Government Accounting Review

GOVERNMENT ACCOUNTING Problem 1. The agency received an allotment for DBM of P10,000,000 which is accompanied by with a notice of cash allocation of 90% of the allotment. During the year, the agency incurred an obligation of 90% of the NCA but only 40% of these obligation were paid by the agency. The enty to record the unused NCA is: A. SING

4,860,000 Cash – NT, MDS

B. SING

4,860,000 5,760,000

Cash – NT, MDS C. Cash – NT, MDS SING D. Cash – NT, MDS SING

5,760,000 4,860,000 4,860,000 5,760,000 5,760,000

Problem 2. Performance bonds are required by the agency from contractors/suppliers to ensure their performance of contracts, which may be in the form of cash or certified check or surety. What is the journal entry to record receipt of performance bonds in form of surety? A. Cash – Collecting Officer Performance bonds payable B. Cash – Collecting Officer Guarantee deposits payable C. Guarantee deposits Performance bonds payable D. Performance bonds payable Guarantee deposits Problem 3. On May 5, 2015 Agency DOF transfers cash of P20,000,000 to DPWH for a land beautification project. The project was completed by DPWH on October 3, 2015. What is the entry of Agency DOF to record the completion of the beautification project? A. Land development 20,000,000 Cash – NT, MDS B. Land development 20,000,000 Due from NG – DPWH C. Land development 20,000,000 Cash in bank – check disbursements D. No entry

20,000,000 20,000,000 20,000,000

Problem 4. LTO collected motor vehicles registration fees amounting to P250. These were remitte ti the Bureau of Treasury. To record the remittance by LTO in the National Governement books, the entry would be: A. Cash – NT, MDS Registration fees B. Registration fees 250 Cash – NT, MDS C. Registration fees 250 Cash – Collecting Officer D. Cash – Disbursing Officer 250 Cash – Collecting Officer

250 250 250 250 250

Problem 5. Agency Z have an obligation for equipment per purchase order amounting to P800,000. Subsequently, the agency liquidates the equipment acquired in full. The entry to record this transaction would be (ignore tax implication) A. Memorandum entry in RAOCO B. Accounts Payable 800,000 Cash – NT, MDS C. SING 800,000 Cash – NT, MDS D. Obligation Liquidated 800,000 Cash – NT, MDS

800,000 800,000 800,000

Problem 6. The entry for obligations of stamps P5,000 for replenishment of petty cash fund is: A. Stamps Cash – NT, MDS B. Stamps expense Cash – NT, MDS C. Memo entry – RAOMO D. Petty Cash fund Cash – NT, MDS Problem 7. Agency LOL issued a bill for rent of office space to VIP Holdings, P400,000. The agency is authorized per special provision to use receipts from rentals for their operations. The entry on the Agency bools to record the foregoing transactions would be: A. Memo entry B. Accounts Receivable 400,000 SING 400,000 C. Accounts Receivable 400,000 Rent Income 400,000 D. Cash – Collecting Officer 400,000 Rent Income 400,000 Problem 8. The straight-line method of depreciation shall be used for government property, plant and equipment and a 10% residual value shall be set up. What is the estimated useful life of government buildings that are predominantly wood, mixed wood and concrete, predominantly concrete? A. B. C. D.

15 years, 20 years and 25 years, respectively 5 years, 15 years and 30 years, respectively 10 years, 25 years and 40 years, respectively 10 years, 20 years and 30 years, respectively

Problem 9. The notice of cash allocation from Bureau of Treasury shall be recorded by the government agencies in which of the following books? A. B. C. D.

Regular Agency Books Registry of Notice of Cash Allocation and Replenishments National Government Books Registry of Allotment and Notice of Cash Allocation

Problem 10. Which of the following statements is incorrect?

A. The tax remittance advice is recorded by the agency by crediting SING B. The gross payroll is advanced to a disbursing officer and is recorded by crediting Cash – NT, MDS C. Upon payment of the office equipment on account, Due to BIR account shall be credited for the withholding tax D. The unused NCA is to be reverted to the Bureau of Treasury by crediting the Cash – NT, MDS account Problem 11. Which of the following is incorrect? A. In the construction of building by contract, Advances to Contractor account may be debited when billings are received B. In the construction of building by contract, Construction in Progress account is credited to recognize the Building account C. Issued purchase orded for the office equipment requires only a memo entry in RAOCO D. The agency enters the obligation for bank charges in RAOFE, Cash in Bank – LCCA account is credited in the regular agency books Problem 12. Out of its total appropriation for 2014, Department of Kurap received its allotment broken down as follows: Capital Outlay (CO) Maintenance and Other Operating Expense Personal Services (PS) Financial Expenses Total

20,000,000 10,000,000 5,000,000 1,000,000 36,000,000

The Department of Budget and Management (DBM) issued Notice of Cash Allocation to Department of Kurap in the amount of P20,000,000. Department of Kurap records the allotment by a: A. B. C. D.

