CHAPTER 1 SOLMAN

1. Compared to the accounting for business entities, government accounting places greater
emphasis on the sources and utilization of government funds and the management’s
stewardship over government resources.
2. Taxes are the main source of funds of the government.
3. Other sources of funds of the government include fees, borrowings, and grants from other
governments and international bodies.
4. Currently, the financial reporting of government entities is based NGAS.
5. The principles used in the financial reporting of government entities are very unique that only
a very few of these principles are similar to those that are applied to business entities.
6. The principles in the GAM for NGAS are similar to the principles in the PFRSs.
7. The GAM for NGAS is promulgated by the Philippine Congress under the authority conferred
to it under the Philippine Constitution.
8. A unique financial reporting requirement of government entities is the use of fund cluster
accounting. Under fund cluster accounting, separate books and reports are prepared for each
type of fund held by a government entity.
9. The GAM for NGAS is promulgated primarily to harmonize government accounting standards
with the U.S. GAAP.
10. An item is recognized as an asset if it meets both the “probable future economic benefits”
and “reliable measurement” criteria, regardless of whether the item is a resource controlled
arising from past events.
ANSWERS:
1. TRUE 2. TRUE 3. TRUE 4. FALSE 5. FALSE 6. TRUE 7. FALSE 8. TRUE 9. FALSE 10.
FALSE
MULTIPLE CHOICE:
1. Which of the following is a unique requirement of government accounting that is not required
in the accounting for business entities?
a. The use of double entry recording system.
b. The use of single entry recording system.
c. The use of accrual basis of accounting.
d. The presentation of budget information in the financial statements.
2. What is the legal basis of the COA in promulgating the GAM for NGAS?
a. P.D No. 1445, State Audit code of the Philippines
b. The Philippine Constitution
c. R.A. 9298, The Philippine Accountancy Act of 2004
d. Philippine Public Sector Accounting Standards (PPSAS)
3. Which of the following is tasked in keeping the general accounts of the government,
supporting vouchers, and other documents?
a. COA b. DBM c. NGAS d. Congress
4. The Bureau of Treasury (BTR) is responsible for
a. Promulgating accounting and auditing rules and regulations.
b. The formulation and implementation of the national budget with the goal of attaining the
nation’s socio-economic objectives.
c. Receiving and keeping national funds and managing and controlling the disbursements
thereof.
d. Directly implementing the projects of the government.
5. According to the GAM for NGAS, the basis of accounting to be applies by government entities
is the
a. Cash basis b. Accrual basis c. Modified accrual basis d. Any of these as a policy choice
6. Government resources must be utilized efficiently and effectively in accordance with the law.
According to P.D. No. 1445, who is directly responsible in implementing this policy?
a. All employees who are entrusted with the possession of government resources.
b. The head of the government agency.
c. The COA.
d. All elected officials.
7. The transfer of government funds from one officer to another requires the prior authorization
of the
a. Commission on Audit
b. Head of the Agency
c. The President of the Republic of the Philippines
d. Bureau of Treasury
8. Mr. A, a government employee entrusted with the custody of government funds, was
instructed by Mr. B (a politician) to release funds for the acquisition of a car as a birthday gift for
Mr. B’s daughter who will be having her 18th birthday next week. To relieve Mr. A from any
liability, what should Mr. A do?
a. Mr. A shall not release the fund but rather notify Mr. B, in writing, that his instruction is illegal.
b. Mr. A shall release the fund and then notify Mr. B, in writing, that his instruction is illegal.
c. Mr. A shall release the fund but retains 20% commission.
d. Mr. A shall release the fund but requires Mr. B to promise, in writing, that the car shall be
returned to the government after his daughter’s birthday.
9. Mr. C, a government employee entrusted with the custody of government funds, has lost the
government funds entrusted to him in a force majeure. What should Mr. C do to relieve him from
liability?
a. Mr. C should immediately notify the head of Agency after 30 days.
b. Mr. C should immediately notify the COA within 30 days.
c. Mr. C should immediately notify the Bureau of Treasury within 30 days.
d. Mr. C should keep the event a secret and wait for next funds to arrive.
10. These refer to the attributes that make information useful to users a. Usefulness
characteristics b. Quantitative characteristics c. Qualitative characteristics d. Fundamental
principles
11. Information loses this qualitative characteristic if it is not reported on a timely basis.
a. Relevance b. Reliability c. Neutrality d. Materiality
12. Which of the following qualitative characteristics does an entity most likely would need to
make some trade-offs?
a. Faithful representation and substance over form
b. Materiality and relevance
c. Relevance and reliability
d. Understandability and comparability
13. An entity recognizes an estimated loss from the decline in value of a property. Which of the
following is most likely the qualitative characteristic being applied by the entity?
a. Reliability b. Substance over form c. Faithful representation d. Prudence
14. Which of the following is not one of the fund clusters of a government entity?
a. Regular agency fund
b. Foreign Assisted Projects Fund
c. Special Account – Locally funded/domestic grants fund
d. Business related funds
e. Petty cash fund
15. To provide a proper balance between relevance and reliability, the overriding consideration
is
a. How users’ needs are best satisfied.
b. Relevance is always more important than reliability.
c. Reliability is always more important than relevance.
d. Greater weight shall be given to relevance compared to reliability.

