Quiz 1: - 11 - Answer - Key - Chapter - 1 - and - Chapter - 2 - Quizpdf

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QUIZ 1
The unlawful use of government resources shall not be the personal liability of the employee found to
be directly responsible therefor.
True
False
A government officer entrusted with the possession of government resources is
responsible for the safekeeping therefor in accordance with the law. Every accountable officer shall be
properly bonded. True
False
No accountable officer shall be relieved from liability merely because he has acted under the direction
of a superior officer in unlawfully utilizing the government resources entrusted to him, unless before
that act, he has notified the superior officer, in writing, that the utilization is illegal.
True
False
Each agency shall maintain accounting books and budget registries which are reconciled with the
cash records of the BIR and the budget records of the BTr .
True
False
The Philippine Constitution and other laws require government funds to be utilized in accordance with
the direct orders of the
President. True
False
This encompasses the processes of analyzing, recording, classifying, summarizing and
communicating all transactions involving the receipt and disposition of government funds and
property, and interpreting the results thereof.
a) Accounting
b) Government accounting
c) Financial accounting
d) Management accounting
This is essentially the set of standards used by the Philippine Government for government
accounting.
a) PFRS
b) TGAS
c) NGAS
d) GAM for NGAs
The Government Accounting Manual for National Government Agencies is promulgated by which
government agency based on the authority conferred to it by the Philippine Constitution?
a) Bureau of Treasury
b) Bureau of Internal Revenue
c) Commission on Audit
d) Department of Budget and Management The financial records and reports of
government entities shall comply with the following (select the exception):
a) Fund cluster accounting
b) Philippine Public Sector Accounting Standards (PPSAS) and relevant laws, rules and
regulations
c) Accrual basis of accounting
d) Single-entry bookkeeping
Which of the following is not a phase in the budget cycle?
a) Budget Computation
b) Budget Preparation
c) Budget Accountability
d) Budget Execution
This is the first step in the budget cycle, wherein the Department of Budget and
Management calls all government agencies.
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a) Budget Call
b) Budget Deliberation
c) Budget Computation
d) Budget Hearing
The authorization made by a legislative body to allocate funds for purposes specified by the legislative
or similar authority.
a) Budget allocation authority
b) Execution
c) Government authorization
d) Appropriation
The phase in the budget cycle where the government funds are spent.
a) Budget Accountability
b) Budget Execution
c) Budget Allocation
d) Budget Spending
The authority issued by the DBM to central, regional, and provincial offices and operating units to
cover their cash requirements. It specifies the maximum amount of cash that can be withdrawn from
a government servicing bank in a certain period, and is based on the agency’s submitted Monthly
Cash Program.
a) Allotment Release Program
b) Notice of Transfer of Allocation
c) Notice of Cash Allocation (NCA)
d) Non-Cash Availment Authority
The last step in the last phase of the budget of the budget cycle is
a) Execution
b) Audit
c) Payment/Disbursement
d) Performance Reviews
Quiz 2
Technically, only the Journals and Ledgers are considered accounting records; the Registries are
budget records. True
False
Separate accounting records and budget registries are maintained for each fund cluster. True
False
Government entities and business entities use the term "obligation" or the phrase "incurrence of
obligation" similarly.
True
False
A check disbursement is normally recorded as a credit to the "Cash - Modified Disbursement
System (MDS), Regular" account.
True
False
The GAM for NGAs requires the Collecting
Officer to issue an official receipt to acknowledge the receipt of the Notice of
Cash
Allocation. True
False
This type of expenditure pertains to all types of employee benefits.
a) FE
b) PS
c) CO
d) MOOE
Entity A, a government entity, made disbursements for the travelling expenses of its
personnel. These expenditures are most likely classified as
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a) PS
b) FE
c) MOOE
d) CO
The receipt of an allotment is recorded by a government entity in the
a) ORS
b) RAOD
c) RAOD and RAPAL
d) RAPAL
The receipt of an appropriation is recorded by a
government entity in the
a) RAOD
b) ORS
c) RAOD and ORS
d) RAPAL
According to the Revised Chart of Accounts (RCA) issued by COA, the "Subsidy from National
Government" account is a(an)
a) Liability account
b) Asset account
c) Revenue account
d) Equity account
Which of the following is a non-exchange transaction?
a) Leasing
b) Collection of taxes
c) Rendering of legal services
d) Collection of tuition fees It is a type of fund held by a government entity that is
designated for special purposes.
a) Fiduciary fund
b) Special fund
c) Trust fund
d) General fund
The receipt of a performance bond or a security deposit is credited to a
a) revenue account
b) liability and cash accounts
c) liability account
d) cash account
According to the GAM for NGAs, which of the following may never give rise to revenue for a
government entity?
a) Services in-kind
b) Concessionary loans
c) Grant with condition
d) Debt forgiveness
When an amount already recognized as revenue becomes subsequently uncollectible, it is a) not
recognized
b) either as an expense or an adjustment to the revenue originally recognized, depending on the
accounting policy
c) recognized as an adjustment to the revenue
originally recognized
d) recognized as expense
Quiz 3
It encompasses the processes of analyzing, recording, classifying, summarizing and communicating all
transactions involving the receipt and disposition of government funds and property, and interpreting
the results thereof.
a) Government auditing
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b) Government accounting
c) Government reporting
d) Tax accounting
The GAM for NGAs is promulgated by the
a) Board of Accountancy (BOA)
b) Commission on Audit (COA)
c) Commission on Accounting (COA)
d) Bureau of Internal Revenue (BIR)
The Commission on Audit (COA) is responsible for
a) directly implementing the projects of the government.
b) receiving and keeping national funds and managing and controlling the disbursements thereof.
c) promulgating accounting and auditing rules and regulations.
d) the formulation and implementation of the national budget with the goal of attaining the nation’s
socio-economic objectives.
Which of the following is not charged with government accounting responsibility?
a) Bureau of Internal Revenue
b) Commission on Audit
c) Department of Budget and Management
d) Non-stock, non-profit private hospital
Which of the following qualitative characteristics may be sacrificed when reporting information on a
timely basis?
a) Faithful representation
b) Reliability
c) Substance over form
d) Relevance
According to the GAM for NGAs, information has this qualitative characteristic if it can be used to
assist in evaluating past, present or future events or in confirming or correcting past evaluations.
a) Predictive value
b) Relevance
c) Materiality
d) Feedback value
This refers to the comparability between the financial statements of different entities?
a) Horizontal comparability
b) Inter-comparability
c) Vertical comparability
d) Intra-comparability
When the substance of a transaction or event differs from its legal form, the entity should report the
transaction’s or event’s
a) legal form
b) a trade-off between substance and form
c) substance
d) either substance or form, depending on
their significance
The implication that users must be informed of the entity’s policies, changes to those policies,
and the effects of those changes refers to
a) Comparability
b) Understandability
c) Completeness
d) Reliability
In the financial reporting system of the national government, to which of the following shall an entity
reconciles its cash records?
a) COA
b) Office of the President
c) BTr
d) DBM
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Which of the following approaches to budget preparation provides the best internal control?
a) Zero-based budgeting
b) Zero-sum budgeting
c) Incremental budgeting
d) Top-down budgeting This approach to budgeting requires the justification of items in
the budget irrespective of whether they are new or carried over from the previous year.
a) Bottoms-up budgeting
b) Bottoms-down budgeting
c) Incremental budgeting
d) Zero-based budgeting
Which of the following is correct regarding zero- based budgeting?
a) All zeroes in the budget are omitted.
b) Several parties participate in the budget preparation starting from the lowest levels of the
government to the highest levels.
c) The current year’s budget is formulated without regard to the previous year’s budget.
d) All proposed programs and expenditures in the upcoming year must be new. Programs and
expenditures in the previous year should never be carried over to the next year.
Which of the following would most likely comes first in the budget process?
a) Budget Call from the DBM
b) President’s enactment of the budget
c) Presentation to the Office of the President
d) Budget accountability report Which of the following would most likely comes last in the budget
process?
a) Allotment
b) Disbursements
c) Performance review
d) Budget accountability reports
Entity A, a government entity, receives authorization to disburse funds not to exceed ₱1B in a
specified period. This event can be described as
a) Appropriation
b) Allotment
c) None of the choices
d) Notice of Cash Allocation Entity A, a government entity, receives notice that out of
its ₱10B approved budget for the year, Entity A can incur obligations up to ₱4B in the first quarter.
This event can be described as
a) Notice of Cash Allocation
b) None of the choices
c) Appropriation
d) Allotment
Entity A, a government entity, receives notice that for the current year, the maximum amount it can
spend on maintenance and other operating expenses is ₱ This event can be described as
a) Allotment
b) Notice of Cash Allocation
c) None of the choices
d) Appropriation
After receiving its obligational authority amounting to ₱4B, Entity A enters into binding
agreements for the eventual payments of a total sum of ₱ The “₱3B” event can be described as
a) Disbursement authority
b) Allotment
c) Disbursement
d) Obligation
It is a part, segment, unit or function of a government agency, headed by a manager, who is
accountable for a specified set of activities.
a) Budget center
b) Responsibility center
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c) Call center
d) Responsibility accounting Which of the following records is technically not considered
an accounting book?
a) General journal
b) Registry of Appropriations and Allotments
c) Subsidiary ledger
d) Cash Disbursements Journal Which of the following is (are) affected when a government entity
incurs obligations?
a) ORS and RAOD
b) RAPAL
c) RAOD
d) ORS
Which of the following is (are) affected when a government entity makes disbursements to settle
recorded obligations?
a) Journal and Ledger
b) All of the other choices
c) ORS
d) RAOD
Which of the following accounts is most likely credited when a government entity remits its collections
to the National Treasury?
a) Cash-Tax Remittance Advice
b) Cash-Modified Disbursement System
(MDS), Regular
c) Cash – Collecting Officers
d) Cash-Treasury/Agency Deposit, Regular
This event is recorded in the books of accounts.
a) Notice of Cash Appropriation
b) Closing entries
c) Notice of Appropriation
d) Notice of Allotment
The receipt of allotment is recorded in the
a) ORS
b) RAPAL and RAOD
c) RAOD
d) RAPAL
According to the GAM for NGAs, the Registries are (choose the incorrect statement)
a) maintained by the accounting unit of a government entity
b) maintained by the budget division of a
government entity
c) maintained by fund cluster
d) maintained for each object of expenditure, whenever the registry is used for monitoring
obligations and disbursements
The 8-digit Revised Chart of Accounts (RCA) Code for the account “Subsidy from National
Government” starts with number
a) 6
b) 2
c) 4
d) 3
Which of the following is not a form of disbursement authority?
a) Allotment
b) Non-Cash Availment Authority
c) Notice of Cash Allocation
d) Cash Disbursement Ceiling The NCA is recorded in the
a) RANCA
b) Books of Accounts
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c) ORS
d) RANCA and Books of Accounts A government entity recognizes revenue from
exchange or non-exchange transactions. Which of the following may not give rise to revenue by a
government entity?
a) Receipt of a bequest from the king of a foreign realm.
b) Receipt of cash donation from an international organization.
c) Receipt of military equipment as donation from a foreign government.
d) Receipt of free trainings and seminars regarding process technology on
farming from an international organization.
All of the following give rise to the recognition of revenue from non-exchange transaction except
a) Fines and penalties
b) Sale of goods
c) Donation of goods in-kind
d) Taxes
According to P.D. 1445, all revenues of an entity shall be remitted to the National Treasury and
included in the
a) National fund
b) Official fund
c) Special fund
d) General fund
Remittances of collections to the National Treasury are recorded as a debit to which of the following
accounts
a) Cash – Collecting Officers
b) Subsidy from National Government
c) Cash-Treasury/Agency Deposit,
Regular
d) Cash-Modified Disbursement System
(MDS), Regular
The national government received a foreign grant conditioned on the construction of a public
infrastructure. Entity A was chosen as the implementing agency. When the national government
received the grant, the entry in the
BTr’s books included a
a) credit to the “Other Deferred Credits” account.
b) credit to the “Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas” account.
c) credit to the “Subsidy from National Government” account.
d) debit to the “Cash – Modified Disbursement System (MDS), Regular” account.
At the end of the period, the “Cash- Treasury/Agency Deposit, Regular” account is closed to the
a) Accumulated Surplus or Deficit account.
b) Cash-Modified Disbursement System
(MDS), Regular account.
c) This account is not closed.
d) Subsidy from National Government account.
Which of the following does not give rise to revenue from assistance or subsidy?
a) Non-Cash Availment Authority
b) Notice of Cash Allocation
c) Tax Remittance Advice
d) Inter-agency Fund Transfer
According to P.D. 1445,
a) Amounts received in trust and from business-type activities of the government may be
separately recorded.
b) Where mechanical devices (e.g. electronic official receipt) are used to acknowledge cash receipts,
the BIR may approve, upon request, the exemption from the use of accountable forms.
c) A collecting officer shall immediately issue a temporary receipt upon collecting a
payment of any nature.
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d) All revenues of an entity shall be retained by the entity and included in its General Fund, unless
another law specifically allows otherwise.
According to the GAM for NGAs, revenue includes only those that are received or receivable by the
entity in its own account. Accordingly, receipts on behalf of another entity are
a) remitted only through the use of the TRA.
b) recognized as revenue.
c) recorded only in the registries but not in the books of accounts.
d) recorded as liability. Government entities and business entities use the same accounting
treatment for all of the following except
a) recognizing revenue from royalty agreements.
b) remittance of taxes withheld to the BIR
c) recognizing revenue from dividends.
d) trade discounts allowed to customers.
QUIZ 4
No additional cash advance shall be given to any official or employee unless previous
cash advance given to him is first liquidated.
True
False
All disbursements shall be made through Disbursement Vouchers or Payroll which
are approved by the Head of the Requisitioning Unit.
True
False
The Non-Cash Availment Authority is a disbursement authority issued
to government agencies with foreign service posts.
True
False
A certification on the availability of allotment is required before a
disbursement of government funds is made. According to the GAM for NGAs, who
shall issue the certification?
a) Chief Accountant
b) Head of Agency
c) Budget Officer
d) Requisitioning Individual The entry in the books of a government agency
with foreign service post to record the receipt of disbursement authority called
the CDC includes
a) debit to Subsidy from National
Government
b) credit to Subsidy from National
Government
c) credit to Cash-Constructive Income
Remittance
d) debit to Cash-Modified Disbursement System (MDS)
Which of the following government agencies will most likely be able to obtain a
disbursement authority in the form of a CDC?
a) NFA
b) DFA
c) DPWH
d) BIR
Which of the following modes of disbursements is most similar to a check
disbursement?
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a) eMDS
b) NCAA
c) ADA
d) NBA
Which of the following is not used in processing disbursements?
a) ORs
b) PCVs
c) DVs
d) Payroll
Which of the following is not a form of disbursement authority? NCA
NTA
TRA
Allotment
Entity A acquires equipment on account and settles the account by debiting Accounts
Payable and crediting Subsidy from National Government. The mode of disbursement
used by Entity A is most likely a(an)
a) CDC
b) ADA
c) NCAA
According to the GAM for NGAs, a
government entity's cash comprises all
of the following, except
a) Cash Equivalents
b) cash treasury accounts
c) cash in bank
d) cash on hand
Which of the following is not considered a financial asset?
a) Prepaid assets
b) Investment in debt securities
c) Petty cash fund
d) Accounts receivable Dishonored checks are recorded by a government
entity as
a) Other receivable
b) Accounts receivable
c) Losses
d) Notes receivable The "Loans Receivable" account is most likely to be used
in the books of accounts of which of the following government agencies?
a) BTr
b) All of the other choices
c) COA
d) NIA
The subsequent changes in the fair value of an investment that is classified as
available for sale are recognized in a) not recognized
b) net asset or equity
c) surplus or deficit
d) any of the others as an accounting policy
This document is prepared when end users request for the issuance of inventories that
are available on stock.
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a) Purchase Requisition Form

