- .

_Chil
JIii"'"
?ti firl?
ial Assets
--------
]82 183

CHOICE a financial of
M(JLT[PLE considered ass et? fl:\ W}tlch the following may be
PROBLEM'6-2: not is CJ fund of a government entity? paid throughthe petty cash
follo,.;ng
I. Which of the ·

Rent worth
fund a. ,12,000.
Petty cash
debt securities v
a.
Pantry supplies Worth '15,000.
Investmentin
b.
receivable ?-- Office supplies worth
,20,000.
c. _.Accounts None of these.
d.
Prepaidassets
entity is most lik
I ely

2. A cash shortage
of a government ' reco
td.eii 7 Entity A maintains a
petty cash fund. At
any given point of
·

tiIJle, the cash hand and the

on
as a petty cash vouchers
/. debit to a receivableaccolll'lt equal to the ledger balance
of the
must be
or overage account petty cash fund. If these are
b. debit to a cash shortage not equal, the
difference is either
income account shortage or overage. This
c. credit to miscellaneous
account
I
system of handlingpetty cash fund is called
or overage
d. credit to a cash shortage a. Impress System
c. Pretty Cash
b. Fluctuating Balance System
System
recordedby a government entity as )Y.lmprest?ystem
3. Dishonored checks are
c. Accounts receivable
Notes receivable 8_ According to the GAM for
a.
receivables
d. Losses N_GAs,
the establishment of a petty
,,,b:' Other cash fund
;a requires the approval of the Head of
record the
of a petty
replenishment cash fun d Agency.
4. The entry to of a b. requires the approval of the Chief Accountant.
governm?t entity is c. requires·the approval of the President of the
Expense accounts
xxx
does
Philippines.
Y d. not require any formal approval because
Cash-Modified Disbursement System funds
cash petty
are likely to be immaterial.
(MDS), Regular XXX
b. Expense accounts XXX
9. The "Loans Receivable" account is most likelyJ0 be used in
Petty Cash XXX the books of accounts of which of the
C. Expense accounts XXX following government
agencies?
Cash-CollectingOfficers XXX
a. COA
d. Expense accounts XXX yBTr
b. NIA d. All of these
Cash-Treasury/Agency
Deposit,Regular XXX

10. Which of the

5. Under this method of bank reconciliation statement followingis not one of the characteristics of a
preparation, the derivative?
unadjusted book and bank balances are
brought to an adjusted balance that is
.,.a-:- It requires no notional amount (or only-a very minimal
statement
reported on the
of fin?cial position. notional amount).
a. Bank to Book Method b. Its value
Y."Adjusted Balance Method changes in response to the change in an
b. Book to Bank
Method d. All of these underlying.

-
 -----:-------._ "''"· ,..
''\i' .
'"""'
. pt1C1II
184 ftfl 185
net
;,,vestment (or only a
;,,;riiJ v
' 1,456,792
c, Itrequire< no
net
iflvest:IJlent). 1,330,873 c. 1,582,711
miniJnal initial date-
b- d. 2,000,000
future
d. It is settled at a

...-1.e interest income in 20x] .

? Jll ?
,. "'"1 580
,&J. I

CHOICE a.
203,951
c. 186,322
6-3: MlfL TifLE these refer to
increll'l y.
for NGAs,
d. 200,000
PROBLEM_the G AM the acquisition eri? .

1. According to
·butable to '
lSstJ.e
? that are &recdY attfl
..-,ment
.
,
Ot
6-
If the investm?nt
is cl?ified
as available for sale
,1:?1 of a finaild al ,n?u
.
.......
·

F.u,ana ial costs

'

asset and the fair value at year-end is

financi?
?
c.
?1,800,000, how much
the gain (loss) from the
JS

a Costs to sell d. Variable costs changein fair value?

Transaction costs a.
(200,000)
Y. C. 195,7()9
categories of b. (217,289) d. 238,869
of the finanC'lqJ
is not one
.

