PREPARATION OF GENERAL PURPOSE FINANCIAL STATEMENTS (GPFS)
1. Which of the following is not among the other reports required to be submitted by government entities to the
COA?
A completed 14 column worksheet in yellow paper
2. Statement 1: The condensed statement of financial position presents only the line items.
Statement 2: The detailed statement of financial position presents all the asset, liability and equity accounts in the
RCA.
Both statements are true
3. Which among the following does not require a separate disclosure in the notes to financial statements?
All of these
4. Closing entries ________
Remove the balances from the agency’s temporary accounts
5. The following are responsible for the preparation of financial statements except
Cashier
6. According to the GAM for NGAs, government entities shall present expenses in the statement of financial
performance according to the
Either function or nature of expenses as a matter of accounting policy choice
7. Which of the following is a peculiar general purpose financial statement of government entities?
Statement of Comparison of Budget and Actual Amounts
8. Which of the following is an adjusting event?
Sale of inventories that evidences the correct NRV of inventories at the reporting date
9. Financial statements are free from material error and bias and can be depended on by users to represent faithfully
that which it purports to represent or could reasonably be expected to represent.
Reliability
10. These are financial statements that are required to be prepared at any given period or at a financial reporting
period without closing the books of accounts.
Interim reports
11. Statement 1: According to the GAM for NGAs, government entities shall present financial statements annually.
Statement 2: However, government entities are also required to prepare interim financial statements on quarterly
basis.
Both statements are true
12. The closing of the ‘Cash – Treasury/Agency Deposit, Regular” account to the “Accumulated Surplus (Deficit)”
account is presented in the statement of changes in equity
Under the “Adjustment of net revenue recognized directly in net assets/equity” line item
13. Which of the following is not one of the components of a complete set of general purpose financial statements?
Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
14. Which of the following does not lead to the classification of a liability as a current?
It is cash or a cash equivalent, unless it is restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting date
15. These refer to financial statements intended to meet the needs of users who are not in a position to demand reports
tailored to meet their particular information needs
General Purpose Financial Statements
16. This is also termed as the adjusted trial balance
Pre-closing trial balance
17. Finance lease payments pertaining to the reduction of the outstanding finance lease liability are classified in the
statement of cash flows as
Financing activities
18. According to the GAM for NGAs, the statement of financial position is presented in comparative form and in
All of these
19. The NCA is least likely to be reported in which of the following financial statements?
Statement of financial position
20. A government entity presents payments for purchases of items of PPE in the statement of cash flows
Net of withholding taxes
21. Entity A presents its cash flows from operating activities using the direct method. Entity A holds foreign
currencies. These are appropriately translated to the spot exchange rates at the reporting date. How should entity
A present the translation difference in the statement of cash flows?
As a reconciliation of the cash and cash equivalents at the beginning and end of the period,
presented separately from the operating, investing, and financing activities
22. Statement 1: Government entities present information on other comprehensive income just like business entities.
Statement 2: Under GAM for NGAs, correction of prior period errors is recognized directly in equity.
Only statement 2 is true
23. Statement 1: In the statement of financial position of a government entity, current assets include those held
primarily for trading.
Statement 2: In the statement of financial position of a government entity, current liabilities include those due to
be settled within 18 months after reporting date.
Only statement 1 is true
24. The GAM for NGAs requires all of the following information to be displayed prominently and repeatedly on the
face of the financial statements, except
Name of the related registries used
25. A government entity recognizes the effect of this item in surplus or deficit rather than directly in equity.
Receipt of notice of cash allocation
26. Which among the following are included in the computation of surplus or deficit for a period?
The effect of changes in accounting estimates
27. Additional disclosures shall be made in the notes if an entity presents expenses by
Function
28. A government entity presents payments for purchases of inventories in the statement of cash flows
Net of withholding taxes
29. Changes in accounting policies are accounted for
Any of these
30. Which of the following is an objective of the general purpose financial statements of government entities?
To demonstrate the accountability of the entity for the resources entrusted to it
31. Which of the following is most likely applicable to a government entity but not to a business entity?
Presenting a statement of financial position in a detailed format
32. It serves as the covering letter in transmitting the agency’s financial statements to the COA, DBM, and other
oversight agencies and parties.
