AFAR 2304

GOVERNMENT ACCOUNTING
INSTRUCTOR: DAVE U. CERVAS, CPA U.S. CMA CTT MRITax
Content Author: ARMEE JAY L. CRESMUNDO, CPA MSA

I. Basic Concepts in Government Accounting

• Government accounting encompasses the processes of analyzing, recording,
classifying, summarizing, and communicating all transactions involving the receipt
and disposition of government funds and property, and interpreting the results
thereof. (State Audit Code of the Philippines, P.D. No. 1445, Sec. 109)

• Compared to the accounting for business entities, government accounting places

greater emphasis on the following:
1. Sources and utilization of government funds; and
2. Responsibility, accountability, and liability of entities entrusted with government
funds and properties.

• Government resources must be utilized efficiently and effectively in accordance

with the law. The head of a government agency is directly responsible in
implementing this policy. All other personnel entrusted with the custody of
government resources are responsible to the head of the government agency, are
accountable for the safeguarding thereof, and are liable for any losses.

• The following offices are charged with government accounting responsibility:

1. Commission on Audit (COA)
• Promulgate accounting and auditing rules
• Keep the general accounts
• Submit financial reports
2. Department of Budget and Management (DBM)
• Implementation of the national budget
3. Bureau of Treasury (BTr)
• Cash custody and control of disbursements.
4. Government agencies
• Maintain accounting books and budget registries which are reconciled with
the cash records of the BTr and the budget records of the COA and DBM.

II. The GAM for NGAs

• The Government Accounting Manual for National Government Agencies (GAM
for NGAs) is promulgated by the COA under the authority conferred to it by the
Philippine Constitution.

• The GAM for NGAs was promulgated primarily to harmonize the government
accounting standards with the International Public Sector Accounting Standards
(IPSAS). The IPSASs are based on the IFRSs.

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 • Objectives of the GAM for NGAs:
To update the following:
1. Standards, policies, guidelines and procedures in accounting for government
funds and property;
2. Coding structure and accounts; and
3. Accounting books, registries, records, forms, reports, and financial statements.

• Basic Accounting and Budget reporting Principles

1. Compliance with PPSAS and relevant laws, rules, and regulations
2. Accrual basis of accounting
3. Budget basis for presentation of budget information in the financial statements
4. Revised Chart of Accounts
5. Double entry bookkeeping
6. Financial statements based on accounting and budgetary records
7. Fund cluster accounting
Code Fund clusters
01 Regular Agency Fund
02 Foreign Assisted Projects Fund
03 Special Account – Locally Funded/ Domestic Grants Fund
04 Special Account – Foreign Assisted/ Foreign Grants Fund
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts

• Qualitative Characteristics
1. Understandability
2. Relevance
3. Materiality
4. Timeliness
5. Reliability
6. Faithful representation
7. Substance over form
8. Neutrality
9. Prudence
10. Completeness
11. Comparability

• Components of General-Purpose Financial Statements

1. Statement of Financial Position;
2. Statement of Financial Performance;
3. Statement of Changes in Net Assets/Equity;
4. Statement of Cash Flows;
5. Statement of Comparison of Budget and Actual Amounts; and
6. Notes to the Financial Statements

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III. The Budget Process
• The national budget (government budget) is the government’s estimate of the
sources and uses of government funds within a fiscal year. This forms the basis for
expenditures and is the government’s key instrument for promoting its socio-
economic objectives.

• The Budget Cycle: (PLEA)

1. Budget Preparation – bottom-up approach; zero-based budgeting
a. Budget Call
b. Budget Hearings
c. Presentation to the Office of the President

2. Budget Legislation
a. House Deliberations
b. Senate Deliberations
c. Bicameral Deliberations
d. President’s Enactment

3. Budget Execution
a. Release Guidelines and BEDs
b. Allotment – is an authorization issued by the DBM to government agencies to
incur obligations for specified amounts contained in a legislative
appropriation in the form of budget release documents. It is also referred to
as Obligational Authority.
c. Incurrence of Obligations
d. Disbursement Authority
i. Notice of Cash Allocation (NCA) – authority issued by the DBM to central,
regional, and provincial offices and operating units to cover their cash
requirements. The NCA specifies the maximum amount of cash that can be
withdrawn from a government servicing bank in a certain period.
ii. Notice of Transfer of Allocation – authority issued by an agency’s Central
Office to its regional and operating units to cover the latter’s cash
requirements.
iii. Non-Cash Availment Authority – authority issued by the DBM to agencies
to cover the liquidation of their actual obligations incurred against
available allotments for availment of proceeds from loans/grants through
supplier’s credit/constructive cash.
iv. Cash Disbursement Ceiling – authority issued by the DBM to agencies
with foreign operations allowing them to use the income collected by their
Foreign Service Posts to cover their operating requirements.

