Government Accounting and NPE
Part 1:
i
.
Its main function is the availability and appropriation of funds for public services.
a. Department of Finance.
c. National Budget System.
b. Department of Treasury.
d. Commission on Audit.
ii
Which government body is responsible for the design and preparation of the New
Government Accounting System (NGAS)?
a. Department of Budget and Management.
b. Bureau of Treasury.
c. Commission on Audit.
d. Government Agencies.
.
iii
.
The following are the systems followed in the New Government Accounting System (NGAS),
except
a. Commercial accounting.
c. Responsibility accounting.
b. Double-entry bookkeeping.
d. Fund accounting.
iv
.
This is the basis of accounting under the New Government Accounting System.
a. Modified accrual.
c. Accrual basis.
b. Cash basis.
d. Strict accrual.
.
To provide for responsibility accounting, the New Government Accounting System uses a
standard chart of accounts with
a. Three digits.
c. Five digits.
b. Four digits.
d. Six digits.
v
vi
.
vii
.
viii
.
The financial statements under NGAS include all except
a. Statement of income and expenses.
b. Statement of operations.
c. Balance sheet.
d. Cash flow statement
Under NGAS, which is false regarding purchase of property and supplies?
a. Asset method is followed where purchase is recorded as asset.
b. Depreciation accounting is followed.
c. Purchases are taken up as expense.
d. Corollary entry is not used.
Upon approval and issuance of the Agency Budget Matrix (ABM), the pertinent data on
release for each government agency shall be entered in the Registry of Appropriation and
Allotment (RAPAL) by
a. Department of Budget and Management.
b. Bureau of Treasury.
c. Commission on Audit.
d. Government agencies.
ix
.
Although the agency will not journalize its appropriation end allotments, it shall maintain
four registries for the allotment it receives and for the obligations it incurs. Which of the
following is the registry in the books of the agency?
a. Registry of allotment and obligation.
b. Registry of appropriations and allotments.
c. Registry of notice of cash allocation and replenishment.
d. Registry of allotment and notice of cash allocation.
x
.
As provided in the constitution, no money shall be paid out of the National Treasury except
in pursuance of
a. Budget.
c. Fund.
President's executive order. d.
Appropriation.
b.
Part 2: NPE
1. On 5/5/x5, a donor contributed an equity security having a P500,000 fair value. The
donor stipulated that (a) the NPO may sell the equity security at any time and make
other suitable investments, (b) the P500,000 endowment must remain intact in
perpetuity, and (c) the income and gains may be spent only on diabetes research (no
mention is made regarding the treatment of losses). The equity security had a fair
value of P530,000 at 12/31/x5. (No dividends were received in 20x5.) Which of the
following categories of net assets is impacted at 12/31/x5?
a.
b.
c.
d.
Increase TR net assets by P30,000.
Increase UR net assets by P30,000.
Increase PR net assets by P30,000.
Do not increase any category of net assets by P30,000.
2. On 5/5/x5, a donor contributed an equity security having a P500,000 fair value. The
donor stipulated that (a) the NPO may sell the equity security at any time and make
other suitable investments, (b) the P500,000 endowment must remain intact in
perpetuity, and (c) the income and gains may be spent only on diabetes research (no
mention is made regarding the treatment of losses). The equity security had a fair
value of P530,000 at 12/31/x5 and P480,000 at 12/31/x6. (No dividends were
received in either year.) In early 20x6, a portion of the equity security was sold for
P30,000 cash. The NPO spent P22,000 cash on diabetes research in 20x6. What is
the change in the various categories of net assets for 20x6 as a result of the decline
in the equity security’s market value in 20x6?
a.
b.
c.
d.
e.
Decrease UR net assets by P50,000.
Decrease TR net assets by P50,000.
Decrease TR net assets by P8,000 and UR net assets by P12,000.
Decrease TR net assets by P30,000 and UR net assets by P20,000.
Decrease PR net assets by P30,000 and UR net assets by P20,000.
3. On 5/5/x5, a donor contributed an equity security having a P500,000 fair value. The
donor stipulated that (a) the NPO may sell the equity security at any time and make
other suitable investments, (b) the P500,000 endowment must remain intact in
perpetuity, and (c) the income and gains may be spent only on diabetes research (no
mention is made regarding the treatment of losses). (No dividends were received in
any year.) In early 20x6, a portion of the equity security was sold for P30,000 cash.
The NPO spent P22,000 cash on diabetes research in 20x6. The equity security had a
fair value of P530,000 at 12/31/x5, P480,000 at 12/31/x6, and P555,000 at 12/31/x7.
What is the change in the various categories of net assets for 20x7 as a result of the
increase in the equity security’s market value in 20x7?
a.
b.
c.
d.
Increase UR net assets by P20,000 and TR net assets by P55,000.
Increase TR net assets by P75,000.
Increase PR net assets by P12,000 and TR net assets by P63,000.
Increase PR net assets by P20,000 and TR net assets by P55,000.
e. Increase UR net assets by P12,000 and TR net assets by P63,000.
