REVIEWER IN GOVERNMENT ACCOUNTING PART TWO

1.The following are the characteristics of Heritage Assets,except for one.Which is it?
a. Their value in cultural, environmental, educational and historical terms is unlikely to be
fully reflected in a financial value based purely on a market price.
b. Legal and /or statutory obligations may impose prohibitions or severe restrictions on
disposal by sale
c. They are often irreplaceable and their value may increase over time ,even if their physical
condition deteriorates
d. Specialized in nature and do not have alternative uses.
2. Statement I: In order to settle the obligations incurred by the agencies,the Department
or Budget and Management prepare Allotment Release Program (ARP) so that cash may
be allocated in payment of the obligations
Statement II: The allotment specifies the maximum amount of cash that can be withdrawn
from a government servicing bank for the period indicated.
a. Only the first statement is true
b. Only the second statement is true
c. Both statements are true
d. Both statements are false
3.Statement I: The General Appropriations Bill(GAB) is the legislative authorization that
contains the new appropriations in terms of specific amounts for salaries,wages and other
personnel benefits; maintenance and other operating expenses and capital outlays
authorized to be spent for the implementation of various programs/projects and activities
of all departments, bureaus and offices of the government for a given year.
Statement II: The House,Senate and Bicameral Deliberations of the President’s Budget are
conducted before the approval of the General Appropriations Act.
a. Only the first statement is true
b. Only the second statement is true
c. Both statements are true
d. Both statements are false
4.Besides the five criteria for recognizing Infrastructure Assets,the following are the
additional characteristics peculiar to the said asset, except for one.What is it?
a. Part of a system or network
b. Immovable
c. May be subject to constraints on disposal
d. Specialized in nature and have alternative uses.
5.Statement I: The Government Budget Cycle is initiated by the Department of Budget
thru the issuance of Budget Call which contains budget parameters earlier set by the
Development Budget Coordination Committee (DBCC) as well as policy guidelines and
procedures to aid government agencies in the preparation and submission of their budget
proposals.The issuance of Budget Call is under the Budget Legislation Phase.
Statement II: Citizen engagement, consultation with Regional Development Councils
(RDCs) and Program Convergence Budgeting are conducted after agencies submit their
proposals to the Department of Budget and Management
a. Only the second is true
b. Both statements are true
c. Both statements are false
d. Only the first statement is true
6.The following are the accounting entries to record the cash purchase of inventory are
correct, except one.Which is it?
a. To recognize purchase of inventories for sale.Dr.Merchandise Inventory; Cr.Cash-
Modified Disbursement Systems(MDS),Regular
b. To recognize purchase of raw materials.Dr.Raw Materials Inventory;Cr.Cash-Modified
Disbursement Systems (MDS), Regular
c. To recognize purchase of sofa.Dr.Semi-Expendable Furniture and Fixtures;Cr.Cash-
Modified Disbursement Systems (MDS), Regular
d. To recognize the purchase of welfare goods for distribution.Dr.Other Supplies and
Materials for Distribution;Cr.Cash-Modified Disbursement Systems (MDS), Regular
7.On June 25,20X1,a Government Agency made the following acquisitions:
Printing Equipment P14,000
Medical Equipment P100,000
Water fountain P50,000
Vacant lot for capital appreciation P150,000
How much is to be recognized as Property,Plant and Equipment?
a. Php 314,000
b. Php 300,000
c. Php 250,000
d. Php 150,000
8.On June 25,20X1,a Government Agency made the following acquisitions:

Printing Equipment P14,000

Medical Equipment P100,000
Water fountain P50,000
Vacant lot for capital appreciation P150,000

How much is to be recognized as Investment Property?

 a. Php 314,000
b. Php 300,000
c. Php 250,000
d. Php 150,000
9.Statement I: The Allotment Release Program (ARP) serves as the basis for the issuance of
either a General Allotment Release Order(GARO) or a Special Allotment Release Order
(SARO).The ARP fixes the monthly, quarterly and annual disbursement levels.