2 Which of the following

GAM for NGAs? If the investment is
assets under the
classified as availa:b]e for
sale financial
a
Held-to-maturityinves11J1et1t5 '
asset, how much is the interest income in 20xl?
221,580
b. Loans and receivables a. c. 186,322
finaildal assets
c.
Available-for-sale
other comprehensiveincome
/ 203,951 d. 200,000
Fmancial asset through
"'
According to the GAM for NGAs,
B. changes in fair value of
investment for Pl,000,000. Transacti 1
cl ass ifi e d
investments
3. Entity _Aacquires an
rosts amount to ,10,000. At year-end,the investment has a :; a. recognized
as available

in surplus or deficit
for sale financial assets are

is classified
value of P900,000. H the
investment finanC!aJ
as .

? recognized in net assets

defidt, how much is the loss from
asset through surplus or the c. not recognized

in tau value, d. orb

? c.110,000
a

/100,000
d. 0 A
b. 90,000 9. Entity acquires an investment for Pl00,000 and incurs
transaction costs of Pl0,000. At
year-end, the fair value of the
for the next
Use the fallowing infimnaiion four questions investment is PS0,000. EntityA recognizes a P30,000 loss from
On January 1, 20x1, Entity A acquires 10-year, 10%, P2,000,000 fae? the change in fair value. The investment would most likely to
amount bonds for ,1,456,792 and classifies them as held-to have been classified under which of the following categories
maturity investments. Transaction costs on the acquisition amount of financial assets?
to P125,919. The issuer pays annual interest every December 31. Available-for-sale financial assets
The effective interest rate is 14%. b. Financial through surplus asset or deficit
c. Held-to-maturity investments
4. The initial
carrying amount of the investment on January 1, d. Loans and receivables
20x1 is
 186 ??t,
'-.: cial Assets
fill?
for ,100,ooo a
an
Investment nq ;. 187
the fair
10. Entity A acquires At year-end, Va) •oa.
of ,10,QOO- the
"• or'?• b. Preparing •
bank_
transaction costs However, inv ? 'OConciliation
•

,i20,00o· 0'htie?1 maintame

.

db Ya for each
government bank
mvestment
· is
in the year-end
fina,, I
statement of Making estimates entity.
account

appropriately reparted of ,106,382. The ?,1

.
c.
of
amount •nve.,liii establishingan •mount for recurring expenses before
at a carrying classified under
position been Whicl,Of "11 d. Maintainingthe a
petty cash fund.
to have petty cash fund
would most likely assets? Ii; '
of financial
Balance System
categories whereinthe total under a Fluctuating
following
financialassets
Available-for-sale
cash vouchers
may or may
cash on hand and
petty
a. not be
rnvestments of petty cash fund at equal to a fixed amount
Y. Held-to-m?turity e.
any given point of
Requiring at least three time.
Loans and receivables '

bidders
c.
due to insufficient inf ormat· making pure h eses. or canvasses before
d. Cannot be determined ton
.

5, The per transaction thresholdfor

petty cash disbursements of
QISCUSSION
CLASSROOM a govemmen t en tity ts
·

PROBLEM 6-4: FOR PS,000

GAM for NGAs, a government entity's a.
,,9'15,000
1. According to the cas0 ,10,000
b.
of the following except d. No limit;
sky is the limit.
comprises all
cash on hand y.-rashequivalents
a.
d. cash treasury ac 6. A government agency shall prepare a bank I

b. cash in bank counts each bank reconciliation for

account maintained. Bank
reconciliations are
excluded from the amount
preparedusing the
Which of the following is of
2. Caso a. Bank to Book Method
f finan I ,K"AdjustedBalance
. .

statement o era position Method

that is r?ported in the of a b. Book to Bank Method
d. Any of these
government entity?
unreleased checks drawn c. undeposited collections
a. 7. If the adjusted balance of cash is less than the
b. cancelled checks drawn faPost-dated checks received unadjusted
balance per books and there are other
no
reconcilingitems or
errors, the difference is most
of
likelycaused by
3. An unexplained cash overage a government entity is a. Credit memo c. Depositsin transit
recorded as a b. Debit memo
? Outstandingchecks
a. credit to a payableaccount
b. debit to cash shortage or overage account
a 8. According to the GAM for NGAs, receivables are measured at
? credit to miscellaneous income account Initial Subsequent
d. credit to a cash shortageor overage account a. Fair value Amortized cost
Fair value plus transaction costs Amortized cost

