The Government Accounting

Process

ACCT 1063
ACCOUNTING FOR GOVERNMENT AND NON FOR PROFIT ORGANIZATION
Government Accounting Process

 It comprises the activities of analyzing, recording, classifying, summarizing and

communicating transactions involving the receipt and disposition of government funds and
property, and interpreting the results thereof.
Books of Accounts and Registries

1. Journals
 General Journal
 Cash Receipts Journal
 Cash Disbursement Journal
 Check Disbursement Journal
Books of Accounts and Registries

2. Ledgers
 General Ledgers
 Subsidiary Ledgers
Books of Accounts and Registries

3. Registries
 Registries of Revenue and Other Receipts(RROR)
 Registries of Appropriations and Allotments(RAPAL)
 Registry of Allotments, Obligations and Disbursements(RAOD)
 Registries of Budget, Utilization and Disbursements(RBUD)
RAOD-Object of Expenditures

 Personnel Services(PS)
 Maintenance and Other Operating Expenses(MOOE)
 Financial Expenses(FE)
 Capital Outlay(CO)
The Government Accounting Cycle

1. Appropriation
2. Allotment 
3. Incurrence of Obligation 
4. Disbursement Authority - NCA 
5. Disbursements 
6. Billings, Collections & Remittances 
7. Unadjusted trial balance 
8. Adjusting entries 
9. Closing entries 
10. Preparation of financial statements
 Recording in:

Transactions Registries & other records Journal and Ledger

a. Appropriation RAPAL -
b. Allotment RAPAL and Appropriatre RAODs
-
c. Incurrence of
ORS and Appropriate RAODs
Obligations -
d. NCA RANCA Cash-MDS, Regular xx
Subsidy from National Gov't xx
updating of ORS and
e. Disbursement
Appropriate RAODs Expenses/Assset xx
Payable xx
Payable xx
Cash-MDS, Regular xx
updating of ORS and
f. Tax Remittance Advice
Appropriate RAODs Cash-TRA xx
Subsidy from National Gov't xx
Due to BIR xx
Cash-TRA xx
g. Billings, Collections &
RROR, RCD/CRReg
Remittances Accounts Receivable xx
Cash- CO xx
Cash- CO xx
Accounts Receivable xx
Cash-Treasury/Agency Deposit, Regular xx
Cash- CO xx
h. Reversion of Unused NCA RANCA Subsidy from National Gov't xx
Cash-MDS, Regular xx
1.Appropriation
 Entity A receives its GAA amounting to P1,000,000
2. Allotment
 Entity A receives its allotment amounting to P960,000 from the DBM
3. Incurrence of Obligation
 Entity A incurs obligations amounting to P700,000.
4. Disbursement Authority - NCA
Entity A receives the following Notice of Cash Allocations (NCA), net of tax:
a. For current year's appropriation 600,000
b. For prior year's accounts payable and not yet due and demandable obligations 25,000

Cash-Modified Disbursement System (MDS), Regular  600,000

Subsidy from National Government 600,000
To recognize receipt of NCA from the DBM

Cash-Modified Disbursement System (MDS), Regular  25,000

Subsidy from National Government 25,000
To recognize receipt of NCA from the DBM

Note: The NCA is recorded in the Registry of Allotments and Notice of Cash Allocation(RANCA)
5. Disbursements
Personnel Services (PS)
a. Set up of payable to officers and employees upon approval of payroll.
Salaries and Wages 200,000
Personal Economic Relief Allowance (PERA) 50,000
Gross Compensation 250,000
Withholding Tax (20,000)
GSIS (9,000)
Pag-IBIG (2,000)
PhilHealth (1,000)
Total Deductions (32,000)
Net 218,000
Salaries and Wages, Regular 200,000
Personal Economic Relief Allowance (PERA) 50,000
Due to BIR 20,000
Due to GSIS 9,000
Due to Pag-IBIG 2,000
Due to PhilHealth 1,000
Due to Officers and Employees 218,000
Advances for Payroll 218,000
Cash-Modified Disbursement System (MDS), Regular 218,000

Due to Officers and Employees 218,000

Advances for Payroll 218,000
Operating expenses

Entity A pays for the following expenses:

 Water 1000
 Electricity 5000
 Telephone 2000
 Janitorial 10000
 Security 12000
Total 30,000
Less: Withholding taxes (2000)
NET 28,000
Water Expenses 1000
Electricity Expenses 5000
Telephone Expenses 2000
Janitorial Expenses 10000
Security Expenses 12000
Due to BIR 2000
Cash-MDS, Regular 28000
Capital Outlays (CO)
Purchase of office equipment 
Receipt of delivery of purchased office equipment worth P300,000 from current year's obligation.

