20 Government Accounting_ANSWER KEY

1 Suggested answer (c) National Budget System The Philippine Budgetary System consists of the methods and
practices of the government for planning, programming and budgeting. It includes the adoption of sound economic
and fiscal policies. Its primary concern is the availability and use of money to provide the necessary services expected
of the government. 20-2 Suggested answer (c) Commission on Audit The Commission on Audit (COA) based on the
authority granted under Sec. 2 (2), Art. IX-D of the 1987 Constitution made a revamp of the existing government
accounting system. On October 30, 2001, it issued COA Circular Nos. 2001-004 and 2001-005 for the implementation
of the new system by the national government agencies and local government units, respectively 20-3 Suggested
answer (a) Accrual and cash basis The International Public Sector Accounting Standards Board (IPSASB) develops
International Public Sector Accounting Standards (IPSASs) which apply to accrual basis of accounting and IPSASs
which apply to the cash basis accounting. IPSASs set out requirements dealing with transactions and events in
general purpose financial reports of all public sector entities other than GBEs. 20-4 Suggested answer (d) Eight digits
In the new coding system scheme of this COA Circular 2013-002, the account code structure consist of eight (8)
mandatory digits, such as: Account group (1 digit), Major Account Group (2 digits), Sub-Major Account Group (2
digits), General Ledger Accounts (2 digits), and General Ledger Contra-accounts (1 digit). 20-5 Suggested answer (c)
(BEDs) Bidget Execution Documents is the annual documents required by the DBM at the onset of the budget
execution phase, which contain the following: 1.) Physical and Financial Plan, 2.) Monthly Disbursement Program, 3.)
Estimate of Monthly Income, and 4.) List of Not Yet Due and Demandable Obligations

20-6 Suggested answer (a) (PFP) Physical and Financial Plan is a budget execution document that serves as overall
plant of the government agencies encompassing the physical and financial aspects, consistent with their approved
budget level for the year, broken down by quarter. 20-7 Suggested answer (d) Statement of Allotment, Obligations and
Balances is a budget accountability report, which serve as the agencies' summary report of allotments received and
corresponding obligations incurred during the month from all sources by object of expenditure, and shall be reported
on monthly basis. Monthly Disbursement Progam, list not yet due and demandable obligations, and estimate of
monthly income are budget execution documents. 20-8 Suggested answer (b) (NCA) Notice of Cash Allocation (NCA)
is a disbursement authority use for payment of personnel services, maintenance and other operating expenses,
capital outlay, financial expenses, foreign assisted projects, and prior years/current years' accounts payable

20-9 Suggested answer (b) Special Budget Special Budget is a budget of special nature and generally submitted in
special forms on account that itemized are not adequately provided in the Appropriation Act or that the amounts are
not at all included in the Appropriation Act. 20-10 Suggested answer (c) Budget Call The budget preparation begins
with the issuance of "Budget Call" by the DBM. This document outlines the priority areas of government activity
applicable to the budget year, which begins a year and one month hence. 20-11 Suggested answer (d) Appropriation
Article VI, Sec. 29 (1) provides that no money shall be paid out of the National Treasury except in pursuance of an
appropriation made by law. 20-12 Suggested answer (a) NCA An initial comprehensive NCA shall be issued directly to
the operating units covering the first semester requirements. NCAs to cover the second semester requirements for
regular budget shall be subject to the submission of FARs/BARs as of the end of June and consistent with the
approved Monthly Disbursement Program (MDP)

20-13 Suggested answer (c) CDC CDC is the authority issued by DBM to DFA and DOLE to utilize their income
collected/retained by the Foreign Service Posts (FSPs) to cover their operating requirements, but not exceed the
released allotment to the said post. Non-inssuanceof CDCs for actual utilization of retained income by FSPs (already
taken up as revenue and disbursement per BTr report) results to unreconciled accounts between BTr and agency
books. 20-14 Suggested answer (c) Disbursement It is the final step of the budget execution phase, where
government monies are actually spent. The Modified Disbursement Scheme is mostly used, where disbursements of
national government agencies chargeable against the Treasury are made through government servicing banks, such
as the Land Bank of the Philippines. 20-15 Suggested answer (d) Street Location code is a nine-digit code composed
of Region, Province, City/Municipality, and Barangay.

