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Government Accounting > MIDTERM REVIEWER > Flashcards

MIDTERM REVIEWER Flashcards

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1
Q

According to P.D. No. 1445, government personnel entrusted with the custody of government
resources (choose the incorrect statement)
a. are responsible for the safekeeping therefor in accordance with the law.
b. are directly responsible to the head of the agency for the efficient and effective utilization
therefor.
c. are directly responsible to the public for the efficient and effective utilization therefor.
d. must be properly bonde

A

c. are directly responsible to the public for the efficient and effective utilization therefor.

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2
Q

The coverage of the GAM for NGAs includes all of the following, except:

a. basic concepts used in auditing the accounts and financial reports of government entities.
b. basic concepts used in preparing general purpose financial statements in accordance
with the PPSAS.
c. basic concepts used in reporting of budgetary information.
d. basic concepts used in preparing other financial reports as may be required by laws.

A

a. basic concepts used in auditing the accounts and financial reports of government entities.

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3
Q

It refers to the authority issued by an agency’s Central Office to its regional and operating
units to cover the latter’s cash requirements.

a. Notice of Cash Allocation
b. Notice of Transfer of Allocation
c. Non-Cash Availment Authority
d. Cash Disbursement Ceiling

A

b. Notice of Transfer of Allocation

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4
Q

Which of the following statements best describes the various Registries maintained by
government entities?

a. The Registries primarily serve as an internal control for controlling and monitoring the
conformance of actual results with the approved budget.
b. The Registries serve as ledgers to classify the effects of accountable events on the financial
statement elements. This allows the reconciliation of assets, liabilities, equity, revenues
and expenses in the general purpose financial statements of government entities.
c. The Registries support the Journals and Ledgers in a way that they authenticate the
validity and legality of government transactions. This enhances the transparency in the
financial reporting of the government.
d. All of these.

A

a. The Registries primarily serve as an internal control for controlling and monitoring the
conformance of actual results with the approved budget.

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5
Q

According to the PPSAS, a financial asset is recognized when

a. an entity becomes a party to the contractual provisions of the instrument.
b. there is reasonable certainty that the asset will result to inflow of resources embodying
economic benefits to the entity.
c. its cost can be measured with sufficient reliability.
d. c and d

A

a. an entity becomes a party to the contractual provisions of the instrument.

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6
Q

The receipt of Notice of Cash Allocation is recorded in the

a. Books of accounts (Journal and Ledger)
b. Registry of Allotments and Notice of Cash Allocation (RANCA)
c. a and b
d. None of these

A

c. a and b

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7
Q

The receipt of subsidy from the national government or other government agencies

a. gives rise to the recognition of revenue
b. does not give rise to the recognition of revenue
c. gives rise to a liability but not revenue
d. b and c

A

a. gives rise to the recognition of revenue

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8
Q

These refer to fees paid for the use of the entity’s assets such as trademarks, patents,
software, and copyrights.

a. Lease expense
b. Royalties
c. Interest
d. Any of these

A

b. Royalties

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9
Q

Entity A is a government hospital. Entity A would most likely recognize revenue from services
rendered to a patient

a. when the services are rendered and the patient is billed.
b. when the fee is collected.
c. on a straight line basis.
d. by reference to the stage of completion at the reporting date.

A

a. when the services are rendered and the patient is billed.

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10
Q

Which of the following items are classified by a government entity as Inventory Held for
Consumption?

a. Minor tools and equipment costing less than ₱15,000.
b. Raw materials that are consumed in the production process.
c. Office supplies and similar materials.
d. Rice and other welfare goods held for distribution

A

c. Office supplies and similar materials.