Statement II: Upon receipt of the General Allotment Release Order (GARO) or a Special
Allotment Release Order (SARO),become authorized to incur obligations on behalf of the
Government.
a. Only the first statement is true
b. Only the second statement is true
c. Both statements are true
d. Both statements are false
10.Statement I: When the General Appropriations Act is in full force and effect,the next
step is the implementation of the budget which is primarily the function of the Bureau of
Internal Revenue.
Statement II: Various departments and agencies are required to submit Budget Execution
Documents (BED) before the preparation of Allotment Release Program (ARP).
a. Only the first statement is true
b. Only the second statement is true
c. Both statements are true
d. Both statements are false
11.A Government Entity purchased a printing equipment from a VAT-registered seller for
P112,000 .The seller offered a trade discount of 10% .It also cost P10,000 for training the
employee to use the printing equipment.What is the initial measurement of the equipment?
a. P100,000
b. P100,800
c. P110,800
d. P90,000
12.Statement I: The Budget Preparation Phase covers the period commencing from the
time the Department of Budget and Management issues the Budget Call up to the creation
of the President’s Budget.
Statement II: The Budget Legislation Phase ends with harmonized version of the General
Appropriations Bill after the deliberations of the Bicameral Conference Committee
a. Only the first statement is true
b. Only the second statement is true
 c. Both statements are true
d. Both statements are false
13.Statement I: The amount for the reserve fund of a cooperative shall atleast ten per
centum(10%) of net surplus provided that in the first five (5) years of operation after
registration,this amount shall not be more than fifty-five per centum (55%) of the net
surplus.
Statement II: The remaining net surplus of a cooperative after following the order of
distribution per RA 9520 shall be made available to the members in the form of interest on
share capital disregarding the normal rate of return our investment and patronage
refunds.
a. Only the second is true
b. Only the first statement is true
c. Both statements are true
d. Both statements are false
14.Statement I: The depreciable amount of an intangible asset with a finite useful life shall
be allocated on a systematic basis over its useful life.The entry would be a debit to
“Depreciation-Intangible Asset” and a credit to “Accumulated Depreciation-Intangible
Asset”.
Statement II: The Vicente Medical Center purchased a one-time use medical equipment on
March 31,20X1 with a purchase price of P100,000.The equipment was specially used for a
VIP government patient on the next day.In recording the purchased equipment,the
equipment shall debited account”Medical Equipment” with code of “10605110”.
a. Both statements are true
b. Only the second statement is true
c. Only the first statement is true
d. Both statements are false.
15.Statement I: Under the finance lease,the lessor shall record lease receivable of net
investment
Statement II: Borrowing costs shall be always recognized as an expense in the period in
which they are incurred.
a. Both statements are true
b. Only the first statement is true
c. Both statements are false
d. Only the second statement is true
16.Statement I: Non-controlling interest is the portion of the surplus or deficit and net
assets/equity of a controlled entity attributable to net assets/equity interest that are not
owned, directly or indirectly through controlled entities by the controlling entity.
Statement II: Borrowing costs are interest and other expenses incurred by an entity in
connection with the borrowing of funds
a. Both statements are true
b. Only the second statement is true
c. Only the first statement is true
d. Both statements are false
17.Statement I: The net surplus of a cooperative can be utilized for investment as long as
allowed by Republic Act 9520 .Such sum of the reserve fund in excess of the share capital
maybe used at any time for any project that would expand the operations of the
cooperative upon the resolution of the general assembly.
Statement II: Excess payments made by the members for the loans borrowed are construed
as profit of the cooperative.
a. Only the second statement is true
b. Both statements are true
c. Only the first statement is true
d. Both statements are false
18.Statement I: Temporarily restricted net assets are the portion of net assets who use is
limited by donor imposed stipulations that do not expire and cannot be removed by action
of the not for profit entity.
