ACC11 – ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ENTITIES

PART I – True or False

1. Taxes are regarded as next only to foreign borrowing in terms of main source of funds of the
government. (F)
2. Government accounting focuses more on stewardship and accountability over government funds
and resources. (T)
3. The principles found in the GAM for NGAs are totally different and independent from the Philippine
Financial Reporting standards or PFRS. (F)
4. A Government asset may not be necessarily owned and controlled. (F)
5. To align our Government accounting with International standards, the Philippine Public Sector
Accounting Standards (PPSAS) was developed in harmony with the International Public Sector
Accounting Standards (IPSAS). (T)
6. Through responsibility accounting, Government Agency managers and heads are evaluated in
terms of the respective areas that they have direct and full control. Accordingly, departures from
budgets are directly attributable to their roles and performances. (T)
7. As a matter of correct procedure, Government agencies commences to incur obligations only after
allotments are received. (T)
8. The other term for “Appropriations” is “Obligational Authority” (T)
9. The Department of Budget and Management has the authority to reject or cut budgets as initially
submitted to them by the Government Agencies. (T)
10. Budget deliberations in the House of the Representatives immediately commences upon the DBM’s
approval of the proposed Government Agency budgets (F)
11. The responsibility over the fair presentation of any Agency’s financial statements rests jointly with
the agency’s management and the Commission on Audit. (F)
12. Among the main objectives of the General-Purpose Financial Statements (GPFSs) is to reveal the
Agency’s accountability over the resources entrusted to it. (T)
13. In the preparation of their financial reports, the agencies are allowed to depart from complying with
the Philippine Public Sector Accounting Standards (PPSAS), if such departure would provide a
more faithful presentation of their financial statements. (T)
14. There are six (6) components comprising the General-Purpose Financial Statements for
Government Agencies. (T)
15. Government Agency’s financial statements shall be presented at least annually. (T)
16. The Notice of Cash Allocations (NCA) is an authority issued by the Commission on Audit to the
different Government Agencies to cover for their respective cash requirements (F)
17. Different fund clusters should be accounted for and maintained in separate books accordingly. (T)
18. The Registry of Appropriations and Allotments or RAPAL shall be maintained by the NGAs to
monitor and ensure that the agency’s disbursements should not exceed their obligations. (F)
19. The Registry of Allotments, Obligations and Disbursements or RAOD shall serve as a control
document to ensure that the agency’s allotments should not exceed its appropriations. (F)
20. The obligations incurred in relation to an agency personnel’s gasoline allowance as part of his
contractual employment benefits can be recorded in the RAOD under Personnel Services. (T)
21. Transaction costs on financial assets classified under the held to maturity category are normally
capitalized. (T)
22. Under the GAM for NGAs, the Department of Health (DOH) in accounting for its medical inventories
may use the Perpetual Inventory System and with the First-In-First Out method on costing
inventories (F)
23. Agricultural produce is measured at fair value less cost to sell at the point of harvest (T)
24. Government assets classified under Investment properties are not subject to depreciation. (F)
25. Heritage assets acquired from non-exchange transactions are initially measured at fair value. (T)
26. The Statement of Financial Position shows the entity’s financial condition for a period covering the
fiscal year. (F)
27. Entity A has a prior period correction of error concerning a significant expense that was not
recorded. Such adjustment would normally be reported in the Statement of Net Assets/Equity. (T)
28. The indirect method of presenting cash flows from operating activities is not allowed for
Government entities. (T)
29. The Statement of Comparison of Budgets and Actual Amounts (SCBAA) shows the variances
between budgeted and actual results for a reporting period. (T)
30. Fair presentation of the financial statements means the faithful representation of the effects of
transactions and other events in accordance with PPSAS. (T)
31. The most common mode of disbursements for Government entities are through checks. (T)
32. Obligations recorded in the registries but not yet recorded in the agency’s accounting books are
referred to as “Not yet due and demandable” (T)
33. Obligations from a business entity standpoint is another term for liability which may not be the case
from a Government entity standpoint. (T)
34. The Commission on Audit releases the allotment to those eligible Government agencies having
authorized appropriations. (F)
35. The receipt of allotment for a Government agency would mean updating both the RAPAL and
RAOD registry documents. (T)

