ACT 132

Government Accounting
Part 2 Lecture

Prof. Papala P. Masorong, CPA, PhD

Revised Chart of Account
Revise Chart of Account
The Government Auditing Code of the Philippines provides that the
recording of financial transactions and operations shall be in conformity with
the GAAP. It also directs the COA to prescribe a chart of accounts that will
permit a simpler and more orderly process of national consideration to enable
the public officers to review their activities according to selected areas of
responsibility and accountability.

The Chart of Accounts provides a framework within which the accounting

records are constructed.
Unified Accounts Code Structure or UACS

The is a government-wide harmonized budgetary, treasury and

accounting code classification framework jointly developed by the
Department of Budget and Management (DBM), the Commission
on Audit (COA), the Department of Finance (DOF) and the Bureau of
the Treasury (BTr) to facilitate reporting of all financial transactions
of agencies including those for revenue generation.
As a coding framework for financial transactions, the UACS ensures
that all processes, from budgeting and cash management to
accounting and audit will follow a single classification system or
common language. The new codes will make it easier to collect,
aggregate, consolidate and report financial transactions across
Unified Accounts Code Structure or UACS (Con’t)
The UACS is the heart of the Government Integrated Financial
Management Information System or GIFMIS that will collect and
organize financial information in a central database to support budget
preparation, management, execution and financial reporting or
accounting and audit in a timely, accurate and efficient manner.
More popularly known as FOLMO, the 5 key elements of the UACS
with specified number of digits are the following: Funding Source
(8), Organization (12), Location (9), Major Final Output/Program,
Activity and Project (15), and Object (10). Each element is composed of
segments. All in all, the UACS has 54 digits
Responsibilities of the Oversight Agencies in the Adoption of UACS

 DBM – validation and assignment of new codes for funding source,

organization, sub-object codes for expenditure items
 COA – consistency of account classification and coding structure with
the RCA
 DOF-BTr – consistency of account classification and coding standards
with the Government Finance Statistics
• DBM and Proponent Agency – validation and assignment of new
Program, Activity
Objectives

 To provide new accounts for the adoption of} the Philippine Public
Sector Accounting Standards (harmonized with IPSAS)
 To provide uniform accounts for national} government accounting
and budget systems to facilitate the preparation of harmonized
financial and budgetary accountability reports
 To expand the account code from three (3) digits in the NGAS
Chart of Accounts to eight (8) digits, to allow expansion or
creation of new accounts as may be necessary to implement new
standards or policies and provide up to four levels of consolidation
depending on the users’ information
Codes are assigned to account groups to facilitate location of accounts in the general
and subsidiary ledgers, to provide systematic arrangement and classification of
accounts and facilitate preparation of the consolidated financial reports as follows:

Code Account Groups

1 Assets
2 Liabilities
3 Equity
4 Income
5 Expenses
COA Revised Chart of Accounts (Account Code Structure
0 00 00 00 0

Account Group

Major Account Group

Sub-Major Account Group

General Ledger Accounts

General Ledger Contra-Account

Account Groups - represents the account classification as to Assets, Liabilities,
Equity, Income and Expenses
Major Account Group – represents classification within the account group
Major Assets Accounts (Cash and Cash Equivalent, Investments, Receivables,
Inventories, and Investment Property)
Major Liabilities Accounts (Financial Liabilities, Inter-Agency Payables, Intra-
Agency Payables, Trust Liabilities, Deferred/Unearned Income, Provision, and
Other Payables)
Major Equity Accounts (Government Equity, Revaluation Surplus, Intermediate
Accounts, and Equity in Joint Venture)
Major Income Account (Tax Revenue, Service and Business Income, Assistance and Subsidy, Shares,
Grants and Donation, Gains, and Other Non-Operating Income)

Major Expenses Accounts (Personnel Services, Maintenance and Other Operating Expenses,
Financial Expenses, Direct Cost and Non-Cash Expenses)

Sub-Major Account Group represents classification within the major accounts (Cash and Cash
Equivalent: Cash on Hand, Cash in Bank-Local Currency, Cash in Bank-Foreign Currency etc.)

General Ledger Account represents the account to be presented in the detailed financial
statements (Cash-Collecting Officer, Petty Cash and etc.). The first two digit from the left is the
general ledger code and the last digit is for the contra-account.

Intermediate Accounts – are closed to Government Equity account at the end of the accounting
period. This includes Income and Expense Summary.
Accounting for Income, Collections and Related
Transaction
Accounting Methods for Income
1. Accrual Methods
2. Cash Basis – use for all taxes, fees, charges and other revenue
where accrual method is impractical.
Accrual of Revenue to the General Fund

