L-NU AA-23-02-01-18

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

FINALS EXAMINATION – ACCTG 6 Accounting for Government & Non-profit Organizations

2nd Semester, AY 2020– 2021
Prepared by: Amie Jane R. Miranda, CPA

Name:_____________________________________ Score:____________________

Student No.: _______________ Year/Section:___________ Date of Exam: ____________

I. MULTIPLE CHOICES. Choose the best answer from the choices and encircle your answer. Strictly “NO
ERASURES”.

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 authorityissued 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.
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

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 d. 1,988,320
6. 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
7. 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.
8. 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
9. The Statement of Comparison of Budget and Actual Amounts is dated
a. As of the reporting date
b. For a given reporting period
c. Either a or b
d. Not dated
10. 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.
a. to provide information regarding the government’s financial performance
11. 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.
12. 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.
13. 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
14. 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
15. Entity A exchanges an item of PPE with Entity B. How should Entity A account for any cash paid or
received from the exchange?

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 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.
16. 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:
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
17. How much is the impairment loss?
a. 10,000
b. 20,000
c. 30,000
d. 0
18. 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
19. 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
20. 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.
d. Just like business entities, government entities may (if they choose to) prepare interim financial
statements on a quarterly basis.
21. The notes to the financial statements are 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.
22. 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

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23. 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.
24. 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.
25. The operator in a service concession arrangement is a
a. government entity
b. private entity
c. separate entity
d. jeepney
26. 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.
27. 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.
c. Presenting information on earnings per share.
d. Continued depreciation of idle equipment
28. 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.
29. 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
payable in the books of accounts of the BTr.
e. 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.
30. 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.
31. 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

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32. 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.
33. 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.
34. On the statement of activities for a private not-for-profit institution, the account, net assets
releasedfrom 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.
35. A statement of functional expenses is required for which of the following private not-for-profit
institutions? (use SFAS 117 in answering this question)
a. Hospital
b. Voluntary Health and Welfare Organization
c. Fraternal Organization
d. College
36. A government entity derecognizes which of the following?
a. Idle PPE
b. Unserviceable PPE
c. Fully depreciated PPE
d. Partially damaged PPE
37. 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
38. 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.
39. 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

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 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
40. 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%
41. 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.
42. 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.
43. Guil College, a private not-for-profit college, received the following cash inflows:
 Php400,000 from students for tuition.
 Php200,000 from a donor who stipulated that the money be invested indefinitely and the
earnings used for student scholarships.
 Php100,000 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. Php700,000.
b. Php400,000.
c. Php600,000.
d. Php500,000.
44. On December 30, 19X4, Leigh Museum, a not-for-profit organization, received a Php7,000,000
donation of Day Co. shares with donor stipulated requirements as follows:
 Shares valued at Php5,000,000 are to be sold with the proceeds used to erect a public viewing
building.
 Shares valued at Php2,000,000 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. Php0
b. Php2,000,000

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 c. Php5,000,000
d. Php7,000,000
45. 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
46. Vista, a voluntary health and welfare organization, received a donation of Php100,000 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
47. Ellen College, a private not-for-profit institution,received a Php100,000 grant for faculty research
in20x1. The grant money was not spent until 20x2. For20x1, Ellen College should report the
contribution as:
a. Unrestricted revenue
b. Temporarily restricted revenue.
c. Other operating revenue.
d. Other non-operating revenue.
48. An NPO hospital has the following account balances:
Amount charged to patients Php500,000
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. Php422,000
b. Php430,000
c. Php500,000
d. Php540,000
49. Home Care, Inc., a nongovernmental voluntaryhealth and welfare organization, received
twocontributions in 2003. One contribution of Php250,000 was restricted for use as general support
in 2004.The other contribution of Php200,000 carried no donorrestrictions. What amount should
Home Care reportas temporarily restricted contributions in its 2003statement of activities.
a. Php450,000
b. Php250,000
c. Php200,000
d. Php0
50. The Weyman Hospital, a private, not-for-profitinstitution, reported the following information:

Gross patient service revenue Php1,000,000

Allowance for discounts tohospital employees 20,000
Bad debt expense 40,000
Contractual adjustments 100,000

What amount should the hospital report as net patientservice revenue?