PART II – Multiple Choice

36. This is the agency of the Government tasked to safekeep all the transaction records and documents
along with the general accounts.
a. Department of Finance
b. National Government Agencies
c. Commission on Audit
d. Department of Budget and Management
e. House of Representatives
37. The following are among the objectives of the GAM for NGAs, except for:
a. To harmonize government accounting standards with the international standards
b. To update the coding structure and accounts
c. To update accounting books, registries, forms, records and financial statements
d. To update government accounting standards to be following and consistent with the
provisions of the US GAAP.
38. Which among the following is among the responsibilities of the Department of Budget and
Management (DBM)
a. Central repository of National funds and managing and controlling the disbursements
thereof.
b. Directly implementing the projects of the National Government.
c. Formulation and implementation of the National Budget.
d. Promulgating accounting and auditing rules and regulations.
e. None of the above
39. This is regarded as the title of the revised government accounting system for National Government
Agencies which took effect in January 1, 2016.
a. National Government Accounting Manual
b. Philippine Government Accounting System
c. New Government Accounting System
d. Government Accounting Manual
e. Philippine Public Sector Accounting Standards
40. Among the following are sources of revenue for the National Government, except for:
a. Grants, gifts and donations from other Governments
b. Contract price on Government contracts awarded to private companies.
c. Taxes, fines and penalties
d. Service fees collected by government agencies
e. None of the above
41. This is the budget process characterized by the issuance of a budget call by the Department of
Budget and Management.
a. Budget Announcement
b. Budget Preparation
c. Budget Legislation
d. Budget Execution
e. None of the above
42. It refers to the dispensation by the Department of Budget and Management to the different
Government Agencies to enter into contracts and incur obligations.
a. Allocation
b. Allotment
c. Appropriation
d. Authorization
e. None of the above
43. It refers to the dispensation by the National Government to the different Government Agencies to
use Government funds subject to the approved amount.
a. Allocation
b. Allotment
c. Appropriation
d. Authorization
e. None of the above
44. It is regarded as the implementation of the National Budget by the different Agencies and
Departments and the release of allotments.
a. Budget Accountability
b. Budget Execution
c. Budget Preparation
 d. Budget Legislation
e. None of the above
45. It is regarded as the process of enacting the appropriation bill into law.
a. Budget Preparation
b. Budget Legislation
c. Budget Execution
d. Budget Accountability
e. None of the above
46. The following are among the components of a complete set of General-Purpose Financial
Statements, except for:
a. Notes to the Financial Statements
b. Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
c. Statement of Comparison of Budget and Actual Amounts
d. Statement of Changes in Net Assets/Equity
e. Statement of Cash Flows
47. Which of the following is most likely applicable to a Government entity but not to a business entity?
a. Presenting a Statement of Financial Position in a detailed format.
b. Presenting cash flows from operating activities using the direct method.
c. Presenting additional disclosures in the Notes when expenses are presented in the
Statement of Financial Performance by function.
d. Presenting a Statement of Financial Position showing distinctions between current and
non-current assets and liabilities.
e. None of the Above
48. As required by the GAM for NGAs, which among the following methods of presenting cash flows
from (used in) operating activities in the Statements of Cash Flows is allowed?
a. Direct method
b. Indirect method
c. A or B
d. Neither A nor B
49. The Department of Public Works and Highways (DPWH) presents their payments for the purchase
of an earth-moving equipment (to be used in their road maintenance projects) in the Statement of
Cash Flows as:
a. Under operating activities
b. Under investing activities
c. Under financing activities
d. Under Notes to the Financial Statements
50. The Department of Education (DepEd) receives its Notice of Cash Allocation from the DBM. This
event is least likely to be reported in which of the following financial statements of the agency.
a. Statement of Financial Position
b. Statement of Financial Performance
c. Statement of Cash Flows
d. Notes to the Financial Statements
51. The variety of registries kept by Government entities are technically considered as:
a. Safekeeping registries
b. Journals
c. Budget records
d. Books of accounts
e. Ledgers
52. The budget for maternity benefits of teachers from the Department of Education will be most likely
recorded in the RAOD under:
a. Personnel Services (PS)
b. Maintenance and Other Operating Expenses (MOOE)
c. Financial Expenses (FE)
d. Capital Outlays (CO)
53. The budget for interests on borrowings concerning the Government’s borrowed funds in its battle
against the COVID 19 pandemic shall be recorded in the RAOD under:
a. Personnel Services (PS)
b. Maintenance and Other Operating Expenses (MOOE)
c. Financial Expenses (FE)
d. Capital Outlays (CO)
54. An agency’s receipt of appropriation shall be recorded in the
a. RAOD
b. RAPAL
c. ORS
d. A and B
55. As per the Revised Chart of Accounts issued by the Commission on Audit, the “Subsidy from
National Government” account is a(an).
 a. Asset account
b. Liability account
c. Revenue account
d. Equity account
56. The Department of Tourism (DOT) self-constructed an Investment Property amounting to P11.2
million in 2020. The journal entry to recognize this based on the Certificate of Project Acceptance
would be?
a. Debit: Guarantee Deposit Payable P1,120,000, Debit: Investment Property Building
P10,080,000 and Credit: Construction in Progress-Building P11,200,000
b. Debit: Investment Property Building P11,200,000, Credit: Construction in Progress-
Building P10,080,000, Credit: Guarantee/Security Deposit P1,120,000
c. Progress Billings P11,200,000 and Credit: Construction in Progress-Building
P11,200,000
d. Investment Property-Building P11,200,000 and Credit: Construction in Progress-Building
P11,200,000
57. The Department of Agriculture (DAR) purchased an agricultural machine on account at P200,000,
with credit terms of 2/10, n/30. What is the journal entry to record the purchase of machine on
account?
a. Debit: Agricultural and Forestry Equipment P200,000 and Credit Accounts Payable
P200,000
b. Debit: Agricultural and Forestry Equipment P196,000 and Credit Accounts Payable
P196,000
c. Debit: Property Plant and Equipment P200,000 and Credit Accounts Payable P200,000
d. Debit: Property Plant and Equipment P196,000 and Credit Accounts Payable P196,000
58. The Department of Finance (DOF) purchases a photocopying machine for cash with the following
details:
Invoice price P45,000
Delivery cost 3,000
Installation cost 1,500
Test run costs 1,000
Less: Withholding Tax 3,140
Net Amount P47,360

