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

LYCEUM-NORTHWESTERN UNIVERSITY
Tapuac District, Dagupan City

COLLEGE OF BUSINESS EDUCATION

Preliminary Examination – Accounting for Government & Non-profit Organizations

2nd Semester, A.Y. 2021-2022
Prepared by: Judy Anne T. Ramirez, CPA

Name: _______________________ Score: _________________

Student No: _______________________ Date of Examination: _________________

Multiple Choice. Choose the option of the best answer.

1. Which of the following is a unique requirement of government accounting that is not required in the
accounting for business entities?
a) The use of double-entry recording system
b) The use of single-entry recording system
c) The use of accrual basis of accounting
d) The presentation of budget information in the financial statements

2. What is the legal basis of the COA in promulgating the GAM for NGAs?
a) PD 1445 State Audit Code of the Philippines
b) The Philippine Constitution
c) RA 9298 The Philippine Accountancy Act of 2004
d) Philippine Public Sector Accounting Standards

3. Which of the following is tasked in keeping the general accounts of the government, supporting
vouchers, and other documents?
a) COA c) NGAs
b) DBM d) Congress

4. The Bureau of Treasury (BTR) is responsible for

a) promulgating accounting and auditing rules and regulations.
b) the formulation and implementation of 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 disturbances thereof.
d) directly implementing the projects of the government.

5. According to the GAM for NGAs, the basis of accounting to be applied by government entities is the
a) Cash basis c) Modified accrual basis
b) Accrual basis d) Any of these as a policy choice

6. Government resources must be utilized efficiently and effectively in accordance with the law.
According to P.D. No. 1445, who is directly responsible in implementing this policy?
a) All employees who are entrusted with the possession of government resources.
b) The head of the government agency.
c) The COA.
d) All elected officials.

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7. The transfer of government funds from one officer to another requires the prior authorization of the
a) Commission on Audit c) President of Republic of the Philippines
b) Head of Agency d) Bureau of Treasury

8. Mr. A, a government employee entrusted with the custody of government funds, was instructed by
Mr. B, a politician to release funds for the acquisition of a car as a birthday gift for Mr. B's daughter
who will be having her 18th birthday next week. To relieve Mr. A from any liability, what should Mr.
A do?
a) Mr. A shall not release the fund but rather notify Mr. B, in writing, that his instruction is illegal.
b) Mr. A shall release the fund, and then notify Mr. B, in writing, that his instruction is illegal.
c) Mr. A shall release the fund but retains 20% commission.
d) Mr. A shall release the fund but requires Mr. B to promise, in writing, that the car shall be
returned to the government after his daughter's birthday

9. Mr. C, a government employee entrusted with the custody of government funds, has lost the
government funds in a force majeure. What should Mr. C do to relieve him from liability?
a) Mr. C should immediately notify the Head of Agency within 30 days
b) Mr. C should immediately notify COA within 30 days
c) Mr. C should immediately notify Bureau of Treasury within 30 days
d) Mr. C should keep the event a secret and wait for next funds to arrive

10. These refer to the attributes that make information useful to users.
a) Usefulness characteristics c) Qualitative characteristics
b) Quantitative characteristics d) Fundamental principles

11. Information loses this qualitative characteristic if it is not reported on a timely basis.
a) Relevance c) Neutrality
b) Reliability d) Materiality

12. Which of the following qualitative characteristics does an entity most likely would need to make
some tradeoffs?
a) Faithful Representation and Substance Over Form
b) Materiality and Relevance
c) Relevance and Reliability
d) Understandability and Comparability

13. An entity recognizes an estimated loss from the decline in value of a property. Which of the
following is most likely the qualitative characteristic being applied by the entity?
a) Reliability c) Faithful representation
b) Substance over Form d) Prudence

14. Which of the following is not one of the fund clusters of a government entity?
a) Regular Agency Fund c) Business Related Funds
b) Foreign Assisted Projects Fund d) Petty Cash Fund

15. To achieve a proper balance between relevance and reliability, the overriding consideration is
a) how users’ needs are best satisfied.
b) relevance is always more important that reliability.
c) reliability is always more important than relevance.
d) greater weight shall be given to relevance compared to reliability.