20-16 Suggested answer (d) Social economic fund Sec. 105 of Manual on the New Government Accounting System
for local Government Units (LGU) provides that local government units shall maintain special accounts in the general
fund for public utilities and other economic enterprises; loans, interest, bond issues and other contributions for specific
purposes; and development projects funded from the share of the local government concerned from the internal
revenue collections which may be created by law or ordinance 20-17 Suggested answer (c) Special education fund
Special education fund (SEF) consists of the proceeds of one percent tax on the asseseed value of real property in
addition to the basic real property tax, which a province or city, or a municipality within the Metropolitan Manila Area,
may levy and collect. The proceeds of the additional one percent of real property tax accruing to special education
fund shall be automatically released to the local school boards. In case of provinces, the proceeds of the special
education fund shall be divided equally between the provincial and municipal school boards

20-18 Suggested answer (a) Revised Chart of Accounts Funding Source code is a six-digit code to reflect the
Financing Source, Authorization, and Fund Category. The first digit is for Financing Source. The next two digits (2nd
and 3rd) are for Authorization. And the last three digits (4th to 6th) are for the fund category 20-19 Suggested answer
(d) Government owned and Controlled Corp. Organization Codes is a twelve digit code to reflect the Department,
Agency and Sub-Agency or Operating Unit/Revenue Collecting Unit. 20-20 Suggested answer (d) Department For
purposes of UACS, Constitutional Offices, the Judiciary and the Legislatute are categorized as department-level
entities

20-21 Suggested answer (Program ) A program is an integrated group of activities that contributes to an agency or
department's continuing objective. Examples include: General Administration and Support, Support to operations, and
Operations. 20-22 Suggested answer (b) Joint Legislative - Executive Council In order to harmonize budgetary and
accounting code classification that will facilitate the efficient and accurate financial reporting of actual revenue
collections and expenditures compared with programmed revenues and expenditures, and Joint Circular No. 2013-1
dated August 6, 2013, the Department of Budget and Management (DBM), Commission on Audit (COA), Department
of Finance (DOF), and Bureau of Treasury (Btr) jointly developed the Unified Accounts Code Structure (UACS)

20-23 Suggested answer (a) Bottom up approach For the first time in history, the National Budget for 2013 was
prepared using the "bottom up" approach that engages the grassroots communities in designing the National Budget,
as opposed to the conventional way of allocating resources from top to bottom 20-24 Suggested answer (c) General
Appropriation Act Release Document (GAARD) To facilitate the swift and efficient implementation of the government's
expenditure program, the DBM phased out the Agency Budget Matrix (ABM), which was replaced by the General
Appropriation Act Release Document (GAARD), as the primary fund release document for comprehensive release of
budgetary items appropriated in the General Appropriation Act, known as "For Comprehensive Release" (FCR)

20-23 Suggested answer (a) Bottom up approach For the first time in history, the National Budget for 2013 was
prepared using the "bottom up" approach that engages the grassroots communities in designing the National Budget,
as opposed to the conventional way of allocating resources from top to bottom 20-24 Suggested answer (c) General
Appropriation Act Release Document (GAARD) To facilitate the swift and efficient implementation of the government's
expenditure program, the DBM phased out the Agency Budget Matrix (ABM), which was replaced by the General
Appropriation Act Release Document (GAARD), as the primary fund release document for comprehensive release of
budgetary items appropriated in the General Appropriation Act, known as "For Comprehensive Release" (FCR)

20-26 Suggested answer (d) Memo entry only in the registry Under the new system, the agency shall no longer
journalize its appropriation and allotments. The recording shall be in form of memorandum entry only in the Registry of
Allotment, Obligations and Disbursement (RAOD). Since the allotment received is Maintenance and other Operating
Expenses (MOOE), the recording shall be in Registry of Allotments, Obligations, and Disbursement - Maintenance
and Other Operating Expenses (RAOD-MOOE) 20-27 Suggested answer (c) cash - MDS, Regular 6,000,000 Subsidy
from National Gov't 6,000,000 All cash allocated for the agency whether in form of the Notice of Cash Allocation or in
Tax Remittance Advice (TRA) or other forms or manner of release shall be journalized by the agency by debitting the
appropriate account and crediting subsidy from national government. Whether a separate NCA is received for current
year obligations or a different one for prior year/s obligations, the NCA received is recorded as Cash-MDS, Regular
and Subsidy from National Government. This entry shows that the NCA received is the share of the agency in the
income of the National Government and is a proof that there is cash allocated for the agency by the National
Treasurer.