4. All of the followingare considered internal controls over cash c. Fair value minus transaction costs Amortized cost

d. Fair value Fair value

except
a. Requiring a cash custodian to be properly bonded. The
amount of bond shall not be less than the cash
accountability
of the custodian.
? ?'til
/iitK'lltOr/Cw
,
/Rlr value of an lnve I
,?•1,ges In the
recognizedIn
"litieiit IRY
9. The sut,sequent (or sal• ore \1 I
is cl•ssifieJ RS 0vail•ble Chapter7
surplus or deficit

b. net assets or
equity
recognizedaccoUJ1ting
Inventories
c. not Policychoice
as an
d. any of these
NGAs, the ver rnine 06jectives
10. According to' the
CAM for y PUrpo?
Of
£«•Account
J.
for inventories
by•
derivatives is
c. risk incurrence 2-
Describe the procedures in governmen1enHty.
the
management receipt and disposition of
-

!).- <risk d. a orb inventories by a ?ove!'lment

entity.
b. speculation

1ntrod·uction
Jr,ventories assets:
·
are

Held for sale

d1stnbuttonin
.
or .
.
a.
the ordinary course
operations(Finishedgoods); of

b. In the process of production

for sale or distribution (Work in
process);
or r

In the form of materials

c, or supplies to be consumed in the
productionprocess or distributed in the
(Raw materials and supplies). rendering of services

More specifically,the inventories of

consists of the
a government entity
following:
a. Inventory Held for Sale (e.g.,medicines for sale in government
pharmacies)
b. Inventory Held for Distribution (e.g., rice and other welfare
goods held for distribution)
c. Inventory Held for Manufacturing
(e.g., raw materials, work-
in-process)
d. Inventory Held for Consumption (e.g., office supplies
inventory)
e. Semi-Expendable Property consists of machinery,
-

equipment, furniture and fixtures and similar items that are

not capitalized as PPE because their costs are below the
?15,000 capitalization threshold for PPE.
 hoh1,.... \11
r ..
?,) I
·

,,,1or/l!S
190
? - 191
-

,t cost and sub", forrnulas

"'"'"red %(! I
cos t
?1,} f goodssold and cost o( ,

10111,uy otlt
0thc
folJowlng CORI formulnR:
1nvcnto1'lcson hand arc determined
.

i.181n8
eciftc ipe11tlflcatlo11
t'hls shall be
.>, Spot
,,
ordinarily Interchangeable uRcd
(I.e.,
-

for itcmR that ore

rc,,otcd for spec, 'fl c unique) and Lhrnw that are

r;cg
'
,,, projects.
Under
this formulo,
11pccific costs are attributed to
following: rebates, identified lh.Hnfl o( inventory.
osr comprisesthe trade discounts, ond
resents the actual cost11 of
Acct)rdlngly, coRt of sol
cxc/11d/11g •11,1
a. Purchase cost, price,
in purcl>•SC the asset to its
::Jng the Apcclflc Items sotd whll
Inventory represents the
similar deductions 1 actual costR of the spectf
Direct costs
incurred In bringing
costs, conversion
"1•11Q? items on hand.
b.
(e.g., freight co,?,
location and condlHon productionovcrhc
and •d
Weightedaverage cost this shall be used for
costs of labor 101 t,. -