b) Requisition and Issue Slip
c) Purchase Order
d) Custodian Inventory Slip
Which of the following cost formulas is not available for use by government entities?
Weighted average
Specific identification
FIFO
All of the other choices are available Agricultural produce after the point of harvest
is accounted for as PPE prepaid assets inventory investment property Which of the
following is an investment property?
a) Property held for strategic purposes
b) Property occupied by employees
c) Property held to provide a social
service and which also generates cash inflows
d) Property that is being constructed or developed for future use as
investment property
For government entities, the capitalization threshold for PPE is
at least P5,000 not less than
P25,000 more than P15,000 P15,000 or more
QUIZ 5
Which of the following is not a financial liability?
a) Notes payable
b) Due to BIR
c) Accounts payable
d) Electricity bill payable
Transaction costs on issuing bonds are
a) deducted from the initial carrying
amount of the bonds
b) expensed outright
c) subsequently amortized as expense using the straight-line method
d) added to the initial carrying amount
of the bonds
A provision is measured at
a) lower of cost and fair value
b) fair value
c) the entity's best estimate of the
settlement amount
d) cost
Which of the following is correct regarding contingent assets?
a) Contingent assets are recognized and disclosed if probable
b) Contingent assets are always ignored
c) Contingent assets are recognized if
probable
d) Contingent assets are only
disclosed if probable
A present obligation whose cost can be measured reliably but with improbable outflow
of resources embodying economic benefits or service potential is most likely to be
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a) disclosed only
b) recognized
c) ignored
d) recognized and disclosed Which of the following distinguished a provision from other
types of liabilities? a) A provision is supported by an
internally generated document (e.g. DVs) rather than externally generated
document (e.g. ORs)
b) A provision requires disclosure in the notes
c) A provision necessarily needs to be estimated because it is a
liability of uncertain timing or amount
d) A provision need not meet all of the recognition criteria for a liability before it is
recognized
A government entity, which is a lessee under a finance lease, recognizes an asset
acquired under a finance lease, and the related lease liability, measured at
a) the fair value of the lease property at inception date
b) the lower between the fair value of
the lease property at inception date, and the present value of the minimum lease
payments at inception date
c) the present value of the
minimum lease payments at inception date
d) the higher between the fair value of
the lease property at inception date, and the present value of the minimum lease
payments at inception date
Entity A acquires an asset under a finance lease. The lease does not transfer ownership
or contain any purchase option. Which of the following statements is correct?
a) Entity A will depreciate the leased asset over the shorter of the asset's
useful life and the lease term
b) The lease cannot qualify for
accounting as finance lease
c) Entity A will not depreciate the asset
d) Entity A will depreciate the leased asset over its useful life In accounting for finance
leases, lease payments are discounted using
a) lessee's incremental borrowing rate
b) the interest rate implicit in the
lease if determinable; if not, then the lessee's incremental
borrowing rate
c) the interest rate implicit in the lease
or lessee's incremental borrowing rate
d) the interest rate implicit in the lease Any asset or liability arising from a lease is
initially recognized at the conception of the lease
a) inception of the lease or
commencement of the lease
b) commencement of the lease term
c) inception of the lease Entity A entered into two lease contracts: Lease 1: transfers
substantially all the risks and rewards incidental to ownership of the leased asset.
Lease 2: does not transfer substantially all the risks and rewards incidental to
ownership of the leased asset
How should Entity A classify the leases?
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(Lease 1, Lease 2)
a) Finance, Finance
b) Finance, Operating
c) Operating, Operating
d) Operating, Finance
According to the GAM for NGAs, government entities shall present financial
statements annually. True
False
The statement of financial position is dated as at the reporting date. True
False
Government entities present information on other comprehensive income, just like
business entities.
True
False
The GAM for NGAs requires government entities to present expenses in the statement
of financial performance according to the function of those expenses.
True
False
The statement of financial performance of a government entity is the exact equivalent
of the statement of comprehensive income of a business entity.
True
False
Which of the following is not one of the components of a complete set of general
purpose financial statements of government entities?
a) Statement of Changes in Net Assets/Equity
b) Notes to the Financial Statements
c) Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances
d) Statement of Comparison of Budget and Actual Amounts
Additional disclosures shall be made in the notes if an entity presents expenses by
a) all of the other choices
b) nature
c) function
d) current/noncurrent
The GAM for NGAs requires which of the following methods of presenting cash flows
from (used in) operating activities in the statement of cash flows? a) Direct method
b) Neither direct nor indirect method
c) Indirect method
d) Direct or indirect method A government entity presents payments for purchases of
inventories in the statement of cash flows
a) net of withholding taxes
b) under investing activities
c) as footnote disclosure only
d) gross of withholding taxes
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FINAL QUIZ
Which of the following shall certify the availability of allotment before obligations can be incurred and
disbursements are made?
a. Budget Officer
b. COA Auditor
c. Chief Accountant
d. Head of Agency
Which of the following shall certify the availability of funds and completeness of supporting documents
before the Head of Agency or his/her authorized representative can enter into contracts that obligate
the government for the eventual payment of government funds?
a. BTr
b. Chief Accountant
c. COA Auditor, jointly with DBM
d. Budget Officer
All Disbursement Vouchers (DVs) or Payroll shall be approved by the a. Chief Accountant
b. Budget Officer
c. COA Auditor Head of Agency
According to the GAM for NGAs, cash disbursements are made through
a. Any of the other choices
b. cash advances to authorized personnel
c. direct cash payments by the Head of
Agency to the payees
d. direct cash payment by Collecting Officers to payees
Which of the following reflects a Non-Cash Availment Authority (NCAA) mode
of disbursement?
a. Accounts Payable
Cash-Constructive
Income Remittance
b. Accounts Payable
Cash – Modified
Disbursement System (MDS),
Regular
c. Accounts Payable
Subsidy from National Government
d. None of these.
Entry C
Entry B
Entry A
It is a hedge of the exposure to changes in fair value of a recognized asset or liability or an
unrecognized firm commitment, or an identified portion of such an asset, liability or firm commitment,
that is attributable to a particular risk and could affect surplus or deficit.
a. Fair value hedge
b. Cash flow hedge
c. Hedge of a net investment in a foreign operation
d. Hedge of a recognized asset or liability All of the following may cause the cancellation of a check
drawn by a government entity except
a. The check is prepared using a pen with
red ink (incorrect)
b. The check becomes stale
c. The check is dishonored
d. Wrong spelling or unnecessary markings on the check
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Which of the following statements is incorrect regarding the accounting for unreleased checks by a
government entity?
a. At the start of the year, a reversing entry is made for the unreleased checks in the previous
year.
b. Unreleased checks are reverted back to cash.
c. Unreleased checks are physically cancelled.
d. The accounting procedures for unreleased checks prescribed under the GAM for NGAs apply
only to commercial checks.
Which of the following may not be included as part of cash in the note disclosures?
a. Post-dated checks drawn
b. Unreplenished petty cash fund consisting of only the coins and
currencies held as at the reporting date
c. Issued checks that were cancelled because they became stale
d. Treasury bills acquired 3 months before maturity date
Which of the following does not qualify as cash equivalent for a government entity?
a. Temporary investments in stocks that are expected to be sold within 1 month after the
reporting date.
b. Money market placement with an original term of 1 year but matures within 3 months after the
reporting date. (incorrect)
c. All of the other choices
d. Money market placement with an original term of 3 months.
Entity A, a government entity, purchases office supplies. Entity A would most likely record the
purchase
a. as Inventory Held for Distribution
b. by debiting the Purchases account
c. by debiting the Office Supplies Expense account
d. as Inventory Held for Consumption Which of the following documents is prepared when
issuing semi-expendable property to end- users?
a. Waste Materials Report
b. Supplies Ledger Card (SLC)
c. Inventory Custodian Slip
d. Requisition and Issue Slip (RIS)
The supply or property office of a government entity uses this to record and monitor the movements
and balances of inventories.
a. Stock Ledger Card
b. Stock Card
c. Registry of Inventory
d. Inventory Listing
For government entities, inventories are assets
(choose the incorrect one)
a. In the form of materials or supplies to be consumed in the production process or in the
rendering of services.
b. Used in the production of goods.
c. In the process of production for sale, consumption, distribution or exchange.
(incorrect)
d. Held for sale, consumption, distribution, or exchange.
Who owns the goods in transit under FOB shipping point?
a. buyer
b. courier
c. either buyer or seller
d. seller
Which of the following is most likely an acceptable measurement for agricultural produce
Initial measurement Subsequent
measurement
a. fair value less costs to sell cost
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b. fair value less costs to sell lower of

cost
and NRV
c. fair value lower of cost and
FV less costs to sell
d. fair value less costs to sell fair value less costs to sell
a (incorrect)
d c b
Biological assets and agricultural produce are recognized when all of the following are present
except
a. control (incorrect)
b. probable future event
c. probable future economic benefits
d. fair value or cost can be measured reliably
Which of the following properties falls under
the definition of investment property? 1. Land held for long-term capital appreciation
2. Property occupied by an employee paying market rent
3. Property being constructed on behalf of third parties
4. A building owned by an entity and leased out under an operating lease a. 2, 3, and 4
b. 1 and 2
c. 1 and 4
d. 2 and 4
Which of the following measurement bases is acceptable for the subsequent measurement of an
investment property held by a government entity?
a. fair value less cost to sell
b. none of the other choices
c. fair value
d. cost less accumulated impairment losses
Which of the following statements is correct
regarding investment property?
a. Transfers to or from investment property shall be made when, and only when,
there is a change in use.
b. When a government entity applies the fair value model to account for its investment
properties subsequent to initial recognition, changes in fair values are recognized in surplus
or deficit rather than a direct adjustment to equity.
c. An entity may classify assets other than land and/or building as investment property.
d. During the period, Entity A, a government entity, reclassifies a building that was previously
used as office space to investment property. Entity A will recognize a gain if the fair value of
the asset exceeds its carrying amount on the date of transfer.
The distinguishing characteristic that identifies an investment property from the other assets of
c. Earns rental as part of the ordinary operations of the entity.
d. The property does not derive cash flows separate from the other assets of the entity.
Select the incorrect statement regarding impairments of investment properties.