4. Budget Accountability
a. Budget Accountability Reports
b. Performance Reviews
c. Audit

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 • The following table summarizes the difference among important terms in the budget
process:
Authorization by a legislative body to allocate funds for
APPROPRIATION
specified purposes
Authorization to agencies to incur obligations (i.e., obligational
ALLOTMENT
authority)
Amount contracted by an authorized officer for which the
OBLIGATION government is held liable
DISBURSEMENT Actual amount paid out of the budgeted amount

• The approved budget consists of the following:

1. New General Appropriations
2. Continuing Appropriations
3. Supplemental Appropriations
4. Automatic Appropriations
5. Unprogrammed Funds
6. Retained Income/Funds
7. Revolving Funds
8. Trust Receipts

• Appropriation – is the authorization made by a legislative body to allocate funds for

purposes specified by the legislative or similar authority.
1. New General Appropriations – annual authorizations for incurring obligations,
as listed in the GAA.
2. Continuing Appropriations – authorizations to support the incurrence of
obligations beyond the budget year (e.g., multi-year construction projects).
3. Supplemental Appropriations – additional appropriations to augment the
original appropriations which proved to be insufficient.
4. Automatic Appropriations – authorizations programmed annually which do not
require periodic action by Congress.
5. Unprogrammed Funds – standby appropriations which may be availed only
upon the occurrence of certain instances.
6. Retained Income/Funds – collections which the agencies can use directly in
their operations.
7. Revolving Funds – receipts from business-type activities of agencies which are
authorized to be constituted as such. These are self-liquidating and all obligations
and expenditures incurred by virtue of said business-type activity shall be
charged against the fund.
8. Trust Receipts – receipts by a government agency acting as agent.

• Responsibility accounting is a system of providing cost and revenue information

over which a manager has direct control of. It requires the identification of
responsibility centers and the distinction between controllable and non-controllable
costs.

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IV. The Government Accounting Process
A. 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
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)

B. 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.

C. Basic Recordings
Recording in:
Transaction
Registries & Other records Journal & Ledger
1. Appropriation RAPAL None
RAPAL and appropriate
2. Allotment None
RAODs
3. Incurrence of Obligations ORS and appropriate RAODs None
Cash-MDS, Regular xx
4. NCA RANCA xx
Subsidy from NG
Expense/Asset xx
Payable xx
Updating of ORS and
5. Disbursements
appropriate RAODs
Payable xx
Cash-MDS, Regular xx
Cash-TRA xx
6. Tax Remittance Advice
Subsidy from NG xx
(TRA is used for Updating of ORS and
remittance of taxes appropriate RAODs
Due to BIR xx
withheld) Cash-TRA xx
Accounts receivable xx
Cash-CO xx

7. Billings, Collections, & Cash-CO xx

RROR, RCD/CRReg
Remittances Accounts receivable xx

Cash-Deposit, Regular xx
Cash-CO xx

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 Subsidy from NG xx
8. Reversion of Unused NCA RANCA Cash-MDS, Regular xx

D. Revenues and Other Receipts

• 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.

• Revenues may arise from exchange and non-exchange transactions:

1. Exchange transaction – examples: sale of goods and rendering of services.
2. Non-exchange transactions – examples: tax revenue, fines and penalties and
donations.

• Revenue from the sale of goods shall be recognized when all of the following
conditions are satisfied:
1. Significant risks and rewards of ownership of the goods are transferred to the
buyer;
2. The entity does not retain continuing managerial involvement or effective
control over the goods sold;
3. It is probable that economic benefits will flow to the entity;
4. Revenue can be measured reliably; and
5. Costs relating to the transaction can be measured reliably.

• 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:
1. The stage of completion can be measured reliably;
2. It is probable that economic benefits will flow to the entity;
3. Revenue can be measured reliably; and
4. 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 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.

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 • Dividends are recognized when the entity's right to receive payment is
established.

• 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.