such as
of Hems of Inventorythat arc
large numbers
manuf,ctureditems). t>rdinArlly
lnlcrchon?coblc. Thi
sholl be applied under a /JC'7Jl'/11n/
Under this
/11vr111ory
l!.'fHle,11,
Cost cxcl11dcsthe following:
formula,a new wrightcd
of wasted
materials, labor, and produc,lion is computed ofter every purchosc. The ovcrogli
unlt cost
Abnormal amounts
1.1.
used in
computed ovcrug
overhead; costs ore
dclcrminlng
the cost of goods sold and
inventory on hand.
b. Sellingcosts; and . Accordingly,
of solcA nnd ,•.ndfti!J,
cost
c. Administrative overheads inventory arc stated al
ovcrogc costs, rothcr than ot llw actunl
osts of the i1wcntorics sold
or on hond. Thls rnclhod I.
'xcl'ptions: ornmonly rdcrrcd lo in trodillonal
occoL1nting by b111ilncs
a. Inventories received from non-exchon??
transnctions (e.g., •ntitics as thl1 "moving
ovcrnge" cost formLJla.
acquisiuon-datcfair vn/11e.
.

donations) are initiallymeasured at

measured
b. Agriculturalproduceare initially at fair value
less ovcrnmcnt entities shall use th(! per1Jeh,n/ Inventory
point of harvest.
costs to sell at the system. Under Lhis system, purchoscs, soles, and olht•r •

items, their initial measurements

For these are deemed 1rans?clionsaffectinginventoryarc recorded in the "invl'ntory"
their costs for purposes of subsequent measurement at the lowerof and "cost of sales" accounts,
appropriate. Morcovcr, stock cards
as
cost or NRV/Current replacement
cost. and stock ledgers are maintained.
These enable the retrieval of
information on costs and quantities of inventories sold
Net and on
Realizable Value (NRV) is estimated selling price less hand at any given point of lime.
However, purchases of supplies
estimated costs of completionand estimated selling/disposalcosts. and materials out of the
petty cash fund for Immediate use or on
I

Current
emergency cases are chargeddirectlyas expense
replacement cost is the cost the
..

entity wou Id incur lo The FIFO cost formula and the

acquire the asset on the periodic inventory system
reportingdate. are not used
by government entities.·
 - ---

c:???,?l) ,1orie5
,,,11,' ,

192 193

Expense recognizedas
.
.

e lnventoru field
exchartged,consu?Peiis,,
"
Recognition as an inventory for
MnMufactu'
:,,,,>·"'ocess-Inventory
•
....... ,,u
of an or 2K ··-
...

,mount ·?- t'I Cost of Sales

The carrying distributed,
or current replacen,•nt v• t,{atedals lnvento,y 800 2K

th?period
it is
inventory
sold,
to ,ts
NRV
exp•""'·
,,.?t,
Raw
.
ect Labor
O?nufacturing 90()
F;nJshedGood, Inventory
To recogniu
2K

wnte-down of Overhead
,

is also
,..:og,,1zed as M
To recognizetra11sfer
30() fi11ished
goods
cost of sales of
as appropriate, ofraw
labor and
rials,direct manufacturing
111ate roduct,on
.

rocess
•

d to
0ver/leaGoods
·she d Inventory 2K
fil11
wor k -
Process-Inventory 2K
To recognizetransferofcompleted
ished goods
t{[i!!
to ,
·ts
,,111

Jflventories
costing '200 are fou?d to
have a net ?ealizable
value of
,1 50 and
current replacementcost of ,1so.
'

Held for Sale I

.
Inventoru Held for Distribution
SO
SO Ilrnpairment Loss-Inventories
Welfare Goods for
·

20

Distribution 20

Inventory Held for Sale -

_D...:.:is:....:tr.:..:ibut·
.::ln:.:v?en;::..:t?o?ry'-H_el_d_.,_}_o_r
---.!On
Cost of sales 800 Welfare Goods Expense BOO Receipt and Disposition of Inventories
800 Welfare Goods for
Merchandise Inventory
Receipt.
lnuentoru Held for Manufacturin 1. End users prepare the Purchase
Request (PR) form to request
for the purchase of items not available
on stock. The PR is the
basis in preparing
the Purchase Order.
'End users' refer to the
individuals who will actually be
Semi-ExpendableMachinery
andEquipmentExpenses 800
using the items. For example, the end users of office
supplies
Semi-Expendable are those who are working in the
Machinery800 office; the end users for
To recognizethe issuance ofsemi- cleaning materials are the janitors. As an internal control, only
ndab/e machineru to end-users the appropriate end users are allowed to make purchase
requests for the items they need. It would be inappropriate for
an office clerk to make a purchase
request for c?eaning
materials.
 ;/1!8
e11/II
194
,,,v ------------------ JYS
Purchase Order([>
·-

rhe OJ. As an internal

ares
supplier when 'I'\? control,
The
offf"'1p re
,uthl>dzed
.
.

