The Government Accounting Process: Problem 3-1: True or False

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Chapter 3
The Government Accounting Process
PROBLEM 3-1: TRUE OR FALSE

1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
6. TRUE
7. TRUE
8. FALSE
9. TRUE
10. FALSE
PROBLEM 3-2: MULTIPLE CHOICE

1. B
2. D
3. A
4. B
5. A
6. D
7. C
8. A
9. B
10. A
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1. D
2. D
3. C
4. B
5. C
6. D
7. B
8. B
9. D
10. D

1. A
2. C
3. A
Solution:
Subsidy from NG (NCA) 625,000
Subsidy from NG (TRA) 48,000
Unused NCA (6,000)
Net Financial
Assistance/Subsidy 667,000
4. C
Solution:
Revenue 290,000
Expenses (885,000)
Surplus (Deficit) from operations (595,000)
Subsidy from NG (NCA) 750,000
Subsidy from NG (TRA) 140,000
Unused NCA (43,000)
Net Financial
Assistance/Subsidy 847,000
Surplus (Deficit) for the period 252,000
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5. A
Solution:
Adjusted Trial Balance (Dr. & Cr.) 2,765,000
Statement of Financial Position (Dr.) (1,880,000)
Statement of Financial Performance
(Dr.) 885,000
Statement of Financial Position (Cr.) 1,137,000
Surplus (Deficit) for the period 252,000
6. C
7. C
8. C
9. A
10. C
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PROBLEM 3-5: BASIC RECORDING DRILLS
Solutions:
a. Recording in the Registry of Appropriations and Allotments
(RAPAL).
b. Recording in the RAPAL and appropriate Registries of
Allotments, Obligations and Disbursements (RAOD)
maintained by object of expenditure.
c. Recording in RAOD and Obligation Request and Status
(ORS).
d. Journal entry:
Date Cash-Modified Disbursement System
(MDS), Regular 850,000
Subsidy from National 850,000
Government
To recognize receipt of NCA from
DBM
e. Journal entry:
Dat Salaries and Wages, Regular 450,000
e
Personal Economic Relief Allowance 50,000
(PERA) 125,00
Due to BIR 0
Due to GSIS 25,00
Due to Pag-IBIG 0
Due to PhilHealth 20,000
Due to Officers and Employees 12,00
To recognize payable to officers and 0
employees upon approval of payroll 318,00
0
f. Journal entry:
Date Advances for Payroll 318,000
Cash-Modified Disbursement
System (MDS), Regular 318,000
To recognize grant of cash advance
for payroll
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g. Journal entry:
Date Due to Officers and Employees 318,000
Advances for Payroll 318,000
To recognize liquidation of Payroll
Fund
h. Journal entry:
Date Office Supplies Inventory 200,000
Accounts Payable 200,000
To recognize delivery of office supplies
i. Journal entry:
Date Accounts Payable 180,000
Due to BIR 10,000
Cash – Modified Disbursement
To recognize payment of accounts
payable
j. Journal entry (in the entity’s books):

Date Cash-Tax Remittance Advice 135,000
Government
To recognize the constructive receipt
of NCA for TRA
Date Due to BIR 135,000
Cash-Tax Remittance Advice 135,000
To recognize constructive remittance
of taxes withheld to the BIR through TRA
k. Journal entry:
Date Due to GSIS 25,000
Due to Pag-IBIG 20,000
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To recognize remittance to GSIS,
Pag-IBIG and PhilHealth
l. Journal entry:
Date Accounts receivable 200,000
Power Supply System Fees 200,000
To recognize billing of income
m. Journal entry:
Date Cash – Collecting Officers 200,000
Accounts Receivable 200,000
To recognize collection of billed income
Date Cash-Treasury/Agency Deposit, 200,000
Regular 200,000
Cash – Collecting Officers
To recognize remittance of income to
BTr
n. Journal entry:
Date Subsidy from National Government 305,000
To recognize reversion of unused
NCA
Cash-Modified Disbursement System (MDS), Regular

