of interests, and political
expression) as well as those performing service functions (i.e., provision of health, education and
welfare services). This description does not take into account individual forms of citizen action
such as voting or writing to legislators, but it embraces most organized forms, including social
movements and community-based cooperatives serving solidarity objectives. Government
agencies, private businesses, commercial cooperatives and mutual have been deliberately
excluded.
NPOs as a Sector
The UNDP2 describes NPOs as the “third sector”, the first and second being the government
and private sectors. This is in recognition of the distinct characteristics of NPOs from other forms
of organization especially from the commercial ones. Several studies reveal that NPOs contribute
significantly to the development of society and the economy.
In many countries, accounting pronouncements cater to the needs of commercial organizations.

Although fundamental accounting principles apply to any type of organization, appropriate
standards and guidelines for NPOs are needed to fit the specifications and peculiarities of these
organizations. Basic differences between commercial organizations and NPOs include the
following:
1) NPOs do not operate primarily for profit but for specific needs of a community, group,
organization or its membership.
2) Most of NPOs revenues come from funds contributed, donated, granted or given as other
forms of support. Revenues from income generating activities, if any, are eventually
plowed back to program operations.
Unlike in the business community where an exchange transaction occurs, in nonprofit

organizations, resource providers do not expect to receive either repayment or economic benefits
proportionate to the resources provided. There is no defined ownership interest that can be sold,
transformed or redeemed or that convey entitlements to a share to a residual distribution of
resources in the event that the organization is dissolved.
3) NPOs have the responsibility to account for these funds designated for a specific purpose
for a specified period of time. The nature of the revenues received requires ensuring that
separate types of funds are properly tracked and reported.
NPO Governance and Accountability

For NPOs to fulfill their goals and objectives as well as to realize stakeholders’ expectations
efficiently and effectively, they must be governed by the principles of Fairness, Accountability,
and Transparency. Fairness - rights of stakeholders should be observed and respected;
Accountability - Board and management should be answerable on their performance to
stakeholders; Transparency - timely, accurate and sufficient information must be disclosed.
The foremost responsibility for NPOs is to be accountable to the needs and aspirations of the
community it is working with since serving community interests is the stated primary goal of most
NPOs. In practice, these communities lack mechanisms for holding NPOs accountable. Unlike
donors, communities cannot withdraw their funding; unlike governments, they cannot impose
conditionalities.
NPOs are also accountable to its donors, who may be both external (for example, governments,
foundations, or other NPOs) and internal (members who contribute smaller amounts). The
simplest level of responsibility is that of spending money for the purpose to which it has been
designated.
Lastly, NPOs are also accountable to its organization. They are responsible to their stated
mission, governing board, management and staff, partners, and to the NPO community as a
whole.
Financial accounting in NPOs, the topic of this guide, hopes to contribute significantly to helping
NPOs increase their capacity to express accountability to their different stakeholders.
Basic differences between commercial organizations and NPOs include the following:
1) NPOs do not operate primarily for profit but for specific needs of a community, group,
organization or its membership.
2) Most of NPOs revenues come from funds contributed, donated, granted or given as other
forms of support. Revenues from income generating activities, if any, are eventually
plowed back to program operations.
3) NPOs have the responsibility to account for these funds designated for a specific purpose
for a specified period of time. The nature of the revenues received requires ensuring that
separate types of funds are properly tracked and reported.
Unlike in the business community where an exchange transaction occurs, in nonprofit

organizations, resource providers do not expect to receive either repayment or economic benefits
proportionate to the resources provided. There is no defined ownership interest that can be sold,
transformed or redeemed or that convey entitlements to a share to a residual distribution of
resources in the event that the organization is dissolved.
Figure 1 Table compares the main financial statements of a nonprofit organization (NPO) with
those of a for-profit corporation
NON PROFIT ORGANIZATION FOR PROFIT CORPORATIONS

Statement of Financial Position Statement of Financial Position /Balance
Sheet
Statement of Activities Income Statement
Statement of Functional Expenses (by
Function and Nature)
Statement of Cash Flow Statement of Cash Flow
Notes to Financial Notes to Financial
Statements Statements
Statement of Financial Position
A nonprofit's statement of financial position is similar to a balance sheet that reports the
organization's assets and liabilities, but since this is a nonprofit organization there is no owner's
equity or stockholders' equity but as Net Assets.
The primary purpose of NPO is to provide programs that meet certain needs of society thru its
various activities, thus it issues Statement of Activities. The statement of activities reports
revenue and expense that is presented in accordance with the two classifications of net assets
• With Donors Restrictions
• Without Donor Restrictions
The net assets section of a nonprofit's statement of financial position requires at a minimum the
following:
Net assets
Without donor restrictions Â xxx
With donor restrictions xxx
Total net assets xxx
These classifications are based on the restrictions made by the donors at the time of their
contributions.
1. Net assets without donor restrictions

If a donor does not specify a restriction on his or her contribution, the amount received by the
nonprofit is recorded as an asset and as contribution revenues. Unrestricted contribution
revenues (reported on the statement of activities) also cause the amount of net assets without
donor restrictions to increase.
When the board of directors designates some of the nonprofit's unrestricted assets for a specific
purpose, those assets must continue to be reported as net assets without donor restrictions.
2. Net assets with donor restriction
When a nonprofit organization receives contribution that have donor-imposed restrictions, the
amount is normally recorded as an asset and as donor restricted contribution revenues. Donor-
restricted contribution revenues are reported on the statement of activities.
Statement of Activities
The statement of activities reports revenue and expense amounts in accordance with to the two
classifications of net assets illustrated in the Net asset. Below is an outline of the statement
Components of Statement of Activities:
• Contributions
• Membership dues
• Program fees
• Fundraising events
• Grants
• Investment income
• Gain on sale of investments
• Reclassifications when net assets are released from restrictions (a negative amount in
the With Donor Restrictions column and a positive amount in the Without Donor
Restrictions column)
Under the accrual method of accounting, revenues are reported in the accounting period in which
they are earned. In other words, revenues might be earned in an accounting period that is
different from the period in which the cash is received.
Reported Expenses and Losses
Expenses are reported according to