• For exchange of goods, the following rules shall be applied:

a. Similar – no revenue is recognized
b. Dissimilar – revenue is recognized, measured using the following order of
priority:
i. Fair value of the goods or services received, adjusted by the amount of any
cash transferred.
ii. Fair value of the goods or services given up, adjusted by the amount of any
cash transferred.

• Revenue from non-exchange transactions are derived mostly from taxes, fines
and penalties, gifts, donations and goods in-kind.

c. Disbursements
1. Check
MDS Check Commercial Check
Asset/Expense/Liability xx Asset/Expense/Liability xx
Cash-MDS, Regular xx Cash in Bank-Local Currency, CA xx

2. Cash
Advances for/to (Appropriate Account) xx
Cash-MDS, Regular xx
To record the grant of cash advances.
Expenses (Appropriate Account) xx
Advances for/to (Appropriate Account) xx
To record the liquidation of cash advances.

3. Cashless payments:
a. Advice to Debit Account (ADA) – the ADA is an accountable form used as an
authorization issued by a government agency to the MDS-GSB instructing the
bank to debit a specified amount from its available NCA to pay the
creditors/payees listed in the LDDAP-ADA.
Accounts payable xx
Cash-MDS, Regular xx
To record payment of payables to suppliers/contractors through ADA.

b. Electronic Modified Disbursement System (eMDS) – the eMDS is like the

ADA except that disbursements are made directly from the accounts of the BTr
that are maintained with the Land Bank of the Philippines (LBP). Agencies

AFAR 2304 GOVERNMENT ACCOUNTING 7

 subscribed under LBP’s eMDS can make online disbursements for selected
transactions.

c. Cashless Purchase Card System (Credit Card) – made through the use of an
electronic card (i.e., credit card).
Office supplies inventory xx
Accounts payable xx
To recognize purchase of office supplies through CPC.
Accounts payable xx
Cash-MDS, Regular xx
To recognize settlement of CPC billing statement.

d. Non-Cash Availment Authority (NCAA)

Books of Entity A Books of BTr
Communication Equipment xx
Accounts payable xx
To recognize receipt of PPE procured through
the direct payment scheme.
Accounts payable xx Subsidy to NGAs xx
Subsidy from NG xx Loans Payable – Foreign xx
To recognize receipt of NCAA and payment of To recognize the replenishments made to AGSB
payable. negotiated MDS-checks and payments on
account of the NGA.

e. Tax Remittance Advice (TRA)

Books of Entity A
Cash-Tax Remittance Advice xx
Subsidy from NG xx
To recognize the constructive receipt of NCA for TRA.
Due to BIR xx
Cash-Tax Remittance Advice xx
To recognize constructive remittance of taxes withheld to the BIR through TRA.

Books of BIR Books of BTr

Cash-TRA xx Subsidy to NGAs xx
Income tax xx Cash-TRA xx
To recognize constructive receipt of taxes To recognize constructive receipt of remittance
remitted by NGAs through TRA. of taxes by NGAs through TRA.

• Disallowances refer to expenditures made by an agency that are subsequently

invalidated or disallowed by the COA because they are found to be irregular,
unnecessary, excessive, extravagant, or unconscionable. Disallowances are recorded
in the books of accounts only when they become final and executory.

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MULTIPLE CHOICE QUESTIONS

1. What is the title of the revised government accounting system for national government
agencies which will be effective starting January 1, 2016?
A. Government Accounting Manual (GAM)
B. New Government Accounting System (NGAS)
C. Philippine Government Accounting System (PGAS)
D. National Government Accounting Manual (NGAM)

2. Under Article IX-D Section 2 of the 1987 Constitution of the Republic of the Philippines,
it shall have the exclusive authority, subject to the limitations in this Article, to define
the scope of its audit and examination, establish the techniques and methods required
therefore, and promulgate accounting and auditing rules and regulations, including
those for the prevention and disallowance of irregular, unnecessary, excessive,
extravagant, or unconscionable expenditures, or uses of government funds and
properties. It shall also be responsible to keep the general accounts of the Government
and, for such period as may be provided by law, preserve the vouchers and other
supporting papers pertaining thereto.
A. Commission on Audit
B. Civil Service Commission
C. Commission on Elections
D. Commission on Human Rights

3. The Government Accounting Manual aims to update the following, except

A. Standards, policies, guidelines, and procedures in accounting for government funds
and property
B. Coding structure and accounts
C. Accounting books, registries, records, forms, reports, and financial statements
D. Scope and objectives of audit