quantities nd
.J
arna?iri,1
to the
proP erty/Supply Division) the SC (mainlaincd by th<'
and SLC
document,ssu st'-nec,·fications, PO
2.
nting D' 1v1s1on ) arc 1:>
(maintained by th
·

q , ·

agre>?.1 Accot.1
PO is a
111d ,ca
t es
.
the ·

chased, The s
erves
as
periodically
·

reconciled. ?
.

purchase.It items being pur supplier.

.

t?

prices of
the
.

and the Property/SupplyDivision

contract between th• enblJ'
canvass
fro 111 at
least 3
and
.

supp/·1er8 7.
\fO
(D\I) 'then
.

forwards
. prepares the Disbursement
;1,
'f),:cher
Recall that a ,1,000 ab ovc. 11 together with
,mo unting
to
doCU,nents,
to the
AccounHng
D;v;,;0n support;n?
requ;redfor purchases
,
for processing
men t. 0

PropertYISl.l paY
delivered,the
'h ase d items
Delive ry
are
.
of the Ppi?
Wh en th e pure portion ,

Rec , ..

"received" D15posrtio
3 .
n
and Acceptance I! 'ip1 ,
.

' the .

Di1v1s1on signs
.

prepare the Requisition

the Inspection E n d users
. .

(DR) and prepares Property Inspectoepo,1 s. and Issue Slip (RIS) to

will be used by the r .
req uest
for the issuance of
items avaiJable
? on stock. The Head
(JAR). The IAR the de I.ivere d
iitems. .

0 f
the reques timg in ct·1v1id ual ·

shalt approve 'the R IS Th e

inspectingand accepting Division forwards the DR RIS is then
Property/Supply '
1,\1 ap proved forwarded to the
.

The Property/Supply
Division.
and PO to the Property Inspector.
the conformance· The Property/SupplyDivision prepares the
inspects of
the 9·
4. The Property Inspector in both the. PO and Materials Issued (RSM!).The
Report of Supplies
delivered items with the specifications /nd DR RSMIwill be used by the
inspection(i.e., acce Stock Card Keeper in updatingthe·sc and the
and indicates the result of
the

!AR.
deliveries
Rejected will be re?•no,>
rned to
Division in jou,rnalizing
the items issued.
Accounting
rejection)hi the
the supplier.
forwards the copies of D R, lAR 10. The Accounting Division records the items issued
The Property Inspector in the books
and and updates the SLC.
and PO to both the Property/ Supply Division A ccountin
g
of accounts

Division for recording.

11. The following are other documents used in the disposition of
Property/SupplyDivision, through
.the Stock Card inventories:
5. The
in the Stock Card (SC). Waste Materials Report
Keeper, records the accepteddeliveries a. -

prepared by the Property or

The SC shows the quantities of all receipts and issuances of Supply Custodian to report wasted materials, such as

inventory, as well as the available balance at any given point destroyed spare parts and other
spoilages.
of time. b. Report on the Physical Count
of Inventories used in -

reporting the results of physical counts. It shows the

6. The AccountingDivision records the
accepted deliveries in the balance of inventory,as well as any shortagesor overages.
books of accounts and in the SuppliesLedgerCard (SLC). The c. Report of Accountability for Accountable Forms used to -

SLC shows both the quantities and of all report the movement and status of accountable forms in
monetary amounts
receipts and issuances of inventory,as well as the available the possession of an officer.
balance at any given
point of time.
 ---Sh?) ,.
Jtfl/et1tories 197
when
prepared issuing ?
cuswdianSlip sLfMS
-

'''l1.
.