Statement II: Unrestricted net assets are the portion of the net assets that carry no donor
imposed stipulations.
a. Only the first statement is true
b. Both statements are false
c. Both statements are true
d. Only the second statement is true
19. Statement I: On June 9,20X1,Hero University filed and paid thru Tax Remittance
Advice the Monthly Remittance Return of Income Taxes Withheld on Compensation (BIR
Form No.1601-C).In recording the remittance of taxes in the Journal Entry Voucher,the
bookkeeper debited account “Due to BIR” with code of “20201010” and credited account
“Cash-Tax Remittance Advice” with code of “10104070”.
Statement II: On February 14,20X1, Hero University purchased a photocopying machine
with total cost of P100,000.The applicable withholding tax is P3,140.The bookkeeper
prepared the Journal Entry Voucher with a debit to “Office Equipment” with code of
“10605020” and credit to “Due to GSIS” with code of “20201010” and credit to “Cash-
Modified Disbursement System(MDS), Regular” with code of “10104040”.
a. Only the first statement is true
b. Both statements are true
c. Only the second statement is true
 d. Both statements are false
20.Statement I: A biological asset for sale shall be measured on initial recognition and at
each reporting date at its fair value
Statement II: A contingent asset is recognized when the possibility of an outflow of
resources embodying economic benefits or service potential is certain.
a. Both statements are true
b. Only the second statement is true
c. Both statements are false
d. Only the first statement is true
21.Statement I: Each National Government Agencies shall be assigned a responsibility
center code defined as organization code in the United Accounts Code Structure Manual.
The organization code and the agency’s major offices/departments code shall consist of 15
digits.The first two(2) digits represent the department.
Statement II: Under Responsibility Accounting, National Government Agencies are
basically cost centers which primary purpose is to render service to the public at the lowest
possible cost.
a. Both statements are false
b. Both statements are true
c. Only the first statement is true
d. Only the second statement is true
22.Statement I: Reforestation projects are recognized as Investment Property,
Reforestation Projects in the books of accounts of a government agency
Statement II: Heritage Assets are those assets which have historical, cultural,
environmental significance and are intended be preserved in trust for future generations
and shall be measured at fair value
a. Both statements are true
b. Both statements are false
c. Only the second statement is true
d. Only the first statement is true
23.Statement I: The source document for the Journal Entry Voucher with a debit entry to
account “Cash-Collecting Officers” with an account code of “10101010” and credit entry to
“Accounts Receivable” with an account code of “10301010” is a report prepared by the
Accounting Office.
Statement II: On June 15,20X1,Hero University purchased construction materials and paid
the labor for the construction of a new school building amounting to P10,000,000 which
was charged to the General Fund.In recording the said transaction in the Journal Entry
Voucher,the bookkeeper with debit account”Construction in Progress-Buildings and Other
Structures” with account code of “10699030” and credit account”Cash-Modified
Disbursement System(MDS), Regular” with account of “10104040”.
a. Only the first statement is true
b. Both statements are false
c. Both statements are true
d. Only the second statement is true
24.Besides the five criteria for recognizing Infrastructure Assets, the following are the
additional characteristics peculiar to the said asset, except for one.What is it?
a. Part of a system or network
b. Specialized in nature and have alternative uses
c. Immovable
d. May be subject to constraints on disposal.
25. Statement I: A controlling entity shall present atleast three (3) set of financial
statements after it consolidates it’s controlled entities.
Statement II: A five-year lease of an equipment with a useful life of 20 years is accounted
for as Finance Lease.
a. Both statements are false
b. Both statements are true
c. Only the first statement is true
d. Only the second statement is true
26.Statement I: Only the head of any agency of the government has the fiscal responsibility
over Government Funds and Property.
Statement II: Expenditures or obligations chargeable against any authorized allotment
shall be incurred or authorized in any department, office or agency upon securing the
certification of it’s Chief Accountant or head of accounting unit as to the availability of
funds and the allotment to which the expenditure or obligation may be properly charged.
a. Only the second statement is true
b. Only the first statement is true
c. Both statements are false
d. Both statements are true
27.Statement I: The three forms and structures of joint ventures are jointly controlled
operations, jointly controlled assets and jointly controlled entities
Statement II: An entity whose financial statements comply with PPSASs shall make an
explicit and unreserved statement of such compliance in the notes.
a. Both statements are true
b. Both statements are false
c. Only the first statement is true
 d. Only the second statement is true
28. Statement I: Foreign currency monetary items shall be translated using the functional
rate.