Unless otherwise specifically provided by law, all revenue (income)

accruing to the departments, offices and agencies by virtue of the
provisions of existing laws, orders and regulations shall be deposited in
the NT or in the duly authorized depository of the Government and shall
accrue to the xxx General Fund of the Government: Provided, that
amounts received in trust and from business-type activities of
government may be separately recorded and disbursed in accordance
with such rules and regulations as may be determined by the Permanent
Committee. (Sec. 44, Chapter V, Book VI, E.O. No. 292)
Special, Fiduciary and Trust Funds
 Receipts shall be recorded as revenue of Special, Fiduciary or Trust Funds (TF) or Funds other
than the GF, only when authorized by law and following such rules and regulations as may be issued
by the Permanent Committee consisting of the Secretary of Finance as Chairman, and the Secretary
of the Budget and the Chairman, Commission on Audit, as members. The same Committee shall
likewise monitor and evaluate the activities and balances of all Funds of the NG other than the GF and
may recommend for the consideration and approval of the President, the reversion to the GF of such
amounts as are:
• No longer necessary for the attainment of the purposes for which said Funds were established;
• Needed by the GF in times of emergency; or Violative of the rules and regulations adopted by the
Committee: provided, that the conditions originally agreed upon at the time the funds were received
shall be observed in case of gifts or donations or other payments made by private parties for specific
purposes. (Sec. 45, Chapter V, Book VI, EO 292)
Sources of Revenue and Other Receipts

1. Revenue from Exchange Transaction

• Sale of goods or provisions of services to third parties or to other NGAs
• Use by other entity of assets yielding interest, royalties and dividends or similar
distributions
o Interest income – charges for the use of cash or cash equivalents, or amounts
due to the entity;
o Royalties – fees paid for the use of entity’s assets such as trademarks, patents,
software, and copyrights;
o Dividends – share of the National Government from the earnings of its
capital/equity investments in Government-Owned or Controlled Corporations
(GOCCs) and other entities
2. Revenue from Non-Exchange Transaction
a. Tax Revenue
1. Tax Revenue-Individual and Corporation
2. Tax Revenue-Property
3. Tax Revenue-Goods and Services
4. Tax Revenue-Others
b. Fines and Penalties
1. Tax Revenue
2. Service Income
3. Business Income

c. Shares, Grants and Donations

1. Share from National Wealth
2. Share from Philippine Amusement and Gaming Corporation (PAGCOR)/ Philippine Charity
Sweepstakes Office (PCSO)
3. Share from Earnings of GOCCs
4. Income from Grants and Donations in Cash
5. Income from Grants and Donations in Kind


d. Revenue from non-exchange transactions may also arise when, in respect of an inflow of resources from a
non-exchange transaction, the entity satisfies a present obligation recognized as a liability which may be as follows:
1. Trust Liabilities – Customers’ Deposits Payable and Guaranty/Security Deposits Payable
2. Deferred Credits – Deferred Finance Lease Revenue and Other Deferred Credits
3. Unearned Revenue – Investment Property and Other Unearned Revenue
Sale of Goods or Provisions of Services to Third Parties or to Other NGAs
Revenue Revenue Recognition Point
Service Income  
Permit Fees, Registration Fees, When services are rendered or if not practicable, when fees are
Registration Plates, Tags and Stickers Fee, collected upon issuance of the respective permits, certificates of
Clearance and Certification Fees, registration, plates, stickers, clearance, certification, franchises and
Franchising Fees and Licensing Fees, licenses.
Supervision and Regulation When services are rendered or when tickets or relevant document
representing violation are issued or if not practicable, when fees are
collected
Spectrum Usage Fees When bills are rendered for the use, allocation and assignment of radio
frequency wave lengths or if not practicable, when fees are collected
Inspection Fees When bills are rendered for the conduct of inspection by authorized
government official or if not practicable, when fees are collected
Legal Fees, Verification and When filing fees are billed or if not practicable, when fees are
Authentication collected
Passport and Visa Fees When fees are billed upon issuance of the passport and visa or if not
practicable, when fees are collected
Processing Fees When fees are billed or collected for the processing of documents for
securing permits/applications.
Other Service Income When fees are billed or if not practicable, when fees are
collected
Business Income  
School Fees, Affiliation Fees, When fees are billed or if not practicable, when fees are
Examination Fees, Seminar/ Training collected
Fees
Rent/Lease Income, Communication When fees are billed for earned revenue from use of
Network Fees, Transportation System government property/facilities or if not practicable, when fees
Fees, Road Network Fees, Waterworks are collected
System Fees, Power Supply System
Fees, Seaport System Fees, Landing
and Parking Fees, Income from
Hostels/ Dormitories and Other Like
Facilities, Slaughterhouse, and Other
Service Income
Sales Revenue When the significant risks and rewards of ownership have been
transferred to the buyer as indicated in the sales invoice
Hospital Fees When fees are billed for hospital and related services rendered,
or if not practicable, when fees are collected
Share in the Profit of Joint Venture Venture When share in the profit is earned
Other Business Income When earned or if not practicable, when fees are collected
Entity A is authorized to print accounting manuals for sale to other NGAs. Assume that on July
16, 2014, Entity A sold accounting manuals on account with a list price of P100,000 less trade
discounts of 10%, 10% and 5%.

Required: Compute for the invoice price of the merchandise and journalize the transaction.

Account Title Account Code Debit Credit

Accounts Receivable 10301010 P76,950  

Sales Revenue 40202160   P76,950

To recognize the sale of the accounting manuals      

List Price P100,000    

Less: Trade Discount (P100,000 x 10%) 10,000    
  P90,000    
Less: Trade Discount (P90,000 x 10%) 9,000    
  P81,000    
Less: Trade Discount (P81,000 x 5%) 4,050    
Invoice Price P76,950    
Use by Other Entityof Assets Yielding Interest, Royalties and Dividends or Similar
Distributions

Interest income – charges for the use of cash or cash equivalents, or amounts due to the entity;

Example: Assume that on August 5, 2015, Entity A received a 60-day, 9%, P12,000 promissory note from X entity
for accounting manuals sold. On October 4, 2015, Entity X paid cash in settlement of its note.