What is the journal entry to record the purchase of this photocopying machine?
a. Debit: Office Equipment P50,500 and Credit: Due to BIR P3,140 and Credit: Cash-
Treasury/Deposit Regular P 47,360
b. Debit: Office Equipment P50,500 and Credit: Due to BIR P3,140 and Credit: Cash-MDS
Regular P 47,360
c. Debit: Office Equipment P50,500 and Credit: Due to BIR P3,140 and Credit: Cash-
Disbursing Officer P 47,360
d. Debit: Office Equipment P50,500 and Credit: Due to BIR P3,140 and Credit: Cash in
Bank-Local Currency P 47,360
59. Agency A is authorized to print accounting manuals for sale to other NGAs. Assume that on Oct.
24, 2020, Agency A sold accounting manuals on account with a list price of P100,000 less trade
discounts of 10%, 10% and 5%. How much is the invoice price of the merchandise?
a. P100,000
b. P90,000
c. P76,950
d. P75,000
60. Entity A purchased a land for capital appreciation at a cash price of P1,000,000. Professional fees
and transfer taxes totaling P50,000 were also paid. The journal entry includes:
a. Debit: Investment Property P1,000,000
b. Debit: Professional fees and Transfer Taxes P50,000
c. Credit: Cash-MDS, Regular P1,050,000
d. Credit: Cash-Disbursing Officer P1,050,000
61. Which among the following cash flows is presented in the financing activities section of a Statement
of Cash flows?
a. Lease payments under an operating lease
b. Lease payments under a finance lease
c. Receipt of repayment of loan
d. Amortization of a finance lease liability
62. These refer to the set of financial statements intended to meet the needs of users who are not in a
position to demand reports tailored to meet their particular information needs.
a. All-Purpose Financial Statements
b. General Purpose Financial Statements
c. Managerial Reports
d. Financial Reports
63. The GAM enumerates the following as among the components of General-Purpose Financial
Statements for NGAs except for:
a. Statement of Financial Position
b. Statement of Financial Performance
c. Statement of Retained Earnings
d. Statement of Cash Flows
e. Statement of Changes in Net Assets/Equity
64. Finance lease payments pertaining to the reduction of the outstanding finance liability are normally
classified in the Statement of Cash Flows as:
a. Financing activities
b. Investing activities
c. Operating activities
d. Not presented
65. Which among the following is regarded as an unusual report included in the General-Purpose
Financial Statements for Government Agencies?
a. Statement of Financial Performance
b. Statement of Appropriations, Allotments, Obligations, Disbursements
c. Statement of Comparison of Budget and Actual Amounts
d. Statement of Cash flows
66. Which of the following results to the recognition, in the books of accounts, of expenses classified as
Personnel Services?
a. Granting of cash advance for payroll
b. Liquidation of payroll fund
c. Issuance of office supplies to end users
d. Set up of payable for payroll
67. The authorization on the Obligation Request and Status to establish the availability of allotment is
under the responsibility of:
a. Head of the Budget Division
b. Chief Accountant
c. Head of the Agency
d. Requisitioning end-user
68. The Chief Accountant of a Government Agency shall charge obligations incurred against available
allotment to ensure that.
a. The Notice of Cash Allocation is sufficient to meet the disbursement needs.
b. There are no unreleased appropriations
c. Obligations don’t exceed the allotments
d. Allotments don’t exceed Obligations
69. The Department of Public Highways (DPWH) acquires an equipment on account and settles the
account by debiting Accounts Payable and crediting Subsidy from National Government. The mode
of disbursement used by them is most likely a(an)
a. Credit Card transaction
b. Advice to Debit Account
c. Cash Disbursement Ceiling
d. Non-Cash Availment Authority
70. It is an authority issued by the Department of Budget and Management (DBM) to central, regional
and provincial offices and operating units to cover their cash requirements.
a. Notice of Cash Allocation (NCA)
b. Tax Remittance Advice (TRA)
c. Cash Disbursement Ceiling (CDC)
d. Non-Cash Availment Authority (NCAA)