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16. How does government accounting differ from the accounting for business entities?
a) Government accounting places more emphasis on profit-making.
b) Government accounting is very complex that only highly intellectual individuals can understand.
c) Government accounting places greater emphasis on sources and utilization of funds in
accordance with the law and management’s stewardship over government resources entrusted
to the entity.
d) Government accounting is specialized in nature that the principles applicable to business
entities are never applicable to government entities.

17. Which of the following is not a source of revenue for the government?
a) Taxes
b) Fees collected by government agencies
c) Grants and donations from other governments
d) Contract price on government contracts awarded to private companies.

18. Entity A (a government agency) is entrusted with government resources. According to P.D. 1445,
who is directly responsible for the efficient and effective utilization of these resources?
a) The government employees who have custody over the resources.
b) The Head of Entity A.
c) The COA staff stationed in Entity A.
d) The Foot of Entity A.

19. Which of the following is not charged with government accounting responsibility under the GAM for
NGAs?
a) COA c) NGAs
b) DBM d) House of Representatives

20. The Department of Budget and Management (DBM) is responsible for

a) promulgating accounting and auditing rules and regulations.
b) the formulation and implementations of 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 the government.

21. Which of the following is not one of the objectives of the GAM for NGAs?
a) to harmonize government accounting standards with international standards.
b) to update the coding structure and accounts.
c) to update accounting books, registries, records, forms, reports and financial statements.
d) to update government accounting standards to be consistent with the provisions of U.S. GAAP.

22. All of the following are requirements peculiar to a government entity. Which is not?
a) Presenting budget information in the financial statements.
b) Fund cluster accounting.
c) Incorporating budgetary controls in the financial reporting system.
d) Accrual basis of accounting.

23. Which of the following qualitative characteristics is improved when information is reported on a
timely basis?
a) Relevance c) Understandability
b) Reliability d) a and b

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24. The best estimate for a loss is P100,000. However, the entity deliberately overstated the loss to
P200,000. Which of the following qualitative characteristics is violated?
a) Prudence c) a and b
b) Reliability d) Nothing is violated

25. Which of the following financial statements is peculiar to a government entity?

a) Balance Sheet
b) Statement of Cash Flows
c) Statement of Comparison of Budget and Actual Amounts
d) Statement of Changes in Equity

26. Which of the following does not properly described the budget process used in the Philippines?
a) Bottom-up budgeting c) Zero-based budgeting
b) Top-down budgeting d) Non-incremental budgeting

27. Arrange the following steps 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 c) II, V, II, I and III
b) V, II, IV, I and III d) V, I, II, IV and III

28. Arrange the following steps according to the sequence that they appear in the budget cycle
I. Allotment II. Disbursement III. Disbursement IV. Appropriation V. Obligation
a) IV, I, II, V and III c) IV, I, V, II and III
b) IV, I V, III and II d) IV, V, I, II and III

29. This type of budget is prepared in such a way that estimated revenues exceed estimated
expenditures.
a) Balance budget c) Obligations budget
b) Excess budget d) Budget meal

30. This summarized an agency’s fiscal year plans and performance targets. It shows the agency’s
physical and financial plan, monthly cash program, estimate of monthly income, and list of
obligations that are not year due and demandable.
a) Budget Execution Documents (BEDs)
b) Special Allotment Release Order
c) Statement of Approved Budget, Utilizations, Disbursements and Balances
d) Aging of Due and Demandable Obligations

31. It is an authorization issued by the DBM to NGAs to incur obligations. It is also referred to as
Obligational Authority.
a) Appropriation c) Budget call
b) Allotment d) Budget hearings

32. It refers to the amount contracted by a duly authorized administrative officer for which the
government is held liable.
a) Appropriation c) Obligation
b) Allotment d) Disbursement

33. Which of the following best describes the Notice of Cash Allocation (NCA)?
a) It is a form of legislative authorization in the allocation of funds for specified purposes.