Statement of management responsibility
33. According to the GAM for NGAs, the responsibility over financial statements rests with the entity’s management,
particularly the
Head of the entity and head of finance/accounting
34. Amounts in the statement of financial position show
Cumulative balances from the formation of the entity up to the reporting date
35. Statement 1: The statement of comparison of budget and actual amounts shows the variances between actual
results of the current and previous years.
Statement 2: The inclusion of statement of comparison of budget and actual amounts in a complete set of financial
statements of a government entity enhances the transparency of financial reporting of the government.
Only statement 1 is true
36. When an entity presents expenses in the statement of financial performance by function, it shall provide additional
disclosures in the notes that include all of the following except
Capital outlays
37. These differences between the ‘actual amounts on comparable basis’, presented in the statement of comparison of
budget and actual amounts, and amounts presented in the other components of financial statements occur when
the approved budget is prepared on a basis other than the accounting basis.
Basis Differences
38. Which of the following cash flows is presented in the financing activities section of a statement of cash flows?
Amortization of a finance lease liability
39. The statement of financial performance of a government entity differs from the statement of profit or loss of a
business entity in which of the following respects?
The use of the term “surplus or deficit” rather than “profit or loss”
40. Which of the following information is not reported in the statement of changes in net assets/equity?
Effects of changes in accounting estimates
41. Statement 1: Non-adjusting events are never recognized but are always disclosed.
Statement 2: Prior period errors are corrected by retrospective restatement.
Only statement 2 is true
42. Statement 1: The statement of financial position is dated as at the reporting date.
Statement 2: The government entity has the prerogative of choosing either condensed and detailed statement of
financial position.
Only statement 1 is true
43. Statement 1: The statement of changes in net assets/equity shows in comparative form the changes affecting
“Accumulated Surplus/(Deficit)”.
Statement 2: The statement of changes in net assets/equity shows the effects of changes in accounting policies and
corrections of errors.
Both statements are true
44. The effect of which of the following is recognized directly in equity rather than in surplus or deficit?
Gains or losses on remeasuring available-for-sale financial assets
45. Statement 1: The GAM for NGAs requires government entities to present expenses in the statement of financial
performance according to the function of those expenses.
Statement 2: The statement of financial performance is presented in comparative, condensed, and detailed
formats.
Only statement 2 is true
46. The presentation requirements for statement of cash flows of government entities differ from the requirements of
a business entity in which of the following respects?
The presentation of cash flows from (used in) operating activities using the direct method only; the
choice of using the indirect method is not available.
47. The GAM for NGAs requires which of the following methods of presenting cash flows from operating activities
in the statement of cash flows?
Direct method
48. Statement 1: The statement of financial performance of a government entity is the exact equivalent of the
statement of comprehensive income of a business entity.
Statement 2: The statement of financial performance of a government entity is prepared for different fund clusters.
Only statement 2 is true
49. The inclusion of a degree of caution in the exercise of judgments needed in making the estimates required under
conditions of uncertainty, such that assets or revenue are not overstated and liabilities and expenses are not
understated.
Prudence
50. Omission or misstatement of information could influence the decision of users or assessments made on the basis
of the financial statements.
Materiality
51. Statement 1: The objectives of general purpose financial reporting in the public sector should be to provide
information useful for decision making, and to demonstrate the accountability of the entity for the resources
entrusted to it.
Statement 2: Financial statements have a predictive or prospective role, providing information useful in predicting
the level of resources required for continued operations, the resources that maybe generated by continued
operations, and the associated risks and uncertainties.
Both statements are true