ACCOUNTING FOR DISBURSEMENT Petty cash fund – fund used for the non-recurring,

emergency and petty expenses of the agency.

Disbursements
– constitute all cash paid out during a given period either in
currency or by check. Inventory Accounting System
– the settlement of government payables/obligations by cash Asset Method – method to be followed in recording
or by check. disbursement when expenditures apply to more than just the
Disbursement system – involves the preparation and accounting period.
processing of disbursement voucher, preparation and Semi-expendable items – taken up as fixed assets or
issuance of check; payment by cash; granting, utilization and inventory depending on the nature of the items.
liquidation/replenishment of cash advances. Perpetual Inventory Method – system used in tracking the
quantity of the inventories on hand.
Types of Checks Moving Average Method
1. Modified Disbursement System Checks – issued by – method of costing used for costing the inventories.
government agencies chargeable against the account of – method of calculating the cost of inventory on the basis of
the Treasury of the Philippines, which are maintained with weighted average on the date of issue.
different MDS – Government Servicing Banks. – used to provide a new unit cost after each purchase and/or
*Notice of Cash Allocation – authorization issued by the when items are issued/used.
Department of Budget and Management to government Purchase and Construction of Fixed Assets
agencies to withdraw cash from the National Treasury *Fixed assets are charge against capital outlay.
through the issuance of MDS checks or other authorized Construction Period Theory
mode of disbursements. Construction Period Theory
2. Commercial Checks – issued by government agencies – theory to be followed in recording the fixed assets acquired
chargeable against the Agency Checking Account with through construction.
government servicing banks. – all expenses incurred during the construction period shall
be capitalized.
Disbursement by Cash Liquidated damages – amount charged to the contractor
Advances for Payroll – account debited for the amount for delayed completion of the project and to be deducted
granted to regular disbursing officer for payment of salaries, from the total cost.
wages, honoraria, allowances and other personnel benefits. Infrastructure Assets
Advances to Officers and Employees – used to record Infrastructure Assets – assets for use of the general public
amount advanced to officers and employees for official travel Construction in Progress – account used to record the
and credited the same for liquidation of advances. costs for the construction.
Due from Officers and Employees – used to record claims Guaranty/Security Deposits Payable – account used to
from these officers and employees for overpayment, cash record performance bonds and retention fee.
shortage, loss of assets and other bills issued by the agency General Repair/Construction of Fixed Assets by
and credited the same for collection of the receivables. Administration
Revenue expenditures – expenditure that benefits only the
Disbursement through Petty Cash Fund current period and therefore reported as an expense.
Imprest system – system used in maintaining the Petty Capital expenditures – expenditure that benefits the
cash fund. current and future period and therefore reported as an asset.
Construction Materials Inventory – account used to Subsidy from National Government
record the materials purchased for the construction or 4. Cash advances for Travel (RAOMO)
general repair of fixed assets. Record cash advances granted for travel
Advances to Special Disbursing Officer – used to record Advances to Officers and Employee
the amount granted to agency’s accountable officers and Cash – MDS, Regular
employees for special purpose/time-bound undertakings to Record liquidation of cash advance-travel
be liquidated within specific period. Travelling expenses – local
Advances to Officers and Employee

JOURNAL ENTRIES FOR DISBURSEMENT AND RELATED Record refund of cash advance – travel (Excess of cash
advance)
TRANSACTIONS
Cash – Collecting Officer
1. MDS Checks Advances to Officers and Employee
NCA is received 5. Disbursements through Petty Cash Fund (RAOMO)
Cash – MDS, Regular Record establishment of Petty Cash Fund
Subsidy from National Government Petty Cash
Payment of Payable Cash – MDS, Regular
Accounts Payable No replenishment before year –end
Cash – MDS, Regular Expense
2. Commercial Checks Petty Cash
Collection of Income Replenishment in ensuing year
Cash – Collecting Officer Petty Cash
Income Cash – MDS, Regular
Record deposit Replenishment before year – end
Cash in Bank – LC, current account Expense
Cash – Collecting Officer Cash – MDS, Regular
Payment of Expenses 6. Inventory (RAOMO)
Expense Record payment of the purchase order previously
Cash in Bank – LC, current account obligated
3. Cash advance for payroll (RAOMO) Inventory/ Accounts Payable
Record grant of cash advance to disbursing officer Due to BIR
Advances for Payroll Cash – MDS, Regular
Cash – MDS, Regular Remittance of tax
Record liquidation of cash advances and expenses Due to BIR
Salaries and wages – regular pay Subsidy from National Government
Personal Economic Relief Allowance (PERA) Record issuance of inventory
Due to GSIS Expense