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11
Q

Under this inventory system, purchases, sales, and other transactions affecting inventory are
recorded in the “inventory” and “cost of sales” accounts, as appropriate. Moreover, stock
cards and stock ledgers are maintained.

a. Specific identification
b. Periodic inventory system
c. Perpetual inventory system
d. Weighted average

A

c. Perpetual inventory system

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12
Q

This consolidates all issued Requisition and Issue Slips (RIS) for inventories and is used in
updating both the Stock Card and the Stock Ledger Card

a. Report of Supplies and Materials Issued (RSMI)
b. Report on Inventory Subsidiary Ledgers (RISL)
c. Report of Accountability for Accountable Forms
d. Report on the Physical Count of Inventories

A

a. Report of Supplies and Materials Issued (RSMI)

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13
Q

Relief and other welfare goods held for distribution are most likely to be classified by a
government entity as

a. Semi-Expendable Property
b. Inventory Held for Consumption
c. Inventory Held for Distribution
d. None of these

A

c. Inventory Held for Distribution

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14
Q

Entity A, a government entity, records purchases of items of inventory under the “Purchases”
account and freight-in under the “Freight-in” account. Which of the following statements is
correct?

a. Entity A is not compliant with the requirements of GAM for NGAs.
b. Entity A is not compliant with the requirements of GAM for NGAs. This can be rectified
by note disclosure.
c. Entity A is compliant with the requirements of GAM for NGAs, but needs to make a note
disclosure of the accounting policy choice.
d. Entity A uses the periodic inventory system and this is okay. There are no other
requirements from Entity

A

a. Entity A is not compliant with the requirements of GAM for NGAs.

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15
Q

A government entity’s biological asset has fair values less costs to sell of ₱100,000 and
₱120,000 at the beginning and end of the period, respectively. The year-end adjusting entry
will most likely include

a. a debit to unrealized gain of ₱20,000 to be recognized in profit or loss
b. a credit to unrealized gain of ₱20,000 to be recognized in profit or loss
c. a credit to unrealized gain of ₱20,000 to be recognized directly in equity
d. a credit to unrealized gain of ₱20,000 to be recognized in surplus or deficit

A

d. a credit to unrealized gain of ₱20,000 to be recognized in surplus or deficit

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16
Q

Entity A acquires a biological asset for ₱100, equal to fair value, and incurs transaction cost
of ₱10 on the purchase. The costs to sell at the acquisition date are ₱20. Which of the
following statements is correct?

a. Entity A recognizes the purchased asset at ₱100.
b. Entity A recognizes the purchased asset at ₱90.
c. Entity A recognizes a loss of ₱30 on the initial recognition of the purchased asset.
d. Entity A recognizes a gain of ₱20 on the initial recognition of the purchased asset.

A

c. Entity A recognizes a loss of ₱30 on the initial recognition of the purchased asset.

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17
Q

Transactions and events are recognized in the accounting records and recognized in the
financial statements of the periods to which they relate.

a. Time value of money
b. Recognition
c. Accrual basis of accounting
d. Going concern

A

c. Accrual basis of accounting

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18
Q

Entity A, a government entity, maintains a petty cash fund with an established amount of
₱40,000. During the period, Entity A disburses ₱10,000 for office supplies from the petty
cash fund. The entry to record the disbursement is
a. Office Supplies Expense
Petty Cash
10,000
10,000
b. Office Supplies
Petty Cash
10,000
10,000
c. Office Supplies
Cash-Treasury/Agency Deposit, Regular
10,000
10,000
d. Office Supplies Expense
Cash-Modified Disbursement System
(MDS), Regular
10,000
10,000
e. None of these.

A

d. Office Supplies Expense
Cash-Modified Disbursement System
(MDS), Regular
10,000
10,000

19
Q

Which of the following statements is correct?

a. The purchases account is used in a periodic inventory system but not in a perpetual
inventory system.
b. Government entities sometimes record the acquisition of inventories under the purchases
account.
c. The classification of inventories as held for distribution at no charge or at a minimal
charge is not uncommon to business entities.
d. Raw materials and work-in-process inventories are applicable only for business entities

A

a. The purchases account is used in a periodic inventory system but not in a perpetual
inventory system.

20
Q

A government entity records a transaction by debiting an account with a Revised Chart of
Account (RCA) Code that starts with “1” and crediting an account with an RCA Code that
starts with “4.” This transaction is most likely a

a. remittance of collection to the National Treasury.
b. payment of accounts payable.
c. receipt of inter-agency fund transfer.
d. receipt of NCA

A

d. receipt of NCA

21
Q

The GAM for NGAs is promulgated by the COA under the authority conferred to it by the

a. Philippine Accountancy Act
b. Philippine Constitution
c. Philippine Accounting Standards
d. State Audit Code (P.D. No. 1445)

A

b. Philippine Constitution

22
Q

According to the GAM for NGAs, deliberately overstating liabilities is

a. not prohibited under the prudence concept
b. allowed because only the overstatement of assets is not acceptable
c. prohibited based on the concepts of relevance and materiality
d. prohibited based on the concept of faithful representation.

