Nature and Scope of NGAS - 5

Accounting for Budgetary Accounts - 8

The New Standard Chart of Accounts - 5
Accounting for Disbursements and Related Transactions - 6
Accounting for Income, Collections, and Related Transactions - 7
Government Financial Reports - 8
Accounting for Non-for-Profit Organizations - 31

1. I. The Governmental Accounting Standards Board sets financial reporting standards for
all units of government: federal, state, and local.
II. Fund accounting exists primarily to provide assurance that resources are used
according to legal or donor restrictions.
A. Both statements are true.
B. Only statement I is true.
C. Only statement II is true.
D. Both statements are false.

2. I. Governmental-type activities fund statements must use an accrual basis when

preparing government-wide financial statements.
II. Under the accrual basis of accounting, revenues are recognized when measurable
and available to finance expenditures of the current period.
A. Both statements are true.
B. Only statement I is true.
C. Only statement II is true.
D. Both statements are false.

3. I. The Financial Accounting Standards Board and the Governmental Accounting

Standards Board are parallel bodies under the oversight of the Financial Accounting
Foundation.
II. The only objective of the Governmental Accounting Standards Board is to help users
determine compliance with finance-related laws, rules, and regulations.
A. Both statements are true.
B. Only statement I is true.
C. Only statement II is true.
D. Both statements are false

4. I. Depreciation on capital assets is included as an expense in the Statement of Activities

in the governmental fund statements.
II. Permanent funds can be either a governmental fund or a fiduciary fund where only
income on donated assets may be spent.
A. Both statements are true.
B. Only statement I is true.
C. Only statement II is true.
D. Both statements are false
5. The following are charged with the government accounting responsibility, except for
A. COA
B. DBM
C. BTr
D. DepEd

6. According to the GAM for NGAs, information has this qualitative characteristic if it can be
used to assist in evaluating past, present, or future events or in confirming or correcting past
evaluations.
A. Feedback value
B. Predictive value
C. Materiality
D. Relevance

7. It is an authorization issued by the DBM to NGAS to incur obligations. It is referred to as

Obligational Authority.
A. Appropriation
B. Allotment
C. Budget Call
D. Budget Hearings

8. Under the Government Accounting Manual (GAM), the financial reporting system of the
Philippine government consists of an accounting system on an accrual basis and a budget
reporting system on a budget basis under the statutory responsibility of the National
Government Agencies (NGAs), Bureau of the 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 a 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 shall maintain Regular Agency (RA) Books and National Government (NG)
Books for the recording of its transactions.
D. Each entity maintains budget registries which are reconciled with the budget records
maintained
by the DBM and the Government Accountancy Sector (GAS), COA.

For items, 9 - 12 refer to the problem.

A legislation approves the allocation of P100B funds to support the operations of Entity A (a
government agency) in the current year. At the start of the first quarter, Entity A receives
authorization to incur obligations for a maximum amount of P45B in that quarter. Entity A
extends half of that authorization to its lower operating units. During the quarter, Entity A
received monthly authorization to disburse funds not to exceed P15B per month. Entity A
extends half of those monthly authorizations to its lower operating units. At the end of the
quarter, total obligations incurred amounted to P40B while total disbursements amounted to
P35B.

9. The allocation of the P100B funds to Entity A is authorized by

A. Department of Budget and Management
B. Commission on Audit
C. Bureau of Treasury
D. Congress

10. The P45B authorization is received by Entity A from

A. Department of Budget and Management
B. Commission on Audit
C. Bureau of Treasury
D. Congress

11. Which of the following best describes the P15B monthly authorizations?
A. Allotment
B. Obligation authority (e.g. Notice of Cash Allocation)
C. Disbursement Authority (e.g., Notice of Cash Allocation)
D. Disbursement Authority (e.g., Notice of Transfer Allocation)

12. The half of the P15B monthly amortizations extended by Entity A (central office) to its lower
operating units is referred to as
A. Cash disbursement ceiling
B. Non-cash Availment Authority
C. Notice of Cash Allocation (NCA)
D. Notice of Transfer of Allocation