a. Impairments of investment properties of government entities are recognized in surplus or
deficit.
b. Impairment losses on investment properties measured under the cost model are
never reversed.
c. Investment properties are subject to impairment.
d. Compensation from third parties for investment property that was impaired or lost shall be
recognized in surplus or deficit when the compensation becomes receivable and not offset with
the amount of loss.
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All of the following are directly attributable costs in the acquisition or construction of an item of PPE
except
a. Broker’s commission (incorrect)
b. Costs of employee benefits arising directly from the construction or acquisition of PPE
c. Cost of staff training
d. Costs of site preparation
According to the GAM for NGAs, the costs incurred during the construction of an asset are
a. initially recorded in the registries and recorded in the journals only when the construction is
complete and the asset is turned over and accepted by the government entity.
b. capitalized in a construction in progress account.
c. capitalized in the building account or other account.
d. expensed in the period incurred.
Government entities recognize depreciation
a. on a monthly basis.
b. on a weekly basis.
c. any of the other choices
d. only at year-end.
All of the following are expensed outright and do not form part of the cost of an item of PPE except
a. Professional fees incurred in the training of staff who will be operating the machinery acquired.
b. Administration and other general overhead costs.
c. Installation and assembly costs after the asset is in the location and condition intended by
management.
an entity is?
a. Changes in fair value of the asset is Which of the following is included in the initial
recognized in surplus or deficit. cost of an item of PPE?
b. Generates separately identifiable cash a. Cash discounts not taken flows from the other
assets of the entity. b. Trade discounts
c. Refundable purchase taxes
d. Insurance costs while a purchased equipment is in-transit.
d. Present value of the estimates of decommissioning and restoration costs
Interest expense on financial liabilities are recognized using the
a. any of the other choices
b. straight line method
c. effective interest method
d. amortized cost (incorrect)
It is a program that is planned and controlled by management, and materially changes either the
scope of an entity’s activities or the manner in which those activities are carried out.
a. Operating segment
b. Discontinued operations
c. Restructuring
d. Responsibility center
A legal obligation to restructure exists if, at the reporting date,

a. the entity has a detailed formal plan for a restructuring.
b. the entity has entered into a binding agreement to sell or transfer an operation.
c. the entity has a detailed formal plan for a restructuring and the plan to restructure is announced
to those affected by it.
d. the plan to restructure is announced to those affected by it.
Minimum lease payments (MLP) exclude which of the following?
a. Guaranteed residual value
b. Rentals
c. Bargain purchase option
d. Executory costs and contingent rents
The discount rate used in accounting for finance leases is the (assume all of the following are determinable)
P a g e | 17
a. lease contract stated interest rate

b. lessee’s incremental borrowing rate of interest
c. interest rate implicit in the lease
d. interest rate on government bonds Initial direct costs incurred on leases are expensed immediately.
a. generally expensed immediately except those incurred by lessors under sales type leases which are
capitalized.
b. generally capitalized except those incurred by lessors under sales type leases which are expensed
immediately.
c. capitalized. (incorrect)
When the lease qualifies as a finance lease under the “major part of the economic life” criterion, the leased asset is
depreciated
a. over the lease term
b. over its useful life
c. over the shorter of the lease term and
the useful life
d. not depreciated
Which of the following will lead to finance lease classification?
a. Transfer of ownership
b. any of the other choices
c. Bargain purchase option
d. Lease term is at least 75% of the leased asset’s useful life
The GAM for NGAs requires all of the following
information to be displayed prominently and repeatedly on the face of the financial statements, except
a. The reporting currency
b. The level of rounding-off of amounts
c. Name of fund cluster
d. Name of the related Registries used
Which of the following does not lead to the classification of a liability as current?
a. It is cash or a cash equivalent, unless it is restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting date.
b. Expected to be settled in the entity’s normal operating cycle.
c. Due to be settled within 12 months after the reporting date.
d. Held primarily for trading.
The presentation requirements for statement of cash flows of government entities differ from the requirements of a
business entity in which of the following respects?
a. The classification of cash flows according to operating, investing and financing activities.
b. The presentation of cash flows from (used in) operating activities using the direct method only; the choice of
using the indirect method is not available.
c. The presentation of cash flows from (used in) investing and financing activities at gross amounts of receipts
and disbursements, unless the conditions for presenting at net amounts are met.
d. The presentation of statement of cash flows in comparative form, with cross-referencing to the notes whenever
deemed relevant to the understanding by users of financial statements. (incorrect)
A government entity recognizes the effect of this item in surplus or deficit rather than directly in equity.
a. Change in accounting policy
b. The increase in the fair value of an investment that is classified as available- for-sale financial
asset
c. Receipt of Notice of Cash Allocation
d. Correction of a prior period fraudulent transaction that is discovered in the current year
When an entity presents expenses in the statement of financial performance by function, it shall provide additional
disclosures in the notes that include all of the following except
a. employee benefits expense
b. depreciation expense
c. capital outlays
d. amortization expense
ANSWER KEY PRELIM EXAM

EXAM DATE: 9/16/2020
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1. What is the legal basis of the COA in promulgating the GAM for NGAs?
a. Revised Penal Code, Art. 217
b. State Audit Code of the Philippines, P.D. No. 1445, Sec. 109
c. Article IX-D, Section 2 par. (2) of the 1987 Constitution of the Republic of the
Philippines
d. R.A. 9298
2. The GAM for NGAs aims to update all of the following except
a. standards, policies, guidelines and procedures in accounting for government funds and
property
b. coding structure and accounts
c. accounting books, registries, records, forms, reports and financial statements
d. rules and regulations regarding the filing and payment of taxes by government
employees
3. Which of the following is one of the Fundamental Principles for Revenue under the GAM for NGAs?
a. No payment of any nature shall be received by a collecting officer without immediately
issuing an official receipt in acknowledgement thereof. The receipt may be in the form
of postage, internal revenue or documentary stamps and the like, officially numbered
receipts, subject to proper custody, accountability, and audit.
b. Temporary receipts may be issued to acknowledge the receipt of public funds;
provided that, an official receipt is issued within a short period of time as may be
prescribed by the COA.
c. Money in the hands of the Collecting Officer may be utilized for the purpose of cashing
private checks, upon proper endorsement and identification of the payee or endorsee.
Checks drawn in favor of the government in payment of any such indebtedness shall
likewise be accepted by the officer concerned.
d. All of these
4. Which of the following is not one of the Fundamental Principles for Disbursement of Public Funds
under the GAM for NGAs?
a. No money shall be paid out of any public treasury or depository except in pursuance of
an appropriation law or other specific statutory authority.
b. Government funds or property shall be spent or used solely for public purposes.
c. Trust funds shall be available and may be spent only for the specific purpose for which
the trust was created or the funds received.
d. Fiscal responsibility shall, to the greatest extent, be assumed solely by the Head of the
government agency.
5. Which of the following statements is incorrect regarding the GAM for NGAs?
a. 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.
b. 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.
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c. 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.
d. The DBM accounts for the cash, public debt and related transactions of the NG.
6. This accounting concept is necessary so that users can use information in the financial statements
in noting differences and similarities between those information presented and information from
other sources that the user may have. a. Financial statement analysis and ratios
b. Understandability
c. Comparability
d. Feedback value or confirmatory value
7. Which of the following principles is not in accordance with the Basic Government Accounting and
Budget Reporting Principles under the GAM for NGAs?
a. modified accrual basis of accounting in accordance with the PPSAS
b. budget basis for presentation of budget information in the financial statements (FSs) in
accordance with PPSAS 24
c. RCA prescribed by COA
d. financial statements based on both accounting and budgetary records
e. fund cluster accounting
8. The NGAs are responsible for

a. promulgating accounting and auditing rules and regulations.
b. implementing the national budget with the goal of attaining the nation’s socio-
economic objectives.
c. receiving and keeping national funds and managing and controlling the disbursements
thereof.
d. directly implementing the projects of, and performing the functions delegated by, the
government.
9. The basis of accounting required by the GAM for NGAs is

a. Budget basis
b. Modified accrual basis
c. Cash basis
d. Accrual basis
10. The President’s explanation of the country’s fiscal policy and budget priorities is contained in a
document called the
a. National Expenditure Program
b. President’s Budget Message
c. President’s Fiscal Policy and Priorities
d. Budget of Expenditures and Sources of Financing
11. After the incurrence of obligations, the next step in the budget cycle is
a. Allotment
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b. Disbursement
c. Appropriation
d. Disbursement authority
12. It is the expenditure authority derived from appropriation laws, government ordinances, and other
decisions related to the anticipated revenue or receipts for the budgetary period. a. Notice of Cash
Allocation
b. Allotment
c. Approved Budget
d. General Appropriations Bill
13. After the budget call, budget hearings are made whereby agencies defend their proposed programs
and expenditures for the upcoming year before the a. COA
b. DBM
c. Congress
d. BTr
14. Under responsibility accounting, a cost is considered controllable at a given level of managerial
responsibility if
a. the manager has the power to incur it within a given period of time.
b. the cost is non-recurring, can be measured with sufficient reliability and is not
immaterial
c. the cost is a fixed cost, such that its incurrence is reasonably certain. d. all of these.
15. Which of the following statements best differentiates the government accounting process from the
accounting process of a business entity?
a. The government accounting process involves numerous complicated steps or
procedures that are beyond the understanding of a mere JPIA member, but not for a
CPA.
b. The government accounting process involves procedures that are not generally
acceptable for business entities.
c. The government accounting process is similar to that of a business entity, except that
it incorporates budgetary controls, such as recording in the budget registries and
preparing periodic budget accountability reports.
d. Unlike for the accounting process of business entities which ends in the preparation of
general purpose financial statements, the government accounting process ends with
the audit by the COA.
16. This report, required of government entities, shows the names of creditors, the amounts owed to
them, and the number of days these obligations are outstanding. This report is submitted to the
COA and DBM within 30 days after the end of the year. a. List of Not Yet Due and Demandable
Obligations
b. Aging of Due and Demandable Obligations
c. Percentage of Obligations Report
d. Report on Allotments, Obligations and Disbursements
17. Under this approach to budgeting, several parties participate in the budget preparation, starting
from the lowest levels of the government up to the highest levels. a. Bottoms-up budgeting
b. Zero-based budgeting
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c. Incremental budgeting
d. Bottom-up budgeting
18. It encompasses the processes of analyzing, recording, classifying, summarizing and

communicating all transactions involving the receipt and disposition of government funds and
property, and interpreting the results thereof. a. Government accounting
b. Government reporting
c. Government auditing
d. Tax accounting
19. The GAM for NGAs is promulgated by the

a. Commission on Accounting (COA)
b. Commission on Audit (COA)
c. Board of Accountancy (BOA)
d. Bureau of Internal Revenue (BIR)
20. The Commission on Audit (COA) is responsible for

a. the formulation and implementation of the national budget with the goal of attaining
the nation’s socio-economic objectives.
b. receiving and keeping national funds and managing and controlling the
disbursements thereof.
c. directly implementing the projects of the government.
d. promulgating accounting and auditing rules and regulations.
21. Which of the following is not charged with government accounting responsibility?
a. Commission on Audit
b. Bureau of Internal Revenue
c. Non-stock, non-profit private hospital
d. Department of Budget and Management
22. Which of the following qualitative characteristics may be sacrificed when reporting information
on a timely basis? a. Relevance
b. Reliability
c. Substance over form
d. Faithful representation
23. According to the GAM for NGAs, information has this qualitative characteristic if it can be used to
assist in evaluating past, present or future events or in confirming or correcting past evaluations.
a. Feedback value
b. Predictive value
c. Materiality
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d. Relevance
24. This refers to the comparability between the financial statements of different entities? a. Inter-
comparability
b. Intra-comparability
c. Horizontal comparability
d. Vertical comparability
25. When the substance of a transaction or event differs from its legal form, the entity should report
the transaction’s or event’s a. substance
b. legal form
c. a trade-off between a and b
d. either a or b, based on their significance
26. The implication that users must be informed of the entity’s policies, changes to those policies, and
the effects of those changes refers to a. Comparability
b. Completeness
c. Understandability
d. Reliability
27. In the financial reporting system of the national government, to which of the following shall an
entity reconciles its cash records? a. Commission on Audit
b. Bureau of Treasury
c. Department of Budget and Management
d. Office of the President
28. Which of the following approaches to budget preparation provides the best internal control?
a. Incremental budgeting
b. Zero-sum budgeting
c. Top-down budgeting
d. Zero-based budgeting
29. This approach to budgeting requires the justification of items in the budget irrespective of
whether they are new or carried over from the previous year. a. Zero-based budgeting
b. Bottoms-up budgeting
d. Bottoms-down budgeting
30. Which of the following is correct regarding zero-based budgeting?