Receipt of 850,00
NCA 0
318,00
0 Advances for payroll
170,00
0 Payment of accounts
57,00 Remittances to GSIS,
Page |7
0 Pag-IBIG, & PhilHealth

305,00
0 end
o. Unreleased appropriation:
(1,000,000 Appropriation – 980,000 Allotment) = 20,000
p. Unobligated allotment:
(980,000 Allotment – 880,000 Obligations) = 100,000
q. “Not Yet Due and Demandable” Obligations

(880,000 Obligations – 500,000 gross compensation – 200,000
purchase of office supplies) = 180,000
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PROBLEM 3-6: BASIC RECORDING DRILLS
Solutions:
1. Journal entry
(MDS), Regular 1,000,00
Subsidy from National 0 1,000,00
Government 0
DBM
2. Journal entry (in the entity’s books):

Date Cash-Tax Remittance Advice 100,000
Government
of NCA for TRA
Date Due to BIR 100,000
3. Recording in the RAPAL and appropriate Registries of

maintained by object of expenditure.
4. Recording in the Registry of Appropriations and Allotments

(RAPAL).
5. Recording in RAOD and Obligation Request and Status

(ORS).
6. Recording in RAOD and Obligation Request and Status

(ORS).
Page |9
7. Journal entry:
Date Accounts receivable 250,000
Affiliation Fees 250,000
Date Cash – Collecting Officers 200,000
Date Cash-Treasury/Agency Deposit, 200,000
Regular 200,000
BTr
8. Journal entry:
Date Subsidy from National Government 50,000
NCA
9. Journal entry:
Date Office Equipment 100,000
To recognize delivery of office
equipment
10. Journal entry:

Date Accounts Payable 60,000
Due to BIR 3,000
payable
P a g e | 10
PROBLEM 3-7: WORKSHEET PREPARATION
Solutions:
Requirement (a): Recordings

a. The appropriation is posted (recorded) in the Registry of
Appropriations and Allotments (RAPAL).
b. The allotment is posted (recorded) in the Registry of

Appropriations and Allotments (RAPAL) and Registries of
Allotments, Obligations and Disbursements (RAOD).
c. The obligations are recorded in the Obligation Request and

Status (ORS) and Registries of Allotments, Obligations and
Disbursements (RAOD).
d. Journal entry
Date Cash-Modified Disbursement System 430,000
(d)
(MDS), Regular 430,000
Subsidy from National
Government
the DBM
e. Journal entries
(e.1) Salaries and Wages, Regular 70,000
(PERA) 18,000
Due to BIR 4,000
Due to GSIS 1,000
Due to Officers and Employees
To recognize payable to officers and
employees upon approval of payroll
(e.2) Advances for Payroll 55,000
P a g e | 11
To recognize grant of cash advance for

payroll
(e.3) Due to Officers and Employees 55,000
To recognize liquidation of Payroll Fund 0
f. Journal entries
(f.1) Office Equipment 200,000
equipment
(f.2) Depreciation-Machinery and 38,000
Equipment 38,000
Accumulated Depreciation – O.E.
To recognize depreciation of office
equipment
g. Journal entry
(g) Accounts Payable 200,000
Due to BIR 12,000
payable
h. Journal entry
(h) Office Supplies Inventory 100,000
Due to BIR 5,000
i. Journal entry
(i) Office Supplies Expense 90,000
Office Supplies Inventory 90,000
To record the issuance of office supplies
to end users
P a g e | 12
j. Journal entry
(j.1) Advances to Officers and Employees 20,000
To recognize grant of cash advance for
travel
(j.2) Traveling Expenses - Local 17,000
Advances to Officers and 17,000
Employees
To recognize liquidation of cash
advance for travel
(j.3) Cash – Collecting Officers 3,000
Advances to Officers and 3,000
Employees
To recognize refund of excess cash
advance for travel
(j.4) Cash – Treasury/Agency Deposit,
Regular 3,000
Cash – Collecting Officers 3,000
To recognize remittance of the refund
of excess cash advance for travel
k. Journal entry
(k.1) Cash – Collecting Officers 40,000
Permit fees 40,000
To recognize collection of unbilled
service income
(k.2) Cash-Treasury/Agency Deposit, 30,000
Regular 30,000
To recognize remittance of income
to the BTr
l. Journal entry
(l) Water Expenses 5,000
P a g e | 13
Electricity Expenses 10,000