20-28 Suggested answer (d) 0 Any unutilize NCA at the end of the month shall automatically lapse and reverted to the
National Treasury; thus no amount of which shall be reflected in the books of any government agency at the end of
any month 20-29 Suggested answer (a) Sec 55, Chapter 19, Government Accounting Manual states that for national
government agencies receiving subsidies from the national government in form of NCA, adjusting entry shall be made
for the reversion of the unused NCA at the end of the period COA Circular No. 2013-002 dated January 30, 2013,
Description of Accounts, provides that Cash Modified Disbursement System, Regular is credited for the reversion of
Lapsed regular NCA with corresponding debit to subsidy from National Government account. 20-30 Suggested
answer (d) Books of Commission on Audit Under the new system, the Commission n Audit does not journalized the
appropriations. The control of the release of allotments and the NCA sha be made by the Department of Budget and
Management and the Bureau of Treasury, through the registries that they shall maintain. The agency shall also
monitor the allotments and the obligations it incurs in the registry that it shall also maintain.

20-31 Suggested answer (d) Memo entry only in the registry Although the agency will not journalized its appropriation
and allotments, it shall maintain four registry for the allotments it receives and for the obligations it incurs. The
recording is in form of memo entry. In addition, corollary journal entries shall no longer be used in the new accounting
system. Acquisition of inventory, fixed assets and other assets shall be recognized as capital expenditures in the
regular books of accounts, negating the need for corollary journal entries. 30-32 Suggested answer (c) Equipment
100,000 Cash-MDS, Regular 90,000 Withholding tax payable 10,000 Fixed assets are charged against capital outlay.
Since corollary entrt is no longer in use, the asset account is taken up upon purchase. In recording the fixed assets,
the construction theory shall be followed, which is in accordance with SFAS. SFAS provides that "the historical cost of
acquiring an asset includes the cost necessarily incurred to bring it to the condition and allocation necessary for its
intended use"

20-33 Suggested answer (a) Department of Budget and Management The DBM, DOF-BTr, and COA are collectively
responsible for the UACS. Specifi, validation and assignment of new codes for funding sources, organization,
sub-object codes for expenditure items shall be the responsibility of DBM. Further more, validation and assignment of
new program, activity, and project codes shall be decided jointly by the proponent agency and DBM. 20-34 Suggested
answer (d) Commission on Audit The DBM, DOF-BTr, and COA are collectively responsible for the UACS. Specifically,
consistency of account classification and coding structure with the Revised Chart of Accounts shall be the
responsibility of COA. 20-35 Suggested answer (b) Government Business Enterprises The PPSAS shall be applied to
National Government Agencies, Local Government Units, and Government-Owned and /or Controlled Corporations
not considered as Government Business Enterprises, where the Philippine Financial Reporting Standards (PFRS) and
relevant standards issued by FRSC, BOA and PRC shall apply.

20-36 Suggested answer (d) 30 days Sec 2, Art. VII of the Philippine Constitution provides that the President of the
Philippines shall submit to Congress with 30 days from the opening of regular session, as the basis of the general
appropriation bill, a budget of expenditures and sources of financing, including receipts from existing and proposed
revenues measures. However it should be noted that under the New Budget Preparation calendar of Aquino
Administration, the Budget Call is issued in December (unlike around April in the past); and the submission of the
President's budget a day after the State of the Nation Address (in contrast to earlier practice where it is submitted
during the late in the 30 day window that the constitution prescribes.) 20-37 Suggested answer (b) Monetary board
and subject to such limitations as may be provided by the law The constitutional provisions related to government
accounting and budgeting provide the President may contract or guarantee foreign loans on behalf of the Republic of
the Philippines with the prior concurrence of the Monetary Board and subject to such limitations as my be provided by
law.