4. It encompasses the processes of analyzing, recording, classifying, summarizing and

communicating all transactions involving the receipt and disposition of government
funds and property, and interpreting the results thereof.
A. Government auditing
B. Government reporting
C. Government accounting
D. Government analyzing

5. It refers to the financial plan of a government for a given period, usually for a fiscal year,
which shows what its resources are, and how they will be generated and used over the
fiscal period.
A. Government budget
B. Government financial position

AFAR 2304 GOVERNMENT ACCOUNTING 9

 C. Government financial statements
D. Government financial performance

6. It refers to the first step in the government budgetary process wherein the President,
through the assistance of the Department of Budget and Management, shall prepare and
submit to the Congress within 30 days from the opening of regular session of Congress
a budget of expenditures and sources of financing, including receipts from existing and
proposed revenue measures.
A. Budget preparation
B. Budget legislation or authorization
C. Budget execution
D. Budget accountability

7. It refers to the second step in the government budgetary process which involves the
enactment by the Congress of the General Appropriation Act (GAA) based on the budget
submitted by the President which cannot be increased by the Congress. The initiative
for the enactment of the appropriation law shall come from the House of
Representatives.
A. Budget preparation
B. Budget legislation or authorization
C. Budget execution
D. Budget accountability

8. It refers to the third step in the government budgetary process which involves the
implementation of the general appropriation act which includes the release of revenue
allotment under the supervision of Department of Budget and Management.
A. Budget preparation
B. Budget legislation or authorization
C. Budget execution
D. Budget accountability

9. It refers to the final step in the government budgetary process which involves the
submission of proper documentary reports by responsible officer, liquidation of
expenditures and audit conducted by Commission of Audit to ensure the public funds
are spent in accordance with the appropriation act.
A. Budget preparation
B. Budget legislation or authorization
C. Budget execution
D. Budget accountability

10. Under the Government Accounting Manual (GAM), the financial reporting system of the
Philippine government consists of accounting system on accrual basis and budget
reporting system on budget basis under the statutory responsibility of the National

AFAR 2304 GOVERNMENT ACCOUNTING 10

 Government Agencies (NGAs), Bureau of Treasury (BTr), Department of Budget and
Management (DBM), and the Commission on Audit (COA). Which of the following is
incorrect under the Government Accounting Manual?
A. Each entity of the National Government (NG) maintains complete set of accounting
books by fund cluster which is reconciled with the records of cash transactions
maintained by the BTr.
B. The BTr accounts for the cash, public debt and related transactions of the NG.
C. Each entity maintains budget registries which are reconciled with the budget
records maintained by the DBM and the Government Accountancy Sector (GAS),
COA.
D. Each entity shall maintain Regular Agency (RA) books and National Government
(NG) books for the recording of its transactions.

11. The General Accounting Manual enumerates the following components of the General-
Purpose Financial Statements of National Government Agencies except
A. Statement of Financial Position
B. Statement of Financial Performance
C. Statement of Retained Earnings
D. Statement of Cash Flows
E. Statement of Changes in Net Assets/Equity
F. Statement of Comparison of Budget and Actual Amounts
G. Notes to the Financial Statements, comprising a summary of significant accounting
policies and other explanatory notes.

12. The books of accounts of National Government Agencies under the GAM shall consist of
the following except
A. General Journal
B. Cash Receipts Journal
C. Cash Disbursement Journal
D. Regular Agency and National Government Books
E. Check Disbursements Journal
F. General Ledgers
G. Subsidiary Ledgers

13. The registries of National Government Agencies under the GAM shall consist of the
following except
A. Registries of Revenue and Other Receipts (RROR)
B. Registries of Appropriations and Allotments (RAPAL)
C. Registries of Allotments, Obligations and Disbursements (RAOD)
D. Registries of Budget, Utilization and Disbursements (RBUD)
E. Registries of Priority Development Assistant Program (RPDAP)

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14. It refers to the registry maintained by NGA unit to monitor the revenue and other
receipts estimated/budgeted, collected and remitted/deposited.
A. Registries of Revenue and Other Receipts (RROR)
B. Registries of Appropriations and Allotments (RAPAL)
C. Registries of Allotments, Obligations and Disbursements (RAOD)
D. Registries of Budget, Utilization and Disbursements (RBUD)