Date Account Title Account Code Debit Credit

Aug 5 Notes Receivable 10301020 P12,000  
  Sales Revenue 40202160   P12,000
  To recognize the sale      
         
Oct 4 Cash-Collecting Officers 10101010 12,180  
  Notes Receivable 10301020   12,000
  Interest Income 40202210   180
  To recognize the collection of      
notes receivable
  Interest = P12,000 x 9% x 60/360 =      
P180
         
         
2.2 Royalties – fees paid for the use of entity’s assets such as
trademarks, patents, software, and copyrights;

2.3 Dividends – share of the National Government from the

earnings of its capital/equity investments in Government-
Owned or Controlled Corporations (GOCCs) and other entities
Example. Entity A is authorized to print accounting manuals for sale to other NGAs. Assume that on July 16,
2014, Entity A sold accounting manuals on account with a list price of P100,000 less trade discounts of 10%, 10%
and 5%.
Required: Compute for the invoice price of the merchandise and journalize the transaction.

Account Title Account Code Debit Credit

Accounts Receivable 10301010 P76,950  

Sales Revenue 40202160   P76,950

To recognize the sale of the accounting manuals      

List Price P100,000    

Less: Trade Discount (P100,000 x 10%) 10,000    
  P90,000    
Less: Trade Discount (P90,000 x 10%) 9,000    
  P81,000    
Less: Trade Discount (P81,000 x 5%) 4,050    
Invoice Price P76,950    
Recognition of Revenue from Non-Exchange Transactions

1. The cash basis of accounting shall be applied by all government agencies in the
recognition of revenue from non-exchange transaction until a reliable model of
measurement of this revenue is developed. Therefore, asset and the corresponding revenue
or liability that arises from non-exchange transaction shall be recognized when collected or
when these are measurable and legally collectible.
a. Taxation revenue shall be determined at a gross amount. It shall not be reduced
for expenses paid through the tax system.
b. Gifts and donations, other than services in kind shall be recognized as assets and
revenue when it is probable that the future economic benefits or service potential will flow
to the entity and shall be measured at fair value.
c. Goods in-kind received without conditions shall be recognized as revenue
immediately.
d. Donation in cash or in kind shall be recognized as revenue.
2. Revenue from non-exchange transactions shall be measured at the amount of the increase in net assets recognized by the
entity, unless it is also required to recognize a liability. Where a liability is recognized and subsequently reduced, because the
taxable event occurs, or a condition is satisfied, the amount of the reduction in the liability will be recognized as revenue. (Pars.
48 and 49, PPSAS 23)

3. Measurement of Assets on Initial Recognition from Non-Exchange Transactions. An asset acquired through a non-exchange
transaction shall initially be measured at its fair value as at the date of acquisition. (Par. 42, PPSAS 33)

4. Measurement of Liabilities on Initial Recognition. Where the time value of money is material, the liability will be measured
at the present value of the amount expected to be required to settle the obligation. (Par. 58, PPSAS 23)

5. Tax Revenue. Taxes are economic benefits or service potential compulsory paid or payable to public sector agencies, in
accordance with laws and or regulations, established to provide revenue to the government. Taxes do not include fines or other
penalties imposed for breaches of the law. Unless otherwise specified in laws and regulations, the taxable event for:

a. Income tax is the earning of assessable income during the taxation period by the taxpayer;
b. Value added tax is the undertaking of taxable activity during the taxation period by the taxpayer;
c. Goods and services tax is the purchase or sale of taxable goods and services during the taxation period;
d. Customs duty is the movement of dutiable goods or services across the customs boundary;
e. Death duty is the death of a person owning taxable property; and
f. Property tax is the passing of the date on which the tax is levied, or the period for which the tax is levied, if the tax is
levied on a periodic basis
Exchanges of Goods or Services for Similar/Dissimilar Good or Services

When goods or services are exchanged or swapped for goods or services which are of a similar nature and value,
the exchange is not regarded as a transaction which generates revenue. However, when goods are sold or services are
rendered in exchange for dissimilar goods or services, the exchange is regarded as a transaction which generates revenue.
The revenue is measured at the fair value of the goods or services received, adjusted by the amount of any cash or cash
equivalents transferred. When the fair value of the goods or services received cannot be measured reliably, the revenue is
measured at the fair value of the goods given up, adjusted by the amount of any cash or cash equivalents transferred. (Par.
17, PPSAS 9)

General Procedure for Cash Collect

A. Domestic Sources
• The NGA collects the revenue of the government from whatever source;
• The NGA remits the collections to the BTr thru Authorized Government Depository Bank;
• The AGDB advises the BTr;
• The BTr records the collections in its books; and
• The BTr replenishes the MDS account(s) with the bank for check negotiated.