13. It is the system of prescribing the procedures for recording appropriations, allotments,
and obligations.
A. Government Accounting
B. Fund accounting
C. Obligation accounting
D. Budgetary accounting

14. All disbursements shall be supported by

A. Disbursement Voucher.
B. Disbursement voucher duly certified and approved and its supporting documents.
C. Checks.
D. Disbursement voucher and its supporting documents.
15. The budget process includes all of the following except
A. Budget Plan
B. Budget Preparation
C. Budget Execution
D. Budget Legislation

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

17. It is the method used by government agencies in recording disbursements when

expenditures apply to more than just the accounting period.
A. Expense method
B. Periodic inventory method
C. Perpetual inventory method
D. Asset method

18. Which of the following is not a form of disbursement authority?

A. Notice of Cash Allocation
B. Notice of Transfer of Allocation
C. Tax Remittance Advice
D. Allotment

19. Which of the following is a form of disbursement authority?

A. Cash Disbursement Ceiling
B. Cash Availment Authority
C. Notice of Transfer of Resources
D. Cash Disbursement Flooring

20. Entity A pays P100,000 accounts payable through ADA. The entry to recognize the payment
of payables to suppliers is
A. Debit Accounts Payable, credit Cash-Modified Disbursement System, Regular.
B. Debit Accounts Payable, credit Cash
C. Debit credit Cash-Modified Disbursement System, Regula, credit accounts payable
D. Answer not given
21. An Entity disburses P20,000 for certain expenses through a cash advance. The entry to
record the grant of cash advances would include
A. A debit to Cash-Modified Disbursement System, Regular of P20,000.
B. A credit to Cash-Modified Disbursement System, Regular of P20,000 .
C. A debit to an expense account of P20,000.
D. A credit to an expense account of P20,000.

22. Which of the following NOT is a mode of disbursement?

A. Check
B. Cashless Payments
C. Cash
D. Lending

23. The receivable accounts in the new standard chart of accounts of the NGAS include all
except
A. Due from national treasury
B. Due from officers and employees
C. Currency swap receivable
D. Interest receivable

24. The general income in the Revised Chart of Accounts per Circular No. 2003-001, includes
A. Gain accounts
B. Local taxes
C. Subsidy income
D. National taxes
25.
26.
27.
28.
29.
30. Which of the following contributed services are not recognized in the financial statements?
A. Contributed services that create nonfinancial assets
B. Contributed services that are performed by persons having specialized skills
C. Contributed services performed by persons not having specialized skills
D. Contributed services that enhance nonfinancial assets

31. Journals and ledgers are the books of accounts of national government agencies. Which of
the following journals shall be used under the new government accounting system?
A. Journals of checks issued
B. General Journal
C. Journal and analysis of obligations
D. Journal of bills rendered

32. The books of accounts are composed of the following:

 A. Journals and general/subsidiary ledgers
B. Regular Agency books and National Government books
C. National Government books and books of original entry
D. Regular Agency books and books of original entry
33.

39. The difference between a nonprofit organization’s annuity funds and life income funds is:
A. The status of each fund in the organization’s investment pool
B. The fixed versus variable amount of payments to recipients
C. Some other differences
D. The nature of the Fund Balance ledger account

40. Any restrictions on gifts, grants, or bequests received by nonprofit organizations are
imposed by
A. Donors
B. Governing boards
C. “Nonprofit Organizations”
D. State laws

41. A nonprofit organization has been receiving free electricity from a local utility. How should
the nonprofit organization account for this?
A. As contributed assets, with a credit to be made to revenues and a debit to be made to
expenses
B. As contributed services, with a credit to be made to revenues and a debit to be made to
expenses
C. As contributed services, with a credit to be made to revenues
D. As contributed assets, with a credit to be made to revenues.