a. 840,000
b. 900,000
c. 880,000

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 d. 980,000
51. The Johnson Hospital, a private not-for-profithospital, received the following revenues in thecurrent
year:
Proceeds from sales of the Hospital’s flower shop Php60,000
Dividends and interest revenuenot restricted Php20,000
Cash contributions for the renovation ofthe children’s ward in the Hospital Php200,000

Which of these amounts should be reported as otherrevenues and gains (other revenue) on the
Statementof Operations?
a. Php280,000
b. Php80,000
c. Php60,000
d. Php260,000
52. A private not-for-profit hospital providedPhp150,000 in charity care for the current year.
Thehospital should report this charity care as
a. Net patient service revenue of Php150,000 andpatient care expense of Php150,000.
b. Net patient service revenue of Php150,000 on thestatement of operations.
c. Only in the notes to the financial statements.
d. As an unpaid accounts receivable on the balancesheet.
53. A hospital has the following account balances:
Revenue from newsstand Php 50,000
Amounts charged to patients 800,000
Interest income 30,000
Salary expense – nurses 100,000
Bad debts 10,000
Undesignated gifts 80,000
Contractual adjustments 110,000
What is the hospital’s net patient service revenue?
a. Php880,000
b. Php800,000
c. Php690,000
d. Php680,000
54. Electra, a not-for-profit performing artsorganization, held some donor restricted endowmentfunds
which are invested in stocks that are listed onthe NY Stock Exchange, so the fair values are
readilydeterminable. Most of the investments representamounts between 2% and 5% of the
outstandingcommon stock of the investee corporations.However, Electra does own stock in one
companythat gives it the ability to exercise significantinfluence over the operating and financing
policies ofthe investee company. How should these two types ofinvestments be reported on
Electra’s Statement ofFinancial 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
55. A private not-for-profit performing arts centerreceives the following three donations:
 A gift of $90,000 which is unrestricted.
 A gift of $125,000 restricted for payment ofsalaries.
 A gift of $200,000 that is restricted forever butthe income from the gift may be used for
currentexpenditures.

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, unrestrictednet assets increase and decrease by the
sameamount.
d. When the money is spent for salaries, temporarilyrestricted net assets decrease.

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56. Gerlack College, a private, not-for-profitinstitution, received a donation of $2,000,000 as achallenge
grant. If the college raises an additional$2,000,000 within the next two years, it may keep
thedonation. If it fails, the $2,000,000 must be returnedto the donor. How would the college record
thereceipt of the grant?
a. Unrestricted revenue.
b. Temporarily restricted revenue.
c. Note to the financial statement.
d. Refundable advance.
57. Which of the following transactions of a privatevoluntary health and welfare organization
wouldincrease temporarily restricted net assets in thestatement 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
58. On December 31, 20X1, the Board of Trusteesof a private, not-for-profit college
designated$5,000,000 of unrestricted net assets for theconstruction of an addition to the music
building.What effect does this designation have on thecollege’s unrestricted and temporarily
restricted netassets shown on the statement of financial position onDecember 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
59. The following contributions were received by aprivate voluntary health and welfare
organization.Which of these would not be recorded as an increasein unrestricted revenue?
a. A carpenter donated labor and materials for the construction of a deck.
b. A painter donated paint and labor to paint all the meeting rooms.
c. 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.
d. A CPA firm donated its services to audit the financial statements for the past year.
60. In November 20x1 Gilmore Heating and AirConditioning Service repaired the air conditioningsystem
for GenCare, a voluntary health and welfareorganization and mailed an invoice for $3,000.
OnDecember 25, a note was received by GenCareindicating that Gilmore was canceling the invoice
andthat repairs were being donated. For the year ended,December 31, 20x1, GenCare should report
thesecontributed services as:
a. A footnote.
b. No disclosure is required but a thank-you notewas mailed to Gilmore.
c. An increase in unrestricted revenues and anincrease in expenses on the statement of activities.
d. An increase in temporarily restricted net assets inthe statement of activities
61. 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
62. Which of the following statements is correct?
a. 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.
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.

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 e. A government entity can make disbursements even before it receives a disbursement authority.
63. 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.
64. 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.
65. 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.
66. 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
67. 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.
68. 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.
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.
69. Which of the following statements is correct?
a. 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.
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
70. 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.

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 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
System (MDS), Regular” account.
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
ajmiranda
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Goodluck and Godbless

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

Dean, College of Business Education

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