Due to BIR 2,000
To recognize issuance of MDS checks
as payment for expenses
m. Journal entry
(m.1) Cash-Tax Remittance Advice 37,000
Government
of NCA for TRA
(m.2) Due to BIR 37,000
to BIR of taxes withheld through TRA
n. Journal entry
(n) Due to GSIS 4,000
Cash-Modified Disbursement 7,000
System (MDS), Regular
P a g e | 14
Requirement (b): Posting in the ledger

P a g e | 15
P a g e | 16
Requirement (c): Unadjusted Trial Balance
Accounts Debit Credit

Cash - Collecting Officers 10,000
Cash-Treasury/Agency Dep., Reg. 33,000
Cash-MDS, Regular 52,000
Cash-Tax Remittance Advice -
Office Equipment 200,000
Accumulated Depreciation - Equipment 38,000
Advances for Payroll -
Advances to Officers and Employees -
Accounts Payable -
Due to Officers and Employees -
Due to BIR -
Due to GSIS -
Due to Pag-IBIG -
Due to PhilHealth -
Accumulated Surplus (Deficit) -
Permit Fees 40,000
Subsidy from NG 467,000
Salaries and Wages, Regular 70,000
PERA 10,000
Travelling Expenses - Local 17,000

Office Supplies Expense 90,000
Water Expenses 5,000
Depreciation-Machinery & Equipment 38,000
Totals 545,000 545,000
P a g e | 17
Requirement (d): Adjusting Entry
(AJE) Subsidy from National Government 52,000

To recognize reversion of unused NCA
P a g e | 18
Requirement (e): Worksheet

P a g e | 19
Requirement (f): Closing entries
(CL1 Accumulated Surplus/(Deficit) 33,000

)
Cash-Treasury/Agency Deposit,
Regular 33,000
To recognize closing of cash deposit
account
(CL2 Permit Fees 40,000
)
Subsidy from National Government 415,000
PERA 10,000
Travelling Expenses - Local 17,000
Depreciation-Mac. & Equipt. 38,000
Revenue and Expense Summary 215,000
To recognize closing of income and
expense accounts
P a g e | 20
(CL3 Revenue and Expense Summary 215,000

)
Accumulated Surplus/(Deficit) 215,000
To recognize closing of revenue
and expense summary
P a g e | 21
PROBLEM 3-8: WORKSHEET PREPARATION
Solutions:
Requirement (1): Recordings
a. The appropriation is posted (recorded) in the Registry of
Appropriations and Allotments (RAPAL).
b. The allotment is posted (recorded) in the Registry of

Appropriations and Allotments (RAPAL) and Registries of
Allotments, Obligations and Disbursements (RAOD).
c. The obligations are recorded in the Obligation Request and

Status (ORS) and Registries of Allotments, Obligations and
Disbursements (RAOD).
d. Journal entry
Date Cash-Modified Disbursement System 1,050,00
(d)
(MDS), Regular 0 1,050,00
Subsidy from National 0
Government
the DBM
e. Journal entries
(e.1) Salaries and Wages, Regular 380,000
(PERA) 90,000
Due to BIR 30,000
Due to GSIS 20,000
Due to Officers and Employees 0
(e.2) Advances for Payroll 250,000
To recognize grant of cash advance for 0
P a g e | 22
payroll
P a g e | 23
(e.3) Due to Officers and Employees 250,000

