Gov Acctg Solman Millan PDF

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CHAPTER 1PROBLEM 1-1: TRUE OR FALSETrue 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. True 2. Taxes are the main source of funds of the ...

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CHAPTER 1 PROBLEM 1-1: TRUE OR FALSE True 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. True 2. Taxes are the main source of funds of the government. True 3. Other sources of funds of the government include fees, borrowings, and grants from other governments and international bodies. False 4. Currently, the financial reporting of government entities is based on NGAs. False 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. True 6. The principles in the GAM for NGAs are similar to the principles in the PFRSs. False 7. The GAM for NGAs is promulgated by the Philippine Congress under the authority conferred to it under the Philippine Constitution. True 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. False 9. The GAM for NGAs is promulgated primarily to harmonized government accounting standards with the U.S. GAAP. False 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.

PROBLEM 1-2: 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. PD 1445 State Audit Code of the Philippines b. The Philippine Constitution c. RA 9298 The Philippine Accountancy Act of 2004 d. Philippine Public Sector Accounting Standards 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 disturbances thereof. d. directly implementing the projects of the government. 5. According to the GAM for NGAs, the basis of accounting to be applied 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 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 within 30 days b. Mr. C should immediately notify COA within 30 days c. Mr. C should immediately notify 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 tradeoffs? 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 achieve a proper balance between relevance and reliability, the overriding consideration is a. how users’ needs are best satisfied. b. relevance is always more important that reliability. c. reliability is always more important than relevance. d. greater weight shall be given to relevance compared to reliability.

PROBLEM 1-3: FOR CLASSROOM DISCUSSION 1. How does government accounting differ from the accounting for business entities? a. Government accounting places more emphasis on profit-making. b. Government accounting is very complex that only highly intellectual individuals can understand it. c. Government accounting places greater emphasis on sources and utilization of funds in accordance with the law and management’s stewardship over government resources entrusted to the entity. d. Government accounting is specialized in nature that the principles applicable to business entities are never applicable to government entities. 2. Which of the following is not a source of revenue for the government? a. Taxes b. Fees collected by government agencies c. Grants and donations from other governments d. Contract price on government contracts awarded to private companies. 3. Entity A (a government agency) is entrusted with government resources. According to P.D. 1445, who is directly responsible for the efficient and effective utilization of these resources? a. The government employees who have custody over the resources. b. The Head of Entity A. c. The COA staff stationed in Entity A. d. The Foot of Entity A. 4. which of the following is not charged with government accounting responsibility under the GAM for NGAs? a. COA b. DBM c. NGAs d. House of Representatives 5. The Department of Budget and Management (DBM) is responsible for a. promulgating accounting and auditing rules and regulations. b. the formulation and implementations 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. 6. Which of the following is not one of the objectives of the GAM for NGAs? a. to harmonize government accounting standards with international standards. b. to update the coding structure and accounts. c. to update accounting books, registries, records, forms, reports and financial statements. d. to update government accounting standards to be consistent with the provisions of U.S. GAAP.

7. All of the following are requirements peculiar to a government entity. Which is not? a. Presenting budget information in the financial statements. b. Fund cluster accounting. c. Incorporating budgetary controls in the financial reporting system. d. Accrual basis of accounting. 8. Which of the following qualitative characteristics is improved when information is reported on a timely basis? a. Relevance b. Reliability c. Understandability d. a and b 9. The best estimate for a loss is P100,000. However, the entity deliberately overstated the loss to P200,000. Which of the following qualitative characteristics is violated? a. Prudence b. Reliability c. a and b d. Nothing is violated 10. Which of the following financial statements is peculiar to a government entity? a. Balance Sheet b. Statement of Cash Flows c. Statement of Comparison of Budget and Actual Amounts d. Statement of Changes in Equity

CHAPTER 2 PROBLEM 1-1: TRUE OR FALSE False 1. 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 2. 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 3. After the budget call from the DBM, the proposed budget of various agencies are submitted to the Office of the President for review. False 4. An entity can incur obligations after receiving notice of its appropriation but before receiving the allotment. False 5. Budget deliberations in the Congress start in the House of Senate. True 6. A government entity must first receive an allotment before it can incur obligations. False 7. A government entity can make disbursements even before it receives a disbursement authority. False 8. Appropriation is also called obligational authority. True 9. 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 10. 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 attributed to the managers accountable therefor.

PROBLEM 2-2: MULTIPLE CHOICE 1. Which of the following does not properly described the budget process used in the Philippines? a. Bottom-up budgeting b. Top-down budgeting c. Zero-based budgeting d. Non-incremental budgeting 2. 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 a. V, IV, II, I and III b. V, II, IV, I and III c. II, V, II, I and III d. V, I, II, IV and III

3. 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 a. IV, I, II, V and III b. IV, I V, III and II c. IV, I, V, II and III d. IV, V, I, II and III 4. This type of budget is prepared in such a way that estimated revenues exceed estimated expenditures. a. Balance budget b. Excess budget c. Obligations budget d. Budget meal 5. This summarized 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 year due and demandable. a. Budget Execution Documents (BEDs) b. Special Allotment Release Order c. Statement of Approved Budget, Utilizations, Disbursements and Balances d. Aging of Due and Demandable Obligations 6. It is an authorization issued by the DBM to NGAs to incur obligations. It is also referred to as Obligational Authority. a. Appropriation b. Allotment c. Budget call d. Budget hearings 7. It refers to the amount contracted by a duly authorized administrative officer for which the government is held liable. a. Appropriation b. Allotment c. Obligation d. Disbursement 8. Which of the following best describes the Notice of Cash Allocation (NCA)? a. It is a form of legislative authorization in the allocation of funds for specified purposes. b. It is a form of authorization to a government agency to incur obligations on behalf of the government. c. It is a form of authorization to a government agency to make disbursements out of government funds. d. It is a notice received from the Congress that cash is allocated for the payment of planned expenditures.