1. Program functions
2. Support functions
3.
1. Program functions
Program expenses (or program services expenses) are the amounts directly incurred by the
nonprofit in carrying out its programs. For instance, if a nonprofit has three main programs, then
each of the three programs will be listed along with each program's expenses.
2. Supporting functions
Support expenses are reported in two subgroups:
• Management and general

• Fundraising and development
In order to accurately report the amount in each of these subgroups, it may be necessary to
allocate some management and general salaries to fundraising based on the time spent by
employees performing fundraising activities.
A nonprofit's transactions are recorded in accounts in the general ledger. A listing of the titles of
the general ledger accounts is also known as the chart of accounts.
The accounts in the general ledger and in the chart of accounts are organized as follows:
• statement of financial position accounts

o asset accounts
o liability accounts
o net asset accounts
• statement of activities accounts
o revenues and gains
o expenses and losses
The number of accounts in a nonprofit's general ledger accounts depends on the number of
programs that the nonprofit has, the types of revenues it earns, and the level of detail required
for planning and control of the organization.
The Statement of Functional Expenses
The statement of functional expenses is reported in a matrix form to report expenses by their
function such as programs, management and general, fundraising and by the nature or type of
expense such as salaries, rent etc..
The FASB now requires every nonprofit to present expenses by function and nature in one place
(statement or notes).
The Statement of Cash Flows
The statement of cash flows of a nonprofit organization is similar a for-profit business. This
reports the change in the cash and cash equivalent during the accounting period.
The statement of cash flows consists of three sections:

1. net cash from operating activities

2. net cash from investing activities
3. net cash from financing activities
The operating section reports the changes in cash other than those reported in the investing
and financing sections.
The investing section of the statement of cash flows reports the amounts spent to purchase
long-term assets such as equipment, vehicles and long-term investments. The investing section
also reports the amount received from the sale of long-term assets.
The financing section of the statement of cash flows reports the amounts received from
borrowings and also any repayments.
While the statement of cash flows, or cash flow statement, may be a bit difficult to prepare, it is
an important financial statement to be read.
The Notes to the Financial Statements

The notes to the financial statements are an integral part of all the statements prepared by an
NPO - the statement of financial position, the statement of activities, and the statement of cash
flows. The Accounting Standards Update No. 2016-14 requires important additional disclosures
regarding liquidity, restrictions, for creditors, donors, and among others.
Users and their Information Needs as applied to NPOs
EXTERNAL USERS
a. Donors/Grantors/Funding Agencies
- Degree of attainment of development objectives as indicated in financial statements and
reports.
- Degree of compliance with agreed amount and manner of using funds.
- Degree of compliance with prescribed financial accounting and reporting system and
procedures
b. Creditors (Banks/Financing Institutions)
- Information on ability to pay as indicated by ratios of solvency, liquidity, and stability as well as
status of their security.
c. Government Agencies
- Compliance with laws, government rules and regulations, payment of taxes (if any) and
reportorial requirements
d. General Public
- Effect of the activities of NPOs to the community and society in general
INTERNAL USERS
a. Members
- Information on how fees, donations, grants, and proceeds from fundraising activities were used.
- Other information needs such as managerial remuneration, use of assets, management

efficiency, etc.
b. Management Team
- Board of directors/trustees for policy-making, strategic decision-making, and fulfilling its
trusteeship/stewardship role.
Objectives of Financial Reporting
The primary objective of financial reporting by NPOs is to provide information about the financial
position, performance, and cash flows of the organization that is useful, and indeed, necessary,
for a wide range of users to engage in informed decision making.
Financial reporting prepared for this purpose meets the common needs of most users. However,
financial reporting does not provide all the information that users may need to make decisions
since they mostly portray the financial effects of past events.
Financial reporting also shows the results of the stewardship of management for the resources
entrusted to it. Those users who wish to assess the stewardship or accountability of management
do so in order that they may make sound decisions.
The financial reports of NPOs should complement other non-financial, performance reports.
The financial reporting is the means by which the information gathered and presented in financial
accounting is regularly communicated to those who use it.
Basis of Accounting
The basis of accounting affects the timing of recognition of income and expenses.
When a cash basis of accounting is used, income is recognized once it is received while expense
is recognized once it is paid. On the other hand, using an accrual basis means that income is
recognized when it is earned, even when it has not yet been received, and expenses are
recognized when they are incurred even when they have not yet actually been paid.
The basis of accounting used, as discussed and summarized above, affects the presentation of
the financial statements of the organization. In cash basis, a transaction is recorded only when
actual cash has been received or spent. Basically, only the movement of cash can constitute a
transaction. Under this basis of accounting, funds are recognized as receipts for the period if
these are actually.
Exemption
In some countries, cash basis of accounting is allowed or required by local laws for NPOs. In
such cases, NPOs may use the cash basis.
Assumption of Going-Concern
The financial statements are normally prepared on the assumption that an NPO is a going
concern, and will continue to be in operation for the foreseeable future. It is thus assumed that
the NPO has neither the intention nor the need to liquidate or scale back its operations; if such
an intention or need exists, the financial statements may have to be prepared using a different
basis, in which case, this basis should be disclosed.
There are instances where an NPO is established ad hoc or its existence is limited to a specific
period. In this case, the management of an ad hoc NPO should properly disclose its nature and
terms of existence, as well as the implications of its ad hoc nature on its financial statements.
Qualitative Characteristics of Financial Statements

These are the attributes that make the information in financial statements useful to various NPO
stakeholders, who are the users of the information. An essential quality of the information
provided is its understandability by users.
a. Relevance. Information has the quality of relevance when it influences the decisions of
users by helping them evaluate past, present or future events or confirming, or
correcting their past evaluations.
1. Materiality. Information is material if its omission or misstatement could

influence the decision of users taken on the basis of the financial statements.
2. Timeliness. Accounting information must be available on time when needed if it

is to influence decisions. Lack of timeliness reduces relevance.
b. Reliability. Information is reliable when it is free from material error and bias and can
be depended upon by users to embody faithfully the representation contained therein.
1. Faithful Representation. To be reliable, information must represent faithfully the

transactions and other events that it either purports to represent or could reasonably be
expected to represent.
2. Substance over form. Transactions and other events are accounted for and
presented in accordance with their substance and not merely their legal form.
3. Neutrality. Information must be free from bias. Financial statements are not
neutral if, by selection or presentation of information, they influence the making of a
decision or judgment in order to achieve a predetermined result or outcome.
4. Prudence. Some degree of caution in the exercise of the judgments needed in

making the estimates required under conditions of uncertainty, such that assets or
revenues are not overstated and liabilities or expenses are not understated.
5. Completeness. Information must be complete within the bounds of materiality.