CHAPTER 2 SOLMAN
1.Responsibility accounting greatly enhances budget accountability because managers are
evaluated only in terms of the costs or other variables that they control, and therefore, budget
deviations can be readily
True
2.After deliberations in both houses in the Congress are finished, a committee is formed to
harmonize any conflicts between the Representatives and Senate versions of the General
Appropriations Bill. This committee is called the
Bicameral Conference Committee
3.Arrange the following steps according to the sequence that they appear in the budget cycle. I.
Allotment II. Bicameral deliberations III. Budget accountability reports IV. President's enactment
of the GAA V. Budget hearings with the DBM
V, II, IV, I and III
4.Fact pattern: 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 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
receives 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. The P15B monthly authorizations are received by Entity A from
DBM
5.After the budget call from the DBM, the proposed budget of various agencies are submitted
immediately to the Office of the President for review
False
6.This summarizes an agency's fiscal year plans and performance targets. It shows the
agency's physical and financial plan, monthly cash program, estimate of monthly income, and
list of obligations that are not yet due and demandable.
Budget Execution Documents (BEDs)
7.Fact pattern: 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 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
receives 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. Which of the following best describes the $15B monthly authorizations?
Allotment
8.An entity prepares its budget by simply rolling over the budget in the previous year and
adjusting each line item by 10% increment to reflect inflation. This process is described as zero-
based budgeting.
False
9.A government entity can make disbursements even before it receives a disbursement
authority.
False
10.Budget deliberations in the Congress start in the House of Senate
False
11.Fact pattern: 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 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
receives 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. The P45B authorization is received by Entity A from
DBM
12.What is the correct sequence of the following steps in the budget process? I. Budget
Legislation II. Budget Accountability III. Budget Preparation IV. Budget Execution
III, I, IV and II
13.An entity can incur obligations after receiving notice of its appropriation but before receiving
the allotment
False
14.All disbursements of government entities must be in conformance with the law and the
National budget
15.Fact pattern: 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 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
receives 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. In Entity A's first quarter Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances, how much is shown as “unpaid obligations?"
P5B
16.Fact pattern: 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 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
receives 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. The allocation of the P100B funds to Entity A is authorized by
Department of Budget and Management (DBM)
17.It refers to the amount contracted by a duly authorized administrative officer for which the
government is held liable..
Obligation
18.Responsibility accounting requires all of the following except
separate books of accounts to segregate controllable and non-controllable costs
identification of responsibility centers
distinction between controllable and non-controllable costs
coding structure for responsibility centers
19.Fact pattern: 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 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
receives 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. The P45B authorization is referred to as
Allotment
20.It is an authorization issued by the DBM to NGAs to incur obligations. It is also referred to as