A

d. prohibited based on the concept of faithful representation.

23
Q

It is the expenditure authority derived from appropriation laws, government ordinances, and
other decisions related to the anticipated revenue or receipts for the budgetary period.

a. Approved Budget
b. Notice of Cash Allocation
c. General Appropriations Bill
d. Allotment

A

a. Approved Budget

24
Q

No journal entry is made for a disbursement under this mode of disbursement.

a. LDDAP-ADA
b. CPC
c. eMDS
d. None of these

A

d. None of these

25
Q

The receipt of a disbursement authority in the form of Non-Cash Availment Authority (NCAA)
is debited to which of the following accounts?

a. Subsidy from National Government
b. Cash-Modified Disbursement System (MDS), Regular
c. Accounts Payable
d. Cash-Constructive Income Remittance

A

c. Accounts Payable

26
Q

Which of the following transactions is not recorded through a credit to the “Cash-Modified
Disbursement System (MDS), Regular” account?

a. Reversion of unused NCA at the end of the period.
b. Constructive remittance of taxes withheld to the BIR.
c. Payment of accounts payable wherein the tax portion is withheld.
d. Granting of cash advance for payroll.

A

b. Constructive remittance of taxes withheld to the BIR.

27
Q

This account is credited when government entities remit collections to the National Treasury.

a. Cash-Modified Disbursement System (MDS), Regular
b. Cash-Treasury/Agency Deposit, Regular
c. Cash-Collecting Officers
d. Cash-Tax Remittance Advice

A

c. Cash-Collecting Officers

28
Q

All of the above involves the physical transfer of cash except

a. Remittance of collections of revenue to the National Treasury
b. Remittance of employee contributions to GSIS, Pag-IBIG and PhilHealth
c. Remittance of taxes through the Tax Remittance Advice
d. Remittance of excess cash advance by an officer

A

c. Remittance of taxes through the Tax Remittance Advice

29
Q

The third step in the Budget Preparation phase of the Budget Cycle is

a. President’s Budget
b. Budget Hearings
c. President’s Enactment
d. Budget Call

A

a. President’s Budget

30
Q

Which of the following is not one of the objects of expenditures under the GAM for NGAs?

a. PS
b. MOOE
c. CF
d. All of these are objects of expenditures under the GAM for NGAs.

A

c. CF

31
Q

When does a government entity recognize dividend income?

a. on a time proportion basis that takes into account the effective yield on the asset
b. when earned in accordance with the substance of the relevant agreement
c. when the entity’s right to receive payment is established
d. when the significant risks and rewards are transferred

A

c. when the entity’s right to receive payment is established

32
Q

Government expenditures classified as MOOE are those that

a. pertain to finance costsc. pertain to various operating expenses
b. pertain to all types of employee benefits
c. pertain to various operating expenses other than employee benefits and financial
expenses
d. pertain to capitalizable expenditures

A

c. pertain to various operating expenses other than employee benefits and financial
expenses

33
Q

Which of the following statements is correct?

a. Entity A acquires equipment from a supplier, on account. A lender settles the account of
Entity A by directly paying the supplier the proceeds of a loan payable that is recorded in
the BTr’s books. This transaction is called Cash Disbursement Ceiling (CDC).
b. All disbursements shall be made through Disbursement Vouchers (DVs) or Payroll which
are approved by the Head of the Requisitioning Unit.
c. Government entities are not allowed by law to make purchases using credit card.
d. The Non-Cash Availment Authority (NCAA) is a disbursement authority issued to
government agencies with foreign service posts.
e. No additional cash advance shall be given to any official or employee unless the previous
cash advance given to him is first liquidated.

A

e. No additional cash advance shall be given to any official or employee unless the previous
cash advance given to him is first liquidated.

34
Q

Which of the following statement is incorrect?
a. A check disbursement is normally recorded as a credit to the “Cash-Modified
Disbursement System (MDS), Regular” account.
b. 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.
c. At the end of each year, an adjustment is made to revert any unused NCA of a government
entity.
d. The GAM for NGAs requires the Collecting Officer to issue an official receipt to
acknowledge the receipt of the Notice of Cash Allocation.
e. 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.

