True or False

Question 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.

Answer 1

TRUE

Question 2

Taxes are the main source of funds of the government.

Answer 2

TRUE

Question 3

Other sources of funds of the government include fees, borrowings, and grants from other governments and international bodies.

Answer 3

TRUE

Question 4

Currently, the financial reporting of government entities is based on NGAs.

Answer 4

FALSE; Based on GAM for NGAs

Question 5

The principle 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.

Answer 5

FALSE; government accounting places greater emphasis on the sources and utilization of government funds and the management’s stewardship over government resources BUT same.

Question 6

The principle in the GAM for NGAs are similar to the principles in the PFRSs.

Answer 6

TRUE

Question 7

The GAM for NGAs is promulgated by the Philippine Congress under the authority conferred to it under the Philippine Constitution.

Answer 7

FALSE; Promulgated by the Commission on Audit

Question 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.

Answer 8

TRUE

Question 9

The GAM for NGAs is promulgated primarily to harmonize government accounting standards with the U.S. GAAP.

Answer 9

FALSE; With the IPSAS (International Public Sector Accounting Standards)

Question 10

An item is recognized as an asset if it means both the “probable future economic benefits” and “reliable measurement” criteria, regardless of whether the item is a resource controlled arising from past events.

Answer 10

FALSE; Liabilities are present obligations of the entity arising from past events…

Question 11

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.

Answer 11

FALSE; Lowest to Highest

Question 12

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.

Answer 12

FALSE; Incremental budgeting

Question 13

After the budget call from the DBM, the proposed budget of various agencies are submitted to the Office of the President for review.

Answer 13

FALSE; The proposed budget of various agencies will defend their budget proposals before the DBM. (Budget Hearing before Presentation to the Office of the President)

Question 14

An entity can incur obligations after receiving notice of its appropriation but before receiving the allotment.

Answer 14

FALSE; Notice of its appropriation and after

Question 15

Budget deliberations in the Congress start in the House of Senate.

Answer 15

FALSE; House of Representatives

Question 16

A government entity must first receive an allotment before it can incur obligations.

Answer 16

TRUE (Appropriation - Allotment - Incurrence of Obligations - Disbursement Authority)

Question 17

A government entity can make disbursements even before it receives a disbursement authority.

Answer 17

FALSE; Only after it receives a Disbursement Authority.

Question 18

Appropriation is also called obligational authority.

Answer 18

FALSE; Allotment

Question 19

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.

Answer 19

TRUE

Question 20

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.

Answer 20

TRUE

Question 21

Technically, only the Journals and Ledgers are considered accounting records; the Registries are budget records.

Answer 21

TRUE

Question 22

Separate accounting records and budget registries are maintained for each fund cluster.

Answer 22

TRUE

Question 23

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

Answer 23

FALSE;

Question 24

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.

Answer 24

TRUE

Question 25

A check disbursement is normally recorded as credit to the “Cash-Modified Disbursement System (MDS) Regular” account.

Answer 25

TRUE

Question 26

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.

Answer 26

TRUE

Question 27

At the end of each year, an adjustment is made to revert any unused NCA of a government entity.

Answer 27

TRUE

Question 28

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

Answer 28

FALSE

Question 29

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.

Answer 29

TRUE

Question 30

The remittance of amounts withheld to other government agencies, such as the BIR, BOC, GSIS, PhilHealth, and Pag-IBIG, is done through the TRA.

Answer 30

FALSE; BIR only.