9. Disbursements by government entities are most commonly made through a. MDS Checks b. Cash c. Petty Cash Fund d. Credit Card 10. Responsibility accounting requires all of the following except a. separate books of accounts to segregate controllable and non-controllable costs b. identification of responsibility centers c. distinction between controllable and non-controllable costs d. coding structure for responsibility centers

PROBLEM 2-3: MULTIPLE CHOICE 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. 1. The allocation of the P100B funds to Entity A is referred to as a. Allotment b. Appropriation c. Obligation d. Sub-allotment 2. The allocation of the P100B funds to Entity A is authorized by a. Department of Budget and Management (DBM) b. Commission on Audit (COA) c. Bureau of Treasury (BTr) d. Congress 3. The P45B authorization is referred to as a. Allotment b. Appropriation c. Obligation d. Sub-allotment 4. The P45B authorization is received by Entity A from a. DBM b. COA c. BTr d. Congress

5. The half of the P45B authorization extended by Entity A (Central Office) to its lower operating units is referred to as a. Allotment b. Appropriation c. Obligation d. Sub-allotment 6. Which of the following best describes the P15B monthly authorizations? a. Allotment b. Obligation authority (e.g., Notice of Cash Allocation ‘NCA’) c. Disbursement authority (e.g., Notice of Cash Allocation ‘NCA’) d. Disbursement authority (e.g., Notice of Transfer of Allocation ‘NTA’) 7. The P15B monthly authorizations are received by Entity A from a. DBM b. COA c. BTr d. Congress 8. The half of the P15B monthly authorizations 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 (NTA) 9. In Entity A’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and Balances, how much is shown as “unreleased appropriations?” a. P65B b. P60B c. P55B d. P45B 10. In Entity A’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and Balances, how much is shown as “unobligated allotments?” a. P6B b. P5B c. P10B d. P15B 11. In Entity A’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and Balances, how much is shown as “unpaid obligations?” a. P6B b. P5B c. P10B d. P15B

PROBLEM 2-4: FOR CLASSROOM DISCUSSION 1. All disbursements of government entities must be in conformance with the law and the a. National budget b. COA audit findings c. PPSASs d. PFRSs 2. 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 a. zero budgeting b. incremental budgeting c. scratch budgeting d. zero-based budgeting 3. 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 citizenstakeholders participate in the budget preparation. a. bottoms-up budgeting b. zero-based budgeting c. top-down budgeting d. bottom-up budgeting 4. 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 a. II, III, I and IV b. III, I, IV and II c. III, I, II and IV d. III, IV, I and II 5. After deliberation 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 a. Adjudication Conference Committee b. Bicaramel Conference Committee c. Referee Conference Committee d. Bicameral Conference Committee 6. It is the authorization made by a legislative body to allocate funds for purposes specified by the legislative or similar authority. a. Appropriation b. Allotment c. Obligation d. Disbursement

7. 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. a. Automatic Appropriations b. New General Appropriations c. Continuing Appropriations d. Supplemental Appropriations 8. 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 a. II, III, I, and IV b. III, I, IV, and II c. III, I, II, and IV d. III, IV, I, and II 9. This is necessary before government entities can enter into contracts that bind the government for the eventual disbursement of government funds. a. Disbursement authority b. Notice of cash allocation c. Allotment d. Incurrence of obligation 10. Under responsibility accounting, a manager’s performance is evaluated a. based on all resources under his custody. b. only in terms of the costs, or other variables, that he controls. c. on the basis of both controllable and non-controllable costs. d. only at year-end.

CHAPTER 3 PROBLEM 3-1: TRUE OR FALSE True 1. Technically, only the Journals and Ledgers are considered accounting records; the Registries are budget records. True 2. Separate accounting records and budget registries are maintained for each fund cluster. False 3. Government entities and business entities use the term "obligation" or the phrase "incurrence of obligation" similarly. True 4. 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 5. A check disbursement is normally recorded as credit to the "Cash-Modified Disbursement System (MDS) Regular" account. True 6. 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 7. At the end of each year, an adjustment is made to revert any unused NCA of a government entity. False 8. The GAM for NGAs requires the Collecting Officer to issue an official receipt to acknowledge the receipt of the Notice of Cash Allocation. True 9. The entry to record the reversion of unused NCA at the end of the period is the exact opposite of the entry used to record the receipt of NCA. False 10. The remittance of amounts withheld to other government agencies, such as the BIR, BOC, GSIS, PhilHealth, and Pag-IBIG, is done through the TRA.

PROBLEM 3-2: MULTIPLE CHOICE 1. The various r...