Quiz 2

Question 1

Heritage assets are measured at cost. However, they are not subsequently depreciates, but subject to impairment.

Answer 1

True

Question 2

The capitalization threshold for items of PPE by government entities is P15,500, which is equal to the cash disbursement limit.

Answer 2

False

Question 3

Reforestation projects cannot be classified as land improvements.

Answer 3

False

Question 4

DWWD’s equipment has a carrying amount of P10 before replacement of an old part. The old part has a carrying amount of P2. The cost of the replacement part is P5. The loss on replacement is P3.

Answer 4

False

Question 5

Government entities record depreciation on an annual basis.

Answer 5

False

Question 6

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 fund/bank transfers.

Answer 6

True

Question 7

Additional cash advance can be given to any official or employee even if the previous cash advance given to him is not yet liquidated to avoid delays of payments.

Answer 7

False

Question 8

All disbursements shall be made through Disbursement Vouchers (DVs) or Payroll which are approved by the Head of the Requisitioning Unit.

Answer 8

False

Question 9

Disbursements through the Cash Disbursement Ceiling (CDC) results to the recognition of a loan payable in the books of accounts of the BTr.

Answer 9

False

Question 10

Infrastructure assets are accounted for in the same manner as the other items of PPE. However, infrastructure assets are generally assigned a residual value of zero.

Answer 10

True

Question 11

Cash or check are not the only valid modes of disbursement for a government entity.

Answer 11

True

Question 12

According to the GAM for NGAs, government entities may choose either the cost model or the revaluation model to subsequently measure their PPE.

Answer 12

True

Question 13

An item of PPE with historical cost of P10, accumulated depreciation of P5 and accumulated impairment losses of P1 is sold for P7. The gain on the sale is P2.

Answer 13

False

Question 14

NGA A acquires an equipment in exchange for another equipment owned by NGA B. The carrying amount of NGA A’s equipment is P10 while its fair value is P9. NGA B’s equipment has a fair value of only P7. However, NGA B pays NGA A P2 for the difference. If the exchange has commerical substance, NGA A will recognize a loss of P1 on the exchange.

Answer 14

True

Question 15

NGA A acquires equipment from a supplier, on account. A lender settles the account of NGA 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).

Answer 15

False

Question 16

All disbursements do not require prior certificates to establish their validity and legality. A certification for obligation itself is void, regardless of origin.

Answer 16

False

Question 17

Government entities are allowed by law to make purchases using credit card.

Answer 17

True

Question 18

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.

Answer 18

False

Question 19

Items below the capitalization threshold of PPE are recognized as Semi-Expandable Property - a separate class of PPE.

Answer 19

False