Omission may cause information to be false or misleading and thus unreliable and
deficient in terms of its relevance.
c. Comparability. Users must be able to compare the financial statements through time in
order to identify trends in its financial position and d. Understandability. An essential
quality of the information provided in financial statements is that it is readily
understandable by users.
Balance between Qualitative Characteristics

In practice, a balancing, or trade-off, between qualitative characteristics is often necessary.
Generally, the aim is to achieve an appropriate balance among the characteristics in order to
meet the objective of financial statements. The relative importance of the characteristics in
different cases is a matter of professional judgment.
Fair Presentation
Financial statements are frequently described as a fair presentation of an organization’s financial
position, performance, and changes in financial position. Although this framework does not deal
directly with such concepts, the application of the principal qualitative characteristics and of
appropriate accounting standards normally results in financial statements that convey what is
generally understood as presenting fairly such information.
Accounting procedures peculiar to specific types of NPOs
The principles that we have discussed so far apply to all types of NPOs. In this section, we will
discuss accounting procedures unique to specific types of NPOs. For this purpose, we will
subdivide NPOs into the following:
1. Health Care Organizations
2. Private, non-profit, Colleges and Universities
3. Voluntary Health and Welfare Organizations
4. Other non-profit organizations
Health Care Organizations
Health Care Organizations include hospitals, clinics, medical group practices, individual practice
associations, individual practitioners, emergency care facilities, laboratories, surgery centers,
other ambulatory care organizations, continuing care retirement communities, health
maintenance organizations, home health agencies, nursing homes, and rehabilitation centers.
In accordance with the “AICPA Audit and Accounting Guide, Health Care Organizations,” the
following are the accounting requirements unique to health care organizations:
1. Components of a complete set of financial statements

2. Presentation of revenues in the statement of operations
3. Presentation of contributions in the statement of operations
4. Disclosure of performance indicator
Financial statements of a health care organizations
According to the “AICPA Audit and Accounting Guide, Health Care Organizations,” health care
organizations shall prepare the following statements:
a. Statement of financial position
b. Statement of operations (in lieu of a statement of activities)
c. Statement of changes in net assets
d. Statement of cash flows, and
e. Notes to the financial statements.
Presentation of revenues in the statement of operation
Revenues in the statement of operations are classifies into the following:

a. Net patient revenue – gross patient service revenue less contractual adjustments,
employee discounts and billed charity care.
b. Premium revenue – results from capitation agreements
c. Other revenues – all other revenues not classifiable as net patient revenue or premium
revenue.
Contractual adjustments
A portion of a hospital’s revenue is collectible from third-party payors, such as the Philippine
Health Insurance Corporation (PhilHealth) and other health insurance providers. In this regard,
a contractual adjustment may arise from the reimbursement agreement.
A contractual adjustment is the difference between what the hospital considers a fair price for
a service rendered versus an agreed upon amount for the service with the insurance company.
For example, the hospital may consider P60,000 a pair price for a service but agrees with
PhilHealth to accept only P58,000. The difference of P2,000 represents the contractual
adjustment which is written off as a direct reduction to patient service revenue.
Employee discounts
These are special discounts available only to the NPO’s employees (and their immediate family
members) in the form of reduction in the price of patient services. Employee discounts are
accounted for as direct reduction to patient service revenue.
Charity care
Charity care pertains to free services rendered to patients. Charity care is not recognized but
rather disclosed only in the notes.
Capitations agreements
Capitations Agreements are agreements with third parties based on the number of employees
instead of services rendered. SFAS No. 117 requires revenues from capitation agreements to
be shown separately on the statement of operations under the caption “Premium revenue,”
which is a line item below net patient revenue.
Other revenues
Other revenues consist of revenues other than patient service revenues and premium revenues.
Examples are the revenues from the hospital’s pharmacy, parking deck, flower and gift shop,
educational programs, donated materials and services.
Presentation of contributions in the statement of operations
Unlike for other NPOs, health care organizations do not present restricted contributions on
the statement of operations as part of revenues. The revenues discussed above (i.e., net patient
service revenues, premium revenues, and other revenues) pertain only to unrestricted
revenues and may include revenues from unrestricted contributions. Revenues from unrestricted
contributions may be separately indicated as such or included in the other revenues
classifications.
Revenues from restricted contributions are presented separately at the bottom part of the
statement of operations, after unrestricted revenues and expenses.
Disclosure of performance indicator
According to the AICPA Guide, the statement of operations shall provide a performance
indicator, such as operating income, revenue over expenses, etc. The policy used in
determining the performance indicator shall be disclosed in the notes.
Unrealized gains and losses on investments in securities are not a part of the performance
indicator, but shall be reported on the statement of operations after the performance indicator.
Private, non-profit, Colleges, and Universities
The accounting procedure that is unique to private, non-profit, colleges and universities is the
accounting for scholarships and fellowships. The concepts are provided below:
a. Scholarships and fellowships granted freely are treated as direct reduction of
revenues from tuition and fees, e.g., academic scholarship.
b. Scholarships and fellowships granted as compensation for services rendered by the
grantee are treated as expenses , e.g., academic scholarships provided to student
assistants and faculty members or their dependents,
c. Refunds of tuition fees from class cancellations and other withdrawal of enrolment are
treated as direct reduction of revenues from tuition and fees.
Voluntary Health and Welfare Organizations
Voluntary Health and Welfare Organizations (VHWO) are non-profit entities that derive their
revenues primarily from donations from the general public to be used for purposes connected
with health, welfare, or community services. Examples include: women and children’s health and
welfare societies, human rights advocates, environmental protection organizations, religious
organizations, museums and other cultural and arts societies, libraries, research and scientific
foundations, professional associations, private elementary schools, social clubs, and fraternal
organizations.
Other non-profit organizations
Other general accounting requirements for NPOs apply to other non-profit organizations. Thus,
there are actually no accounting requirements peculiar to these organizations.
Sample Financial Statements
To present examples of the statement of financial position and the statement of activities we
will follow the activities of Almost Family a nonprofit organization called a daytime shelter for
adults.
Let's assume that Almost Family a Not for Profit Organization was incorporated in January
2019 and its accounting years end on each December 31. The following transactions occurred
during a three-month period.
Transaction 1. On January 31, a donor contributes P100,000, without restriction, for the
operation of Almost Family. This transaction affects the general ledger accounts as follows:
January 31, Cash – general 100,000