B. Foreign Sources
• Foreign Funding Institution remits the amount in foreign currency to the Bangko Sentral ng Pilipinas (BSP);
• The BSP advices the BTr of the receipt of the foreign currency remittances;
• The BTr records the receipt in its book in peso value equivalent;
• Upon receipt of the NCA from DBM, the BTr advices the bank to transfer cash to the agency; and
• The government agency records NCA in its book.
Receipt and Collection Process
Process Person/Unit Responsible

1. Received payment from creditors and Collecting Officer/Cashier Unit

issue OR
2. Record collection in Cash Receipt Record Collecting Officer/Cashier Unit
(CRR)
3. Deposit collections Collecting Officer/Cashier Office

4. Record deposit in CRR Collecting Officer/ Cashier Unit

5. Prepare the Report of Collection and Collecting Officer/Cashier Unit

Deposit (RCD). Forward to Accounting Unit
with copies of Ors and validated Deposit
Slips
6. Prepare JEV, record in the Cash Receipt Accounting Unit
Journal (CRJ)
Types of Collection as to Authority
1.Without Authority to Use
As a general rule, all income regardless of amount and frequency of collection are to
be remitted to the National Treasury. Such income shall be recorded by the collecting
agency in a separate book of account it shall maintain, the National Government (NG)
books. Then collection shall be credited to the income of the collecting agency, which
shall be debited upon remittance to the National Treasury.
Books of BIR (National Government Book)
Account Title Account Code Debit Credit
Cash – Collecting Office 1-01-01-010 xxxxx
Income Tax 4-01-01-010 xxxxx
To record income tax collection

Income Tax 4-01-01-010 xxxxx

Cash - Collecting Officer 1-01-01-010 xxxxx
To record remittance with BTr
Illustration: In the year 2020, the Bureau of Internal Revenue collected a total amount of P1B which
was accordingly remitted to the Bureau of Treasury. Journalize the above transaction.

Bureau of Internal Revenue (National Government Book)

Account Title Account Code Debit Credit

Cash – Collecting Office 1-01-01-010 P1B

Income Tax 4-01-01-010 P1B

To record income tax collection

Income Tax 4-01-01-010 P1B

Cash - Collecting Officer 1-01-01-010 P1B

To record remittance with BTr

2. With Authority to Use: For agencies which are authorized to use income for their operations,
the collections shall be recorded as income in the Regular Agency (RA) books The authority may
be in the form of the special provision of the GAA, specific authority from the Permanent
Committee pursuant to the requirement of the general provision or a special law

Agency’s Regular Books for Its Cash Collections

Account Title Account Code Debit Credit
Accounts Receivable 1-03-01-010 xxxxx
Rent/Lease Income 4-02-02-050 xxxxx
To record rent income

Cash – Collecting Officer 1-01-01-010 xxxxx

Accounts Receivable 1-03-01-010 xxxxx
To record collection of accounts

Cash in Bank – Local Currency Current Account 1-01-02-020 xxxxx

Cash – Collecting Officer 1-01-01-010 xxxxx
To record deposit of the collection

Electricity Expenses 5-02-04-020 xxxxx

Cash in Bank – Local Currency Current Account 1-01-02-020 xxxxx
Illustration: MSU, Marawi, a state university and colleges of the country issued a bill for the rent of the Dimaporo
Gymnasium in the amount P25,000. Several days after, the lessee paid the rent and subsequently paid P12,000 for
some minor repair of an equipment. Journalize the above transaction.

Agency’s Regular Books for Its Cash Collections

Account Title Account Code Debit Credit
Accounts Receivable 1-03-01-010 P25,000
Rent/Lease Income 4-02-02-050 P25,000
To record rent income

Cash – Collecting Officer 1-01-01-010 P25,000

Accounts Receivable 1-03-01-010 P25,000
To record collection of accounts

Cash in Bank – Local Currency Current Account 1-01-02-020 P25,000

Cash – Collecting Officer 1-01-01-010 P25,000
To record deposit of the collection

Repair and Maintenance Expenses 5-02-04-020 P12,000

Cash in Bank – Local Currency Current Account 1-01-02-020 P12,000
To record disbursement chargeable against income
collected
3. Authority with Limitations: If the authority is subject to the limitation that any excess shall be remitted to the
National Treasury, such as collection for seminar and convention fees, the collection shall be recorded in the RA
books. The expense shall be journalized, the balance/excess to be remitted to the National Treasury shall be
transferred to the NG.
Agency’s Regular Books
Account Title Account Code Debit Credit
Cash – Collecting Officer 1-01-01-010 xxxxx
Seminar/Training Fees 4-02-02-150 xxxxx
To record collection of income

Cash in Bank - LCCA 1-01-02-020 xxxxx

Cash – Collecting Office 1-01-01-010 Xxxxx
To record deposit of collection

Water Expenses 5-02-04-010 xxxxx

Telephone Expenses 5-02-05-020 xxxxx
Postage and Courier Expenses 5-05-05-010 xxxxx

Cash in Bank – LCCA 1-01-02-020 xxxxx

To record expenses charge against collection

Seminar/Training Fees 4-02-02-150 xxxxx

Water Expenses 5-02-04-010 xxxxx
Telephone Expenses 5-02-05-020 xxxxx
Postage and Courier Expenses 5-05-05-010 xxxxx
Cash in Bank – LCCA (Unexpended) 1-01-02-020 xxxxx
To close the income for the transfer to NG books      
Agency’s National Government Books

