De Ocampo, Alessandra Nicole R. Ms. Rona Loreta Andrea E.

Gayeta
MGA203 BADVAC3X Accounting for Government and Non-Profit Organization

ASSIGNMENT #2

1. What are the types of government disbursement? enumerate and provide

sample journal entries.

Government disbursements refer to the payments made by the

government to various parties, such as employees, contractors, vendors, and
beneficiaries of government programs. There are several types of government
disbursements, including:

 Salary and Wages Disbursements - payments made to government

employees for their work and services rendered.

Journal entry for salary disbursement:

Debit: Salaries and Wages Expense

Credit: Cash

 Purchase of Goods and Services Disbursements - payments made to

vendors for goods and services purchased by the government.

Journal entry for purchase of goods and services disbursement:

Debit: Supplies Expense or Services Expense

Credit: Cash

 Debt Service Disbursements - payments made to service government

debt.

Journal entry for debt service disbursement:

Debit: Interest Expense or Principal Payment

Credit: Cash
  Transfer Payments - payments made by the government to individuals
or organizations as part of government programs such as social
welfare or subsidies.

Journal entry for transfer payments:

Debit: Subsidy Expense

Credit: Cash

 Capital Expenditure Disbursements - payments made by the

government for the acquisition or improvement of long-term assets
such as infrastructure, buildings, or equipment.

Journal entry for capital expenditure disbursement:

Debit: Equipment or Building Asset

Credit: Cash

Note: The journal entries provided are general examples and may vary
depending on the specific accounting policies and procedures of the
government entity.

2. Differentiate exchange vs. non exchange transactions.

Exchange transactions and non-exchange transactions are two types

of transactions that occur in accounting. Exchange transactions involve the
transfer of goods, services, or other resources between two parties, where
each party receives something of similar value. In an exchange transaction,
both parties are able to determine the value of the goods or services they are
receiving, and they both have the ability to negotiate and agree on the terms
of the exchange.

On the other hand, non-exchange transactions do not involve the

exchange of goods, services, or resources of equal value between two
parties. Instead, non-exchange transactions involve a unilateral transfer of
resources or a transfer of resources where the recipient is not expected to
 provide anything of value in return. In non-exchange transactions, the value of
the resources transferred is not easily measurable or is not measurable at all.

3. What is the role of BTr on government revenues?

The BTr manages government revenues in the Philippines by

collecting, managing, and investing government funds, financing government
projects, and monitoring government debt. Its key functions include collecting
government revenues, managing government funds, investing government
funds, financing government projects, and ensuring the government's
borrowing activities are sustainable.

4. Give example of non exchange transactions. Is it recorded using accrual or

cash basis?

Examples of non-exchange transactions include tax revenues, transfer

payments, and donations.

 Tax revenues are collected by the government through its power to

impose taxes on individuals, businesses, and other entities. Taxpayers
are not receiving anything of equal value in return, making it a non-
exchange transaction.
 Transfer payments are payments made by the government to
individuals, businesses, or other entities without receiving any goods,
services, or other resources of equal value in return. Examples of
transfer payments include social welfare programs and subsidies.
 Donations are contributions made by individuals, businesses, or other
entities without any expectation of receiving anything of equal value in
return. These can be in the form of cash, services, or other resources.

Non-exchange transactions are typically recorded using the accrual basis

of accounting. Under the accrual basis, revenues are recognized when
earned, and expenses are recognized when incurred, regardless of when
cash is received or paid. Accrual accounting provides a more accurate
representation of an entity's financial position and performance, especially for
 non-exchange transactions, where there may be a delay in cash receipts or
payments.

5. What are the accounting policies on inventory, semi expendable ppe, and
ppe.

The accounting policies for inventory, semi-expendable PPE, and PPE

are crucial for businesses as they impact the financial statements and affect
decision-making processes.

Inventory is an essential component of many businesses, and

accounting for it correctly is crucial to accurately reflect the financial position
of the company. GAAP provides guidance on how to account for inventory,
including the lower of cost or net realizable value rule. This rule ensures that
inventory is valued correctly on the balance sheet, and any potential losses in
value are accounted for.

Semi-expendable PPE, also known as consumable PPE, has a longer

useful life than consumable supplies but does not have the same durability as
fixed assets. These assets are typically recorded as expenses when they are
consumed or become obsolete, which helps in more accurate recording of
expenses in the income statement.

PPE, on the other hand, is a significant long-term asset for many

businesses. The accounting policies for PPE vary depending on the asset's
nature, such as property, plant, and equipment or intangible assets. However,
generally accepted accounting principles require that PPE is recorded at cost,
including all expenditures necessary to acquire and bring the asset to its
present location and condition. Depreciation or amortization is then used to
systematically allocate the cost of PPE over its useful life.

Consistency in these policies is essential to ensure that the financial

statements provide reliable and comparable information to users.
Inconsistencies can lead to confusion and misinterpretation of the financial
statements, which can affect decision-making processes. Disclosure of these
policies is also necessary to provide transparency to users and enhance their
understanding of the financial position and performance of the entity.