Memo entry in the Registry of Allotments and Obligations Memo entry in the general journal Memo entry in the tegistry of Appropriations and Allotment National Clearing Account 36,000,000 Appropration allotted 36,000,000

Problem 13. On December 31, 2014, selected ledger accounts of LGU – Sampernandu shows the following: Total NCA received for the year Total MDS checks issued Prepaid rent (10/1/2014 to 9/30/2015) Public infrastructures (completed)

5,000,000 4,975,000 12,000 2,500,000

A. The adjusting entries at the end of the year will include A. B. C. D.

Debit, SING, P28,000 Credit, Government equity, P34,000 Debit, Rent expense, P3,000 Credit, Construction in Progress – agency assets, P2,500,000

B. The closing entry to revert the unused NCA at the end of the year will include A. B. C. D.

Debit, Cash – NT, MDs, P5,000,000 Credit, Government equity, P4,975,000 Debit, SING, P25,000 Credit, Construction in Progress – agency assets, P2,500,000

Problem 14. The DWPH received capital outlay and Notice of Cash Allocation, net of tax remittance advice, from the DBM in the amount of P10,000,000 and P8,000,000, respectively. Upon approval of the project proposal for the improvement of the administration building, purchase order for materials was issued in the amount of P4,000,000. At the date of delivery, construction materials were inspected and paid in full. Materials of P3,500,000 were issued and used in the construction. Payroll for labor cost in the amount of P1,500,000 less 10% withholding tax was submitted to the administration, and cash advance was granted to special disbursing office for the eventual payment of payroll. Withholding tax payable was remitted to the Bureau of Internal Revenue and upon approval of the accomplishment report by the head of the DPWH, the capital expenditures were taken in the books of DPWH. Which of the following journal entries in the Registry Agency Books of DPWH is correct? A. To record the receipt of the allotment for capital outlay Allotment receivable from DBM 10,000,000 Subsidy income from national government 10,000,000 B. To record obligation of materials purchased Construction in materials inventory 4,000,000 Accounts payable 4,000,000 C. To record the recipt of notice of cash allocation, net of tax remittance advice Cash – NT, MDS 8,000,000 Subsidy income from national government 8,000,000 D. To record payment of construction materials, net of 10% withholding tax Accounts payable 4,000,000 Due to BIR 400,000 Cash – Collecting Officer 3,600,000 Problem 15. The Department of Budget and Management of the Philippine Government conducted a seminar about the New Governement Accounting System. The DBM collected a total amount of P20,000 as seminar fees, which was deposited with Landbank of the Philippines and paid the following expenses of the seminar: Office supplies – P5,000; Rent – P3,000 and Printing and Binding – P1,000. The excess of the amount collected was appropriately remitted to the National Treasury. Which of the following journal entries in the Regular Agency Book of DBM is incorrect? A. To record collection of seminar fees Cash – Collecting Officer 20,000 Seminar fees 20,000 B. To record deposit of collections Cash in Bank – LBP 20,000 Cash – Collecting Officer 20,000 C. To record payment of expenses Office supplies expense 5,000 Rent expense 3,000 Printing and publication expense 1,000 Cash – Collecting Officer 9,000 D. To record closing of accounts in Regular Agency Books to National Government Book Seminar fees 20,000

Office supplies expense Rent expense Printing and publication expense Cash in Bank – LBP

5,000 3,000 1,000 11,000

Problem 16. Based on the memorandum agreement for a reforestation project, DPWH (source agency) made an inter-agency transfer of fund to DENR (implementing agency). DPWH issued check in the amount of P5,000,000 which was previously obligated by DPWH for that purpose. Upon receipt of the check by DENR, it was remitted to the Bureau of Treasury. The corresponding Notice of Cash Allocation (NCA) was requested and received by DENR from the DBM. Accordingly, expenses were paid by DENR and appropriate report for this project was submitted to DPWH. Which of the following journal entries in the Regular Agency Book of DENR is incorrect? A. To record cash transfer from DPWH to DENR Cash – Collecting Officer 5,000,000 Due to Bureau of Treasury 5,000,000 B. To record remittances to the Bureau of Treasury Due from Bureau of Treasury 5,000,000 Cash – Collecting Officer 5,000,000 C. To record receipt of Notice of Cash Allocation Cash – NT, MDS 5,000,000 Due from Bureau of Treasury 5,000,000 D. To record expenditure on reforestation Land Improvement, Reforestation 5,000,000 Cash – NT, MDS 5,000,000 E. To record submission of report to DPWH Due to DPWH 5,000,000 Land Improvement, Reforestation 5,000,000 Problem 17. DSWD received a grant or donation from SM Inc. in the amount of P100,000. DSWD has no specific authority for the use of the grant. DSWD remitted the P100,000 cash to the Bureau of Treasury through the bank. Afterwards, the DSWD preapared and submitted special budget for Street Children Christmas Party to DBM. Upon approval of the special budget for DSWD, the DBM released the Special Allowance Release Order (SARO) in the amount of P100,000. Afterwards, the DBM released the Notice of Cash Allocation to the DSWD. Which of the following journal entries in the national government book or regular agency book of DSWD is incorrect? A. To record the receipt of grant from SM in the National Government Book of DSWD Cash – Collecting Officer 100,000 Income from Donation 100,000 B. To record the remittance to the Bureau of Treasury through the bank in the National Government Book of DSWD Income from Donation 100,000 Cash – Collecting Officer 100,000 C. To record the receipt of SARO from DBM in the Regular Agency Book of DSWD Receivable from DBM 100,000 Subsidy Income from National Government 100,000 D. To record the receipt of Notice of Cash Allocation from DBM in the Regular Agency Book of DSWD Cash – NT, MDS 100,000 Subsidy Income from National Government 100,000