Account Title Account Code Debit Credit

Cash in Bank - LCCA (Unexpended) 1-01-02-020 xxxxx
Seminar Training Fees 4-02-02-150 xxxxx
To record transfer of unexpended
collection from regular book to
national agency book

Seminar Training Fees 4-02-02-150 xxxxx

Cash in Bank - LCCA (Unexpended) 1-01-02-020 xxxxx
To record remittance to BTr of the
unexpended income
Illustration: The Commission on Audit conducted a seminar about the New Government Accounting System. The
agency collected a total amount of P100,000 which was deposited with agency depository bank and paid the
following expenses of the seminar: Office Supplies P25,000; rent for the venue, P15,000 and Printing and binding
P5,000, The excess of the amount collected was appropriately remitted to the National Treasury. Journalize the
stated transactions.
Agency’s Book
Account Title Account Code Debit Credit
Cash – Collecting Officer 1-01-01-010 P100,000
Seminar/Training Fees 4-02-02-150 P100,000
To record collection of income

Cash in Bank - LCCA 1-01-02-020 100,000

Cash – Collecting Office 1-01-01-010 100,000
To record deposit of collection

Office Supplies Expenses 5-02-99-050 P25,000

Rent Expenses 4-02-02-050 15,000
Printing and Publication Expense 5-02-99-020 5,000
Cash in Bank – LCCA 1-01-02-020 45,000
To record expenses charge against collection

Seminar/Training Fee 4-02-02-040 100,000

Office Supplies Expenses 5-02-99-050 25,000
Rent Expenses 4-02-02-050 15,000
Printing and Publication Expense 5-02-99-020 5,000
Cash in Bank – LCCA 1-01-02-020 55,000
To close the income for the transfer to NG books
Agency’s National Government Books

Account Title Account Code Debit Credit

Cash in Bank - LCCA (Unexpended) 1-01-02-020 P55,000
Seminar/Training Fees 4-02-02-150 P55,000
To record transfer of unexpended
collection from regular book to national
agency book

Seminar/Training Fees 4-02-02-150 55,000

Cash in Bank - LCCA (Unexpended) 1-01-02-020 55,000
To record remittance to BTr of the
unexpended income
4. Income from Sale of Equipment: Proceeds from sale of non-serviceable, obsolete and other unnecessary
equipment including cars, vans and the like may be deemed automatically appropriated for the purchase of
new ones and for the repair of rehabilitation of existing vital equipment. It is understood that the purchase of
cars and vans is subject to the prior authority required under existing rules.

 Agency’s National Government Books

Account Title Account Code Debit Credit

Cash – Collecting Officer 1-01-01-010 xxxxx
Accumulated Depreciation – Office 1-06-05-021 xxxxx
Equipment
Office Equipment (cost) 1-06-05-020 xxxxx
Gain on Sale of PPE 4-05-01-040 xxxxx
To record sale of office equipment

Gain on Sale of PPE 4-05-01-040 xxxxx

Government Equity 3-01-01-010 xxxxx
Cash – Collecting Officer 1-01-01-010 xxxxx
To record remittance of collection to BTr
Illustration: DPWH sold a non-serviceable car with the following information:
Cost P2,000,000
Accumulated Depreciation 1,700,000
Sales Price P400,000

DPWH wants to purchase a new car in the amount of P1,500,000 and received a SARO for the purpose.
Journalize the stated transactions
Account Title Account Code Debit Credit
Cash – Collecting Officer 1-01-01-010 P400,000  
Accumulated Depreciation – Motor Vehicle 1-06-05-021 1,700,000  
Motor Vehicle 1-06-05-020   2,000,000
Gain on Sale of PPE 4-05-01-040   100,000
To record sale of office equipment      
       
Gain on Sale of PPE 4-05-01-040 100,000  
Government Equity 3-01-01-010 300,000  
Cash – Collecting Officer 1-01-01-010   400,000
To record remittance of collection to BTr      
Grants and Donations Intended for Agency Uses: If there is no specific authority
for their use, grants and donations from whatever source shall also be recorded
in the NG books and shall be remitted to the National Treasury. This agency shall
prepare a special budget for the use of the income remitted but it is intended for
the agency ’ s use such as donations and grants. Upon approval of the special
budget, The DBM will issue the SARO and the NCA. The former is the agency ’s
additional allotment and shall be recorded in the appropriate registry. The SARO
is the agency’s additional subsidy income from the national government and is
journalized in its RA books.
Agency’s National Government Books

Account Title Account Code Debit Credit

Cash – Collecting Officer 1-01-01-010 P100,000

Income from Grants and Donation 4-04-02-020 P100,000

in Cash
To record the receipt of donation &
grants

Income from Grants and Donation in 4-04-02-020 100,000

Cash
Cash – Collecting Officer 1-01-01-010 100,000

To record remittance to BTr

Illustration: The Department of Social Welfare and Development received a grant in the amount of P100,000 and
remitted the same to the National Treasury through the bank. Eventually, the agency prepared and submitted a
special budget for the training and seminar of its employees to DBM. Upon approval of the special budget for DSWD,
DBM release the SARO of P100,000 and Notice of Cash Allocation of the same amount. Journalize the stated
transactions.