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a. Several parties participate in the budget preparation starting from the lowest levels of
the government to the highest levels.
b. All zeroes in the budget are omitted.
c. All proposed programs and expenditures in the upcoming year must be new.
Programs and expenditures in the previous year should never be carried over to the
next year.
d. The current year’s budget is formulated without regard to the previous year’s
budget.
31. Which of the following would most likely comes first in the budget process?
a. Budget accountability report
b. President’s enactment of the budget
c. Presentation to the Office of the President
d. Budget Call from the DBM
32. Which of the following would most likely comes last in the budget process?
a. Budget accountability reports
b. Allotment
c. Disbursements
d. Performance review
33. Entity A, a government entity, receives authorization to disburse funds not to exceed ₱1B in a
specified period. This event can be described as a. Notice of Cash Allocation
b. Allotment
c. Appropriation
d. Adontknowcation
34. Entity A, a government entity, receives notice that out of its ₱10B approved budget for the year,
Entity A can incur obligations up to ₱4B in the first quarter. This event can be described as a.
Notice of Cash Allocation
b. Allotment
c. Appropriation
d. Amnotsurecation
35. Entity A, a government entity, receives notice that for the current year, the maximum amount it
can spend on maintenance and other operating expenses is ₱10B. This event can be described as
a. Notice of Cash Allocation
b. Allotment
c. Appropriation
d. Budgetication
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36. After receiving its obligational authority amounting to ₱4B, Entity A enters into binding
agreements for the eventual payments of a total sum of ₱3B. The “₱3B” event can be described as
a. Disbursement
b. Allotment
c. Disbursement authority
d. Obligation
37. It is a part, segment, unit or function of a government agency, headed by a manager, who is
accountable for a specified set of activities. a. Responsibility Accounting
b. Responsibility Center
c. Budget Center
d. Call Center
38. Guil College, a private not-for-profit college, received the following cash inflows:
• $400,000 from students for tuition.
• $200,000 from a donor who stipulated that the money be invested indefinitely and the earnings
used for student scholarships.
• $100,000 from a donor who stipulated that the money be spent according to the wishes of the
Board of Trustees.
Which amounts of these cash flows should be shown on the cash flow statement as cash from
operating activities?
a. $700,000.
b. $400,000.
c. $600,000.
d. $500,000.
400,000 tuition + 100,000 unrestricted = 500,000
39. On December 30, 19X4, Leigh Museum, a not-for-profit organization, received a $7,000,000
donation of Day Co. shares with donor stipulated requirements as follows:
• Shares valued at $5,000,000 are to be sold with the proceeds used to erect a public viewing
building.
• Shares valued at $2,000,000 are to be retained with the dividends used to support current
operations.
Leigh adopted of FASB Statement No. 117, Financial Statements of Not-for-Profit Organizations. As a
consequence of the receipt of the Day shares, how much should Leigh report as temporarily
restricted net assets on its 19X4 statement of financial position?
a. $0
b. $2,000,000
c. $5,000,000
d. $7,000,000
40. CIBA, a non-profit performing arts organization, received a contribution of a term endowment and
a regular endowment. These endowments should be reported on the statement of activities as:
a. Permanently restricted in Term Endowments; Permanently restricted in Regular
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Endowments
b. Temporarily restricted in Term Endowments; Permanently restricted in Regular
Endowments
c. Temporarily restricted in Term Endowments; Temporarily restricted in Regular
Endowments
d. Unrestricted in Term Endowments; Temporarily restricted in Regular Endowments
41. Vista, a voluntary health and welfare organization, received a donation of $100,000 to be spent in
accordance with the wishes of the institution’s Board of Trustees. This donation should be reported
on the statement of activities as: a. Unrestricted revenue.
b. Other income – gifts.
c. Temporarily restricted revenue
d. Permanently restricted revenues
42. Ellen College, a private not-for-profit institution, received a $100,000 grant for faculty research in
20x1. The grant money was not spent until 20x2. For 20x1, Ellen College should report the
contribution as: a. Unrestricted revenue
b. Temporarily restricted revenue.
c. Other operating revenue.
d. Other non-operating revenue.
43. An NPO hospital has the following account balances:

Amount charged to patients $500,000
Revenue from newsstand 15,000
Undesignated gifts 40,000
Contractual adjustments 70,000
Interest income 12,000
Salaries expense – nurses 120,000
Bad debts 8,000
What is the hospital’s net patient service revenue? a.

$422,000
b. $430,000
c. $500,000
d. $540,000
(500,000 – 70,000) = 430,000
44. Home Care, Inc., a nongovernmental voluntary health and welfare organization, received two
contributions in 2003. One contribution of $250,000 was restricted for use as general support in
2004. The other contribution of $200,000 carried no donor restrictions. What amount should Home
Care report as temporarily restricted contributions in its 2003 statement of activities. a. $450,000
b. $250,000
c. $200,000
d. $0
45. The Weyman Hospital, a private, not-for-profit institution, reported the following information:
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Gross patient service revenue $1,000,000

Allowance for discounts to hospital employees 20,000
Bad debt expense 40,000
What amount should the hospital report as net patient service revenue?
a. 840,000
b. 900,000
c. 880,000
d. 980,000
46. A private not-for-profit hospital provided $150,000 in charity care for the current year. The hospital
should report this charity care as
a. Net patient service revenue of $150,000 and patient care expense of $150,000.
b. Net patient service revenue of $150,000 on the statement of operations.
c. Only in the notes to the financial statements.
d. As an unpaid accounts receivable on the balance sheet.
47. The Johnson Hospital, a private not-for-profit hospital, received the following revenues in the
current year:
Proceeds from sales of the Hospital’s flower shop $60,000
Dividends and interest revenue not restricted $20,000
Cash contributions for the renovation of the children’s ward in the Hospital $200,000
Which of these amounts should be reported as other revenues and gains (other revenue) on the
Statement of Operations?
a. $280,000
b. $60,000
c. $80,000
d. $260,000
48. A hospital has the following account balances:

Revenue from newsstand $ 50,000
Amounts charged to patients 800,000 Interest income
30,000 Salary expense – nurses
100,000
Bad debts 10,000
What is the hospital’s net patient service revenue?

a. $880,000
b. $800,000
c. $690,000
d. $680,000
49. A private not-for-profit performing arts center receives the following three donations:
• A gift of $90,000 which is unrestricted.
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• A gift of $125,000 restricted for payment of salaries.

• A gift of $200,000 that is restricted forever but the income from the gift may be used for
current expenditures.
Which of the following is not true?

a. Temporarily restricted net assets increased by $125,000.
b. Permanently restricted net assets increased by $325,000.
c. When the money is spent for salaries, unrestricted net assets increase and decrease by
the same amount.
d. When the money is spent for salaries, temporarily restricted net assets decrease.
50. Cash flows from a public university bookstore would appear on the statement of cash flows as
a. Cash flows from operations.
b. Cash flows from investing activities.
c. Cash flows from financing activities.
d. Cash flows from noncapital financing
51. Which one of the following is not a required financial statement for a private voluntary health and
welfare organization?
a. Statement of Financial Position
b. Statement of Activities and Changes in Net Assets
c. Statement of Fund Balance
d. Statement of Cash Flows
e. Statement of Functional Expense
52. Gerlack College, a private, not-for-profit institution, received a donation of $2,000,000 as a

challenge grant. If the college raises an additional $2,000,000 within the next two years, it may
keep the donation. If it fails, the $2,000,000 must be returned to the donor. How would the college
record the receipt of the grant? a. Unrestricted revenue.
c. Note to the financial statement.
d. Refundable advance.
53. Which of the following transactions of a private voluntary health and welfare organization would
increase temporarily restricted net assets in the statement of activities for the current year?
I. Received a contribution of $20,000 from a donor in the current year who stipulated that the
money not be spent until the following year.
II. Spent $25,000 for fund raising during the current year from a donation from the previous year.
a. I only
b. I & II
c. II only
d. Neither
54. On December 31, 20X1, the Board of Trustees of a private, not-for-profit college designated
$5,000,000 of unrestricted net assets for the construction of an addition to the music building.
What effect does this designation have on the college’s unrestricted and temporarily restricted net
assets shown on the statement of financial position on December 31, 20X1?
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a. Decrease in Unrestricted Net Assets; Increase in Temporarily restricted net assets

b. Decrease in Unrestricted Net Assets; No effect in Temporarily restricted net assets
c. No effect in Unrestricted Net Assets; Increase in Temporarily restricted net assets
d. No effect in Unrestricted Net Assets; No effect in Temporarily restricted net assets
55. The following contributions were received by a private voluntary health and welfare organization.
Which of these would not be recorded as an increase in unrestricted revenue? a. A carpenter
donated labor and materials for the construction of a deck.
b. A
painter A retired college professor donated reading services to senior citizens. The
organization
would not have paid for these services if they had not been
donated.
donated paint and labor to paint all the meeting rooms. c.
d. A CPA firm donated its services to audit the financial statements for the past year.
56. In November 20x1 Gilmore Heating and Air Conditioning Service repaired the air conditioning
system for GenCare, a voluntary health and welfare organization and mailed an invoice for $3,000.
On December 25, a note was received by GenCare indicating that Gilmore was canceling the
invoice and that repairs were being donated. For the year ended, December 31, 20x1, GenCare
should report these contributed services as: a. A footnote.
b. No disclosure is required but a thank-you
note was mailed to Gilmore.
c. An increase in unrestricted revenues and
increase in expenses on the statement of
an
d. activitie . An increase in temporarily restricted net assets in the statement
s
57. Which of the following types of health care
organizations recognize depreciation expense? Investor-Owned Not-for-Profit
Organizations Governmental Health Care
Health Care Enterprises Organizations
a. Yes Yes No
b. Yes No Yes
c. No No Yes
d. Yes Yes Yes
58. According to US GAAP, the accounting requirement unique to Voluntary Health and Welfare
Organizations (VHWO) is the
a. accounting for marketable securities which are subsequently measured at the lower
of cost and market value.
b. non-depreciation of property, plant and equipment.
c. provision of a statement of functional expenses that reports expenses by both
functional and natural classifications.
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d. recognition criteria for assets, which allow the recognition of items with improbable
inflows of resources embodying economic benefits.
59. ABC Organization, a non-profit entity, acquired shares of stocks to be held as investment for
₱200,000 using unrestricted net assets. During the year, ABC received cash dividends of ₱10,000.
At year-end, the shares have a fair value of ₱220,000.
What is the effect of the transactions described above on the year-end statement of activities of
ABC? increase (decrease)
a. 30,000
b. 20,000
c. (10,000)
d. 10,000
60. Private not-for-profit organizations should report a statement of cash flows using the a. Direct
method.
b. Indirect method
c. Working capital method
d. a or b
61. On the statement of operations of a health care organization, expenses are deducted from (use SFAS
117 in answering this question)
a. Temporarily unrestricted revenues.
b. Unrestricted revenues.
c. Unrestricted revenues and temporarily unrestricted revenues.
d. Permanently restricted revenues.
62. On the statement of activities of a private university, expenses are reported by (use SFAS 117 in
answering this question)
a. Character
b. Department
c. Object
d. Function
63. According to SFAS 117, the financial statements of a not-for-profit entity should focus on the
a. Economic resources measurement approach.
b. Current resources measurement approach.
c. Basic information on the organization as a whole.
d. Modified accrual approach.
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64. On December 1, 20x1, ABC Organization, a non-profit entity, had the following transactions:
• Purchased a vehicle costing ₱150,000 using unrestricted cash
• Received a vehicle with fair value of ₱120,000 from donation
ABC estimates that both of the vehicles have useful lives of 5 years and no residual value. ABC has an
accounting policy implying a time restriction on gifts of long-lived assets.
In ABC’s 20x1 statement of activities, what amount of depreciation expense should be included
under changes in unrestricted net assets?
a. 54,000
b. 4,500
c. 13,312
d. 0
1. It encompasses the processes of analyzing, recording, classifying, summarizing and communicating

all transactions involving the receipt and disposition of government funds and property, and
interpreting the results thereof. a. Government accounting
d. Tax accounting
2. The GAM for NGAs is promulgated by the

3. The Commission on Audit (COA) is responsible for

a. the formulation and implementation of the national budget with the goal of attainingthe nation’s
socio-economic objectives.
b. receiving and keeping national funds and managing and controlling the disbursements thereof.
4. Which of the following is not charged with government accounting responsibility? a. Commission on
Audit
2. This approach to budgeting requires the justification of items in the budget irrespective of
whether they are new or carried over from the previous year. a. Zero-based budgeting
P a g e | 31
3. Which of the following is correct regarding zero-based budgeting?

a. Several parties participate in the budget preparation starting from the lowest levels of the
government to the highest levels. b. All zeroes in the budget are omitted.
c. All proposed programs and expenditures in the upcoming year must be new. Programs and
expenditures in the previous year should never be carried over to the next year.
d. The current year’s budget is formulated without regard to the previous year’s budget.
4. Which of the following would most likely comes first in the budget process?
obligations? a.
ORS
b. RAPAL
c. RAOD
P a g e | 32

d. a d.and c
Budget Call from the DBM
5. Which of the following would most likely comes last in the budget process?
a. ORS
b. RAOD
b. Allotment
c. Disbursements
2. Which of the following is (are) affected when a government entity incurs
3. Which of the following is (are) affected when a government entity makes

disbursements to settle recorded obligations?
c. Journal and Ledger
d. All of these
4. Which of the following accounts is most likely credited when a government entity
remits its collections to the National Treasury?
a. Cash-Tax Remittance Advice
b. Cash-Modified Disbursement System (MDS), Regular
c. Cash-Treasury/Agency Deposit, Regular
d. Cash – Collecting Officers
5. The national government received a foreign grant conditioned on the construction of

a public infrastructure. Entity A was chosen as the implementing agency. When the
national government received the grant, the entry in the BTr’s books included a
a. credit to the “Subsidy from National Government” account.
b. debit to the “Cash – Modified Disbursement System (MDS), Regular” account.
c. credit to the “Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas” account.
d. credit to the “Other Deferred Credits” account.
6. At the end of the period, the “Cash-Treasury/Agency Deposit, Regular” account is

a. Subsidy from National Government account.
b. Accumulated Surplus or Deficit account.
c. Cash-Modified Disbursement System (MDS), Regular account.