Due to BIR Inventory
Due to Pag-Ibig 7. Purchase and Construction of Fixed Assets
Due to PhilHealth (RAOCO)
Advances for Payroll Record NCA received
Remittance of Tax Cash – MDS, Regular
Due to BIR Subsidy from National Government
Record obligation incurred for the purchase of Record receipt of performance bond
equipment Cash – Collecting Officer
Equipment Guaranty/Security Deposit Payable
Accounts Payable Record payment of mobilization fee to the contractor
Record full payment of the equipment Advances to Contractors
Accounts Payable Cash – MDS, Regular
Due to BIR Record receipt of first billing
Cash – MDS, Regular Construction in Progress – Infrastructure
Remittance of tax Advances to Contractors (mobilization fee)
Due to BIR Accounts Payable
Subsidy from National Government Record payment of first billing
Accounts Payable
8. Construction of Fixed Assets (RAOCO) Due to BIR (10% of CIP)
Record NCA received Guaranty/Security Deposit Payable (% of Retention Fee)
Cash – MDS, Regular Cash – MDS, Regular
Subsidy from National Government Record receipt of second/final billing (net of Liquidation
Record payment of mobilization fee to the contractor Damages)
Advances to Contractors Construction in Progress – Infrastructure
Cash – MDS, Regular Accounts Payable
Record receipt of first billing Record full payment
Construction in Progress – Bldg. and other structures Accounts Payable
Advances to Contractors (mobilization fee) Due to BIR (10% of CIP)
Accounts Payable Cash – MDS, Regular
Record payment of first billing Record turn – over and acceptance of Roads
Accounts Payable Road Networks
Due to BIR (10% of CIP) Construction in Progress – Infrastructure
Cash – MDS, Regular Record refund of performance bond
Record receipt of second/final billing Guaranty/Security Deposit Payable
Construction in Progress – Bldg. and other structures Cash – MDS, Regular
Accounts Payable Record refund of retention fee
Record full payment Guaranty/Security Deposit Payable
Accounts Payable Cash – MDS, Regular
Due to BIR (10% of CIP) Remittance of tax
Cash – MDS, Regular Due to BIR
Take up fixed asset completed in the books Subsidy from National Government
Building 10. General Repair / Construction of Fixed Assets
Construction in Progress – Bldg. and other structures by Administration (RAOCO)
Remittance of tax Record NCA received
Due to BIR Cash – MDS, Regular
Subsidy from National Government Subsidy from National Government
9. Infrastructure Assets (RAOCO) Record receipt of construction materials with the charge
Record NCA received invoice
Cash – MDS, Regular Construction Material Inventory
Subsidy from National Government Accounts Payable
Record payment of materials, net of 10% WTax services, taxes on international trade and transactions
Accounts Payable and other taxes including fines and penalties.
Due to BIR 2. General income – encompasses all types of
Cash – MDS, Regular revenue/income generated by government agencies in
Record issuance of materials for use in the construction the exercise of their administrative and regulatory
Construction in Progress – Bldg. and other structures function, income from public enterprises/investments and
Construction Material Inventory income from grants and donations including subsidies.
Record cash advance (net 10% WTax) granted to
disbursing officer Methods of Accounting for Income
Advances to Special Disbursing Officer
1. Accrued method – used by national government
Cash – MDS, Regular
agencies when income is realized during the accounting
Record liquidation of cash advance by disbursing officer
period regardless of cash receipt.
Construction in Progress – Bldg. and other structures
Due to BIR 2. Modified accrual – income is recorded as Deferred
Advances to Special Disbursing Officer Credits to Income and to be recognized upon receipt of
Remittance of tax collection.
Due to BIR 3. Cash basis – used for all other taxes, fees, charges and
Subsidy from National Government other revenue where accrual method is impractical.
If NCA was not reduced by TRA
Due to BIR Other Receipts of Accounts to be Used
Cash – MDS, Regular NGA
Take up the asset account in the books 1. Refund of Cash  Advances to Officers and
Buildings Advances Employees (for travel
Construction in Progress – Bldg. and other structures purposes)
 Advances for Payroll (for
ACCOUNTING FOR INCOME AND COLLECTIONS salaries)
Receipts/Income Collections and Deposits System –
covers the processes of acknowledging and reporting 2. Receipts of  Cash – Collecting Officer
income/collections, deposits of collections with Authorized Performance/Bidde (for cash/checks)
Government Depositary Bank (AGDB) or through the AGDB rs/Bail Bonds  Guaranty Deposits (for
for the account of Treasurer of the Philippines and recording
of collections and deposits in the books of accounts of the surety bonds)
agency. 3. Refund from  Appropriate expense (if
Overpayment of paid in same year)
Income Expenses  Prior Year Adjustments (if
Government income – represents all funds received by the paid in ensuing year)
government from taxes, grants, aids and borrowings 4. Collections Made  Due to …….. (if w/o
Government revenue – represents funds received which do on Behalf of authorization)
not increase any liabilities or reserves of the government. Another  Other Payables (if
Agency/Private authorized)