15. It refers to the registry maintained by NGA unit to show the original, supplemental and
final budget for the year and all allotments received charged against the corresponding
appropriation.
A. Registries of Revenue and Other Receipts (RROR)
B. Registries of Appropriations and Allotments (RAPAL)
C. Registries of Allotments, Obligations and Disbursements (RAOD)
D. Registries of Budget, Utilization and Disbursements (RBUD)

16. It refers to the registry maintained by NGA unit to show the allotments received for the
year, obligations incurred against the corresponding allotment and the actual
disbursements made.
A. Registries of Revenue and Other Receipts (RROR)
B. Registries of Appropriations and Allotments (RAPAL)
C. Registries of Allotments, Obligations and Disbursements (RAOD)
D. Registries of Budget, Utilization and Disbursements (RBUD)

17. It refers to the registry maintained by NGA unit to record the approved special budget
and the corresponding utilizations and disbursements charged to retained income
authorized under the law and other retained income collection of a national government
agency with similar authority.
A. Registries of Revenue and Other Receipts (RROR)
B. Registries of Appropriations and Allotments (RAPAL)
C. Registries of Allotments, Obligations and Disbursements (RAOD)
D. Registries of Budget, Utilization and Disbursements (RBUD)

18. The following are the classifications of different RAPAL, RAOD, and RBUD except
A. RAPAL/RAOD/RBUD – Personal Services
B. RAPAL/RAOD/RBUD – Maintenance and Other Operating Expenses
C. RAPAL/RAOD/RBUD – Financial Expenses
D. RAPAL/RAOD/RBUD – Capital Outlays
E. RAPAL/RAOD/RBUD – Noncash Expenses

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19. Which of the following statements concerning the period of validity of Notice of Cash
Allocations (NCAs) is incorrect?
A. NCA issued and credited to the Regular MDS Sub-Accounts of agencies/OUs for their
regular operations, shall be valid until the last working day of the 3rd month of that
quarter pursuant to DBM Circular Letter (CL) No. 2013-12.
B. NCA issued and credited to the Special MDS Accounts of agencies specifically for
payment of RGITL benefits shall be valid until the last working day of the following
month when the NCA was issued, except when issued in December, pursuant to DBM
Budget Circular No. 2013-1.
C. NCA issued for trust receipts and credited to the Trust MDS Account of agencies shall
be valid until the last working day of the year.
D. NCA issued to the BTr for working funds of agencies shall be valid until the last
working day of the year.
E. NCA, regardless of source, shall be valid only for a period of 1 month from the date
of receipt.

20. On December 31, 2019, the Department of Finance billed its lessee on one of its buildings
in the amount of P10,000. On January 31, 2020, the Department of Finance collected all
the accounts receivable. On February 29, 2020, the Department of Finance remitted the
entire amount to the Bureau of Treasury. What is the journal entry to record the
remittance by the Department of Finance to the Bureau of Treasury?
A. Debit – Accounts Receivable P10,000; Credit – Rent Income P10,000
B. Debit – Accounts Receivable P10,000; Credit – Retained Earnings P10,000
C. Debit – Cash- Collecting Officer P10,000; Credit – Accounts Receivable P10,000
D. Debit – Cash- Treasury/Agency Deposit, Regular P10,000; Credit – Cash- Collecting
Officer P10,000

21. On January 1, 2019, the Department of Public Works and Highways (DPWH) received a
P10,000,000 appropriation from the national government for the acquisition of
machinery. On February 1, 2019, DPWH received the allotment form the Department of
Budget and Management. On March 1, 2019, DPWH entered into a contract with CAT Inc.
for the acquisition of the machinery with a price of P8,000,000. On April 1, 2019, DPWH
received the Notice of Cash Allocation from DBM net of 1% withholding tax for income
tax of supplier and 5% withholding of final tax on VAT of supplier. On May 1, 2019, CAT
Inc. delivered the machinery to DPWH. On June 1, 2019, DPWH paid the obligation to
CAT Inc. On July 1, 2019, DPWH remitted the withheld income tax and final VAT to BIR.
What is the journal entry on March 1, 2019?
A. No entry but just posting to appropriate RAPAL
B. No entry but just posting to appropriate RAPAL and to RAOD
C. No entry but just posting of ORS (Obligation Request and Status) to appropriate
RAOD
D. Debit Machinery P8,000,000; Credit Accounts Payable P8,000,000