Office Equipment 300,000

Accounts Payable 300,000

***Payment
A/Pay 300,000
Less: W/Tax (20,000)
Net 280,000

Accounts Payable 300,000

Due to BIR 20,000
Cash-MDS, Regular 280,000
a. Entity A remits the taxes withheld through TRA.
Cash-Tax Remittance Advice 150,000
Subsidy from National Government 150,000
To recognize the constructive receipt of NCA for TRA

Due to BIR 150,000

Cash-Tax Remittance Advice 150,000
To recognize the constructive remittance of taxes withheld to the BIR through TRA
Billings, Collections & Remittances
a. Entity A bills the following revenue/income:
Power supply system fees 100,000
Landing and parking fees 80,000
Total 180,000

Accounts receivable 180,000

Power Supply System Fees  100,000
Landing and Parking Fees 80,000
To recognize billing of income
b. Entity. A collects P100,000 accounts receivable from the billing above and remits P90,000* of the collection.
Cash - Collecting Officers 100,000
Accounts receivable 100,000
To recognize collection of current year's billed income

Cash-Treasury/Agency Deposit, Regular 90,000

Cash - Collecting Officers 90,000
To recognize remittance of income to the BTr

c. Entity A collects P45,000 accounts receivable from prior year's billing and remits total collection.
Cash - Collecting Officers 45,000 
Accounts receivable 45,000
To recognize collection of prior year's billed income 

Cash-Treasury/Agency Deposit, Regular  45,000 

Cash - Collecting Officers 45,000
To recognize remittance of income to the BTr
Adjusting entries
1. Reversion of unused Notice of Cash Allocation (NCA). 
2. Depreciation expenses:
i. Buildings - $50,000
ii. Equipment - P30,000 
3. Allowance for impairment on accounts receivable of P2,000.
The adjusting entries are as follows:
Subsidy from National Government 6,000
Cash-Modified Disbursement System (MDS), Regular 6,000
To recognize reversion of unused NCA 

Depreciation-Buildings & Other Structures 50,000

Accumulated Depreciation - Bldgs. 50,000
To recognize depreciation of buildings 

Depreciation-Machinery and Equipment 30,000

Accumulated Depreciation - O.E. 30,000
To recognize depreciation of office equipment 

Impairment Loss - Loans and Receivables 2,000

Allowance for Impairment - A/R 2,000
To recognize loss allowance on accounts receivable
 Closing entries
The following are the necessary closing entries: 
a. Closing of the "Cash-Treasury/Agency Deposit, Regular account to the "Accumulated Surplus/(Deficit)"
account 
b. Closing of the "Subsidy from National Government" account to the "Revenue and Expense Summary" account. 
c. Closing of income and expense accounts to the "Revenue and Expense Summary" account and closing of the
net balance of "Revenue and Expense Summary" account to the "Accumulated Surplus/(Deficit)” account.
Only closing entries (a) and (b) are unique to a government entity.

Accumulated Surplus/(Deficit) 575,200

Cash-Treasury/Agency Deposit, Regular 575,200
To recognize closing of cash deposit account 

Subsidy from National Government 667,000

Revenue and Expense Summary 667,000
To recognize closing of subsidy account 
Immigration Tax 
Permit Fees 
Registration Fees 
Other Service Income 
Power Supply System Fees 
Landing and Parking Fees
Salaries and Wages, Regular 
PERA 
Traveling Expenses - Foreign
Office Supplies Expense 
Water Expenses 
Electricity Expenses 
Telephone Expenses 
Janitorial Expenses 
Security Expenses 
Depreciation-Bldgs.
Depreciation-Mac. & Equipt. 
Impairment Loss - L/R 
Revenue and Expense Summary
To recognize closing of income and expense accounts 

Revenue and Expense Summary

Accumulated Surplus/(Deficit)
To recognize closing of revenue and expense summary
Thank you,
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