Two General Classification of Income: Companies
1. Tax revenue – encompasses all taxes imposed on 5. Inter-agency Due to…….
taxable income, properties, and use or sale of goods and Transfer Funds
 3. Authority With Limitations
Types of Collections Record collection of seminar fees
Head of the Office Cash – Collecting Officer
– responsible for the collection and accounting of all Seminar/ Training Fees
revenues and receipts if the agency. Record deposit of collections
– duty is to take all reasonable steps to minimize the risk of Cash in Bank – LC, Current account
losses, defalcation, and other types of irregularities. Cash – Collecting Officer
Record payment of expenses
1. Without Authority To Use Expenses
Record collections made Cash in Bank – LC, Current account
Cash – Collecting Officer Close the accounts in Regular Agency books for the
Income tax transfer to a separate book
Record remittance to Bureau of Treasury through bank Seminar and training fees
Book of Agency Expenses
Income tax Cash in Bank – LC, Current account
Cash – Collecting Officer
Book of BoT Record transfer in a separate book
Cash in Bank – LC, Savings account Cash in Bank – LC, Current account
Income tax Seminar and training fees
2. With Authority To Use Record remittance of excess to Bureau of Treasury
Regular Agency Books – the book where collections with through bank
authority to use is to be recorded. Book of Agency
Examples of collections that can be used: Seminar and training fees
a. Fees collected for seminars, trainings and conferences Cash in Bank – LC, Current account
conducted Book of BoT
b. Proceeds from sale of official publications Cash in Bank – LC, Current account
c. Services fee collected from GSIS, HDMF, PHIC, Mutual Seminar and training fees
Benefits associations/cooperative 4. Income from sale of equipment
d. Excess income realized and deposited with the BTr. Record sale of equipment
Cash – Collecting Officer
Record issuance of bill for the rent of an office space Accumulated Depreciation – Equipment
Accounts Receivable Equipment
Rent/ Lease income Gain on Sale of PPE
Record collection Record remittance of collection to Bureau of Treasury
Cash – Collecting Officer through bank
Accounts Receivable Book of Agency
Record deposit in the bank Gain on sale of PPE
Cash in Bank – LC, Current account Accumulated Surplus/ Deficit
Cash – Collecting Officer Cash – Collecting Officer
Record disbursement for the repair Book of BoT
Repairs and Maintenance – Bldg. and other structures Cash in Bank – LC, Current account
Cash in Bank – LC, Current account Gain on sale of PPE
 Accumulated Surplus/ Deficit 2. Request for relief from accountability
Record NCA allocated, net of TRA 3. Cash overage
Cash – MDS, Regular 4. Stale MDS and commercial checks
Subsidy from National Government 5. Cash settlement of disallowances
Record accounts payable for the equipment delivered 6. Settlement of charges
Equipment 7. Refund of overpayments
Accounts Payable 8. Refund of cash advance
Record full payment of obligation 9. Inter-agency transferred funds
Account Payable 10.Dishonored checks
Due to BIR 11.Performance bonds
Cash – MDS, Regular ACCOUNTING FOR LOSS OF CASH AND PROPERTY
Remittance of withholding tax through TRA Shortage in cash, may be due to:
Due to BIR 1. Malveration
Subsidy from National Government 2. Robbery
3. Theft
5. Grants And Donations Intended For Agency 4. Fire
Special Allotment Release Order (SARO) – agency’s Report of Cash Examination – a document where cash
additional allotment shortage discovered during cash examination conducted by
Notice of Cash Allocation – agency’s additional subsidy auditors is reported.
income from the national government. Audit report – if there is shortage in property.
Record the receipt of grant from Donor Fidelity bond – bond issued by the Bureau of Treasury for
Cash – Collecting Officer properly bonded officer.
Income from Grants and Donations in Cash Report of Collection / Report of Disbursement – a report
Record remittance to the Bureau of Treasury through to be prepared by the defaulting officer if there is any
bank shortage.
Book of Agency
Income from Grants and Donations in Cash GRANT OF RELIEF FROM ACCOUNTABILITY
Cash – Collecting Officer Loss of Assets – an account to be used when relief from
Book of BoT accountability is granted.