 Agency’s National Govt Book

Account Title Account Code Debit Credit

Cash – Collecting Officer 1-01-01-010 P100,000
Income from Grants and Donation in Cash 4-04-02-020 P100,000
To record the receipt of donation & grants

Income from Grants and Donation in Cash 4-04-02-020 100,000

Cash – Collecting Officer 1-01-01-010 100,000
To record remittance to BTr
Regular Agency Book

Account Title Account Debit Credit

Code
Cash-National Treasury-Modified 1-01-04-040 P100,000
Disbursement Scheme
Subsidy from National Government 4-03-01-010 P100,000

To record the receipt of NCA

Miscellaneous Income
Accounting for Loss of Cash and  
Property Entry
 Cash Shortage is discovered Due from Officers and 1-03-05-020 xxxx  
during Cash Examination and Employees 1-01-01-010   xxxx
is reported thru Report of Cash-Collecting Officer
Cash Examination. If      
shortage is established, the        
auditor will issue a       
memorandum and the  
accountant will prepare an    
entry in the JEV  
 Settlement of Cash Shortage Cash-Collecting Officer 1-01-01-010 xxxx  
Due from Officers and 1-03-05-020 xxxx
Employees
 Loss of Property is Due from Officers and 1-03-05-020 xxxx  
established Employees 1-06-02- xxxx  
Accumulated Depreciation-Prop 1-06- xxxx
Property
 Loss of Property due to theft, No Entry      
force majeure, fire & the
like. The accountable
officer shall prepare a
report for the purpose of
requesting relief of
authority.
Grant of Relief of Accountability Loss of Asset 5-05-04-090 xxxx  
is Granted Due from Officers and 1-03-05-020 xxxx
Employees
Grant of Relief of Accountability Cash-Collecting Officer 1-01-01-010 xxxx  
is Denied Due from Officers and 1-03-05-020 xxxx
Employees
Accounting For Cash Overage        
 Cash Overage shall be Cash-Collecting Officer 1-01-01-010 xxxx  
forfeited in favor of the Other Service Income 4-02-01-990 xxxx
government and an OR shall
be issued by the Cashier
Stale MDS and Commercial Checks
 Checks issued in the previous Government Equity 3-01-01-010 xxxx  
year Accounts Payable 2-01-01-010   xxxx
 Record the receipt of NCA Cash-MDS-Regular 1-01-04-040    
Subsidy from National Govt 4-03-01-010
 Issuance of new Check Accounts Payable 2-01-01-010 xxxx  
Cash-MDS-Regular 1-01-04-040 xxxx
 Cancellation of current year Cash-MDS-Regular 1-01-01-010 xxxx  
stale check Accounts Payable 2-01-01-010 xxxx

 Issuance of new Check Accounts Payable 2-01-01-010 xxxx  

Cash-MDS-Regular 1-01-04-040 xxxx
Cash Settlement of Disallowance

 If disallowance was not Cash-Collecting Officer 1-01-01-010 xxxx  

recorded (Record Government Equity 3-01-01-010 xxxx
settlement)

 If disallowance is Cash-Collecting Officer 1-01-01-010 xxxx  

recorded (as Accounts Receivables 1-03-05-010 xxxx
receivable) Disallowances/Charges

 Current Year Cash-Collecting Officer 1-01-01-010 xxxx  

Overstatement Accounts Receivable 1-03-01-010 xxxx
Settlement of Charges
 Disallowances/Charges Receivables 1-03-05-010 xxxx
made in previous year Disallowances/Charges xxxx
and settled in current Government Equity 3-01-01-010
year
 Settlement Cash-Collecting Officer xxxx
Receivables 1-01-01-010 xxxx
Disallowances/Charges 1-03-05-010
 Disallowances/Charges Receivable- xxxx
made in current year and Disallowances/charges 1-03-05-010 xxxx
settled in current year Other Service Income 4-02-01-990
 Settlement Cash-Collecting Officer xxxx
Receivables 1-01-01-010 xxxx
Disallowances/Charges 1-03-05-010
Refund of Over-Payment of Due from Officers and 1-01-01-010 xxxx
salaries and wages Employees xxxx
Salaries and Wages-Regular
Settlement Cash-Collecting Officer 1-01-01-010 xxxx
Due from Officers and xxxx
Employees
Refund of Cash Advances for Cash-Collecting Officer 1-01-01-010 xxxx
salaries and wages Advances for Payroll 1-99=01-020 xxxx

Cash-Collecting Officer 1-01-01-010 xxxx

Advances to Officers and 1-99-01-040 xxxx
Employees
Refund of Cash Advances (Travel) Cash-Collecting Officer 1-01-01-010 xxxx
Advances to Officers and 1-99-01-040 xxxx
Employees
Inter-Agency Transferred of Funds

 Record the transfer of Due from NGAs 1-03-03-010 xxxx

funds from SA to IA (SA Cash-MDS-Regular 1-01-04-040 xxxx
Book)

 Record the receipt of funds Cash-Collecting Officer 1-01-01-010

(IA Book) Due to NGAs 2-02-01-050

 Record the remittance of Due from NGAs 1-03-03-010 xxxx

IA to BTr Cash- Collecting Officer 1-01-01-010 xxxx
Dishonored Checks
 Record dishonored checks Other Receivable 1-03-05- xxxx
Other Service Income 04-02-01-990 xxxx