Revenues: Contributions General 100,000
Transaction 2. On February 1, rents office space and paid with A check for P2,000. This
covers a one-time security deposit of P1,000 plus the February office rent of P1,000.
February 1, Security Deposit 1,000
Rents Expense 1,000
Cash General 2,000.
Transaction 3. On February 2, a P400 check is written to the utility as a one-time security

deposit for electricity and heat service.
February 2 Security Deposit 400
Cash General 400.
Transaction 4. On February 19, Almost Family receives a contribution of P8,000 that the
donor specifies must be used for the purchase of furniture. The contribution is deposited into a
money market account. This transaction affects the general ledger accounts as follows:
February 19
Money Market Account- Donor Restricted 8,000
Revenues: Contributions with Donor Restrictions 8,000
Transaction 5. The electricity and heating invoice has not arrived. It is estimated that the
amount for February's usage was P350, so the following accrual adjusting entry is recorded on
February 28:
February 28
Electricity and Water expenses 350
Accrued Expenses 350
Almost Family
February 28, 2019
Cash and Cash

equivalents P 15,600.00 Accrued Expenses P 350.00
Security Deposits 1,400.00 Net Assets

- Without Donors
Furniture Restrictions 8,650.00
With Donors Restrictions 8,000.00
Total Net Assets 16,650.00

Total Liabilities and Net
Total Assets P 17,000.00 Assets P 17,000.00
Almost Family
For two months ended February 28, 2019
Without Donors With Donors Total

Restrictions Restrictions
Revenue: P 10,000.00 8,000.00 18,000.00

Contributions
Expenses:
Program Expenses -
Gen. Admin. Expenses 1,350.00 1,350.00
Fund Raising Expenses
Change in Net Assets - 1,350.00 8,000.00 16,650.00

Net Asset- beginning
Net Asset -ending 8,650.00 8,000.00 16,650.00

Note that the ending net assets amount must be the same amount on the net assets reported in the Statement of
financial position on the same period
During March, Almost Family paid the March rent of P1,000. Almost Family also paid the
February utilities which were equal to the estimated amount of P350. Almost Family estimates
that March's utilities will be P300.
On March 31, Almost Family paid P8,300 to purchase furniture (using the donor-restricted
donation of P8,000). The statement of financial position dated March 31 will report the following
amounts:
Almost Family
March 31, 2019
Cash and Cash equivalents 5,950.00 Accrued Expenses 300.00
Security Deposits 1,400.00 Net Assets

- Without Donors
Furniture 8,300.00 Restrictions 15,350.00
Total Net Assets
Total Assets 15,650.00 Total Liabilities and Net Assets 15,650.00
Almost Family
Statement of Activities
March 31, 2019
Without Donors With Donors Total

Restrictions Restrictions
Revenue: P
Contributions 8,000.00 - 8,000.00 -
Net asset released fr Restriction 8,000.00 - 8,000.00 -
Expenses:
Program Expenses -
Gen. Admin. Expenses 1,300.00 1,300.00
Fund Raising Expenses
Total Expense 1,300.00 1,300.00
Change in Net Assets 6,700.00 - 8,000.00 - 1,300.00
Net Asset- beginning 8,650.00 8,000.00 16,650.00
Net Asset -ending 15,350.00 - 15,350.00
Note that the ending net assets amount must be the same amount on the net assets reported in the Statement of
financial position on the same period
Definition of Terms
Unrestricted – available for immediate use and for any purpose.
Temporarily restricted – restricted by the donor in such a way that the availability of the
contribution for the NPO’s use is dependent
Organized, i.e., they have some structure and regularity to their operations, whether or not they
are formally constituted or legally registered. More than legal or formal recognition, this
qualification stresses organizational permanence and regularity, reflected in regular meetings, a
membership, and legitimate decision-making structures and procedures.
Private, i.e., they are not part of the apparatus of the state, even though they may receive support
from governmental sources.
Not profit-distributing, i.e., they are not primarily commercial in purpose and do not distribute
profits to a set of directors, stockholders, or managers. While NPOs may generate a surplus from
time to time, they must reinvest these resources back into the objectives of their respective
organizations.
Self-governing, i.e., they have their own mechanisms for internal governance, are able to cease
operations on their own authority, and are fundamentally in control of their own affairs.
Voluntary, i.e., membership or participation in them is not legally required or otherwise
compulsory.
NPO – include many groups and institutions that are entirely or largely independent of
government and that have primarily humanitarian or cooperative rather than commercial
objectives.
Program services – are the activities that result in goods and services being distributed to
beneficiaries, customers, or members that fulfill the purposes or mission for which the
organization exists. Those services are the major purpose for and the major output of the
organization and often relate to several major programs.
Supporting activities – are all activities other than program services. Generally, these include
management and general, fund-raising, and membership-development activities.
Read:
IFRS 15
Republic Act 11232, or the Act Providing for the Revised Corporation Code of the Philippines,
FASB issued Accounting Standards Update (ASU) No. 2016-14 for Not-for-Profit
NGOs Act RA 10693
Tax Code Section 30(e), (g), and (h)).
Revenue Memorandum Order 20-2013 Section 5(b))
ACTIVITIES / ASSESSMENT
1. Explain the applicability of the PFRSs to NPOs.