Statement II: The adjustment entry to record unrecognized interest income from prior
period are debit to “Cash in Bank-Local Currency, Current Account” and credit
to”Interest Income”.
a. Both statements are true
b. Only the second statement is true
c. Both statements are false
d. Only the first statement is true
29.Statement I: Service Concession Asset is an asset used to provide private services in
behalf of the grantor for a specified period of time.
Statement II: The monthly Bank Reconciliation Statement shall be prepared by the Chief
Accountant/designated staff for each of the bank accounts maintained by the agency/entity
using the Book to bank method.
a. Both statements are true
b. Only the first statement is true
c. Both statements are false
d. Only the second statement is true
30.Statement I: Rehabilitate operate and retain (ROR) is a contractual arrangement
whereby an existing facility is turned over to the private sector to refurbish,operate and
maintain for a franchise period at the expiry of which the legal title to the facility is turned
over to the Government.
Statement II: Presentation currency is the currency of the primary economic environment
in which the entity operates.
a. Only the first statement is true
b. Both statements are false
c. Both statements are true
d. Only the second statement is true
31.Statement I: General fund and donor funds are the two types of funds used by a
hospital.Included in the General fund is the Endowment fund which is used by a hospital to
account for a trust where the principal must be kept intact and the income be expanded for
their current operations or a specific purpose in accordance with the grantor’s wishes.
Statement II: The Statement of Activities provide relevant information about the effects of
transactions and other events and circumstances that change the amount and nature of net
assets of a Not for Profit organization.
a. Only the second statement is true
 b. Only the first statement is true
c. Both statements are true
d. Both statements are false
32.Statement I: A dishonored check shall be settled by tendering payment in cash or by
certified check to the Collecting officer concerned.Bank transfer is also another mode of
payment acceptable by the Government.
Statement II: The Collecting Officer shall issue an Official Receipt for the receipt of NCA.
a. Both statements are true
b. Both statements are false
c. Only the second statement is true
d. Only the first statement is true
33.Statement I:To qualify as intangible asset ,an item must possess the following elements :
identifiability ,control over a resource and existence of future economic benefits or service
potential.
Statement II:Accounts Payable 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. Only the second statement is true
b. Both statements are true
c. Both statements are false
d. Only the first statement is true
34.Statement I: A contingent liability is only disclosed when possibility of an outflow of
resources embodying economic benefits or service potential to probable.
Statement II: An agricultural produce harvested from an entity’s biologocal assets shall be
measured at its fair value less cost to sell at the point of harvest.
a. Only the first statement is true
b. Only the second statement is true
c. Both statements are true
d. Both statements are false
35.Statement I: When an entity converts its investment property to owner-occupied
property,the latter shall be carried out less any accumulated depreciation and any
accumulated impairment loss.
Statement II: When an entity converts its investment property to inventories,the latter
shall be recognized at its fair value of the former.
a. Both statements are false
b. Only the second statements is true
c. Both statements are true
d. Only the first statements is true
36.Statement I: The application of PPSASs with additional disclosures when necessary is
presumed to result in financial statements that achieve a fair presentation.
Statement II: In a jointly controlled operation,a venturer uses its own assets in the joint
venture and because it controls those assets ,continues to recognize them in its financial
statements.
a. Both statements are true
b. Both statements are false
c. Only the first statement is true
d. Only the second statement is true
37.Statement I: Financial instrument is any contract that give rise to both a financial asset
of one entity and a financial liability or equity instrument of another entity.
Statement II: Financial instruments resulted from a meeting of minds between two
whereby one binds himself with respect to the other,to give something or to render some
service.
a. Only the first statement is true
b. Both statements are false
c. Only the second statement is true
d. Both statements are true