4. 1A not-for-profit organization receives cash contributions of P1,000,000 that are
donor-restricted for building a new office. As of year-end, P400,000 of these
contributions has been used for building construction. This information is reported as:
a.
P1,000,000 in contribution revenue–permanently restricted on the statement of
activities
b.
P1,000,000 balance in long-term assets on the statement of financial position
c.
P 600,000 balance in current assets on the statement of financial position
d.
P 400,000 in contribution revenue–unrestricted on the statement of activities
5. 2High school students volunteer their time to provide childcare services at the YWCA.
The fair value of their services is estimated to be P5,000. How does the YWCA report
this information in its statement of activities?
a.
Administrative expenses (reduction in unrestricted net assets), P5,000
b.
Direct increase in beginning balance of unrestricted net assets, P5,000
c.
Contribution revenue (increase in unrestricted net assets) and administrative
expenses (decrease in unrestricted net assets), P5,000
d.
The donation of services is not reported
6. In 20x2, a donor makes a documented promise to contribute P1,000,000 to a not-forprofit organization in 20x3. The donor says the contribution may be used for any
purpose, and follows through on her promise in 20x3. How is this donation reported in
the 20x2 and 20x3 financial statements of the not-for-profit organization? Ignore
interest.
a.
b.
c.
d.
20x2:
20x3:
20x2:
20x3:
20x2:
20x3:
20x2:
20x3:
Increase in temporarily restricted net assets for P1,000,000;
Decrease in unrestricted net assets for P1,000,000
Increase in unrestricted net assets for P1,000,000;
Increase in expenses for P1,000,000
Increase in temporarily restricted net assets for P1,000,000;
Decrease in temporarily restricted net assets for P1,000,000
Increase in unrestricted net assets for P1,000,000;
No change in net assets
7. 3A donor contributed P1,000,000 in cash to the ReSA Red Cross in 20x3. The donor
specified that the contribution be held as a permanent endowment, and income from
related investments be used to help victims of typhoon. The ReSA Red Cross invested
the P1,000,000 in securities in 20x3. During 20x4, dividend income of P50,000 was
earned. How did the ReSA Red Cross report this on its 20x4 statement of activities?
a.
P50,000 increase in temporarily restricted net assets
b.
P50,000 increase in temporarily restricted net assets; P50,000 decrease in
temporarily restricted net assets and P50,000 increase in unrestricted net assets
c.
d.
for net assets released from use restrictions
P50,000 increase in permanently restricted net assets
P50,000 increase in unrestricted net assets, P1,000,000 decrease in permanently
restricted net assets
Use the following information to answer questions 8 – 11 below:
The ReSA Relief Foundation (RRF) is a privately funded voluntary health and welfare
organization. Its trial balance at the beginning of 20x4 is as follows:
Cash
Contributions receivable
Investments
Buildings & equipment, net
Accounts payable
Unrestricted net assets
Temporarily restricted net assets
Permanently restricted net assets
Dr (Cr)
P395,000
460,000
200,000
540,000
(160,000)
(680,000)
(415,000)
(340,000)
The following events occurred during 20x4:
1.
Cash contributions of P3,000,000 were received. They consist of:
(a)
P1,500,000 received from the public as general contributions,
(b)
P600,000 received from a grant to support programs to finance higher
education for single parents, and
(c)
P900,000 received as a permanent endowment; this money was invested
in securities, and the donor specified that investment income and gains
and losses are to be used to support RRF’s programs to provide tutoring
in the public schools.
2.
RRF received payments of P50,000 on contribution promises made in previous
years. The present value of these promises increased by P35,000. Additional
documented promises, with a present value of P95,000, were received at the end
of 20x4.
3.
At the end of 20x4, the fair value of RRF’s investments in 1(c) is P920,000.
Investment income on the securities is P25,000, all received in cash. The
investments on hand at the beginning of the year were investment of excess
cash, sold during 20x4 for P210,000.
4.
Expenses for the year were as follows:
Educational programs
P 1,050,000
Financial relief programs
930,000
Administrative
370,000
Fund-raising
65,000
Total
P 2,415,000
These expenses were paid in cash, except for P200,000 still owing on purchased
supplies, salaries, etc., and P40,000 in depreciation on buildings and equipment,
which is included as part of administrative expense. All unpaid bills outstanding
at the beginning of the year were paid in 20x4.
P20,000 of the investment income in 3. above was used for tutoring
expenditures, and P450,000 of the government grant in 1(b) above was used for
financial relief programs. All these expenditures are already included in the
expenses listed above.
8. On RRF’s 2014 statement of activities, the net increase in temporarily restricted net
assets is:
a.
P280,000
b.
P775,000
c.
P210,000
d.
P255,000
9. On RRF’s 20x4 statement of activities, total net assets released from use restrictions are:
a.
P450,000
b.
P520,000
c.
P470,000
d.
P 20,000
10. On RRF’s 20x4 statement of activities, the net change in unrestricted net assets is:
a.
P(395,000)
b.
P(385,000)
c.
P 135,000
d.
P 85,000
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