2. Account for the assets, liabilities, equity, revenues and expenses of NPOs.
3. Enumerate and describe the financial statements of NPOs.
4. State the accounting procedures peculiar to specific types of NPOs.
EXERCISES
1. A nongovernment organization receives P 40,000 of unconditional promise to give with no

donor-imposed restrictions. Of this amount P28,000 is due during the current period and
P12,000 is due in the next period. The organization estimates that 3% of the pledged will
be uncollectible.
Required: Prepare journal entries to record the pledges and indicate the effect that the
pledges will have on the net assets classifications.
2. In January 2020 Mr. X donated a van to Bantay Bata Foundation. The van has a fair value
of P250,000 and a remaining life of 8 years, with no salvage value. No restrictions are
imposed on the use of the van, either by Mr. X or the Bantay Bata Foundation. Also in 2020,
a church donated P20,000 to the Bantay Bata foundation that is restricted for the purchase
of equipment. The money was invested that earned a 5% interest. Accrued interest on the
investment totaled P1,500 on December 31,2020. The income from investment is also
restricted for the purchase of equipment.
Required: Prepare journal entries for these transaction in 2020. Discuss the effect on net
the asset classifications and the financial statements.
3. At the beginning of 2020 the residents of Barangay Pag-asa organized a voluntary health
and welfare organization called May Bukas Pa (MBP). MBP receives cash donation, and
nonperishable groceries, and household items from contributors. The groceries and
household items are distributed free of charge to families on the basis of need. MBP
allocates expenses 80% to community services and 20% to management and general
services, unless otherwise noted.
MBP has paid one administrator with a yearly salary of P 36,000. An accountant donates
his accounting services with a fair value of P15,000 and are allocated to management and
general. Work is also done by regular volunteers whose services cannot be measured. A
local resident has provided free warehouse space for the operation of MBP. Fair value of
rent for the space is P36,000 a year. Utilities of P 72,000 are paid in 2020.
During the year MBP purchased supplies for P3,000. At December 31, 2020, the supplies
inventory was insignificant. Expenses incurred in determining which families were eligible
for MBP,s services and other accounting and reporting expenses totaled P18,000. Donated
assets for 2020 included nonperishable groceries with a fair value of P120,000 and
household items with a fair value of P80,000. During the year, three fourth of the groceries
and half of the household items was distributed. No portion of these distributions was
allocated to management and general services.
In addition to the donated assets, MBP received cash donations of P 60,000 and pledges of
P120,000. MBP estimated that 10% of the pledges would be uncollectible. At year end
P 45,000 of the pledges had been collected. MBP estimates that only P 3,000 of the
remaining pledges will be uncollectible. Town council of the Barangay PAG-ASA made a
P50,000 grant to MBP that will be paid in January 2021.
Required: Prepare a summary entry for MBP for the year 2020.
4. The following information was taken from the accounts and records of ABC Foundation, a
Private, not- for -profit organization. All balances are as of December 31, 2020, unless
otherwise noted.
Unrestricted Support- Membership dues P 300,000
Unrestricted Support- Contributions 2,500,000
Unrestricted Revenues- Investment Income 48,000
Temporarily restricted gain on sale of investments 4,500
Expenses-Fund raising 350,000
Expenses-Research 1,600,000
Expenses- Management and General 150,000
Temporarily Restricted Support-Contribution 300,000
Temporarily Restricted Revenues-Investment Income 25,000
Permanently Restricted Support-Contributions 30,000
Unrestricted Net Assets, January 1,2012 250,000
Temporarily Restricted Net Assets, January 1, 2020 3,000,000
Permanently Restricted Net Assets, January 1, 2020 50,000
The unrestricted support from contributions was received in cash during the year. The expenses
included P 650,000 payable from donor temporarily restricted resources.
Required: Prepare ABC’s statement of activities for the year ended December 31,2020.
Module 5
COOPERATIVES
Overview
This module introduces us to the definition, concepts, and kinds of cooperative operation
in the Philippines.
Module Objectives
After thorough discussion of the topics, the learner will be able to:
• Define and cite the characteristics of a cooperative
• Understand and Compare government agencies, not-for-profit organizations, and
cooperatives
• Identify the basic laws applicable to cooperatives
• Apply the concepts in accounting for cooperatives.
• Prepare simple financial statements of cooperative
Organization and Registration of Cooperatives

➢ The primary objective of every cooperative is to help improve the quality of life of its
members.
➢ A cooperative duly registered shall have limited liability.
➢ A cooperative shall exist for a period not exceeding fifty (50) years from the date of
registration unless sooner dissolve or unless said period is extended.
➢ All cooperatives applying for registration shall file with the Authority the Articles of
Cooperation which shall be signed by each of the organizers.
➢ The articles of cooperation may also contain any other provisions not inconsistent with
any related laws.
➢ Four copies of each Articles of cooperation,bylaws and the general statement shall be
submittes to the Authority.
➢ Each cooperative to be registered under RA 9520 shall adopt bylaws not inconsistent
with the provisions of this Code. The bylaws shall be filed at the same time with the
Articles of Cooperation
➢ Under Art. 10 of R.A 9520 Organizing a Primary Cooperative, Fifteen or more natural
persons who are Filipino citizens, of legal age having a common bond of interest and are
actually residing or working in the intended area of operation,may organize a primary
cooperative under this Code: Provided, that a prospective member of a primary
cooperative must have completed a Pre-Membership Education Seminar (PMES)
➢ Any newly organized primary cooperative may be registered as multi-purpose
cooperative only after compliance with the minimum requirements for multipurpose
cooperative to be set by the Authority. A single-purpose cooperative may transform into
a mutipurpose or may create subsidiaries only after at least two (2) years of operations.
➢ Under Article 16 of R.A 9520, a cooperative formed and organized under this code
acquires juridical personality from the date the Authority issues a certificate of registration
under its official seal. All applications for registration shall be finally disposed of by the
Authority within. period of sixty (60) days from the filing thereof, otherwise the application
is deemed approved, unless the cause of delay is attributable to the applicant: Provided,
that in a case of a denial of application for registration, an appeal shall lie with the Office
of the President within ninety (90) days from receipt of such notice of denial.
➢ Under Article 17 of RA 9520, Certificate of Registration, A certificate of registration issued
by the Authority under its official seal shall be conclusive evidence that the cooperative
therein mentioned duly registered unless it is proved that the registration thereof has
been cancelled.
Administration
➢ The General Assembly shall be composed of such members who are entitled to vote
under the articles of cooperation and bylaws of the cooperatives.
➢ The General Assembly shall be the highest policy-making body of the cooperative and
shall exercise such powers as are stated in RA 9520, in the Articles of cooperation and
bylaws of the cooperatives.
➢ A regular meeting shall be held anually by the general assembly on a date fixed in the
bylaws, or if not ao fixed, on any dated within ninety (90) days after the clo
➢ se of each fiscal year.
➢ Whenever necessary, a special meeting of the general assembly may be called at any
time by a majority vote of the board of directors or as provided in the bylaws.
➢ A quorum shall consists at least 25% of all the members entitled to vote.
➢ Each member of a primary cooperative shall have only one (1) vote. In the case of
members of secondary or tertiary cooperatives, they shall have one basic vote and as
many incentive votes as provided for in the bylaws but not exceed 5 votes.
➢ Unless otherwise provided in the bylaws, the direction and management of the affairs of
the cooperative shall be vested in a board of directors which shall be composed of not
less than 5 nor more than 15 members elected by the general assembly for a term of two
years and shall hold office until their succesors are duly elected,or until duly removed for
caused.
➢ The board of directors shall be responsible for the strategic planning, direction-setting
and policy-formulation activities of the cooperatives.
Responsibilities, Rights and Privileges of Cooperatives

