Quiz – Overview of Government Accounting Problem 1-1 TRUE or FALSE 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. 2. Taxes are the main source of funds of the government. 3. Other sources of funds of the government include fees, borrowings, and grants from other governments and international bodies. 4. Currently, the financial reporting of government entities is based on NGAS. 5. The principles 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. 6. The principles in the GAM for NGAs are similar to the principles in the PFRSs. 7. The GAM for NGAs is promulgated by the Philippine Congress under the authority conferred to it under the Philippine Constitution. 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. 9. The GAM for NGAs is promulgated primarily to harmonize government accounting standards with the U.S. GAAP. 10. An item is recognized as an asset if it meets both the “probable future economic benefits” and “reliable measurement” criteria, regardless of whether the item is a resource controlled arising from past events. Answer Key: PROBLEM 1-1: TRUE OR FALSE 1. TRUE 2. TRUE 3. TRUE 4. FALSE 5. FALSE 6. TRUE 7. FALSE 8. TRUE 9. FALSE 10. FALSE Quiz – The Budget Process Problem 2-1 TRUE or FALSE 1. 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. 2. 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. 3. After the budget call from the DBM, the proposed budget of various agencies are submitted immediately to the Office of the President for review. 4. An entity can incur obligations after receiving notice of its appropriation but before receiving the allotment. 5. Budget deliberations in the Congress start in the House of Senate. 6. A government entity must first receive an allotment before it can incur obligations. 7. A government entity can make disbursements even before it receives a disbursement authority. 8. Appropriation is also called obligational authority. 9. 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. 10. 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 Key: PROBLEM 2-1: TRUE OR FALSE 1. FALSE 2. FALSE 3. FALSE 4. FALSE 5. FALSE 6. TRUE 7. FALSE 8. FALSE 9. TRUE 10. TRUE Quiz – The Government Accounting Process Problem 3-1 TRUE or FALSE 1. Technically, only the Journals and Ledgers are considered accounting records; the Registries are budget records. 2. Separate accounting records and budget registries are maintained for each fund cluster 3. Government entities and business entities use the term “obligation” or the phrase “incurrence of obligation” similarly. 4. The various registries maintained by government entities primarily serve as internal control for controlling and monitoring he conformance of actual results with the approved budget. 5. A check disbursement is normally recorded as a credit to the Cash-Modified disbursement system, regular account 6. 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. 7. At the end of each year, an adjustment is made to revert any unused NCA of a government entity. 8. The GAM for NGAs require the Collecting Officer to issue an official receipt to acknowledge the receipt of the Notice of Cash Allocation. 9. 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. 10. The remittance of amounts withheld to the other government agencies, such as the BIR,BOC, GSIS, Philhealth and Pag-ibig is done through the TRA. Answer Key PROBLEM 3-1: TRUE OR FALSE 1. TRUE 2. TRUE 3. FALSE 4. TRUE 5. TRUE 6. TRUE 7. TRUE 8. FALSE 9. TRUE 10. FALSE Quiz – Revenues and Other Receipts Problem 4-1 TRUE or FALSE 1. All revenues shall be remitted to the BTr and included in the special fund, unless another law specifically requires otherwise. 2. Payments to government entities in the form of checks are not allowed. 3. Revenues of a government entity arise from exchange transactions only. 4. According to the GAM for NGAs, revenue from exchange transactions are measured at the amount of cash received. 5. When cash flows are deferred, the fair value of the consideration receivable is its present value. 6. The constructive remittance of taxes withheld through the TRA gives rise to the recognition of revenue. 7. According to the GAM for NGAs, the receipt of concessionary loans by government entities may give rise to revenue recognition. 8. The taxable event for income tax is the passage of time period for which the tax is levied. 9. Taxes are compulsory payments, imposed on persons, properties or activities, intended to provide revenue to the government. Taxes include fees, fines and penalties. 10. The main source of revenue for the government is taxes. Answer Key PROBLEM 4-1: TRUE OR FALSE 1. FALSE 2. FALSE 3. FALSE 4. FALSE 5. TRUE 6. TRUE 7. TRUE 8. FALSE 9. FALSE 10. TRUE Quiz – Disbursements Problem 5-1 TRUE or FALSE 1. No additional cash advance shall be given to any official or employee unless the previous cash advance given to him is first liquidated. 2. All disbursements require prior certifications to establish their validity and legality. A certification for fictitious obligation is void and results to criminal liability by the certifying officials. 3. 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). 4. All disbursements shall be made through Disbursement Vouchers (DVs) or Payroll which are approved by the Head of the Requisitioning Unit. 5. Government entities are not allowed by law to make purchases using credit card. 6. The Non-Cash Availment Authority (NCAA) is a disbursement authority issued to government agencies with foreign service posts. 7. 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. 8. Disbursements through the Cash Disbursement Ceiling (CDC) results to the recognition of a loan payable in the books of accounts of the BTr. 9. 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. 10. The only valid modes of disbursement for a government entity are through cash or check. Answer Key PROBLEM 5-1: TRUE OR FALSE 1. TRUE 2. TRUE 3. FALSE - NCAA 4. FALSE 5. FALSE 6. FALSE - CDC 7. FALSE 8. FALSE - NCAA 9. TRUE 10. FALSE Quiz – Financial Assets Problem 5-1 TRUE or FALSE 1. According to the GAM for NGAs, all financial assets are initially measured at fair value. 2. According to the GAM for NGAs, government entities shall prepare bank reconciliations only at year-end or whenever the need arise. 3. Only debt instruments with remaining maturity of 3 months or less can qualify as cash equivalents. 4. The PCF of a government entity is replenished when disbursements reach at least 90% or as needed. 5. No journal entry is prepared when a disbursement is made out of the petty cash fund. 6. A government entity established a P30,000 petty cash fund. The custodian must be bonded for at least P5,000. 7. According to the GAM for NGAs, all financial assets shall be initially measured at fair value plus transaction costs. 8. Transaction costs on financial assets classified under the held to maturity category are expensed outright. 9. A derivative derives its value from the changes in value of a specified rate, price, event or some other variable. 10. Risk management is the process of identifying the desired level of risk, identifying the actual level of risk and altering the latter to equal the former. Answer Key PROBLEM 6-1: TRUE OR FALSE 1. FALSE 2. FALSE 3. FALSE 4. FALSE 5. TRUE 6. FALSE – the bond coverage shall not be less than the cash accountability. 7. FALSE 8. FALSE 9. TRUE 10. TRUE