Obligational Authority.
Allotment
21.Arrange the following steps according to the sequence that they appear in the budget cycle.
I. Allotment II. Disbursement authority III. Disbursement IV. Appropriation V. Incurrence of
obligation
IV, I, V, II and III
22.This is necessary before government entities can enter into contracts that bind the
government for the eventual disbursement of government funds
Allotment
23.Which of the following does not properly describe the budget process used in the
Philippines?
Non-incremental budgeting
24.Under responsibility accounting, a manager's performance is evaluated
only in terms of the costs, or other variables, that he controls.
25.Fact pattern: 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 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
receives 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. The half of the P45B authorization extended by Entity A (Central Office) to its lower
operating units is referred to as
Sub-allotment
26.A government entity must first receive an allotment before it can incur obligations.
True
27.An entity prepares its budget for the upcoming year from scratch. It scrutinizes each item in
the budget irrespective of whether the item was included in the previous budget. This process is
called
zero-based budgeting
28.Disbursements by government entities are most commonly made through
MDS Checks
29.Which of the following best describes the Notice of Cash Allocation (NCA)?
It is a form of authorization to a government agency to make disbursements out of
government funds.
30.These are the authorizations programmed annually or for some other period prescribed by
law, by virtue of outstanding legislation which does not require periodic action by Congress.
Automatic Appropriations
31.Fact pattern: 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 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
receives 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. The half of the P15B monthly authorizations extended by Entity A (Central Office) to its
lower operating units is referred to as
d. Notice of Transfer of Allocation (NTA)
32.Appropriation is also called obligational authority.
False
33.Under this approach to budgeting, several parties participate in the budget preparation - from
the lowest levels of government to the highest levels, and sometimes even citizen stakeholders
participate in the budget preparation.
bottom-up budgeting
34.The Notice of Cash Allocation (NCA) is an authority issued by the DBM to central, regional
and provincial offices and operating units to cover their cash requirements.
True
35.Fact pattern: 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 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
receives 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. The allocation of the P100B funds to Entity A is referred to as
Appropriation
36.Fact pattern: 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 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
receives 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. In Entity A's first quarter Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances, how much is shown as "unreleased appropriations?"
P55
37.This type of budget is prepared in such a way that estimated revenues exceed estimated
expenditures.
Balanced budget
38.Fact pattern: 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 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
receives 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. In Entity A's first quarter Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances, how much is shown as "unobligated allotments?"
P5B
39.The budget preparation in the Philippines uses a “bottom-up” approach. Under this
approach, the budget preparation starts from the highest levels of the government down to the
lowest levels.
False
40.Entity A, a government entity, wants to make disbursements. Arrange the following events in
the correct sequence before Entity A can make valid disbursements. I. Allotment II.
Disbursement Authority III. Appropriation IV. Incurrence of obligation
III, I, IV, and II