P a g e | 33
d. This account is not closed.
7. Which of the following does not give rise to revenue from assistance or subsidy?
a. Inter-agency Fund Transfer
b. Notice of Cash Allocation
c. Tax Remittance Advice
d. Non-Cash Availment Authority
8. According to P.D. 1445,

a. Amounts received in trust and from business-type activities of the government may
be separately recorded .
b. All revenues of an entity shall be retained by the entity and included in its General
Fund, unless another law specifically allows otherwise.
c. A collecting officer shall immediately issue a temporary receipt upon collecting a
d. Where mechanical devices (e.g. electronic official receipt) are used to acknowledge
cash receipts, the BIR may approve, upon request, the exemption from the use of
accountable forms.
9. According to the GAM for NGAs, revenue includes only those that are received or
receivable by the entity in its own account. Accordingly, receipts on behalf of another
a. recorded as liability.
b. recognized as revenue.
c. recorded only in the registries but not in the books of accounts.
d. remitted only through the use of the TRA.
10 . Government entities and business entities use the same accounting treatment for
all of the following except
a. trade discounts allowed to customers.
b. recognizing revenue from royalty agreements.
c. recognizing revenue from dividends.
d. remittance of taxes withheld to the BIR
2. Which of the following shall certify the availability of funds and completeness of
supporting documents before the Head of Agency or his/her authorized representative
can enter into contracts that obligate the government for the eventual payment of
government funds?
b. Budget Officer
c. Chief Accountant
d. COA Auditor, jointly with DBM
3. All Disbursement Vouchers (DVs) or Payroll shall be approved by the
a. Budget Officer
b. Head of Agency P a g e | 34
entity are
a. BTr entity?
P a g e | 35
c. Chief Accountant
a.
d. COA Auditor
4. Which of the following is not one of the modes of disbursements by a government
b. credit card
c. online payment
d. payment through Short Messaging System (SMS)
5. Payments of checks that are chargeable against the Treasury Account are credited
a. Modified Disbursement System Checks
b. Commercial Checks
c. Advice to Debit Account
d. Cash-Modified Disbursement System (MDS) account
6. According to the GAM for NGAs, cash disbursements are made through
a. cash advances to authorized personnel

P a g e | 36
check
to the
P a g e | 37
b. direct cash payments by the Head of Agency to the payees

c. direct cash payment by Collecting Officers to payees
d. any of these
7. Which of the following statements regarding the disbursement of government funds

is incorrect?
a. No additional cash advance shall be given to any official or employee unless the
previous cash advance given to him is first liquidated.
b. Transfer of cash advance from one officer to another is prohibited.
c. A cash advance shall not be used to encash checks or to liquidate a previous cash
advance.
d. Officials and employees authorized to travel shall be granted cash advance to cover
traveling ex penses. The amount granted shall be accounted for as “Due to Officers and
Employees.”
8. It is an authority issued by an agency’s Central Office to its regional and operating

units to cover the latter’s cash requirements.
a. Notice of Cash Allocation (NCA)
b. Tax Remittance Advice (TRA)
c. Cash Disbursement Ceiling (CDC)
d. Notice of Transfer of Allocation (NTA)
P a g e | 38
P a g e | 39
QUIZ 1: PUBLIC ACCOUNTING AND BUDGETING
1. Which of the following records is technically not considered an accounting book?

a. General Journal
b. Subsidiary Ledger
c. Cash Disbursements Journal
d. Registry of Appropriations and Allotments
2. Which of the following is (are) affected when a government entity incurs

obligations?
a. ORS
b. RAPAL
c. RAOD
a and c
3. Which of the following is (are) affected when a government entity makes

disbursements to settle recorded obligations?
a. ORS
b. RAOD
c. Journal and Ledger
All of thes e
4. Which of the following accounts is most likely credited when a government entity
remits its collections to the National Treasury?
a. Cash-Tax Remittance Advice
b. Cash-Modified Disbursement System (MDS), Regular
c. Cash-Treasury/Agency Deposit, Regular
d. Cash – Collecting Officers
5. This event is recorded in the books of accounts.

a. Notice of Appropriation
b. Notice of Allotment
c. Notice of Cash Appropriation
d. Closing entrie s
6. The receipt of allotment is recorded in the

a. RAPAL
b. RAOD
c. ORS
d. a and b
7. According to the GAM for NGAs, the Registries are (choose the incorrect
a. maintained by the accounting unit of a government entity
b. maintained by fund cluster
c. maintained for each object of expenditure, whenever the registry is used for P a g e | 40
monitoring obligations and disbursements
d. maintained by the budget division of a government entity
d.
d.
P a g e | 41
8. The 8-digit Revised Chart of Accounts (RCA) Code for the account “Subsidy from
National Government” starts with number
a. 2
b. 3
c. 4
d. 6
9. Which of the following is not a form of disbursement authority?

a. Allotment
c. Non-Cash Availment Authority
d. Cash Disbursement Ceiling
10.The NCA is recorded in the

a. Registry of Allotments and Notice of Cash Allocation (RANCA).
b. Books of accounts (Journal and Ledger)
c. Obligation Request and Status (ORS)
d. a and b
QUIZ:
11.Which of the following approaches to budget preparation provides the best internal
control?
a. Incremental budgeting
b. Zero-sum budgeting
c. Top-down budgeting
d. Zero-based budgeting
12.This approach to budgeting requires the justification of items in the budget

irrespective of whether they are new or carried over from the previous year.
a. Zero-based budgeting
13.Which of the following is correct regarding zero-based budgeting?

a. Several parties participate in the budget preparation starting from the lowest
levels of the government to the highest levels.
b. All zeroes in the budget are omitted.
c. All proposed programs and expenditures in the upcoming year must be new.
Programs and expenditures in the previous year should never be carried over to
the next year.
d. The current year’s budget is formulated without regardto the previous year’s
budget.
14.Which of the
d. Budget Call from the DBM
15.Which of the following would most likely comes last in the budget process?
P a g e | 42

b. Allotment
c. Disbursements
16.Entity A, a government entity, receives authorization to disburse funds not to exceed

₱1B in a specified period.This event can be described as
b. Allotment
c. Appropriation
d. Adontknowcation
17.Entity A, a government entity, receives notice that out of its ₱10B approved budget
for the year, Entity A can incur obligations up to ₱4B in the first quarter. This event
can be described as
b. Allotment
c. Appropriation
d. Amnotsurecation
18.Entity A, a government entity, receives notice that for the current year, the
maximum amount it can spend on maintenance and other operating expenses is
₱10B. This event can be described as a. Notice of Cash Allocation
b. Allotment
c. Appropriation
d. Budgetication
19.After receiving its obligational authority amounting to ₱4B, Entity A enters into
binding agreements for the eventual payments of a total sum of ₱3B. The “₱3B”
event can be described as a. Disbursement
b. Allotment
c. Disbursement authority
d. Obligation
20.It is a part, segment, unit or function of a government agency,headed by a

manager, who is accountable for a specified set of activities. a. Responsibility
Accounting
b. Responsibility Center
c. Budget Center
d. Call Center
QUIZ
21.A government entity recognizes revenue from exchange or non-exchange

transactions. Which of the following may not give rise to revenue by a government
entity?
a. Receipt of military equipment as donation from a foreign government.
b. Receipt of cash donation from an international organization.
c. Receipt of free trainings and seminars regarding process technology on farming
from an international organization.
d. Receipt of a bequest from the king of a foreign realm.
P a g e | 43
22.All of the following give rise to the recognition of revenue from non-exchange
transaction except
a.c. fines and sale of goods penalties
b. taxes
d. donation of goods in-kind
23.According to P.D. 1445, all revenues of an entity shall be remitted to the National
Treasury and included in the
a.c. National Fund General Fund
b. Special Fund
d. Official Fund
24.Remittances of collections to the National Treasury are recorded as a debit to which

of the following accounts
a. Cash – Collecting Officers
b. Cash-Treasury/Agency Deposit, Regular
c. Cash-Modified Disbursement System (MDS), Regular
d. Subsidy from National Government
25.The national government received a foreign grant conditioned on the construction of

a public infrastructure. Entity A was chosen as the implementing agency. When the
national government received the grant, the entry in the BTr’s books included a a.
credit to the “Subsidy from National Government” account.
b. debit to the “Cash – Modified Disbursement System (MDS), Regular” account.
c. credit to the “Cash in Bank-Local Currency, BangkoSentralngPilipinas” account.
d. credit to the “Other Deferred Credits” account.
26.At the end of the period, the “Cash-Treasury/Agency Deposit, Regular” account is
closed to the
a. Subsidy from National Government account.
b. Accumulated Surplus or Deficit account.
c. Cash-Modified Disbursement System (MDS), Regular account.
d. This account is not closed.
27.Which of the following does not give rise to revenue from assistance or subsidy?
a. Inter-agency Fund Transfer
c. Tax Remittance Advice
d. Non-Cash Availment Authority
28.According to P.D. 1445,

a. Amounts received in trust and from business-type activities of the government
may be separately recorded.
b. All revenues of an entity shall be retained by the entity and included in its
General Fund, unless another law specifically allows otherwise.
c. A collecting officer shall immediately issue a temporary receipt upon collecting a
d. Where mechanical devices (e.g. electronic official receipt) are used to
acknowledge cash receipts, the BIR may approve, upon request, the exemption
from the use of accountable forms.
P a g e | 44
29.According to the GAM for NGAs, revenue includes only those that are received or
receivable by the entity in its own account. Accordingly,receipts on behalf of
another entity are
a. recorded as liability.
b. recognized as revenue.
c. recorded only in the registries but not in the books of accounts.
d. remitted only through the use of the TRA.
30.Government entities and business entities use the same accounting treatment for all
of the following except
a. trade discounts allowed to customers.
b. recognizing revenue from royalty agreements.
c. recognizing revenue from dividends.
d. remittance of taxes withheld to the BIR
QUIZ:
31.It encompasses the processes of analyzing, recording, classifying, summarizing and

communicating all transactions involving the receipt and disposition of government
funds and property, and interpreting the results thereof.
a. Government accounting
d. Tax accounting
32.The GAM for NGAs is promulgated by the

33.The Commission on Audit (COA) is responsible for

a. the formulation and implementation of the national budget with the goal of
attaining the nation’s socio-economic objectives.
b. receiving and keeping national funds and managing and controlling the
disbursements thereof.
34.Which of the following is not charged with government accounting responsibility?

35.Which of the following qualitative characteristics may be sacrificed when reporting

information on a timely basis? a. Relevance
b. Reliability
c. Substance over form
d. Faithful representation
P a g e | 45
36.According to the GAM for NGAs, information has this qualitative characteristic if it can
be used to assist in evaluating past, present or future events or in confirming or
correcting past evaluations. a. Feedback value
.
P a g e | 46
b. Predictive value
c. Materiality
d. Relevance
37. This refers to the comparability between the financial statements of different
entities?
a. Inter-comparability
b. Intra-comparability
c. Horizontal comparability
d. Vertical comparability
38. When the substance of a transaction or event differs from its legal form, the entity
should report the transaction’s or event’s
a. substance
b. legal form
c. a trade-off between a and b
d. either a or b, based on their significance
39. The implication that users must be informed of the entity’s policies, changes to
those policies, and the effects of those changes refers to
a. Comparability
b. Completeness
c. Understandability
d. Reliability
40. In the financial reporting system of the national government, to which of the
following shall an entity reconciles its cash records?
b. Bureau of Treasury
c. Department of Budget and Management
d. Office of the President
P a g e | 47
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P a g e | 48
REVIEW MATERIAL FOR FINAL EXAMINATION
1. Which of the following is not an indicator of reliable measurement for an asset?

a. Benefits can be expected on the basis of available evidence or logic.
b. Valuation method is free from material error or bias.
c. Faithful representation of the asset’s benefits.
d. Reliable information will, without bias or undue error, faithfully represent those transactions
and events.
2. It refers to the disbursement authority issued by the DBM to agencies with foreign operations
allowing them to use the income collected by their Foreign Service Posts to cover their operating
requirements.
a. Notice of Cash Allocation (NCA)
b. Tax Remittance Advice (TRA)
c. Cash Disbursement Ceiling (CDC)
d. Non-Cash Availment Authority (NCAA)
3. Account titles in the Revised Chart of Accounts (RCA) are arranged according to this sequence
a. Assets, Equity, Liability, Revenue, and Expenses
b. Assets, Liability, Equity, Revenue, and Expenses
c. Assets, Expenses, Liability, Equity and Revenue
d. In no particular order.
4. Which of the following is an indication of impairment from internal sources?

a. Significant changes with an adverse effect on the entity have taken place during the period, or
will take place in the near future, in the technological, market, economic, or legal environment
in which the entity operates, or in the market to which an asset is
dedicated.
b. During the period, an asset’s market value has declined significantly more than would be
expected as a result of the passage of time or normal use.
c. Significant changes with an adverse effect on the entity have taken place during the period, or
are expected to take place in the near future, in the extent to which, or the manner in which, an
asset is used or is expected to be used.
d. Market interest rates or other market rates of return on investments have increased during the
period, and those increases are likely to affect the discount rate used in calculating an asset’s
value in use and decrease the asset’s recoverable amount materially.
P a g e | 49
5. Entity A, a government entity, had the following transactions during the period:  Received Notice
of Cash Allocation (NCA) amounting to ₱1,226,618.
• Earned total revenue of ₱1,598,000 from billings and collections of unbilled income.
• Incurred total expenses of ₱791,652.
• Remitted total taxes withheld of ₱87,460 to the BIR through Tax Remittance Advice (TRA).
• The “Cash-Modified Disbursement System (MDS), Regular” has an unused balance of ₱132,196
at the end of the period.
How much is the surplus (deficit) for the period? a.