Capital, Property of Funds
➢ ART. 71. Capital. - The capitalization of cooperatives and the accounting procedures
shall be governed by the provisions of this Code and the regulations which shall be
issued.
➢ ART. 72. Capital Sources.- Cooperatives registered under this Code may derive their
capital from any or all of the following sources: "(1) Member’s share capital; "(2) Loans
and barrowings including deposits; "(3) Revolving capital which consists of the deferred
payment of patronage refunds, or interest on share capital; and "(4) Subsidies, donations,
legacies, grants, aids and such other assistance from any local or foreign institution
whether public or private: Provided, That capital coming from such subsides, donations,
legacies, grants, aids and other assistance shall not be divided into individual share
capital holdings at any time but shall instead form part of the donated capital or fund of
the cooperative. "Upon dissolution, such donated capital shall be subject to escheat.
➢ ART. 73. Limitation on Share Capital Holdings.- No member of primary cooperative other
than cooperative itself shall own or hold more than ten per centum (10%) of the share
capital of the cooperative. "Where a member of cooperative dies, his heir shall be entitled
to the shares of the decedent: Provided, That the total share holding of the heir does not
exceed ten per centum (10%) of the share capital of the cooperative; Provided, further,
That the heir qualify and is admitted as members of the cooperative: Provided finally ,
That where the heir fails to qualify as a member or where his total share holding exceeds
ten per centum (10%) of the share capital , the share or shares excess will revert to the
cooperative upon payment to the heir of the value of such shares.
➢ "ART. 74. Assignment of Share Capital Contribution or Interest.- Subject to the provisions
of this Code, no member shall transfer his shares or interest in the cooperative or any
part thereof unless. "(1) He has held such share capital contribution or interest for not
less than one (1) year. "(2) The assignment is made to the cooperative or to a member
of the cooperative or to a person who falls within the field of the membership of the
cooperative; and "(3) The board of directors has approved such assignment.
➢ "ART.78. Investment of Capital. - A cooperative may invest its capital in any of the
following: "(a) In shares or debentures or securities of any other cooperative; "(b) In any
reputable bank in the locality, or any cooperative; "(c) In securities issued or guaranteed
by the Government; "(d) In real state primarily for the use of the cooperative or its
members; or "(e) In any other manner authorized in the bylaws.
➢ "ART. 79. Revolving Capital. – The general assembly of any cooperative may authorize
the board of directors to raise a revolving capital to strengthen its capital structure by
deferring the payment of patronage refunds and interest on share capital or by the
authorized deduction of a percentage from the proceeds of products sold or services
rendered, or per unit of product or services handled. The board of directors shall issue
revolving capital certificates with serial number, name, amount, and rate of interest to be
paid
➢ "ART. 51. Address. – Every cooperative shall have an official postal address to which all
notices and communications shall be sent. Such address and every change thereof shall
be registered with the Authority.
➢ "ART. 52. Books to be Kept Open. –
(1) Every cooperative shall have the following documents ready and accessible to its
members and representatives of the Authority for inspection during reasonable office
hours at its official address: "(a) A copy of this Code and all other laws pertaining to
cooperatives; "(b) A copy of the regulations of the Authority; "(c) A copy of the articles of
cooperation and bylaws of the cooperative; "(d) A register of members; "(e) The books of
the minutes of the meetings of the general assembly, board of directors and committee;
"(f) Share books, where applicable; "(g) Financial statement; and "(h) Such other
documents as may be prescribed by laws or the bylaws.
(2) The accountant or the bookkeeper of the cooperative shall be responsible for the
maintenance of the cooperative in accordance with generally accepted accounting
practices. He shall also be responsible for the production of the same at the time of audit
or inspection. "The audit committee shall be responsible for the continuous and periodic
review of the books and records of account to ensure that these are in accordance with
generally accepted accounting practices. He shall also be responsible for the production
of the same at the time of audit or inspection. "(3) Each cooperative shall maintain records
of accounts such that the true and correct condition and the results of the operation of
the cooperative may be ascertained therefrom at any time. The financial statements,
audited according to generally accepted auditing standards, principles and practices,
shall be published annually and shall be kept posted in a conspicuous place in the
principal office of the cooperative.
"(4) Subject to the pertinent provisions of the National Internal Revenue Code and other
laws, a cooperative may dispose by way of burning or other method of complete
destruction any document, record or book pertaining to its financial and nonfinancial
operations which are already more than five (5) years old except those relating to
transactions which are the subject of civil, criminal and administrative proceedings. An
inventory of the audited documents, records and books to be disposed of shall be drawn
up and certified to by the board secretary and the chairman of the audit committee and
presented to the board of directors which may thereupon approve the disposition of said
records.
Audit, Inquiry and Members’ Right to Examine
➢ Cooperatives under this Code shall be subject to an annual audit by an auditor who
satisfies all the following qualifications:
(1) He is independent of the cooperative being audited and of any subsidiary of the
cooperative; and
(2) He is a member of any recognized professional accounting or cooperative
auditors’ association with similar qualifications
➢ The auditor shall submit to the audit committee a report of the audit which shall contain
a statement of the assets and liabilities of the cooperative, including earnings and
expenses, amount of net surplus as well as losses and bad debts, if any.
➢ The audit committee shall forthwith furnish the board of directors a copy of the audit
report. Thereafter, the board of directors shall present the complete audit report to the
general assembly in its next meeting.
➢ A member shall have the right to examine the records required to be kept by the
cooperative under Article 51 of this Code during reasonable hours on business days and
he may demand, in writing, for a copy of excerpts from said records without charge except
the cost of reproduction.
➢ Any officer of the cooperative who shall refuse to allow any member of the cooperative
to examine and copy excerpts from its records shall be liable to such member for
damages and shall be guilty of an offense which shall be punishable under Article 106 of
this Code: Provided, That if such refusal is pursuant to a resolution or order of the board
of directors, the liability under this article shall be imposed upon the directors who voted
for such refusal: Provided, further, That it shall be a defense of any action under this
article that the member demanding to examine and copy excerpts from the cooperative
records has improperly used any information secured through any prior examination of
the records of such cooperative or was not acting in good faith or for a legitimate purpose
in making his demand.
➢ Every cooperative shall, at its principal office, keep and carefully preserve the records
required by this Code to be prepared and maintained. It shall take all necessary
precaution to prevent its loss, destruction or falsification.
Allocation and Distribution of Funds

