THE GOVERNMENT

ACCOUNTING
PROCESS
 Books of Accounts and Registries
1. Journals
a. General Journal
b. Cash Receipts Journal
c. Cash Disbursements Journal
d. Check Disbursements Journal
2. Ledgers
a. General Ledgers
b. Subsidiary Ledgers
 Books of Accounts and Registries
3. Registries
a. Registries of Revenue and Other Receipts
(RROR)
b. Registry of Appropriations and Allotments
(RAPAL)
c. Registries of Allotments, Obligations and
Disbursements (RAOD)
d. Registries of Budget, Utilization and
Disbursements (RBUD)
 Object of Expenditures
1. Personnel Services (PS) – pertain to all types of
employee benefits.
2. Maintenance and Other Operating Expenses
(MOOE) – pertain to various operating expenses
other than employee benefits and financial expenses.
3. Financial Expenses (FE) – pertain to finance
costs.
4. Capital Outlays (CO) – pertain to capitalizable
expenditures.
Basic Recordings
Basic Recordings (continuation)
Basic Recordings (continuation)
REVENUES AND
OTHER RECEIPTS
Fundamental Principles for Revenue
◦ All revenues shall be remitted to the BTr and
included in the General Fund, unless another
law specifically allows otherwise.
◦ Recording in other types of funds (e.g., Special
Fund) shall be made only when authorized by
law.
◦ Receipts shall be properly acknowledged through
pre-numbered ORs. Receipts can be in the form
of checks.
 Sources of Revenue
Revenues may arise from exchange and
non-exchange transactions.
◦Exchange transaction - examples:
sale of goods and rendering of services.
◦Non-exchange transactions -
examples: tax revenue, fines and
penalties and donations.
 Sale of Goods
Revenue from the sale of goods shall be recognized when all of
the following conditions are satisfied:
a. Significant risks and rewards of ownership of the goods are
transferred to the buyer;
b. The entity does not retain continuing managerial
involvement or effective control over the goods sold;
c. It is probable that economic benefits will flow to the entity;
d. Revenue can be measured reliably; and
e. Costs relating to the transaction can be measured reliably.
 Rendering of Services
◦ Revenue from rendering of services is recognized on a straight line
basis over the contact term.
◦ However, revenue is recognized by reference to the stage of completion
if the outcome of the transaction can be estimated reliably, such as
when all of the following conditions are satisfied:
a. The stage of completion can be measured reliably;
b. It is probable that economic benefits will flow to the entity;
c. Revenue can be measured reliably; and
d. Costs relating to the transaction can be measured reliably.
◦ When the outcome cannot be estimated reliably, revenue is recognized
only to the extent of recoverable costs.
 Interest, Royalties & Dividends
◦Interest is recognized on a time proportion basis
that takes into account the effective yield on the
asset;
◦Royalties is recognized as they are earned in
accordance with the substance of the relevant
agreement; and
◦Dividends are recognized when the entity’s right
to receive payment is established.
 Measurement of Revenue from
Exchange Transactions

◦ Revenue from exchange transactions are measured at the

fair value of the consideration received or receivable.
◦ Any trade discounts and volume rebates shall be taken into
account.
◦ When cash flows are deferred, the fair value of the
consideration is the present value of the consideration
receivable.
 Exchanges of Goods or Services

◦ Similar – no revenue is recognized.

◦ Dissimilar – revenue is recognized, measured using the
following order of priority:
a. Fair value of the goods or services received,
adjusted by the amount of any cash transferred.
b. Fair value of the goods or services given up,
adjusted by the amount of any cash transferred.
 Non-exchange Transactions

◦Revenue from non-exchange

transactions are derived mostly
from taxes, fines and penalties,
gifts, donations and goods in-
kind.
 Tax Revenue
Type of tax Taxable event
▪ Income tax ➢ Earning of taxable income

▪ Value added tax ➢ Undertaking of a taxable

activity
▪ Goods and services tax ➢ Purchase or sale of taxable
goods or services

▪ Customs duty ➢ Movement of dutiable goods

or services across the
customs boundary

▪ Death duty ➢ Death of the owner of the

taxable property
▪ Property tax ➢ Passage of the time period
for which the tax is levied
 Gifts, Donations and Goods In-kind
-Recognized as revenue measured at fair value
when it is probable that future economic benefits
will flow to the entity.
-If without condition, recognized immediately as
revenue.
-If with condition, initially recognized as liability
and recognized as revenue only when the
condition is satisfied.
 Others
◦ Services in-kind – not recognized as revenue.
◦ Debt Forgiveness – carrying amount of debt forgiven is recognized as revenue.
◦ Bequests – (transfers made according to the provisions of a deceased person’s will)
recognized as revenue measured at fair value, if asset recognition criteria are met.
◦ Grant with Condition – initially recognized as liability until condition is satisfied.
◦ Pledges – (unenforceable promises to give) not recognized as revenue.
◦ Concessionary Loans – (loans w/ below-market rate) difference b/w fair value and
transaction price is recognized as revenue, if non-exchange transaction.
 Impairment Losses and Allowance
for Impairment Losses

◦When an amount already recognized as

revenue becomes uncollectible, it is
recognized as expense (i.e., impairment
loss) rather than as an adjustment to the
revenue originally recognized.
 Other Receipts
❖ Subsidy from NG and ➢ Recognized as revenue
other NGAs from assistance and
subsidy.

❖ Receipts from: ➢ Not recognized as

a. excess cash advance; revenue.
b. overpayment of
expenses;
c. performance bonds
and security deposits;
d. collections on behalf
of other entities; and
e. inter or intra-agency
fund transfers.