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22. Using the same data on number 21, what is the journal entry on April 1, 2019?
A. Cash- MDS, Regular P7,520,000
Subsidy Income from National Government P7,520,000
B. Machinery P8,000,000
Accounts Payable P8,000,000
C. Accounts Payable P8,000,000
Due to BIR P480,000
Cash- MDS, Regular P7,520,000
D. Due to BIR P480,000
Subsidy Income from National Government P480,000

23. The salary accountant of DENR provided the following data concerning the salaries of
its officers and employees for the month ended December 31, 2019:
Salaries and Wages P510,000
Personal Economic Relief Allowance (PERA) 55,000
Gross Compensation 565,000
Withholding Income Tax 51,000
GSIS 15,300
PAG-IBIG 10,200
PhilHealth 510
Net P487,990

DENR received the Notice of Cash Allocation from the DBM net of 10% tax on basic
salary. Afterwards, DENR granted cash advance to the cashier for the payroll.
Afterwards, the DENR cashier paid the employees and submitted the liquidation report
of the payroll fund with the corresponding supporting documents. Afterwards, DENR
remitted the withheld tax to BIR and the withheld contribution to GSIS, PAG-IBIG and
PhilHealth. What is the journal entry to recognize grant of cash advance to the cashier
for the payroll?
A. Cash- MDS, Regular 508,500
Subsidy Income from National Government 508,500
B. Salaries and Wages Regular 510,000
PERA 55,000
Due to BIR 51,000
Due to GSIS 15,300
Due to PAG-IBIG 10,200
Due to PhilHealth 510
Due to Officers and Employees 487,990
C. Advances for payroll 487,990
Cash- MDS, Regular 487,990
D. Due to Officers and Employees 487,990
Advances for payroll 487,990
E. Due to BIR 51,000
Subsidy Income from National Government 51,000

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 F. Due to GSIS 15,300
Due to PAG-IBIG 10,200
Due to PhilHealth 510
Cash- MDS, Regular 26,010

24. Department of Health (DOH) received Notice of Cash Allocation in the amount of
P100,000 from DBM. DOH made a total cash disbursement in the amount of P95,000.
What is the journal entry to recognize reversion of unused NCA by DOH in its books?
A. Debit Subsidy Income from National Government P5,000; Credit Cash- MDS, Regular
P5,000
B. Debit Retained Earnings of DOH P5,000; Credit Cash- MDS, Regular P5,000
C. Debit Expenses of DOH P5,000; Credit Cash- MDS, Regular P5,000
D. Debit Investment of DOH P5,000; Credit Cash- MDS, Regular P5,000

25. Which of the following closing entries in the accounting book of Department of Tourism
is incorrect if the following data are provided by its chief accountant?
Total Income, aside from SING P1,598,000
Total expenses 791,652
Total Subsidy Income from National Government 1,181,882

A. Income account other than SING 1,598,000

Revenue and Expense Summary account 1,598,000
B. Revenue and Expense Summary account 791, 652
Expense Account 791,652
C. Subsidy Income from National Government 1,181,882
Revenue and Expense Summary account 1,181,882
D. Revenue and Expense Summary account 1,988,230
Accumulated Surplus (Deficit) 1,988,230
E. Ordinary Shares 3,931,534
Share Premium 3,931,534

26. On January 31, 2016, the collecting officer of Bureau of Customs collected P350,000
import duties plus fines of P10,000 on the goods of an importer. On February 28, 2016,
the Bureau of Customs remitted the 350,000 to the Bureau of Treasury. What is the
journal entry to record the collection of the import duties and fines?
A. Debit Cash- Collecting Officer P360,000; Credit Import Duties P350,000 and
Fines/Penalties P10,000
B. Debit Cash- Treasury/Agency Deposit, Regular P360,000; Credit Cash- Collecting
Officer P360,000
C. Debit Cash- Treasury/Agency Deposit, Regular P360,000; Credit Import Duties
P350,000 and Fines/Penalties P10,000

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27. Using the same data in number 26, but assuming the importer directly deposited the
350,000 import duties and 10,000 fines through Authorized Agent Banks instead of
collection by a customer collecting officer, what is the journal entry to record the
collection/remittance of import duties to Bureau of Treasury?
A. Debit Cash- Collecting Officer P360,000; Credit Import Duties P350,000 and
Fines/Penalties P10,000
B. Debit Cash- Treasury/Agency Deposit, Regular P360,000; Credit Cash- Collecting
Officer P360,000
C. Debit Cash- Treasury/Agency Deposit, Regular P360,000; Credit Import Duties
P350,000 and Fines/Penalties P10,000