➢ Notwithstanding the provisions of existing laws, the net surplus of cooperatives shall be
determined in accordance with its bylaws. Every cooperative shall determine its net
surplus at the close of every fiscal year and at such other times as may be prescribed by
the bylaws.
➢ Any provision of law to the contrary notwithstanding, the net surplus shall not be
construed as profit but as an excess of payments made by the members for the loans
borrowed, or the goods and services availed by them from the cooperative or the
difference of the rightful amount due to the members for their products sold or services
rendered to the cooperative including other inflows of assets resulting from its other
operating activities and which shall be deemed to have been returned to them if the same
is distributed as prescribed herein.
➢ Order of Distribution
1. An amount for the reserve fund which shall be at least ten per centum (10%) of
net surplus: Provided, That, in the first five (5) years of operation after registration,
this amount shall not be less than fifty per centum (50%) of the net surplus:
a. The reserve fund shall be used for the stability of the cooperative
and to meet net losses in its operations. The general assembly may
decrease the amount allocated to the reserve fund when the reserve
fund already exceeds the share capital. Any sum recovered on items
previously charged to the reserve fund shall be credited to such fund.
b. The reserve fund shall not be utilized for investment, other than those
allowed in this Code. Such sum of the reserve fund in excess of the share
capital may be used at anytime for any project that would expand the
operations of the cooperative upon the resolution of the general assembly.
c. Upon the dissolution of the cooperative, the reserve fund shall not be
distributed among the members. The general assembly may resolves:
(i) To establish a usufructuary trust fund for the benefit of anyfederation or
union to which the cooperative is affiliated; and
(ii) To donate, contribute, or otherwise dispose of the amount for the
benefit of the community where the cooperative operates. If the
members cannot decide upon the disposal of the reserve fund, the
same shall go to the federation or union to which the cooperative is
affiliated.
2. An amount for the education and training fund, shall not be more than ten per
centum (10%) of the net surplus. The bylaws may provide that certain fees or a
portion thereof be credited to such fund. The fund shall provide for the training,
development and similar other cooperative activities geared towards the growth
of the cooperative movement:
a. Half of the amounts transferred to the education and training fund
annually under this subsection shall be spent by the cooperative for
education and training purposes; while the other half may be
remitted to a union or federation chosen by the cooperative or of which
it is a member. The said union or federation shall submit to the
Authority and to its contributing cooperatives the following
schedules:
i. (List of cooperatives which have remitted their respective
Cooperative Education and Training Funds (CETF);
ii. Business consultancy assistance to include the nature and
cost; and
iii. Other training activities undertaken specifying therein the
nature, participants and cost of each activity.
b. Upon the dissolution of the cooperative, the unexpended balance of the
education and training fund appertaining to the cooperative shall be
credited to the cooperative education and training fund of the chosen
union or federation.
3. An amount for the community development fund, which shall not be less than
three per centum (3%) of the net surplus. The community development fund shall
be used for projects or activities that will benefit the community where the
cooperative operates.
4. An optional fund, a land and building, and any other necessary fund the total of
which shall not exceed seven per centum (7%).
5. The remaining net surplus shall be made available to the members in the form of
interest on share capital not to exceed the normal rate of return our investments
and patronage refunds: Provided, That any amount remaining after the allowable
interest and the patronage refund have been deducted shall be credited to the
reserve fund.
Types and Categories of Cooperatives