Cash in Bank – LC, Current account
Income from Grants and Donations in Cash ACCOUNTING FOR CASH OVERAGE
Other Service Income – an account to be used for the
amount of cash overage forfeited in favor of the government.
MISCELLANEOUS TRANSACTIONS
Miscellaneous Transactions STALE MDS AND COMMERCIAL CHECKS
– Transaction types that are unique and not recurring in the Stale check – a check that has been outstanding for over six
ordinary course of government operations. months from date of issue or as prescribed.
– Transactions that seldom take place or should not happen Types of Stale check
at all. 1. Unclaimed stale checks which are still with the Cashier
Examples of Miscellaneous Transactions 2. Stale checks which still in the hands of the payees or
1. Loss on cash and property holders in due course
List of Unreleased checks – a report, which is attached to all other obligations classified by law or regulations as trust
the Report of Checks Issued, where unclaimed stale receipts.
checks which are still with the Cashier is to be reported. Forms of Performance Bonds
Accumulated surplus/deficit 1. Cash
– used to record the cumulative results of normal and 2. Certified check
continuous operations of an agency including prior period 3. Surety
adjustments, effect of changes in accounting policy and other Guaranty Deposits - an account used to record deposits,
capital adjustments. subject to refund, made to secure compliance with certain
– used to close the revenue and expense summary account. requirements in a transaction.
JOURNAL ENTRIES
CASH SETTLEMENT OF DISALLOWANCES 1. Accounting for Loss of Cash and Property
Receivable – Disallowance Charges - a receivable To record the discovery of cash shortages
account where disallowed payments which become final and Due from Officers and Employees
executory is to be recorded. Cash – Collecting officers
To record restitution of shortage and issuance of official
REFUND OF CASH ADVANCE receipt
Cash advances – usually granted to the Regular or Special Cash – Collecting officers
Disbursing Officers for salaries and wages or labor payroll for Due from Officers and Employees
To record remittance to the Bureau of Treasury
projects undertaken by administration and to officers and
Book of Agency
employees for official travel.
Other Service Income
Advances to Officers and Employees – an account used
Cash – Collecting officer
for cash advances for official travel granted to the Book of BoT
officials/employees concerned. Cash in Bank – LC, Savings Acct.
Advances for Payroll – an account used for cash advances Other Service Income
for salaries and wages granted to Regular Disbursing 2. Grant of Relief from Accountability
Officers. To record loss of office equipment due to theft
INTER-AGENCY TRANSFERRED FUNDS Due from Officers and Employees
Inter-agency transferred funds – a transfer of cash from Accumulated Depreciation
another agency to implement the project of another agency. Office Equipment
DISHONORED CHECKS To record grant of relief from accountability
Dishonored checks – collections not accepted by the bank Loss of Assets
upon deposit. Due from Officers and Employees
PERFORMANCE BONDS *In case of denial of request for relief of accountability:
Performance bonds To record the receipt of settlement
– A trust receipt. Cash – Collecting officers
– required by the agency from contractors/suppliers to ensure Due from Officers and Employees
performance of contracts. To record deposit to the Bureau of Treasury
Trust Receipt – collections from non-income sources Book of Agency
authorized by law for specific purposes, which are Other Service Income
collected/received by a government officer or agency acting Cash – Collecting officer
as a trustee, agent or administrator or which have been Book of BoT
Cash in Bank – LC, Savings Acct.
received as guaranty for the fulfilment of an obligation and
 Other Service Income *Disallowance was taken up as receivable
3. Accounting for Cash Overage To record collection of settlement
To record forfeited cash overage Cash – Collecting officer
Cash – Collecting officer Receivable – Disallowance/Charges
Other Service Income To record remittance to the Bureau of Treasury
To record deposit to the Bureau of Treasury Book of Agency
Book of Agency Subsidy from National Government
Other Service Income Cash – Collecting officer
Cash – Collecting officer Book of BoT
Book of BoT Cash in Bank – LC, Savings Acct.
Cash in Bank – LC, Savings Acct. Other Service Income
Other Service Income *Overstatement of expenses pertains to the Current Year
4. Stale MDS and Commercial Checks To record collection of settlement
*From Previous year Cash – Collecting officer
To record cancellation of stale check Accounts Receivable
Accumulated Surplus/Deficit To record remittance to the Bureau of Treasury
Accounts Payable Book of Agency
To record receipt of NCA for prior year account Subsidy from National Government
Cash – MDS, Regular Cash – Collecting officer
Subsidy from National Government Book of BoT
To record issuance of a new check Cash in Bank – LC, Savings Acct.