 Collection Cash-Collecting Office 1-01-01-010 xxxx

Other Receivable 1-03-05-990 xxxx

Performance Bond Cash-Collecting xxxx

Officer/Guaranty Deposit xxxx
Guaranty/Security
Deposit Payable
Accounting for Disbursement and Related
Accounts
Fundamental Principles for Disbursement of Public Funds
Section 4 of P.D. No. 1445, the Government Auditing Code of the Philippines, provides that all financial
transactions and operations of any government entity shall be governed by the following fundamental principles:

1. No money shall be paid out of any public treasury or depository except in pursuance of an
appropriation law or other specific statutory authority.
2. Government funds or property shall be spent or used solely for public purposes.
3. Trust funds shall be available and may be spent only for the specific purpose for which the trust was
created or the funds received.
4. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the
financial affairs, transactions, and operations of the government agency.
5. Disbursement or disposition of government funds or property shall invariably bear the approval of
the proper officials.
6. Claims against government funds shall be supported with complete documentation.
7. All laws and regulations applicable to financial transactions shall be faithfully adhered to.
8. Generally accepted principles and practices of accounting as well as of sound management and
fiscal administration shall be observed, provided that they do not contravene existing laws and
regulations.
Expenditure is the obligation incurred by the agency.

Disbursements represent the movement of cash from the BTr or from an

authorized disbursing officer to the final recipient. Payment made for
government obligations.

Journalizing Transactions/Events

In accounting, it is the policy that transactions/events are journalized based on

facts without recognizing the regularity/legality of the transaction/event.
Types of Disbursement

1.By check

1.1 Modified Disbursement Scheme (MDS) Checks

• Issued by government chargeable against the account of the Treasury
• Maintained in government banks with different MDS account
• Covered by Notice of Cash Allocation

Example: Department of Education paid its accounts payable arising from the purchase of
supplies and materials in the amount of P500,000.
Account Title Account Code Debit Credit

Supplies and Material inventory P500,000

Cash-MDS-Regular P500,000
1.2 Commercial Checks. Charge against the agency account with commercial bank

Account Title Account Code Debit Credit

Supplies and Material inventory P500,000

Cash in Bank-LCCA P500,000

2. By Cash. Made by cash advance drawn and maintained in accordance with COA
rules and regulations.
Typical Disbursements Transactions

1. Personnel Services (e.g. Salaries and Wages, Bonuses, Allowances, etc.)

2. Maintenance and Other Operating Expenses (e.g. Travel Expenses, Office
Supplies, Repairs & Maintenance, etc.)
3. Capital Outlay (e.g. Purchase of Equipment, Construction of Building/Office, etc.)
4. Financial Expenses (e.g. Bank Charges, Interest Expense, Loan Amortization, etc.)
1. Personnel Services

Salaries and wages of the agency may be made through the following:

1. Payroll Fund in the hands of the Disbursing Officer (DO) as Cash

Advance Payments are made by the DO in cash to the employees.
2. Payroll Fund deposited in an authorized depository bank, withdrawal
by the employees is through the automated teller machine (ATM).
3. Direct payment to employees by individual check.
 Account Title Account Code Debit Credit
Payment of Payroll (Regular)
Salaries and wages – regular pay, P2,000,000; PERA
P200,000; deductions composed of: withholding taxes,
P120,000; GSIS Life and Retirement Premium, PP180,000;
PagIbig, P10,000 and PhilHealth, P20,000. The net amount
was advance by the agency’s disbursement officer.

Advances for Payroll 1-99-01-020 P1870,000  

Cash-MDS-Regular 1-01-04-040   P1,870,000
To record the cash advance granted to disbursing officer      
     
Salaries and Wages-Regular Pay 5-01-01-010 2,000,000  
Personnel Economic Relief Allowance 5-01-02-010 200,000  
Due to BIR 2-02-01-010   120,000
Due to GSIS 2-02-01-020   180,000
Due to PagIbig 2-02-01-030   10,000
Due to PhilHealth 2-02-01-040   20,000
Advances to Payroll 1-99-01-020   1,870,000
To record payment of salaries and liquidation of cash advances      
      
Government Share: GSIS, P240,000; PagIbig, P20,000,
PhilHealth, 40,000
Retirement and Life Insurance Premium Contribution 240,000
PagIbig Contribution 20,000
PhilHealth Contribution 40,000
Due to GSIS 2-02-01-020 240,000
Due to PagIbig 2-02-01-030 20,000
Due to PhilHealth 2-02-01-040 40,000
To record government share

Due to GSIS 2-02-01-020 360,000

Due to PagIbig 2-02-01-030 30,000
Due to PhilHealth 2-02-01-040 40,000
Cash-MDS-Regular 1-01-04-040 430,000
To records remittances govt institutions

Due to DIR 2-02-01-010 120,000

Subsidy from national Government 4-03-01-010 120,000
Clothing Allowance and Productivity Incentive Bonus
Advances to Payroll 1-99-01-020 100,000
Cash-MDS-Regular 1-01-04-040 100,000
To record cash advance granted for clothing and other
bonuses/allowances