1,988,230
b. 1,898,230
c. 1,742,320
d. 1,988,320
Revenue 1,598,000
Expenses (791,652)
Surplus (Deficit) from operations 806,348
Subsidy from NG (NCA) 1,226,618
Subsidy from NG (TRA) 87,460
Unused NCA (132,196)
Net Financial Assistance/Subsidy 1,181,882
Surplus (Deficit) for the period 1,988,230
Use the following information for the next four questions:

Entity A grants a cash advance of ₱2,000 for the traveling expenses of an officer. Actual expenses
amount to ₱1,800. The officer remits the excess cash advance.
6. The entry to record the grant of cash advance is

a. Advances to Officers
and Employees
2,000
Cash – Disbursing Officer 2,000 b.
Advances to Officers and Employees 2,000
2,000 Cash – Modified Disbursement c. Advances to Officers and Employees 2,000
System (MDS), Regular Cash – Collecting Officer 2,000 d. Any of
these.
7. The disbursement is recorded in the

a. Journal and Ledger
b. RAOD
c. ORS
d. All of these
8. The entry to record the liquidation of the cash

Traveling Expenses – Foreign advance is
a. Advances to Officers and Employees 1
1,800 b. Traveling Expenses – Foreign 1,800

Due to Officers and Employees 1,800 c. Cash – Collecting Officers 1,800
P a g e | 50
Advances to Officers and Employees 1,800 d. a and c
9. The entry to record the receipt and deposit of refund of excess cash advance is
a. Cash – Collecting
Officers 200
Advances to Officers and Employees 200 b. Cash – Treasury/Agency Deposit, Regular
200
Cash – Collecting Officers 200 c. a and b
d. neither a nor b
10. This refers to valid and legal obligations of NGAs/OUs, for which, goods/services/projects have
been delivered/rendered/completed and accepted, regardless of the year when these obligations
were incurred.
a. Accounts Payable
b. Obligations
c. Not Yet Due and
Demandable
d. Liability
11. Which of the following is not an essential characteristic of a financial instrument?

a. There must be a
contract.
b. There are at least
two parties to the
contract.
c. The contract gives
rise to both a
financial asset of one
party and a financial
liability or equity
instrument of
another party.
d. It is subsequently
measured at fair
value.
12. When determining depreciation, an entity considers all of the following except a. Initial cost
b. Useful life
c. Expected residual value at the end of the asset’s useful life
d. Whether the asset is classified as with finite or indefinite useful life.
13. Entity A spends ₱20,000 on the repair of one of its equipment. It is not clear whether the repair is
a major repair or a minor repair. In accordance with the GAM for NGAs, how should Entity A
account for the repair cost? a. As a minor repair
b. As a major repair
c. As an addition
d. a or b
14. The Statement of Comparison of Budget and Actual Amounts is dated

a. As of the reporting
date
P a g e | 51
b. For a given reporting

period
c. Either a or b
d. Not dated
15. The main purpose of the Statement of Comparison of Budget and Actual Amounts is
a. to provide a basis for
increasing the budget
in the following fiscal
year.
b. to provide
information regarding
the government’s
financial condition
vis-a-vis the
resources entrusted
to it.
c. to enhance the
transparency of
government’s
financial reporting.
d. to provide
information regarding
the government’s
financial
performance.
16. The statement of management responsibility for financial statements attached to a government
agency’s combined financial statements (operating units, regional offices, and main office) would
most likely be
a. dated not later than
February 14 of the
year following the
reporting period.
b. dated not earlier than
February 14 of the
year following the
reporting period.
c. signed by the
agency’s Head,
together with the
agency’s Secretary
and Treasurer. d.
none of these.
17. Entity A is a government hospital. Entity A operates a pharmacy within the hospital. Entity A would
most likely recognize revenue from sales of medicines in the pharmacy a. upon billing, when goods
are transferred to the buyer.
b. on a straight-line basis.
c. by reference to the stage of completion at the reporting date.
d. in accordance with the substance of the relevant agreement which requires an in-depth
analysis by a CPA who studied accounting for four to five years, or more.
P a g e | 52
18. Which of the following is not one of the classifications of inventory held by a government entity?
a. Inventory Held for
Distribution
b. Inventory Held for
Long-term Use
c. Inventory Held for
Manufacturing
d. Inventory Held for
Consumption
e. Semi-Expendable
Property
19. Which of the following may not be included in the inventories of a government entity?
a. rice and other
welfare goods held
for distribution
b. raw materials and
work-in-process
c. accountable forms
d. equipment costing
₱15,000
20. Entity A exchanges an item of PPE with Entity B. How should Entity A account for any cash paid or
received from the exchange?
a. Add the cash paid to
the initial
measurement of the
asset received.
b. Deduct the cash paid
from the initial
measurement of the
asset received.
c. Add the cash
received to the initial
measurement of the
asset received.
d. Account for any cash
paid or received in
gain or loss but not
on the initial
measurement of the
asset received.
21. According to the GAM for NGAs, these assets are those which have historical, cultural and
environmental significance, and are intended to be preserved for future generations. a. Cultural
assets
b. Infrastructure assets
c. Heritage assets
d. Historical assets
Use the following information for the next two questions:

P a g e | 53
At the beginning of Year 1, a government entity acquires an intangible asset for ₱100,000. The
intangible asset has a useful life of 10 years. At the end of Year 3, the entity determines an indication
of impairment and makes the following estimates:
Fair value less costs to sell 60,000
Value in use 50,000
22. How much is the impairment loss?

a. 10,000
b. 20,000
c. 30,000
d. 0
A (100,000 x 7/10) – 60,000 = 10,000
23. At the end of Year 6, Entity A determines an indication that the previous impairment may no
longer exist and makes the following estimates:
Fair value less costs to sell 32,000
Value in use 38,000
How much is the gain on the reversal impairment loss?

a. 3,714
b. 5,714
c. 8,714
d. 0
Recoverable amount (VIU – higher): 38,000

CA had no I.L. been recognized in previous period:
(100,000 x 4/10) = 40,000
CA after the I.L: (60,000 x 4/7) 34,286
Gain on reversal of I.L. = (38,000* – 34,286) = 3,714
* Lower than CA had no I.L. been recognized in previous period
24. Entity A leased a new machine to Entity B on January 1, 20x1. The lease expires on January 1,
20x6. The annual rental is ₱90,000. Additionally, on January 1, 20x1, Entity B paid ₱50,000 to
Entity A as a lease bonus and ₱25,000 as a security deposit to be refunded upon expiration of the
lease. In Entity A's 20x4 statement of financial performance, the amount of rental revenue should
be
a. 140,000
b. 125,000
c. 100,000
d. 90,000
C [90,000 + (50,000 ÷ 5 years)] = 100,000
25. Which of the following statements is correct regarding the presentation of financial statements by
government entities?
a. Changes in accounting policies may be accounted for by prospective application.
b. Non-adjusting events are never recognized but are always disclosed.
c. Prior period errors are corrected by retrospective application.
P a g e | 54
d. Just like business entities, government entities may (if they choose to) prepare interim
financial statements on a quarterly basis.
26. The notes to the financial statements is least likely to be expected to show which of the following
information?
a. General information on the reporting entity.
b. Current and noncurrent distinctions of assets and liabilities.
c. Statement of compliance with the PPSAS and basis of preparation of financial statements.
d. Summary of significant accounting policies.
27. A change in accounting estimate is accounted for

a. using the transitional provision, if any.
b. by retrospective application.
c. by prospective application.
d. any of these
28. This is attached to the annual general purpose financial statements of a government entity as a
cover letter.
a. President’s Budget Message
b. Report on Highlights and Executive Summary
c. Statement of Management Responsibility for Financial Statements
d. Dedications, acknowledgments and best wishes.
29. The main purpose of the statement of comparison of budget and actual amounts is
a. to apply the concepts of responsibility accounting.
b. to enhance the transparency of financial reporting of the government.
c. to show information not presented on the face of the other components of a complete set of
general purpose financial statements.
d. to provide vital information needed in impeachment proceedings.
30. The operator in a service concession arrangement is a

a. government entity
b. private entity
c. separate entity
d. jeepney
31. Which of the following applies to business entities but not to government entities?
a. Finance lease accounting by lessors.
b. Noncurrent asset held for sale classification.
c. Direct method of presenting cash flows from operating activities.
d. Cash equivalents classification for debt instruments acquired three months before their
maturity date.
32. Which of the following applies to business entities but not to government entities?
a. Accounting for biological assets at fair value less costs to sell.
b. Preparation of interim financial statements.
P a g e | 55
c. Presenting information on earnings per share.

d. Continued depreciation of idle equipment.
33. The accounting for government entities differs from the accounting for business entities in which of
the following respects?
a. Accounting for exchanges of property, plant and equipment.
b. Accounting for exchanges of intangible assets.
c. Accounting policy choice for the subsequent measurement of investment property.
d. Classification of intangible assets as either with finite or with indefinite useful life for purposes
of subsequent measurement.
34. Which of the following statements is correct?

a. All disbursements shall be made through Disbursement Vouchers (DVs) or Payroll which are
approved by the Head of the Requisitioning Unit.
b. The Non-Cash Availment Authority (NCAA) is a disbursement authority issued to government
agencies with foreign service posts.
c. According to the GAM for NGAs, the Advice to Debit Account (ADA) mode of disbursement can
be used only if the payee maintains an account in the same bank where the government entity
maintains its account.
d. Disbursements through the Cash Disbursement Ceiling (CDC) results to the recognition of a loan
Under the Advice to Debit Account (ADA) mode of disbursement, payments from a
government entity are directly credited to the bank accounts of the payees through
bank transfers .
payable in the books of accounts of the BTr. e.
35. The accounting for government entities differs from the accounting for business entities in which of
the following respects?
a. Classification of joint ventures.
b. Consolidation procedures when preparing consolidated financial statements.
c. Disclosure of events after the reporting date.
d. Impairment requirements, and reversals thereof, for noncurrent assets.
36. The statement of cash flows of government entities

a. shows the historical changes in cash and cash equivalents
b. shows prospective information on budgeted amounts of expected future cash flows c. a and b
d. is prepared using the accrual basis of accounting
37. The classification of leases under the GAM for NGAs is based on
a. the form of the contract rather than the substance of the transaction.
b. the extent of transfer of risks and rewards incidental to ownership of the leased asset from the
lessor to the lessee.
c. the significance in value of the leased asset.
d. the significance in value of the leased asset and the length of the lease term.
P a g e | 56
38. Lessee enters into a lease contract with Lessor. Which of the following would most likely indicate a
substantial transfer of risks and rewards incidental to ownership of an asset? a. The lease term is
10 years for an annual lease payment of ₱5,000,000.
b. Lessee has the option to extend the lease for the remaining half of the leased asset’s useful life
for the same amount of annual lease payment which is expected to be lower than the market
rate during the extended period.
c. The lease transfers ownership of the leased asset to the Lessee if the Lessee pays the Lessor
the leased asset’s fair value, to be determined on payment date.
d. The Lessee has the unilateral right to cancel the lease after the first 5 years of the lease term
without any significant costs.
39. On the statement of activities for a private not-for-profit institution, the account, net assets
released from restrictions, would be shown under revenues, gains, and other support as a
(use SFAS 117 in answering this question)
a. Decrease in permanently restricted and an increase in temporarily restricted net assets.
b. Decrease in restricted and an increase in temporarily restricted net assets
c. Decrease in temporarily restricted and increase in permanently restricted net assets.
d. Decrease in temporarily restricted and increase in unrestricted net assets.
40. A statement of functional expenses is required for which of the following private not-forprofit
institutions? (use SFAS 117 in answering this question)
a. Hospital
b. Voluntary Health and Welfare Organization
c. Fraternal Organization
d. College
41. A government entity derecognizes which of the following?