Accounts Payable Other Service Income
Cash – MDS, Regular 6. Settlement of Charges
*Disallowance is made during Prior Year while
*From Current year Settlement in the Current Year
To record cancellation of stale of check To record the additional charges
Cash – MDS, Regular Receivable – Disallowance/Charges
Accounts Payable Accumulated Surplus/Deficit
To record issuance of a new check To record cash settlement of disallowance
Accounts Payable Cash – Collecting officer
Cash – MDS, Regular Receivable – Disallowance/Charges
5. Cash Settlement of Disallowance *Disallowance and Settlement is made during the
*From Previous Year Current Year
*Disallowance is not recorded in books To record the additional charges
To record collection of settlement Receivable – Disallowance/Charges
Cash – Collecting officer Other Service Income
Accumulated Surplus/Deficit To record cash settlement of disallowance
To record remittance to the Bureau of Treasury Cash – Collecting officer
Book of Agency Receivable – Disallowance/Charges
Accumulated Surplus/Deficit 7. Refund of Overpayment
Cash – Collecting officer *Receivable account for the refund of overpayment was
Book of BoT set up
Cash in Bank – LC, Savings Acct. To record overpayment of salaries and wages
Accumulated Surplus/Deficit Due from Officers and Employees
 Salaries and wages – Regular 9. Inter – Agency Transferred Funds
To record receipt of refund of overpayment To record cash transferred to Agency IA from Agency SA
Cash – Collecting officers Book of SA
Due from Officers and Employees Due from National Government Agency (IA)
To record remittance to the Bureau of Treasury Cash – MDS, Regular
Book of Agency Book of IA
Subsidy from National Government Cash – Collecting officer
Cash – Collecting officer Due to National Government Agency (SA)

Book of BoT
Cash in Bank – LC, Current Acct. To record remittance to Bureau of Treasury
Other Service Income Book of IA
*Receivable account for the refund of overpayment was Due from National Government Agency (BoT)
not set up Cash – Collecting officer
To record receipt of refund of overpayment Book of BoT
Cash – Collecting officers Cash in Bank – LC, Current Acct.
Salaries and wages – Regular Due to National Government Agency (SA)
To record remittance to the Bureau of Treasury To record receipt of NCA
Book of Agency Cash – MDS, Regular
Subsidy from National Government Due from National Government Agency (BoT)
Cash – Collecting officer To record expenses incurred and paid
Book of BoT Land Improvement, Reforestation
Cash in Bank – LC, Current Acct. Cash – MDS, Regular
Other Service Income To record submission of report to Agency SA
8. Refund of Cash Advance Book of IA
To record the issuance of official receipt for the refund of Land Improvements, Reforestation
salaries Due from National Government Agency (IA)
Cash –Collecting officer Book of SA
Advances for Payroll Due to National Government Agency (SA)
To record the issuance of official receipt for the refund of Land Improvements, Reforestation
travel expense 10. Dishonored Checks
Cash – Collecting Officer To record dishonored checks
Advances to Officers and Employees Book of Agency
To record remittance to Bureau of Treasury Other Receivables
Book of Agency Other Service Income
*If granted during the current year
Subsidy from National Government Book of BoT
Cash – Collecting officer Other Service Income
*If granted in prior year Cash in Bank – LC, Current Acct.
Accumulated Surplus/Deficit To record the collection of receivable (dishonored
Cash – Collecting officer checks)
Book of BoT Cash – Collecting officer
Cash in Bank – LC, Savings Acct. Other Receivables
Other Service Income To record remittance/re-deposited dishonored check
 Book of Agency Cash – MDS, Regular
Other Service Income Due from National Government Agency (BoT)
Cash – Collecting officer Book of BoT
Book of BoT Due to National Government Agency
Cash in Bank – LC, Current Acct. Cash in Bank – LC, Savings Acct.
Other Service Income To record the release of performance bond upon
completion of the project
11. Performance Bonds Guaranty/ Security Deposits Payable
*In the form of cash or certified check Cash – MDS, Regular
To record the receipt of performance bond *In the form of surety bonds
Cash – Collecting officer To record the receipt performance bond
Guaranty/ Security Deposits Payable Guaranty Deposits
To record remittance to the Bureau of Treasury Guaranty/ Security Deposits Payable
Book of Agency To record the release of performance bond upon
Due from National Government Agency (BoT) completion of the project
Cash – Collecting officer Guaranty/ Security Deposits Payable
Book of BoT Guaranty Deposits
Cash in Bank – LC, Savings Acct.
Due to National Government Agency
To record receipt of NCA for the release of performance
bond
Book of Agency