To recognize liquidation of Payroll Fund 0
f. Journal entry
(f) Office Equipment 320,000
equipment
g. Journal entry
(g) Accounts Payable 320,000
Due to BIR 20,000
payable
h. Journal entry
(h) Office Supplies Inventory 150,000
i. Journal entry
(i) Accounts Payable 120,000
Due to BIR 10,000
payable
P a g e | 24
j. Journal entry
(j) Water Expenses 20,000
Telephone Expenses 40,000
Janitorial Expenses 80,000
Security Expenses 100,000
Due to BIR 20,000
To recognize issuance of MDS checks
as payment for expenses
k. Journal entry
(k) Office Supplies Expense 130,000
To record the issuance of office supplies
to end users
l. Journal entry
(l) Accounts receivable 240,000
Waterworks System Fees 240,000
m. Journal entry
(m.1 Cash – Collecting Officers 200,000
)
Accounts receivable 200,000
To recognize collection of current year’s
billed income
(m.2 Cash-Treasury/Agency Deposit, Regular 200,000
)
Cash – Collecting Officers 200,000
To recognize remittance of income to the
BTr
n. Journal entry
(n) Cash-Treasury/Agency Deposit, Regular 50,000
Tax on Delivery Vans and Trucks 50,000
P a g e | 25
To recognize collection and remittance

of income to BTr through Authorized
Government Depository Banks (AGDB)
o. Journal entry
(o.1) Cash-Tax Remittance Advice 160,000
Government
of NCA for TRA
(o.2) Due to BIR 160,000
to BIR of taxes withheld through TRA
p. Journal entry
(p) Due to GSIS 34,000
Cash-Modified Disbursement 67,000
P a g e | 26
Requirement (2): Posting to the Ledger

P a g e | 27
P a g e | 28
P a g e | 29
Requirement (3): Unadjusted Trial Balance
Accounts Debit Credit

Cash - Collecting Officers 30,000
Cash-Treasury/Agency Dep., Reg. 250,000
Cash-MDS, Regular 43,000
Cash-Tax Remittance Advice -
Buildings 800,000
Accumulated Depreciation - Buildings 650,000
Accumulated Depreciation -
Equipment 180,000
Advances for Payroll -
Due to Officers and Employees -
Due to BIR -
Due to GSIS -
Due to Pag-IBIG -
Due to PhilHealth -
Accumulated Surplus (Deficit) 333,000
Tax on Delivery Vans and Trucks 50,000
Subsidy from NG 1,210,000
PERA 20,000
Totals 2,753,000 2,753,000
P a g e | 30
Requirement (4): Adjusting Journal Entries
(AJE1.1 Depreciation-Buildings & Other 30,000

)
Structures 30,000
Accumulated Depreciation –
Bldgs.
To recognize depreciation of buildings
(AJE1.2 Depreciation-Machinery and Equipment 20,000
)
Accumulated Depreciation – O.E. 20,000
To recognize depreciation of office
equipment
(AJE2) Impairment Loss – Loans and 5,000
Receivables 5,000
Allowance for Impairment – A/R
To recognize loss allowance on
accounts receivable
(AJE3) Subsidy from National Government 43,000
To recognize reversion of unused NCA
Requirement (5): Worksheet

P a g e | 31
P a g e | 32
Requirement (6): Closing entries
(CL1 Accumulated Surplus/(Deficit) 250,000

)
Cash-Treasury/Agency Deposit,
Regular 250,00
To recognize closing of cash deposit 0
account
(CL2 Tax on Delivery Vans and Trucks 50,000
)
Subsidy from National Government 1,167,00
Salaries and Wages, Regular 0 380,00
PERA 0
Electricity Expenses 0
Depreciation-Bldgs. 80,000
Depreciation-Mac. & Equipt. 100,00
Impairment Loss – L/R 0
Revenue and Expense Summary 30,000
To recognize closing of income and 20,000
expense accounts 5,000
572,00
0
(CL3 Revenue and Expense Summary 572,000
)
To recognize closing of revenue and 0
expense summary
P a g e | 33
Requirement (7): Statement of Financial Position
ENTITY A
STATEMENT OF FINANCIAL POSITION
(REGULAR AGENCY FUND)
AS AT DECEMBER 31, 20X1
Note
ASSETS s
Current Assets
Cash and Cash Equivalents 30,000