a. Idle PPE
b. Unserviceable PPE
c. Fully depreciated PPE
d. Partially damaged PPE
42. Entity A, a government entity, receives notice that for the current year, the maximum amount it
can spend on maintenance and other operating expenses is ₱10B. This event can be described as
b. Allotment
c. Appropriation
d. Budgetication
43. Which of the following statements is incorrect regarding the accounting for unreleased checks by a
government entity?
a. The accounting procedures for unreleased checks prescribed under the GAM for NGAs apply
only to commercial checks.
b. Unreleased checks are reverted back to cash.
c. At the start of the year, a reversing entry is made for the unreleased checks in the previous
year.
d. Unreleased checks are perforated.
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44. On January 1, 20x1, the biological assets of Entity A consist of two 1-year old animals with fair
value less costs to sell of ₱1,000 each.
The following transactions occurred during the period:

• On July 1, 20x1, two 1-year old animals are acquired for ₱1,100 each, equal to the FVLCS on this
date.
• On October 1, 20x1, two animals are born. The FVLCS of a newborn on this date is ₱500.
The FVLCS on December 31, 20x1 are as follows:

Age FVLCS
new born ₱600

3 mos. old ₱800
1 yr. old ₱1,200
1.5 yr. old ₱1,500
2 yrs. old ₱2,000
How much is the total gain from the change in FVLCS during the period?
a. 3,800
b. 4,200
c. 4,400
d. 4,800
Solution:
beg. (1,000 x 2) + (1,100 x 2) = 4,200 end. (2,000
x 2) + (1,500 x 2) + (800 x 2) = 8,600 total gain =
(8,600 – 4,200) = 4,400
45. An office equipment representative has a machine for sale or lease. If you buy the machine, the
cost is ₱7,596. If you lease the machine, you will have to sign a non-cancelable lease and make 5
payments of ₱2,000 each. At the time of the last payment you will receive title to the machine.
The first payment will be made one period after the first day of the lease. The interest rate
implicit in this lease is approximately
a. 10%
b. 12%
c. Between 11% and 12%
d. 16%
PV = Cash flows x PV factor

7,596 = 2,000 x PV ordinary annuity @ x%, n=5
First trial @ 10%:

(2,000 x PV ordinary annuity @ 10%, n=5) = 7,596
(2,000 x 3.7908) = 7,582
7,582 approximates 7,596; a difference of only 14
46. If plotted on a graph, the periodic interest expenses recognized on bonds issued at a premium will
show a: (X axis – time; Y axis - ₱) a. straight line
b. downward line sloping to the right
c. upward line sloping to the right
d. curvilinear line sloping here and there
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47. Which of the following information is not reported in the statement of changes in net
assets/equity?
a. Effects of current period
errors.
b. Surplus or deficit for the
period
c. Items of revenue and
expense that are
recognized directly in
equity
d. The balance of
accumulated surpluses
or deficits at the
beginning of the period
and at the reporting
date, and the changes
during the period.
48. Which of the following is not one of the special journals prescribed by the GAM for NGAs? a. Sales
Journal
b. Cash Disbursements Journal
c. Check Disbursements Journal
d. Cash Receipts Journal
49. The 8-digit Revised Chart of Accounts (RCA) Code for revenues starts with number
a. 1
b. 5
c. 2
d. None of these
50. Which of the following does not affect the amount of surplus or deficit that is reported in the
statement of financial performance? a. receipt of NCA
b. constructive remittance of taxes withheld through TRA
c. closing of the “Cash-Treasury/Agency Deposit, Regular” account
d. adjustment of the “Cash-Modified Disbursement System (MDS), Regular” account for the
unused Notice of Cash Allocation.
e. All of these affect surplus or deficit.
51. Guil College, a private not-for-profit college, received the following cash inflows:  $400,000 from
students for tuition.
• $200,000 from a donor who stipulated that the money be invested indefinitely and the
earnings used for student scholarships.
• $100,000 from a donor who stipulated that the money be spent according to the wishes of the
Board of Trustees.
P a g e | 59
Which amounts of these cash flows should be shown on the cash flow statement as cash from
operating activities?
a. $700,000.
b. $400,000.
c. $600,000.
d. $500,000.
400,000 tuition + 100,000 unrestricted = 500,000
52. On December 30, 19X4, Leigh Museum, a not-for-profit organization, received a $7,000,000
donation of Day Co. shares with donor stipulated requirements as follows:
• Shares valued at $5,000,000 are to be sold with the proceeds used to erect a public viewing
building.
• Shares valued at $2,000,000 are to be retained with the dividends used to support current
operations.
Leigh adopted of FASB Statement No. 117, Financial Statements of Not-for-Profit Organizations. As
a consequence of the receipt of the Day shares, how much should Leigh report as temporarily
restricted net assets on its 19X4 statement of financial position? a. $0
b. $2,000,000
c. $5,000,000
d. $7,000,000
53. CIBA, a non-profit performing arts organization, received a contribution of a term endowment
and a regular endowment. These endowments should be reported on the statement of activities
as:
Term Endowments Regular Endowments
a. Permanently restricted Permanently restricted
b. Temporarily restricted Permanently restricted
c. Temporarily restricted Temporarily restricted
d. Unrestricted Temporarily restricted
54. Vista, a voluntary health and welfare organization, received a donation of $100,000 to be spent
in accordance with the wishes of the institution’s Board of Trustees. This donation should be
reported on the statement of activities as: a. Unrestricted revenue.
b. Other income – gifts.
c. Temporarily restricted revenue
d. Permanently restricted revenues
55. Ellen College, a private not-for-profit institution, received a $100,000 grant for faculty research
in 20x1. The grant money was not spent until 20x2. For 20x1, Ellen College should report the
contribution as: a. Unrestricted revenue
c. Other operating revenue.
d. Other non-operating revenue.
56. An NPO hospital has the following account balances: Amount charged to patients $500,000
Revenue from newsstand 15,000
Salaries expense – nurses 120,000
Bad debts 8,000
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What is the hospital’s net patient service revenue? a.

$422,000
b. $430,000
c. $500,000
d. $540,000
(500,000 – 70,000) = 430,000
57. Home Care, Inc., a nongovernmental voluntary health and welfare organization, received two
contributions in 2003. One contribution of $250,000 was restricted for use as general support in
2004. The other contribution of $200,000 carried no donor restrictions. What amount should
Home Care report as temporarily restricted contributions in its 2003 statement of activities. a.
$450,000
b. $250,000
c. $200,000
d. $0
58. The Weyman Hospital, a private, not-for-profit institution, reported the following information:
Gross patient service revenue $1,000,000

Allowance for discounts to hospital employees 20,000
Bad debt expense 40,000
What amount should the hospital report as net patient service revenue?
a. 840,000
b. 900,000
c. 880,000
d. 980,000
59. A private not-for-profit hospital provided $150,000 in charity care for the current year. The
hospital should report this charity care as
a. Net patient service
revenue of $150,000
and patient care
expense of
$150,000.
b. Net patient service
revenue of $150,000
on the statement of
operations.
c. Only in the notes to
the financial
statements.
d. As an unpaid
accounts receivable
on the balance sheet.
60. The Johnson Hospital, a private not-for-profit hospital, received the following revenues in the
current year:
Proceeds from sales of the Hospital’s flower shop $60,000
Dividends and interest revenue not restricted $20,000
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Cash contributions for the renovation of the children’s ward in the Hospital $200,000 Which of
these amounts should be reported as other revenues and gains (other revenue) on the Statement
of Operations?
a. $280,000
b. $60,000
c. $80,000
d. $260,000
61. A hospital has the following account balances:

Revenue from newsstand $ 50,000
Amounts charged to patients 800,000
Salary expense – nurses 100,000
Bad debts 10,000
What is the hospital’s net patient service revenue?
a. $880,000
b. $800,000
c. $690,000
d. $680,000
62. Electra, a not-for-profit performing arts organization, held some donor restricted endowment
funds which are invested in stocks that are listed on the NY Stock Exchange, so the fair values
are readily determinable. Most of the investments represent amounts between 2% and 5% of
the outstanding common stock of the investee corporations. However, Electra does own stock in
one company that gives it the ability to exercise significant influence over the operating and
financing policies of the investee company. How should these two types of investments be
reported on Electra’s Statement of Financial Position at year end?
Equity Securities Equity Securities 2% - 5%
ownership significant influence a. Fair
value Fair value
b. Equity method Equity method
c. Fair value Equity method
d. Fair value Carrying value
63. A private not-for-profit performing arts center receives the following three donations:
• A gift of $90,000 which is unrestricted.
• A gift of $125,000 restricted for payment of salaries.
• A gift of $200,000 that is restricted forever but the income from the gift may be used for
current expenditures.
Which of the following is not true?

a. Temporarily
restricted net assets
increased by
$125,000.
b. Permanently
restricted net assets
increased by
$325,000.
c. When the money is
spent for salaries,
unrestricted net
assets increase and
P a g e | 62
decrease by the
same amount.
d. When the money is
spent for salaries,
temporarily restricted
net assets decrease.
64. Cash flows from a public university bookstore would appear on the statement of cash flows as
a. Cash flows from
operations.
b. Cash flows from
investing activities.
c. Cash flows from
financing activities.
d. Cash flows from
noncapital financing
65. Which one of the following is not a required financial statement for a private voluntary health
and welfare organization?
a. Statement of
Financial Position
b. Statement of
Activities and
Changes in Net
Assets
c. Statement of Fund
Balance
d. Statement of Cash
Flows
e. Statement of
Functional Expense
66. Gerlack College, a private, not-for-profit institution, received a donation of $2,000,000 as a

challenge grant. If the college raises an additional $2,000,000 within the next two years, it may
keep the donation. If it fails, the $2,000,000 must be returned to the donor. How would the
college record the receipt of the grant? a. Unrestricted revenue.
c. Note to the financial statement.
d. Refundable advance.
67. Which of the following transactions of a private voluntary health and welfare organization would
increase temporarily restricted net assets in the statement of activities for the current year?
I. Received a contribution of $20,000 from a donor in the current year who stipulated that the
money not be spent until the following year.
II. Spent $25,000 for fund raising during the current year from a donation from the previous
year.
a. I only
b. I & II
c. II only
d. Neither
68. On December 31, 20X1, the Board of Trustees of a private, not-for-profit college designated
$5,000,000 of unrestricted net assets for the construction of an addition to the music building.
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What effect does this designation have on the college’s unrestricted and temporarily restricted
net assets shown on the statement of financial position on December 31, 20X1?
Unrestricted Net Assets Temporarily restricted Net Assets
a. Decrease
Increase
b. Decrease
No effect
c. No effect
Increase
d. No effect
No effect
69. The following contributions were received by a private voluntary health and welfare
organization. Which of these would not be recorded as an increase in unrestricted revenue? a. A
carpenter donated labor and materials for the construction of a deck.
b. A
painter A retired college professor donated reading services to senior citizens. The organization
would not have paid for these services if they had not been donated.
donated paint and labor to paint all the meeting rooms. c.
d. A CPA firm donated its services to audit the financial statements for the past year.
70. In November 20x1 Gilmore Heating and Air Conditioning Service repaired the air conditioning
system for GenCare, a voluntary health and welfare organization and mailed an invoice for
$3,000. On December 25, a note was received by GenCare indicating that Gilmore was
canceling the invoice and that repairs were being donated. For the year ended, December 31,
20x1, GenCare should report these contributed services as: a. A footnote.
b. No disclosure is required but a thank-you
note was mailed to Gilmore.
c. An increase in unrestricted revenues and an increase in expenses on the statement of
activitie .
s
d. An increase in temporarily restricted net assets in the statement of activiti
71. Which of the following types of health care organizations recognize depreciation expense?
Investor-Owned Not-for-Profit Organizations Governmental Health Care
Health Care Enterprises Organizations
a. Yes
Yes
No
b. Yes
No
Yes
c. No
No
Yes
d. Yes
Yes
Yes
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72. Entity A, a government entity, has an unused NCA of ₱50,000 at the end of the current year.
The entry to record the reversion of unused NCA is
a. Subsidy from
National Government
Cash-
Modified
Disbursement
50,000
System (MDS), Regular 50,000 b. Accumulated Surplus/(Deficit)
50,000 Cash-Treasury/Agency Deposit,
Regular 50,000 c. Subsidy from National Government 50,000
Cash-Collecting Officers 50,000 d. No journal entry.
73. During the period, Entity A, a government entity, withheld ₱100,000 taxes from its payments to
employees and suppliers. On September 14 of the current year, Entity A remitted the taxes
withheld to the BIR through Tax Remittance Advice. The entry to record the remittance includes
a. Cash-Tax Remittance
Advice 100,000
Due to BIR 100,000 b. Subsidy from National Government 100,000

Cash-Tax Remittance Advice 100,000 c. a and b
d. None of these.
74. The entry to record the granting of cash advance for payroll fund is
a. Salaries and Wages,
Regular xxx
Personal Economic Relief Allowance (PERA) xxx
Due to BIR xxx
Due to GSIS xxx
Due to Pag-IBIG xxx
Due to PhilHealth xxx
Due to Officers and Employees
xxx Advances for Payroll
b. Cash-Modified Disbursement x
System (MDS), Regular xxx

c. Due to Officers and
Employees xxx
Advances for Payroll xxx

d. Cash-Collecting
Officers xxx
Advances for Payroll xxx
75. Entity A, a government entity, bills ₱200,000 for Communications Network Fees. Which of the
following is the correct entry for the billing?
a. Cash-Collecting
Officers 200,000
Communications Network Fees 200,000 b. Cash-Modified Disbursement

System (MDS), Regular 200,000
Communications Network Fees 200,000 c. Accounts receivable
200,000
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Subsidy from National Government 200,000 a.