d. i,-tory p?O
properfY·
expendable TRUE OR
BLEM7-1:
fll?aordingGAMFALSE
for NGAs, to the
inventories
I 11, · e
ntities are, subsequently
meaSUred at
of government
ent replacement netrealizable value Of
Chapter 7 summarv: cost
depending
?
enattes
indud
in u
? the foUo ?sclassified as held for sale on
held for distribution.
whether the inventory
governrnent
..
or

The inventories of lfeld

Inventory
for Distributio/">i I

Inventory Held for Sale, lieid(•.g,

Inventory
djslnbuhon), l0rl
I
According th_e GAM
f?rNGAs, purchases
to /

welfaregoods held for Consumption (e.

tor tz· equ ipment, funuture fixtures and
of machinery,
Property (PPE-lik!'
!feld 016? similar and
Manufacturing, 1nvento,Y Ii za ti on items below the
·

lo 000 capita hr eshold t

supplies),and
Seini-Expen<lable itett\s PPE
f' I
. •
for are recor ded as
thresholdfor PPE). iJlVentones. ,,...,.-

below the ,1s,OOOcapitalization II

Goods held for sale are

meas?ed
subsequentl?. at the
Of
LoUler
• sub
heldfor d1stn'but1onare sequ enuy Relief goods, office supplies,
Cost and NRV while goods
Cost and Current replacement
13.fiXture are
equipment
items that
and furniture and

measured at the Lower of

and the Periodic inventory ystern ate
scost. inventories by
may appropriately be
a.government entity.
recorded as

• The FIFO cost formula

notu sed bv government entities. for
The GAM NGAs
-

allo?government
-

4·
f entities to use the
FIFO cost flow formula.

The GAMNGAs allows for

.r5· government entities to use a
periodicinventory system.

?6. The specific identification L. is not available for use

by government entities, accordingto the GAM for
NGAs.
I'
The Purchase Request (PR) form
t7. is preparedwhen end users
request for the issuance of items of
inventorythat are available
on stock.

t8· If the beginning balance of inventoryis PSO, the net purchases

are PIOO and the cost of goods sold is P30, the ending
inventorymust be Pl20.
,..,....
__..

T
t· .,, {
j 1 «l
r 198
Ch.ip? ? . )
??
1?

eggs. At the
Start Aceordingto th?GJ\M for NGJ\s,
Fact pal/em entity, ,ells '{ one 01 4,
uJJlbers of items of this shall be used for
Entity A, a
govenunenteonsJSte O
d (I) red
egg .

tlie [) fl
?ory
large
illter changeable. that
, ...

invento,Y Entity A ?,,, are ordinarily

pedod, Entity of "2 During the period,
A's acq "Ire,/ , .

for P4. EntityJ\ Specifire 1id en tifi ca ti on

·,-·
aJ110unt
carr'Vlng
egg (or
)'3 and
egg ·

one (1) blue

.
'<>lq :? e
a.

b.
FIFO
(1) brown period· Weighted average cost
th• C,
applied
egg during
,

brown in periodk
,system a
inventory
cost formula E ntity
J\',
identification ,

d. Weighted average cost

9. Under the Specific cost
system
applied in a perpetual inventory
of sale is !'2.
Entity·J\' s
e. Any of the?e as a
mat?erof accounting
ordinarilyinterchangeable, cos, policy choice .

10. II? eggs are

the sale
occurred Only alter all ?
This refers to the cost an
sale " ¥2.5, assuming the c)· entity would incur to acquire asset
on the reporting date. an

were made.
purchases a.
Net realizable value
c. Current replacement cost
Fair value
·

b. d. Present value
------
CHOICE
PROBLEM 7-2: MULTIPLE .

t e ntl·ty purchases Which of the following

mvento ·

nes. To
c6· inventories ·ofa
A l, Entity A a govemmen would most likely debit the(:.
,
. .