CHAPTER 3 SOLMAN

Q1. A check disbursement is normally recorded as a credit to the “Cash - Modified

Disbursement System (MDS), Regular” account.
True
Q2. According to the GAM for NGAs, the Registries are (choose the incorrect statement)
Maintained by the accounting unit of a government entity
Q3. The receipt of allotment is recorded in the
RAPAL and RAOD
Q4. Which of the following accounts is most likely credited when a government entity remits its
collections to the National Treasury?
Cash - Collecting Officer
Q5. A disbursement authority issued by the DBM to DFA and DOLE to utilize their income
collected/retained by the foreign service posts to cover their operating requirements, but not to
exceed the released allotment to the said post.
CDC
Q6. Both the ORS and RAOD are updated each time an obligation is incurred, a payable is
recorded for the obligation incurred, and disbursements are made to settle the recorded
payables.
 True
Q7. Entity A, a government entity, made disbursements for the travelling expenses of its
personnel. This is classified as
Maintenance and other operating expenses
Q8. The remittance of amount withheld to the other government agencies, such as the BIR,
BOC, GSIS, PhilHealth, and PAG-IBIG is done through the TRA.
False
Q9. The receipt of an allotment is recorded by a government entity in the
RAOD and RAPAL
Q10. Which of the following records is technically not considered an accounting book?
Registry of Appropriations and Allotments
Q11. Which of the following is (are) affected when a government entity makes disbursements to
settle recorded obligations?
All of these
Q12. The entry to record the reversion of unused NCA at the end of the period is the exact
opposite of the entry to record the receipt of NCA.
True
Q13. The various registries maintained by government entities primarily serve as internal control
for controlling and monitoring the conformance of actual results with the approved budget.
True
Q14. According to the RCA, the “Subsidy from National Government” account is a/an
Revenue account
Q15. Expenditures to acquire long-term assets are classified as
Capital outlays
Q16. Which of the following accounts is credited when the government entity remits
contributions to the GSIS, PhilHealth, and PAG-IBIG?
Cash - Modified Disbursement System (MDS), Regular
Q17.
In MNOP’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements
and Balances, how much is shown as “unpaid obligations”?
P2B
Q18. “Advances for Payroll” is a/an
Asset account
Q19. Which of the following is recorded in the ORS?
Entering into employment contracts with employees
Q20. The account “Personal Economic Relief Allowance (PERA)” is a/an
Personnel services account
Q21. This event is recorded in the books of accounts.
Closing entries
Q22. The “Subsidy from National Government” account is debited when recording
Reversion of unused NCA
Q23. The GAM for NGAs requires the Collecting Officer to issue an official receipt to
acknowledge the receipt of the NCA.
False
Q24. The receipt of an appropriation is recorded by a government entity in the
RAPAL
Q25. Which of the following is not a form of disbursement authority?
Allotment
Q26.

The P60B authorization is referred to as

Allotment
Q27. Which of the following accounts is debited when the government entity remits its
collections to the National Treasury?
Cash - Treasury/Agency Deposit, Regular
Q28. Which of the following is charged with the responsibility of keeping the general accounts
and related documents of the government?
Commission on Audit
Q29. Which of the following is credited when a government entity receives the NCA?
Subsidy from National Government
Q30.

In MNOP’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements

and Balances, how much is shown as “unobligated allotments”?
P5B
Q31. Obligation recorded in the registries but not yet in the accounting books are referred to as
Not yet due and demandable
Q32. The entry to record the receipt of NCA by a government entity includes a debit to
Cash-Modified Disbursement System (MDS), Regular

Q33.

In MNOP’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements

and Balances, how much is shown as “unreleased appropriations”?
P180B
Q34. At the end of each year, an adjustment is made to revert any unused NCA of a government
entity.
True
Q35. Both the ORS and RAOD are updated each time an obligation is incurred, a payable is
recorded for the obligation incurred, and disbursements are made to settle the recorded
payable.
True
Q36. The 8-digit Revised Chart of Accounts (RCA) Code for the account “Subsidy from National
Government” starts with number
4
Q37. The receipt of NCA is recorded in the
RANCA
Q38. The 8-digit RCA code for expenses starts with number
5
Q39. Technically, only the Journals and ledgers are considered accounting records and the
Registries are budget records.
True
Q40. The various registries maintained by government entities are technically considered as
Budget records
Q41. A journal entry with a credit to “Cash - Modified Disbursement System (MDS), Regular”
account is recorded in the
Check disbursements journal
Q42. Which of the following accounts is credited when the government entity remits taxes
withheld to BIR?
Cash – Tax Remittance Advice
Q43. Government entities and business entities use the term obligation or the phrase
“incurrence of obligation” similarly.
False
Q44. The incurrence of an obligation for future delivery or performance by the obligee is
recorded by a government in the
RAOD and ORS
Q45. This is used to recognize the constructive remittance of taxes withheld.
TRA
Q46. This type of expenditure pertains to all types of employee benefits.
Personnel services
Q47. Separate accounting records and budget registries are maintained for each fund cluster.
 True
Q48.

The P240B allocation is referred to as

Appropriation
Q49. Which of the following is (are) affected when a government entity incurs obligations?
ORS and RAOD
Q50. The RAOD is maintained by the
Budget division of agencies
Q51. In reference to the government accounting cycle, a government entity can incur obligations
after receiving
Allotment