Clothing/Uniform Allowance 80,000

Productivity Incentive Allowance 20,000
Advances for Payroll 1-99-01-020 100,000
To record payment and liquidation of clothing and other
bonuses/allowances

Overtime Pay, P6000

Overtime and Night Pay 6,000
Due to BIR 2-02-01-010 100
Cash-MDS-Regular 1-01-04-040 5,900
To record payment of overtime work

Due to BIR 2-02-01-010 100

Subsidy from national Government 4-03-01-010 100
To record tax remittance for overtime pay
2. Maintenance and Other Operating Expenses

Cash Advances Granted for travel, P27,000

Advances to Officers and Employees 1-99-01-040 27,000
Cash-MDS-Regular 1-01-04-040 27,000
To records cash advance granted for travel

Travelling Expenses-Local 5-02-01-010 25,000

Advances to Officers and Employees 1-99-01-040 25,000
To record liquidation of cash advance for travel

Cash-Collecting Officer 2,000

Advances to Officers and Employees 1-99-01-040 2,000
To record refund of cash advance for travel
Supplies and Material (Asset Method,
Perpetual Inventory with Stock Card and
Weighted Average methos of Costing
Inventory)

Supplies and Material Inventory 450,000

Accounts Payable 450,000
To record the receipts of supplies purchase
from PS-DBM

Accounts Payable 450,000

Due to BIR 2-02-01-010 45,000
Cash-MDS-Regular 1-01-04-040 405,000
To record payment made to PS-DBM

Due to BIR 2-02-01-010 45,000

Subsidy from national Government 4-03-01-010 45,000
To record tax remittances to BIR
Disbursement Through PCF

Petty Cash 10,000

Cash-MDS-Regular 1-01-04-040 10,000
To record establishment of PCF

Office Supplies Expense 5,000

Petty cash Fund 5,000
To record expenses at the end of the year when no
replenishment happened

Office Supplies Expense 5,000

Cash-MDS-Regular 1-01-04-040 5,000
To record replenishment of PCF at the end of the year
Construction Period Theory (Contract Price P10,000,000)

Advances to Contractor (10,000,000 x 15%) 1-99-02-010 1,500,000

Cash-MDS-Regular 1-01-04-040 1,500,000
To record 15% mobilization granted to contractor

Construction in Progress-Bldg and Other Structure 1-06-10-030 4,000,000

Advances to Contractor 1-99-02-010 1,500,000
Accounts Payable 2-01-01-010 2,500,000
To record 40% billing from the contractor

Accounts Payable 2-01-01-010 2,500,000

Guaranty Deposit/Security Deposit Payable (4,000,000 x 10%) 400,000
Due to BIR 2-02-01-010 200,000
Cash-MDS-Regular 1-01-04-040 1,900,000
To record payment of first billing

Due to BIR 2-02-01-010 200,000

Subsidy from National Government 200,000
To record tax remittance to BIR
Construction in Progress-Bldg and Other Structure 1-06-10-030 6,000,000
Accounts Payable 2-01-01-010 6,000,000
To record 100% billing from the contractor

Accounts Payable 2-01-01-010 6,000,000

Guaranty Deposit/Security Deposit Payable 6,000,000 x 10%) 600,000
Due to BIR 2-02-01-010 300,000
Cash-MDS-Regular 1-01-04-040 5,100,000

Investment property, Building 1-06-04-010 10,000,000

Construction in Progress-Bldg and Other Structure 1-06-10-030 10,000,000
To record full payment

Due to BIR 2-02-01-010 300,000

Subsidy from National Government 300,000
To record remittances to BIR

Guaranty Deposit/Security Deposit Payable 1,000,000

Cash-MDS-Regular 1,000,000
To record refund of guaranty deposit
Performance Bond

Cash-Collecting Officer 1,500,000

Guaranty/Security Deposit Payable 1,500,000
To record receipts of performance bond

Guaranty/Security Deposit Payable 1,500,000

Cash-MDS-Regular 1,500,000
To record refund of performance bond      
General Repair/Construction of Fixed Assets by Administration

Cash-MDS-Regular 8,000,000
Subsidy from National Government 8,000,000

Construction Material Inventory 4,000,000

Accounts Payable 4,000,0000
To record the receipts of construction material with charge
invoice

Accounts Payable 4,000,000

Due to BIR 400,000
Cash-MDS-Regular 3,600,000
To record payment of construction materials

Construction in Progress- Bldg and Other Structured 3,500,000

Construction Material Inventory 3,500,000
To record the issuance of construction materials
Advances to Special Disbursing Officer 1,350,000
Cash-MDS-Regular 1,350,000
To record cash advance net of 10% tax for salary of construction
workers

Construction in Progress-Bldg and other Structured 1,500,000

Due to BIR 150,000
Advances to Special Disbursing Officers 1,350,000
To record payment and liquidation of salaries and wages

Due to BIR 150,000

Subsidy from National Government 150,000
To record tax remittance to BIR

Building 5,000,000
Construction in Progress-Bidg and other Structure 5,000,000
To take up the asset account in the book of the agency      

       
Payment of Expenses

Rent Expense 10,000

Due to BIR 250

Cash-MDS-Regular 9,750

To record payment of expenses

Due to BIR 1,000

Cash-MDS-Regular 1,000

To records remittances to BIR

End of Prelim Coverage