20-38 Suggested answer (a) House of Representatives but the Senate may propose or concur with amendments This
is also one of the constitutional provisions related to government accounting and budgeting. 20-39 Suggested answer
(a) Balance Budget Balance budget is the preparation of the national budget where the total estimated revenue must
be more than the total estimated expenditures 20-40 Suggested answer (b) Capital outlay The Notice of Cash
Allocation may be used for payments of Personal Services, Maintenance and other Miscellaneous Expenses. The
New Government Accounting System provides that the three major classifications of government expenses are:
Personal Services, Maintenance and Other Operating Expenses, and Financial Expenses. Capital outlay is not an
expense. It represents fixed assets and should not include public infrastructures which are taken up separately. 20-41
Suggested answer (d) Line-item budget Line item budget is a kind of budget according to basis. It is a budget the
basis of which is the object of expenditures such as: salaries and wages, travelling expenses, freight, supplies and
materials, equipment, etc.

20-42 Suggested answer (a) Advance for payroll xxx Cash-MDS, Regular xxx The account Payroll Fund is no longer
included in the Revised Chart of Accounts in COA Circular No. 2013-002 dated January 30, 2013, instead Advances
for Payroll account was introduced. This account is debited for the amount granted to regular disbursing officer for
payment of salaries, wages, honoraries, allowances and other personnel benefits 20-43 Suggested answer (c) c.
Salaries and Wages - casual 25,000 Due to BIR 2,500 Advance for Payroll 22,500 Again the account Payroll Fund is
no longer included in the Revised Chart of Accounts in COA Circular No. 2013-002 dated January 13, 2013, instead
Advances for Payroll account was introduced. This account is debited for the amount granted to regular disbursing
officer for payment of salaries, wages honoraries, allowances and other personnel benefits. Credit this account for
liquidation

20-44 a. Suggested answer (b) b. Office supplies inventory 12,500 Due BIR 1,250 Cash-MDS, Regular 11,250 b.
Suggested answer (a) a. Office supplies expenses 3,100 Office supplies inventory 3,100 COA Circular #2005-002
dated April 14, 2005 provides that small tangible items with estimated useful life of more than one year but small
enough to be considered as Property, Plant and Equipment shall be recorded as inventories upon acquisition and
expense upon issuance. Other tangible assets not included in the list shall be classified as Property, Plant and
Equipment subject to depreciation 20-45 Suggested answer (c) General Appropriation Ordinance Laws, rules and
regulations of the government provide that all disbursement of public funds, except those received for specific
purposes, shall be covered by an approved General Appropriation Ordinance (GAO) 20-46 Suggested answer (c)
City/Municipality accountant Under the new Barangay Accounting System, processing of transactions shall be done at
the barangay level; while recording in the books through Journal Entry Voucher shall be done by the City/Municipality
accountant. 20-47 Suggested answer (d) No journal entry Under the NGAS for Barangay, the processing of
transactions is at the barangay level, while recording is done by municipal/city account; therefore, no entry shall be
made by the barangay recordkeeper

20-48 Suggested answer (d) Registry of Appropriation and Commitments - Sanggunian Kabataan Fund Generally,
appropriations and commitments of barangay for Personal Services, Maintenance and Other Operating Expenses,
Financial Expenses, and Capital Outlay shall be recorded in its appropriate category in the Registry of Appropriations
and Commitments - General Fund. However, appropriations and commitments for Calamity Fund, 20% Development
Fund, Sanggunian Kabataan Fund, and Gender and Development Fund shall be recorded separately in the
appropriate Registry of Appropriations and Commitments. Thus, the approved appropriation received for an office
equipment in Registry of Appropriation and Commitments - Sanggunian Kabataan Fund. 20-49 Suggested answer (c)
Shall be valid until fully spent or until planned activity is completed The balance of appropriation for Capital Outlay,
20% Development Fun, and Sanggunian Kabataan Fund shall be valid until fully spent or until the planned activity is
completed. Balances at year-end of other appropriations shall revert to unappropriate status.