Receivables 1 115,000
Inventories 20,000
Total Current Assets 165,000
Noncurrent Assets
Property, Plant and Equipment 2 580,000
Total Noncurrent Assets 580,000
TOTAL ASSETS 745,000
Current Liabilities
Financial Liabilities 90,000
Total Current Liabilities 90,000
TOTAL LIABILITIES 90,000
TOTAL ASSETS less TOTAL

LIABILITIES 655,000
NET ASSETS/EQUITY
P a g e | 34
TOTAL NET ASSETS/EQUITY 665,000

P a g e | 35
Requirement (8): Statement of Financial Performance
ENTITY A
STATEMENT OF FINANCIAL PERFORMANCE
(REGULAR AGENCY FUND)
FOR THE YEAR ENDED DECEMBER 31, 20X1
REVENUE Notes
Tax revenue 50,000
Service and Business Income 240,000
TOTAL REVENUE 290,000

Less: CURRENT OPERATING EXPENSES
Personnel Services 3 400,000
Maintenance and Other Operating
4
Expenses 430,000
Non-cash Expenses 5 55,000
TOTAL CURRENT OPERATING

EXPENSES 885,000

SURPLUS/ (DEFICIT) FROM
CURRENT OPERATIONS (595,000)
Net Financial Assistance/Subsidy 1,167,000
SURPLUS/ (DEFICIT) FOR THE PERIOD 572,000

P a g e | 36
Requirement (9): Notes to the Financial Statements
ENTITY A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 20X1
Note 1: Receivable
This account consists of the following:

Allowance for Impairment - A/R (5,000)
Net 115,000
Note 2: Property, Plant and Equipment

Buildings 800,000
Total Cost 1,460,000

Accumulated Depreciation - Buildings 680,000
Accumulated Depreciation - Equipment 200,000
Total Accumulated Depreciation 880,000
Property, Plant and Equipment, net 580,000
Note 3: Personnel Services


PERA 20,000
Personnel Services 400,000
P a g e | 37
Note 4: Maintenance and Other Operating Expenses


Maintenance and Other Operating Expenses 430,000
Note 5: Non-cash Expenses

Depreciation-Buildings & Other Structures 30,000

Depreciation-Machinery and Equipment 20,000
Impairment Loss – Loans and Receivables 5,000
Non-cash Expenses 55,000
P a g e | 38
PROBLEM 3-9: FOR CLASSROOM DISCUSSION
Solutions:
a. Recording in the Registry of Appropriations and Allotments
(RAPAL). No journal entry yet.
b. Recording in the RAPAL and appropriate Registries of
maintained by object of expenditure. No journal entry yet.
c. Recording in RAOD and Obligation Request and Status
(ORS). No journal entry yet.
d. Journal entry:
(MDS), Regular 325M
Subsidy from National 325M
Government
DBM
e. Journal entry:
Dat Salaries and Wages, Regular 280M
e
Personal Economic Relief Allowance 20M
(PERA) 75M
Due to BIR 15M
Due to GSIS 15M
Due to Pag-IBIG 8M
Due to PhilHealth 187M
Due to Officers and Employees
 Updating of ORS.
f. Journal entry:
Date Advances for Payroll 187M
System (MDS), Regular 187M
To recognize grant of cash advance
P a g e | 39
for payroll
 Updating of ORS and RAOD.

g. Journal entry:
Date Due to Officers and Employees 187M
Advances for Payroll 187M
To recognize liquidation of Payroll
Fund
h. Journal entry (in the entity’s books):