➢ Credit Cooperative is one that promotes and undertakes savings and lending services
among its members. It generates a common pool of funds in order to provide financial
assistance to its members for productive and provident purposes;
➢ Consumers Cooperative is one of the primary purpose of which is to procure and
distribute commodities to members and non-members;
➢ Producers Cooperative is one that undertakes joint production whether agricultural or
industrial. It is formed and operated by its members to undertake the production and
processing of raw materials or goods produced by its members into finished or processed
products for sale by the cooperative to its members and non-members. Any end product
or its derivative arising from the raw materials produced by its members, sold in the name
and for the account of the cooperative, shall be deemed a product of the cooperative and
its members;
➢ Marketing Cooperative is one which engages in the supply of production inputs to
members and markets their products;
➢ Service Cooperative is one which engages in medical and dental care, hospitalization,
transportation, insurance, housing, labor, electric light and power, communication,
professional and other services;
➢ Multipurpose Cooperative is one which combines two (2) or more of the business
activities of these different types of cooperatives;
➢ Cooperative Bank is one organized for the primary purpose of providing a wide range
of financial services to cooperatives and their members;
➢ Dairy Cooperative is one whose members are engaged in the production of fresh milk
which may be processed and/or marketed as dairy products;
➢ Financial Service Cooperative is one organized for the primary purpose of engaging in
savings and credit services and other financial services;
➢ Fishermen Cooperative is one organized by marginalized fishermen in localities whose
products are marketed either as fresh or processed products;
Health Services Cooperative is one organized for the primary purpose of providing
medical, dental and other health services;
➢ Housing Cooperative is one organized to assist or provide access to housing for the
benefit of its regular members who actively participate in the savings program for housing.
It is co-owned and controlled by its members;
➢ Insurance Cooperative is one engaged in the business of insuring life and poverty of
cooperatives and their members;
➢ Transport Cooperative is one which includes land and sea transportation, limited to
small vessels, as defined or classified under the Philippine maritime laws, organized
under the provisions of this Code;
➢ Water Service Cooperative is one organized to own, operate and manage waters
systems for the provision and distribution of potable water for its members and their
households;
➢ Workers Cooperative is one organized by workers, including the self-employed, who
are at same time the members and owners of the enterprise. Its principal purpose is to
provide employment and business opportunities to its members and manage it in
accordance with cooperative principles; and
➢ Advocacy Cooperative is a primary cooperative which promotes and advocates
cooperativism among its members and the public through socially-oriented projects,
education and training, research and communication, and other similar activities to reach
out to its intended beneficiaries;
➢ Electric Cooperative is one organized for the primary purposed of undertaking power
generations, utilizing renewable energy sources, including hybrid systems, acquisition
and operation of subtransmission or distribution to its household members;
Merger and Consolidation of Cooperatives
Dissolution of Cooperatives
➢ Voluntary dissolution where no creditors are affected - The dissolution may be
affected by the majority vote of the board of directors, and by a resolution duly adopted
by the affirmative vote of at least ¾ of all the members with voting rights.
➢ Voluntary dissolution where creditors are affected. - The petition for the dissolution
shall be filed with authority.
➢ Involuntary Dissolution - The cooperative may be dissolved by order of competent court
after due hearing on the grounds of:
o Violation of any law, regulation or provision of its bylaws; or
o Insolvency
➢ Dissolution by order of the authority - The authority may suspend or revoke, after due
notice and hearing the certificate of registration of a cooperative on any of the following
grounds:
o Having obtained its registration by fraud.
o Existing for an illegal purpose.
o Willful violation despite notice by authority of the provisions of this code or its
bylaws
o Willful failure to operate on a cooperative basis; and
o Failure to meet the required minimum number of members in the cooperative.
➢ Dissolution by failure to organize and operate
Accounting Policies for Cooperatives

➢ The legal basis for this Rule is based on Article 71, as follows:
o Capital – The capitalization of cooperatives and the accounting procedures shall
be governed by the provisions of this Code, and the regulations which shall be
issued.
➢ Capital Sources:
o Members’ Share Capital
o Loans and Borrowings including deposits
o Revolving Capital
o Subsidies, donations, legacies, grants, aids and such other assistance form any
local or foreign institutions.
➢ Financial Statement Presentation
o Fair presentation
o Complete set of financial statements
o Going Concern
o Accrual
o Comparative
o Consistency
➢ Financial Statements:
Readings
• www.cda.gov.p

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ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS 1

INSTRUCTIONAL MATERIAL FOR

ACCOUNTING FOR GOVERNMENT AND

JOHN CARLO ABILLONAR

General Instructions for Students 7

Module 1 – Basic Concepts of Government Accounting 8

Module 2 – Accounting for National Government Agencies (NGAs) 20

Module 3 – Accounting for Local Government Units (LGUs) 43

Module 4 – Not-For-Profit Organizations 55

GENERAL INSTRUCTIONS FOR STUDENTS

FOR STUDENTS WHO DO NOT HAVE INTERNET CONNECTIVITY AND RECEIVED

BASIC CONCEPTS OF GOVERNMENT ACCOUNTING

The implementation of the Government Accounting Manual (GAM) for National

After successful Completion of this module, you should be able to:

• Define various terms in government budgeting and accounting;

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

Objectives of Government Accounting:

Agencies Charged with Government Accounting Responsibility

➢ Department of Budget and Management (DBM) - mandated to promote the sound,

The Philippine Budget Cycle / Budget Process

1. Budget Preparation and Presentation - a government budgetary process wherein the

2. Budget Legislation or Authorization (Approval) - a government budgetary process which

3. Budget Execution or Implementation - a government budgetary process which involves

4. Budget Accountability - a government budgetary process which involves the submission of

The Government Accounting Manual (GAM)

Objective of the Manual

The Manual aims to update the following:

Basic Government Accounting and Budget Reporting Principles

Comparison between NGAS and GAM

Features NGAS Manual GAM

Four (4) Six (6)

COA Circular 2013-002,

Assets Without distinction With distinction (Current and

Liabilities Without distinction With distinction (Current and

17. Accounting for

With conditionality Income Liability

Without conditionality Income Revenue

With restriction None Revenue

21. New Standards PPSAS Non-compliant PPSAS Compliant

Unified Account Code Structure (UACS)

Reporting requirements that will be best served by the UACS include:

Responsibilities. The DBM, Department of Finance-Bureau of the Treasury (DOF-BTr) and

Elements. The key elements of the coding framework are:

1. Funding Source Codes (6 digits)

Revised Chart of Accounts (RCA) – Updated 2019

to indicate whether it is a contra-account, e.g. Allowance for Impairment, Accumulated

5. UACS Sub-Object Code represents disaggregation of selected assets, liabilities,

Philippine Public Sector Accounting Standards (PPSAS)

PPSAS consists of:

• Government websites such as www.dbm.gov.ph and www.coa.gov.ph

2. What is a budget call? What are the contents of a budget call?

3. What is a supplemental budget?

4. Identify the status of the 2021 proposed budget in the Congress/Senate.

7. Compare cash based budgeting with obligation based budgeting.

1. It encompasses the process of analyzing, recording, classifying, summarizing, and

8. It is defined as a good or service that a department or agency is mandated to deliver to

10. The approved national budget for 2020 is

ACCOUNTING FOR NATIONAL GOVERNMENT AGENCIES (NGAs)

After successful Completion of this module, you should be able to:

Revenue and Other Receipts

Account Title Account Code Debit Credit

Cash-Modified Disbursement System (MDS), Trust 10104060 P100,000

Account Title Account Code Debit Credit