would be subsequently government entity

A ) measured
record a pure h ase, En,.;ty at the lower of
,
u
cost and
c. Expense account current replacement cost?
acco unt ,

a. Inventory b Inventories of rice that

d. a or a. are held for sale
Purchases account
·

b.
b. Medicines being sold by a government-owned
Books to be
pharmacy
hospital,acquires medicines to be soJd c. distributed to students in public schools
f1 2_ Entity A, a government record the Forest products held for sale
A would medicines d.
in its pharmacy. Entity

acquiredas Which of the followingevents

a.
Property
Semi-Expendable p7. or transactions would not lead
to the recognition of the cost of
inventoryas expense?
b. Inventory Held for Consumption
a. The inventory is written down.
c. Inventory Held for Distribution
b. The inventory is distributed for free.
d. Inventory Held for Sale
c. The inventory is exchangedfor dissimilar inventory.
d. The inventory is consumed in the manufacturing process.
f 3. Entity A, government entity, purchases relief goods which
a

are to be held on standby, ready to be

distributed when a
e 8. The accounting division of a government entity uses this to
calamity strikes. Entity A would most likely classify the goods
record and monitor the movements and balances of
purchased as
inventories.
a. lnventory Held for Consumption
b. Inventory Held for Distribution
a. Stock Card c. Journal Entry
b. Stock Ledger Card d. SpecialJournal.
c. Purchases
d. None of these, only a note disclosure shall be made
 -"1clp?
200
'
t > {r/¢1110!!!!----
201
correctly di//ere,,
staten'e,,ts tia,.,
.

Which of the Jol)owil>g

[,edger
o,rd? II, entity A, a gov??ent entity,
9.
- the srock maintained by th e
').
tJ,e intended recipients. The
distributedwelfare goods to
Qud is
Stock
[,edger
o,rd
is maintaine d
8oq Cost of s
to
al es entry recogru·ze the is
Stock Card
event
Stock
by g?
.

a. The a.
while th• II, Welfare Goods xxx
Division
WelfareGoods Expensefor Distribution
Accow>tingDivi,;on. audit by the COA
"'hi!,
b. XXX

,ubjed to Welfare Goods

The Stock Card is ?. for
' XXX
b.
Qud is not. Distribution costs Distribution xxx
Stock L,dger
Card ,hows
quantitiesonly while the St c.
Welfare Goods xxx
The Stock balances only. °'I for Distribution
shows monetary
c.
None The expense xxx
Oud d. is
Ledger
Card ,hows
quantitiesonly whil e the St
when a physical
recognized at the end of the period
d. The 5!04 well oc:1 count is pedonned.
shows quantitiesas as
111<>net
'
the Income
Summary
The expense is closed
Ledger Card
to
-: <lty account.
amounts
3 At year-end, Entity A, a
govemment
when end users request for entity, determines the
prepared
·

10. This document -is the following inf orma ti' on:
j) issuance of inventories
that are available on stock
• Carrying amount of goods held
for distribution PI00,000
Form Net realizable
-

Purchase Requisition • value -

,so,ooo.
a.

b. Custodian Inv?ntorySlip •
Current repla?e?ent
cost- P90,000.
c. Purchase Order
How much of the
dJRequisition and Issue Slip carrying amount of the inventory is
recognized as expense?
a. 10,000 C. 90,()()Q.
MULTIPLE-CHOICE b. 20,000 d. None of these
PROBLEM 7-3:

·Entity A, a governmententity, purcha'Sesinventory

to be held
1.
of activities. Which of the Use the followinginformationfor the next two questions:
for sale in the ordinary course

to record the purchase? Entity A, a government entity, determines the following

following is the correctentry
infonnation regarding the inventoryof Goods A,
a. Merchandise Inventory xxx a non-unique
item:
Accounts Payable xxx
Units Unit Total Cost
b. Purchases xxx
Cost
Payable
Accounts xxx
Balance at January 1, 20xl 3,000 P19.55 P 58,650
c. a or b dependingon the accountingpolicy being used
Purchases:
d. none, a government entity cannot hold inventories for
January 6, 20xl 10,200 21.50 219,300
sale; only for consumption. \

January 26, 20x1 2,250 20.60 46,350

Sales:
January7, 20x1 2,700
January31, 2002 7,200