42. All of the following are objectives of NGAS, except

A. Generate periodic and relevant financial reports for better monitoring or performance.
B. Conform to International Accounting Standards
C. Simplify government accounting
D. Comply with the requirements of the International Monetary Board

43. A non-profit organization receives cash of P400,000 and land with a fair value of P1,500,000
to be used at the entity’s discretion. The entry to record the receipt of unrestricted donations
would include
A. A credit to contributions revenue - unrestricted support of P1,900,000
B. A credit to contributions revenue - unrestricted support of P1,500,000
C. A credit to contributions revenue - unrestricted support of P400,000
 D. A credit to contributions revenue - unrestricted support of P1,100,000

For the next four questions, refer to the problem.

On January 1, 20x2, Entity Y, a non-profit organization, receives the following donations:
● Cash of P2,000,000 to be used to acquire a truck. The truck will be used in Entity Y's
outreach programs.
● Investment in equity securities with a fair value of P500,000 to be held indefinitely Only
the investment income shall be used by Entity A in its operations.
On December 31, 20x2, Entity Y acquires a truck for P2,200,000 and receives cash dividends of
P60,000 from the equity securities.

44. How much should Entity Y record as the temporarily restricted donation on January 1, 20x2?
A. P2,000,000
B. P500,000
C. P2,500,000
D. 0

45. How much should Entity Y record as a permanently restricted donation on January 1, 20x2?
A. P2,000,000
B. P500,000
C. P2,500,000
D. 0

46. The entry to record the receipt of the temporarily restricted donation is
A. Debit - cash P2,000,000 and credit - contributions revenue - temporarily restricted
support P2,000,000.
B. Debit - Investment in securities P500,000 and credit - contributions revenue - temporarily
restricted support P500,000.
C. Debit - cash P2,000,000, debit - Investment in securities P500,000, and credit -
contributions revenue - temporarily restricted support P2,500,000.
D. Debit transportation equipment P2,200,000 and credit cash 2,200,000

47. The entry to record the receipt of the permanently restricted donation is
A. Debit - cash P2,000,000 and credit - contributions revenue - temporarily restricted
support P2,000,000.
B. Debit - Investment in securities P500,000 and credit - contributions revenue - temporarily
restricted support P500,000.
C. Debit - cash P2,000,000, debit - Investment in securities P500,000, and credit -
contributions revenue - temporarily restricted support P2,500,000.
D. Debit transportation equipment P2,200,000 and credit cash 2,200,000
48. The Bureau of Treasury received a P50,000 cash remittance from the Department of
Agrarian Reform (DAR) from its miscellaneous income. What is the 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 P50,000, and Credit Cash-Collecting Officer, DA
P50,000.
B. Debit Cash in Bank, Local Bank P50,000, and Credit Savings of DA, Regular P50,000.
C. Debit Cash in Bank, Local Bank P50,000 and Credit Cash-Treasury/Agency Deposit,
Regular P50,000.
D. Debit Cash in Bank, Local Bank P50,000, and Credit Miscellaneous Income of DA
P50,000.

49. Contributions are reported in the statement of activities using all of the following categories
except,
A. Temporarily restricted
B. Unrestricted
C. Permanently restricted
D. Board-restricted

50. Which of the following donated services would not be recognized as contributions in the
statement of activities?
A. Services provided by a CPA (performing audit for free)
B. Services contributed by lay volunteers manning a phone bank
C. Services provided by a lawyer (giving free legal advice)
D. Services provided by a carpenter (repairing facilities for free)

An NPO receives the following during 20x1:

● P120,000 proceeds from sales of calendars, mugs, T-shirts, and other souvenir items.
The fair value of the items sold is P75,000 while the cost is P50,000.
● P1,000,000 to be used only upon the completion of a new facility that is only 30%
complete as of December 31, 20x1. If the facility is not completed by September 2, 20x2,
the cash shall be returned to the donor.
51. How much contribution revenue is recognized from the donations above?
A. P120,000
B. P75,000
C. P45,000
D. P60,000

52.