Date Cash-Tax Remittance Advice 75M
Subsidy from National 75M
Government
of NCA for TRA
Date Due to BIR 75M
Cash-Tax Remittance Advice 75M
i. Journal entry:
Date Due to GSIS 15M
Due to Pag-IBIG 15M
Due to PhilHealth 8M
System (MDS), Regular 38M
 The ORS and RAOD are updated for the payments above.
j. Journal entry:
Date Accounts receivable 700M
Rent/Lease income 700M
k. Journal entry:
Date Cash – Collecting Officers 550M
P a g e | 40
Accounts Receivable 550M

Date Cash-Treasury/Agency Deposit, 550M
Regular 550M
BTr
l. Journal entry:
Date Subsidy from National Government 100M
Cash-Modified Disbursement 100M
NCA
Cash-Modified Disbursement System (MDS), Regular

Receipt of
NCA 325M
187
M Advances for payroll
38 Remittances to GSIS,
M Pag-IBIG, & PhilHealth
100
M end
P a g e | 41

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Page |1

PROBLEM 3-1: TRUE OR FALSE

PROBLEM 3-2: MULTIPLE CHOICE

PROBLEM 3-3: MULTIPLE CHOICE

PROBLEM 3-4: MULTIPLE CHOICE

PROBLEM 3-5: BASIC RECORDING DRILLS

j. Journal entry (in the entity’s books):

Cash-Modified Disbursement System (MDS), Regular

0 Pag-IBIG, & PhilHealth

q. “Not Yet Due and Demandable” Obligations

PROBLEM 3-6: BASIC RECORDING DRILLS

2. Journal entry (in the entity’s books):

3. Recording in the RAPAL and appropriate Registries of

4. Recording in the Registry of Appropriations and Allotments

5. Recording in RAOD and Obligation Request and Status

6. Recording in RAOD and Obligation Request and Status

10. Journal entry:

PROBLEM 3-7: WORKSHEET PREPARATION

Requirement (a): Recordings

b. The allotment is posted (recorded) in the Registry of

c. The obligations are recorded in the Obligation Request and

To recognize grant of cash advance for

Electricity Expenses 10,000

Requirement (b): Posting in the ledger

Requirement (c): Unadjusted Trial Balance

Accounts Debit Credit

Travelling Expenses - Local 17,000

Requirement (d): Adjusting Entry

(AJE) Subsidy from National Government 52,000

Requirement (e): Worksheet

Requirement (f): Closing entries

(CL1 Accumulated Surplus/(Deficit) 33,000

(CL3 Revenue and Expense Summary 215,000

PROBLEM 3-8: WORKSHEET PREPARATION

b. The allotment is posted (recorded) in the Registry of

c. The obligations are recorded in the Obligation Request and

(e.3) Due to Officers and Employees 250,000

To recognize collection and remittance

Requirement (2): Posting to the Ledger

Requirement (3): Unadjusted Trial Balance

Accounts Debit Credit

Requirement (4): Adjusting Journal Entries

(AJE1.1 Depreciation-Buildings & Other 30,000

Requirement (5): Worksheet

Requirement (6): Closing entries

(CL1 Accumulated Surplus/(Deficit) 250,000

Requirement (7): Statement of Financial Position

Cash and Cash Equivalents 30,000

Total Current Assets 165,000

Total Noncurrent Assets 580,000

TOTAL ASSETS 745,000

TOTAL LIABILITIES 90,000

TOTAL ASSETS less TOTAL

Accumulated Surplus/(Deficit) 655,000

TOTAL NET ASSETS/EQUITY 665,000

Requirement (8): Statement of Financial Performance

Net Financial Assistance/Subsidy 1,167,000

SURPLUS/ (DEFICIT) FOR THE PERIOD 572,000

Requirement (9): Notes to the Financial Statements

Accounts Receivable 120,000

Note 2: Property, Plant and Equipment

Property, Plant and Equipment, net 580,000

Note 3: Personnel Services