200,000 Accounts receivable
Communications Network Fees
200,000
76. During the period, Entity A, a government entity approved a ₱400,000 payroll and granted the
Disbursing Officer a cash advance of ₱280,000, net of withholding taxes and contributions to
GSIS, PhilHealth and Pag-IBIG. The pro-forma entry to record the liquidation of the payroll fund
is
a. Salaries and Wages,
Regular xxx
Due to BIR xxx
Due to GSIS xxx
Due to Pag-IBIG xxx
Due to Officers and Employees xxx b. Advances for Payroll xxx
Cash-Modified Disbursement
System (MDS), Regular xxx c. xxx xxx d.
Due to Officers and Employees Cash-Collecting Officers xxx
Advances for
Advances for Payroll
Payroll
xxx
77. The receipt of an inter-agency fund transfer is recorded as
a. Cash-Collecting Officers xxx

Subsidy from National Government xxx b. Cash-Modified Disbursement System
(MDS), Regular xxx Due to (Central Office, Regional Office, xxx
Operating Units or Other Funds)
c. Cash-Collecting Officers xxx
Due to (Central Office, Regional Office, xxx
Operating Units or Other Funds)
d. Cash-Modified Disbursement System (MDS), Regular xxx
Accumulated Surplus (Deficit) xxx
78. The entry to close the “Cash-Treasury/Agency Deposit, Regular” account at the end of the
period is
a. Accumulated Surplus/(Deficit) xxx Cash-Treasury/Agency Deposit,
Regular xxx
b. Subsidy from National Government xxx
Cash-Treasury/Agency Deposit,
Regular xxx c. Cash-Collecting Officers xxx
Cash-Treasury/Agency Deposit,
Regular xxx d. None of these. The account is not closed.
79. Entity A, a government entity, has withheld a total of ₱800,000 from the salary payments to its
employees representing contributions to the GSIS, Pag-IBIG and PhilHealth. The proforma entry
to record the remittance of the contributions to the GSIS, Pag-IBIG or
PhilHealth is
a. Due to GSIS/ Pag-IBIG/ PhilHealth xxx
Cash-Tax Remittance Advice xxx b. Due to GSIS/ Pag-IBIG/ PhilHealth xxx
Cash-Collecting Officers xxx c. Due to GSIS/ Pag-IBIG/ PhilHealth xxx

Cash-Modified Disbursement
P a g e | 66
System (MDS), Regular xxx d. No journal entry.
80. The entry to record the receipt of a disbursement authority in the form of Cash
Disbursement Ceiling (CDC) is
a. Cash-Constructive Income Remittance xxx
Subsidy from National Government xxx
b. Accounts Payable xxx
c. Accounts Payable xxx
Cash-Modified Disbursement System (MDS), Regular xxx
d. Cash-Modified Disbursement System (MDS), Regular xxx
81. Which of the following statements is incorrect?

a. The various registries maintained by government entities primarily serve as internal
control for controlling and monitoring the conformance of actual results with the
approved budget.
b. The GAM for NGAs requires the Collecting Officer to issue an official receipt to
acknowledge the receipt of the Notice of Cash Allocation .
c. A
check disbursement is normally recorded as a credit to the “Cash-Modified Disbursement
d. Both the ORS and RAOD are updated each time an obligation is incurred, a payable is
recorded for the obligation incurred, and disbursements are made to settle the recorded
payables.
e. At the end of each year, an adjustment is made to revert any unused NCA of a government
entity.
82. An entity accrues salaries and wages after approval of payroll. The entry is
a. Salaries and Wages, Regular xxx

Cash-Modified Disbursement System (MDS),
Regular xxx b. Salaries and Wages, Regular xxx Personal Economic Relief
Allowance (PERA) xxx
Advances to Officers and Employees xxx
c. Salaries and Wages, Regular xxx
Due to BIR xxx
Due to SSS xxx
Due to Pag-IBIG xxx
Due to Officers and Employees xxx d. Salaries and Wages, Regular xxx
Due to BIR Due to GSIS Due to Pag-IBIG xxx
Due to PhilHealth xx
Due to Officers and Employees x
xxx
83. This type of budget is prepared in such a way that estimated revenues exceed estimatedxx
expenditures. x
a. Balanced budget xx
b. Obligations budget x
c. Excess budget
d. Budget meal
84. Entity A, a government entity, receives its Notice of Cash Allocation amounting to
P a g e | 67
₱5,000 ,000 for the year. The journal

entry Cash-Modified Disbursement System (MDS), Regular to record this event is
a. Subsidy from National Government 5,000,000
5,000,0
00 b. Cash-Collecting Officers 5,000,000
Subsidy from National Government 5,000,000 c. Cash-Tax Remittance Advice
5,000,000
Due to the National Government 5,000,000 d. No journal entry.
85. Entity A, a government entity, receives notice of its ₱10M appropriation for the year. The
journal entry to record this event is
a. Cash-Modified Disbursement System (MDS), Regular 10,000,000
10,000,0
10,000,000
Due to the National Government 10,000,000 d. No journal entry.
86. Entity A, a government entity, receives its ₱9M allotment. The journal entry to record this
event is
a. Cash-Modified Disbursement System (MDS), Regular 9,000,000
9,000,0
9,000,000 Due to the National Government 9,000,000
d. No journal entry.
87.
Which All disbursements require prior certifications to establish their validity and legality. A
certification for fictitious obligation is void and results to criminal liability by the
certifying officials .
of the following statements is correct? a.
b. After the budget call from the DBM, the proposed budget of various agencies are submitted
immediately to the Office of the President for review.
c. An entity can incur obligations after receiving notice of its appropriation but before receiving
the allotment.
d. Budget deliberations in the Congress starts in the House of Senate.
e. A government entity can make disbursements even before it receives a disbursement
authority.
88. The journal entry to record the collection of unbilled tax revenue (e.g., Travel Tax) through
direct deposit in Authorized Agent Banks is
a. Accounts Receivable xxx
Travel Tax xxx b. Cash-Modified Disbursement System (MDS), Regular
Travel Tax xxx xxx c. Cash-Collecting Officers xxx

Travel Tax xxx d. xxx
Cash-Treasury/Agency Deposit, Regular
Travel Tax
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xxx
89. Which of the following reflects a Non-Cash Availment Authority (NCAA) mode of
disbursement?
a. Accounts Payable xxx
Cash-Constructive Income
Remittance xxx b. Accounts Payable xxx
Cash – Modified Disbursement
System (MDS), Regular xxx c. xxx
Accounts Payable xxx d. None of these.
90. Arrange the following steps in the budget
process according to the sequence that they appear in the budget cycle.
I. Allotment
II. Bicameral deliberations
III. Budget accountability reports
IV. President’s enactment of the GAA
V. Budget hearings with the DBM
a. V, IV, II, I and III

b. II, V, II, I and III
c. V, II, IV, I and III
d. V, I, II, IV and III
91. Arrange the following steps in the budget process according to the sequence that they
appear in the budget cycle.
I. Allotment
II. Disbursement authority
III. Disbursement
IV. Appropriation
V. Incurrence of obligation
a. IV, I, II, V and III

b. IV, I, V, II and III
c. IV, I, V, III and II
d. IV, V, I, II and III
92. It is an authorization issued by the DBM to NGAs to incur obligations. It is also referred to
as Obligational Authority.
a. Appropriation
b. Budget call
c. Allotment
d. Budget hearings
93. A journal entry with a credit to the “Cash-Modified Disbursement System (MDS), Regular”
account will most likely be recorded in the
a. General Journal
b. Cash Disbursements Journal
c. Special Journal
d. Check Disbursements Journal
94. Which of the following is a non-exchange transaction?

P a g e | 69
a. Leasing
b. Rendering of legal services
c. Collection of taxes
d. Collection of tuition fees
95. Entity A enters into a long-term contract to provide services. The outcome of the
transaction can be estimated reliably and the progress on the contract can be measured
with sufficient reliability. According to the PPSAS, how should Entity A recognize revenue
from the contract?
a. On a straight line basis over the contract term.
b. By reference to the stage of completion of the contract at the reporting date.
c. Full recognition of contract price upon completion of the contract.
d. Only to the extent of costs that are expected to be recovered.
96. According to the GAM for NGAs, interest revenue is recognized

a. on a time proportion basis using the effective interest method.
b. on a straight line basis.
c. in accordance with the substance of the relevant loan agreement.
d. when the entity’s right to receive payment is established.
97. Which of the following statements is correct?

a. The budget preparation in the Philippines uses a “bottom-up” approach. Under this
approach, the budget preparation starts from the highest levels of the government down to
the lowest levels.
b. Government entities and business entities use the term “obligation” or the phrase
“incurrence of obligation” similarly.
c. The only valid modes of disbursement for a government entity are through cash or check.
d. A government entity must first receive an allotment before it can incur obligations.
e. An entity prepares its budget by simply rolling-over the budget in the previous year and
adjusting each line item by 10% increment to reflect inflation. This process is described as
zero-based budgeting.
98. The taxable event for Value added tax (VAT) is the
a. undertaking of a taxable activity.
b. earning of taxable income.
c. movement of dutiable goods or services across the customs boundary. d. any of these
99. Which of the following would result to an increase or decrease in the revenue reported by a
government entity in its statement of financial performance?
a. Impairment loss on an amount already recognized as revenue.
b. Receipt of a pledge.
c. Receipt of donation in the form of services in kind.
d. The repayment of a loan payable is forgiven.
100. Which of the following statements is incorrect?

a. The Notice of Cash Allocation (NCA) is an authority issued by the DBM to central, regional
and provincial offices and operating units to cover their cash requirements.
b. Responsibility accounting greatly enhances budget accountability because managers are
evaluated only in terms of the costs or other variables that they control, and therefore,
budget deviations can be readily attributed to the managers accountable therefor.
P a g e | 70
c. Technically, only the Journals and Ledgers are considered accounting records; the Registries
are budget records.
d. Appropriation is also called obligational authority.
e. Separate accounting records and budget registries are maintained for each fund cluster.

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a) Purchase Requisition Form

b. fair value less costs to sell lower of

Select the incorrect statement regarding impairments of investment properties.

A legal obligation to restructure exists if, at the reporting date,

a. lease contract stated interest rate

ANSWER KEY PRELIM EXAM

c. The objectives of general purpose financial statements (GPFSs) are to provide

8. The NGAs are responsible for

9. The basis of accounting required by the GAM for NGAs is

18. It encompasses the processes of analyzing, recording, classifying, summarizing and

19. The GAM for NGAs is promulgated by the

20. The Commission on Audit (COA) is responsible for

30. Which of the following is correct regarding zero-based budgeting?

400,000 tuition + 100,000 unrestricted = 500,000

43. An NPO hospital has the following account balances:

What is the hospital’s net patient service revenue? a.

(500,000 – 70,000) = 430,000

Gross patient service revenue $1,000,000

48. A hospital has the following account balances:

What is the hospital’s net patient service revenue?

• A gift of $125,000 restricted for payment of salaries.

Which of the following is not true?

52. Gerlack College, a private, not-for-profit institution, received a donation of $2,000,000 as a

a. Decrease in Unrestricted Net Assets; Increase in Temporarily restricted net assets

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

2. The GAM for NGAs is promulgated by the

3. The Commission on Audit (COA) is responsible for

3. Which of the following is correct regarding zero-based budgeting?

c. Presentation to the Office of the President

2. Which of the following is (are) affected when a government entity incurs

3. Which of the following is (are) affected when a government entity makes

c. Journal and Ledger

a. Cash-Tax Remittance Advice

b. Cash-Modified Disbursement System (MDS), Regular

c. Cash-Treasury/Agency Deposit, Regular

d. Cash – Collecting Officers

5. The national government received a foreign grant conditioned on the construction of

a. credit to the “Subsidy from National Government” account.

b. debit to the “Cash – Modified Disbursement System (MDS), Regular” account.

c. credit to the “Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas” account.

d. credit to the “Other Deferred Credits” account.

6. At the end of the period, the “Cash-Treasury/Agency Deposit, Regular” account is

b. Accumulated Surplus or Deficit account.

c. Cash-Modified Disbursement System (MDS), Regular account.

d. This account is not closed.

8. According to P.D. 1445,

4. Which of the following is not one of the modes of disbursements by a government

d. payment through Short Messaging System (SMS)

a. Modified Disbursement System Checks

c. Advice to Debit Account

d. Cash-Modified Disbursement System (MDS) account

a. cash advances to authorized personnel

b. direct cash payments by the Head of Agency to the payees

7. Which of the following statements regarding the disbursement of government funds

8. It is an authority issued by an agency’s Central Office to its regional and operating

QUIZ 1: PUBLIC ACCOUNTING AND BUDGETING

1. Which of the following records is technically not considered an accounting book?

2. Which of the following is (are) affected when a government entity incurs

3. Which of the following is (are) affected when a government entity makes

5. This event is recorded in the books of accounts.

6. The receipt of allotment is recorded in the