28. The Bureau of Treasury received P20,000 cash remittance from Department of Agrarian
Reform (DAR) from its miscellaneous income. What is journal entry of the Bureau of
Treasury in its accounting books to record the receipt of cash remittance from the
income of a national government agency?
A. Debit Cash in Bank, Local Bank P20,000; Credit Cash- Treasury/Agency Deposit,
Regular P20,000
B. Debit Cash in Bank, Local Bank P20,000; Credit Miscellaneous Income of DA P20,000
C. Debit Cash in Bank, Local Bank P20,000; Credit Savings of DA, Regular P20,000
D. Debit Cash in Bank, Local Bank P20,000; Credit Cash- Collecting Officer, DA P20,000

29. The Department of National Defense obtained a loan from Asian Development Bank to
finance the acquisition of Philippines’ first aircraft carrier. The principal of the loan is
$1B. What is the journal entry in the accounting book of Bureau of Treasury to record
the receipt of loan proceeds based on credit advice from BSP?
A. Debit Cash in Bank, Local Bank or BSP $1B; Credit Cash- Treasury/Agency Deposit,
Regular $1B
B. Debit Cash in Bank, Foreign Currency BSP $1B; Credit Loans Payable- Foreign $1B
C. Debit Cash in Bank, Foreign Currency BSP $1B; Credit Subsidy Income from Asian
Development Bank $1B
D. Debit Cash in Bank, Foreign Currency BSP $1B; Credit Capital Account, ADB $1B

30. On February 1, 2016, the Department of Health received P10M cash from PLDT for
medical expenses of victims of calamities. The collection of the P10M donation is
considered as authorized special account. DOH remitted the donation to the Bureau of
Treasury on March 1, 2016. What is the journal entry on March 1, 2016 in DOH book?
A. Debit Cash- Collecting Officer P10M; Credit Medical Fees P10M
B. Debit Cash- Treasury/Agency Deposit Special Account P10M; Credit Cash- Collecting
Officer P10M
C. Debit Cash in Bank- Local Currency, Savings Account P10M; Credit-
Treasury/Agency Deposit, Special Account P10M
D. Debit Cash- Treasury/Agency Deposit P10M; Credit Medical Fees P10M

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31. On September 1, 2019, $10M donation is deposited directly by United Nations World
Health Organization to the Bureau of Treasury to help the Philippine government battle
Zika virus. What is the journal entry in the accounting book of Bureau of Treasury to
record the receipt of grants or donation from UN-WHO?
A. Debit Cash in Bank, Foreign Currency Savings Deposit $10M; Credit Income from
Grants and Donations $10M
B. Debit Cash- Collecting Officer P10M; Credit Income from Grants and Donations $10M
C. Debit Cash in Bank, Foreign Currency Savings Deposit $10M; Credit Loans Payable
$10M
D. Debit Cash- Collecting Officer P10M; Credit Ordinary Share, UN-WHO $10M

32. On February 1, 2016, the Department of Environment and Natural Resources (DENR)
transferred P450,000 fund to the Department of Public Works and Highway (DPWH) for
the construction of DENR’s irrigation project. The P450,000 fund was then remitted by
DPWH to Bureau of Treasury on May 1, 2016. The project was completed and turned
over by DPWH to DENR on October 31, 2016. What is the journal entry in DENR’s book
to record the transfer of funds on February 1, 2016?
A. Debit Due from DPWH P450,000; Credit Cash- MDS, Regular P450,000
B. Debit Cash- Treasury/Agency Deposit/Trust P450,000; Credit Cash- Collecting
Officers P450,000
C. Debit Cash- Collecting Officers P450,000; Credit Due to DENR P450,000
D. Debit Cash- Treasury/Agency Deposit/Trust P450,000; Credit Cash- Collecting
Officers P450,000

33. Using the same data in number 32, what is the journal entry of DPWH to record the
turnover of the irrigation project to DENR on October 31, 2016?
A. Debit Due to DENR P450,000; Credit PPE Account P450,000
B. Debit PPE Account P450,000; Credit Due from DPWH P450,000
C. Debit Due to DENR P450,000; Credit Cash- Collecting Officer P450,000
D. Debit Cash- Collecting Officer P450,000; Credit Due from DPWH P450,000

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