Govt acctg 1234 - REVIEWERS and sample probs PDF

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REVIEW MATERIAL Which of the following is not an indicator of reliable measurement for an asset? a. Benefits can be expected on the basis of available evidence or logic. b. Valuation method is free from material error or bias. c. Faithful representation of the asset’s benefits. d. Reliable informati...

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REVIEW MATERIAL 1. Which of the following is not an indicator of reliable measurement for an asset? a. Benefits can be expected on the basis of available evidence or logic. b. Valuation method is free from material error or bias. c. Faithful representation of the asset’s benefits. d. Reliable information will, without bias or undue error, faithfully represent those transactions and events. 2. It refers to the disbursement authority issued by the DBM to agencies with foreign operations allowing them to use the income collected by their Foreign Service Posts to cover their operating requirements. a. Notice of Cash Allocation (NCA) b. Tax Remittance Advice (TRA) c. Cash Disbursement Ceiling (CDC) d. Non-Cash Availment Authority (NCAA) 3. Account titles in the Revised Chart of Accounts (RCA) are arranged according to this sequence a. Assets, Equity, Liability, Revenue, and Expenses b. Assets, Liability, Equity, Revenue, and Expenses c. Assets, Expenses, Liability, Equity and Revenue d. In no particular order. 4. Which of the following is an indication of impairment from internal sources? a. Significant changes with an adverse effect on the entity have taken place during the period, or will take place in the near future, in the technological, market, economic, or legal environment in which the entity operates, or in the market to which an asset is dedicated. b. During the period, an asset’s market value has declined significantly more than would be expected as a result of the passage of time or normal use. c. Significant changes with an adverse effect on the entity have taken place during the period, or are expected to take place in the near future, in the extent to which, or the manner in which, an asset is used or is expected to be used. d. Market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable amount materially. 5. Entity A, a government entity, had the following transactions during the period:

 Received Notice of Cash Allocation (NCA) amounting to ₱1,226,618.  Earned total revenue of ₱1,598,000 from billings and collections of unbilled income.  Incurred total expenses of ₱791,652.  Remitted total taxes withheld of ₱87,460 to the BIR through Tax Remittance Advice (TRA).  The “Cash-Modified Disbursement System (MDS), Regular” has an unused bal ance of ₱132,196 at the end of the period. How much is the surplus (deficit) for the period? a. 1,988,230 b. 1,898,230 c. 1,742,320 d. 1,988,320

Revenue 1,598,000 Expenses (791,652) Surplus (Deficit) from operations 806,348 Subsidy from NG (NCA) 1,226,618 Subsidy from NG (TRA) 87,460 Unused NCA (132,196) Net Financial Assistance/Subsidy 1,181,882 Surplus (Deficit) for the period 1,988,23

6. The following accounts with their corresponding balances before closing were taken from the accounting records of an NGA on December 31, 2018: Accumulated Surplus/(Deficit), Beginning Subsidy from National Government Cash-Treasury/Agency Deposit, Regular Travel Tax Immigration Tax Registration Fees Other Service Income Salaries and Wages-Regular PERA Traveling Expenses – Local Office Supplies Expense Water Expenses Security Services

P250,000 600,000 700,000 65,000 225,000 15,000 50,000 160,000 15,000 10,000 8,000 5,000 20,000

What is the balance of the Accumulated Surplus/(Deficit), End to be presented in the Statement of Financial Position as of December 31, 2020? Accumulated Surplus/(Deficit), Beginning Add: Credit to Accumulated Surplus/(Deficit)

250,000 737,000

Less: Debit to Accumulated Surplus/(Deficit) Accumulated Surplus/(Deficit),Ending Travel Tax

(700,000) 287,000

65,000

Immigration Tax

225,000

Registration Fees

15,000

Other Service Income

50,000

Salaries and Wages-Regular

160,000

PERA

15,000

Traveling Expenses – Local

10,000

Office Supplies Expense Water Expenses

8,000 5,000

Security Services Revenue expense summary

20,000 137,000

Add: Subsidy from Government

600,000

Total

737,000 (credit)

Use the following information for the next two questions: At the beginning of Year 1, a government entity acquires an intangible asset for ₱100,000. The intangible asset has a useful life of 10 years. At the end of Year 3, the entity determines an indication of impairment and makes the following estimates: Fair value less costs to sell 60,000 Value in use 50,000 7. How much is the impairment loss? a. 10,000 b. 20,000

c. 30,000 d. 0 A (100,000 x 7/10) – 60,000 = 10,000 8. At the end of Year 6, Entity A determines an indication that the previous impairment may no longer exist and makes the following estimates: Fair value less costs to sell 32,000 Value in use 38,000P a g e | 5 How much is the gain on the reversal impairment loss? a. 3,714 b. 5,714 c. 8,714 d. 0 Recoverable amount (VIU – higher): 38,000 CA had no I.L. been recognized in previous period: (100,000 x 4/10) = 40,000 CA after the I.L: (60,000 x 4/7) 34,286 Gain on reversal of I.L. = (38,000* – 34,286) = 3,714 * Lower than CA had no I.L. been recognized in previous period

9. Entity A leased a new machine to Entity B on January 1, 20x1. The lease expires on January 1, 20x6. The annual rental is ₱90,000. Additionally, on January 1, 20x1, Entity B paid ₱50,000 to Entity A as a lease bonus and ₱25,000 as a security deposit to be refunded

upon expiration of the lease. In Entity A's 20x4 statement of financial performance, the amount of rental revenue should be a. 140,000 b. 125,000 c. 100,000 d. 90,000 C [90,000 + (50,000 ÷ 5 years)] = 100,000

10. On January 1, 20x1, the biological assets of Entity A consist of two 1-year old animals with fair value less costs to sell of ₱1,000 each. The following transactions occurred during the period:  On July 1, 20x1, two 1-year old animals are acquired for ₱1,100 each, equal to the FVLCS on this date.  On October 1, 20x1, two animals are born. The FVLCS of a newborn on this date is ₱500. The FVLCS on December 31, 20x1 are as follows: Age

FVLCS

new born

₱600

3 mos. Old

₱800

1 yr. old

₱1,200

1.5 yr. old

₱1,500

2 yrs. old

₱2,000

How much is the total gain from the change in FVLCS during the period? a. 3,800

b. 4,200 c. 4,400 d. 4,800 Solution: beg. (1,000 x 2) + (1,100 x 2) = 4,200 end. (2,000 x 2) + (1,500 x 2) + (800 x 2) = 8,600 total gain = (8,600 – 4,200) = 4,400...