A

d. The GAM for NGAs requires the Collecting Officer to issue an official receipt to
acknowledge the receipt of the Notice of Cash Allocation.

35
Q

Which of the following statement is incorrect?

a. Technically, only the Journals and Ledgers are considered accounting records; the
Registries are budget records.
b. Separate accounting records and budget registries are maintained for each fund cluster.
c. Government entities and business entities use the term “obligation” or the phrase
“incurrence of obligation” similarly.
d. 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.

A

c. Government entities and business entities use the term “obligation” or the phrase
“incurrence of obligation” similarly.

36
Q

Which of the following statements is correct?

a. All revenues shall be remitted to the BTr and included in the Special Fund, unless another
law specifically requires otherwise.
b. Payments to government entities in the form of checks are not allowed.
c. Revenues of a government entity arise from exchange transactions only.
d. According to the GAM for NGAs, revenue from exchange transactions are measured at
the amount of cash received.
e. When cash flows are deferred, the fair value of the consideration receivable is its present
value.

A

e. When cash flows are deferred, the fair value of the consideration receivable is its present
value.

37
Q

Which of the following statements is incorrect?

a. The constructive remittance of taxes withheld through the TRA gives rise to the
recognition of revenue.
b. According to the GAM for NGAs, the receipt of concessionary loans by government entities
may give rise to revenue recognition.
c. Taxes are compulsory payments, imposed on persons, properties or activities, intended
to provide revenue to the government. Taxes include fees, fines and penalties.
d. The main source of revenue for the government is taxes.

A

c. Taxes are compulsory payments, imposed on persons, properties or activities, intended
to provide revenue to the government. Taxes include fees, fines and penalties.

38
Q

Arrange the following steps in the budget process 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, II and III
c. IV, I, V, III and II
d. IV, V, I, II and III

A

b. IV, I, V, II and III

39
Q

It is an authorization issued by the DBM to NGAs to incur obligations. It is also referred to
as Obligational Authority.

a. Appropriation
b. Budget call
c. Allotment
d. Budget hearings

A

c. Allotment

40
Q

Which of the following statements is correct?

a. All disbursements require prior certifications to establish their validity and legality. A
certification for fictitious obligation is void and results to civil liability by the certifying
officials, but not criminal liability.
b. According to the GAM for NGAs, the Advice to Debit Account (ADA) mode of disbursement
can be used only if the payee maintains an account in the same bank where the
government entity maintains its account.
c. Disbursements through the Cash Disbursement Ceiling (CDC) results to the recognition
of a loan payable in the books of accounts of the BTr.
d. Under the Advice to Debit Account (ADA) mode of disbursement, payments from a
government entity are directly credited to the bank accounts of the payees through bank
transfers.
e. The only valid modes of disbursement for a government entity are through cash or check.

A

d. Under the Advice to Debit Account (ADA) mode of disbursement, payments from a
government entity are directly credited to the bank accounts of the payees through bank
transfers.

41
Q

Which of the following is recorded in the Obligation Request and Status (ORS)?

a. Receipt of notice of appropriation
b. Receipt of allotment from the DBM
c. Receipt of Notice of Cash Allocation from the DBM
d. Entering into employment contracts with employees

A

d. Entering into employment contracts with employees

42
Q

The receipt of an allotment is recorded by a government entity in the

a. RAOD
b. ORS
c. RAPAL
d. a and c

A

d. a and c

43
Q

The entry to record the receipt of Notice of Cash Allocation (NCA) by a government entity is:

a. (Debit) Cash-Modified Disbursement System (MDS), Regular; (Credit) Accumulated
Surplus (Deficit)
b. (Debit) Cash-Modified Disbursement System (MDS), Regular; (Credit) Subsidy from
National Government
c. (Debit) Cash-Collecting Officer; (Credit) Subsidy from National Government
d. No journal entry. The event is recorded only in the Registries.

A

b. (Debit) Cash-Modified Disbursement System (MDS), Regular; (Credit) Subsidy from
National Government

Government Accounting (4 decks)

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