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b) It is an authorization to a government agency to incur obligations on behalf of the government.

c) It is an authorization to a government agency to make disbursements out of government funds.
d) It is a notice received from the Congress that cash is allocated for the payment of planned
expenditures.

34. Disbursements by government entities are most commonly made through

a) MDS Checks c) Petty Cash Fund
b) Cash d) Credit Card

35. Responsibility accounting requires all of the following except

a) separate books of accounts to segregate controllable and non-controllable costs
b) identification of responsibility centers
c) distinction between controllable and non-controllable costs
d) coding structure for responsibility centers

A legislation approves the allocation of P100B funds to support the operations of Entity A (a government
agency) in the current year. At the start of first quarter, Entity A receives authorization to incur
obligations for a maximum amount of P45B in that quarter. Entity A extends half of that authorization to
its lower operating units. During the quarter, Entity A receives monthly authorization to disburse funds
not to exceed P15B per month. Entity A extends half of those monthly authorizations to its lower
operating units. At the end of the quarter, total obligations incurred amounted to P40B while total
disbursements amounted to P35B.

36. The allocation of the P100B funds to Entity A is referred to as

a) Allotment c) Obligation
b) Appropriation d) Sub-allotment

37. The allocation of the P100B funds to Entity A is authorized by

a) Department of Budget and Management (DBM)
b) Commission on Audit (COA)
c) Bureau of Treasury (BTr)
d) Congress

38. The P45B authorization is referred to as

a) Allotment c) Obligation
b) Appropriation d) Sub-allotment

39. The P45B authorization is received by Entity A from

a) DBM c) BTr
b) COA d) Congress

40. The half of the P45B authorization extended by Entity A (Central Office) to its lower operating units
is referred to as
a) Allotment c) Obligation
b) Appropriation d) Sub-allotment

41. Which of the following best describes the P15B monthly authorizations?
a) Allotment c) Disbursement authority
b) Obligation authority d) Disbursement authority

42. The P15B monthly authorizations are received by Entity A from

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a) DBM c) BTr
b) COA d) Congress

43. The half of the P15B monthly authorizations extended by Entity A (Central Office) to its lower
operating units is referred to as
a) Cash Disbursement Ceiling c) Notice of Cash Allocation (NCA)
b) Non-Cash Availment Authority d) Notice of Transfer of Allocation (NTA)

44. In Entity A’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and
Balances, how much is shown as “unreleased appropriations?”
a) P65B c) P55B
b) P60B d) P45B

45. In Entity A’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and
Balances, how much is shown as “unobligated allotments?”
a) P6B c) P10B
b) P5B d) P15B

46. All disbursements of government entities must be in conformance with the law and the
a) National budget c) PPSASs
b) COA audit findings d) PFRSs

47. An entity prepares its budget for the upcoming year from scratch. It scrutinizes each item in the
budget irrespective of whether the item was included in the previous budget. This process is called
a) zero budgeting c) scratch budgeting
b) incremental budgeting d) zero-based budgeting

48. Under this approach to budgeting, several parties participate in the budget preparation – from the
lowest levels of government to the highest levels, and sometimes even citizen-stakeholders
participate in the budget preparation.
a) bottoms-up budgeting c) top-down budgeting
b) zero-based budgeting d) bottom-up budgeting

49. After deliberation in both houses in the Congress are finished, a committee is formed to harmonize
any conflicts between the Representatives and Senate versions of the General Appropriations Bill.
This committee is called the
a) Adjudication Conference Committee c) Referee Conference Committee
b) Bicaramel Conference Committee d) Bicameral Conference Committee

50. Entity A, a government entity, wants to make disbursements. Arrange the following events in the
correct sequence before Entity A can make valid disbursements.
I. Allotment II. Disbursement Authority III. Appropriation IV. Incurrence of obligation
a) II, III, I, and IV c) III, I, II, and IV
b) III, I, IV, and II d) III, IV, I, and II

Reviewed and Checked by:

Dr. Genoveva Y. Reyes, CPA, FRIAcc

Dean, College of Business Education

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