REVENUE AND OTHER RECEIPTS

1. At the end of the period, the “Cash-Treasury/Agency Deposit, Regular” account is closed to the
a. Subsidy from National Government account.
b. Accumulated Surplus or Deficit account.
c. Cash-Modified Disbursement System (MDS), Regular account.
d. This account is not closed.

2. Which of the following does not give rise to revenue from assistance or subsidy?
a. Inter-agency Fund Transfer
b. Notice of Cash Allocation
c. Tax Remittance Advice
d. Non-Cash Availment Authority

3. Which of the following is a non-exchange transaction?

a. Collection of taxes
b. Leasing
c. Rendering of legal services
d. Collection of tuition fees

4. The receipt of a performance bond or a security deposit is credited to a

a. cash account
b. liability account
c. revenue account
d. a and c

5. According to P.D. 1445,

a. Amounts received in trust and from business-type activities of the government may be separately recorded.
b. All revenues of an entity shall be retained by the entity and included in its General Fund, unless another law specifically allows otherwise.
c. A collecting officer shall immediately issue a temporary receipt upon collecting a payment of any nature.
d. Where mechanical devices (e.g. electronic official receipt) are used to acknowledge cash receipts, the BIR may approve, upon request,
the exemption from the use of accountable forms.

6. According to the GAM for NGAs, revenue includes only those that are received or receivable by the entity in its own account. Accordingly,
receipts on behalf of another entity are
a. recorded as liability.
b. recognized as revenue.
c. recorded only in the registries but not in the books of accounts.
d. remitted only through the use of the TRA.

7. Government entities and business entities use the same accounting treatment for all of the following except
a. trade discounts allowed to customers.
b. recognizing revenue from royalty agreements.
c. recognizing revenue from dividends.
d. remittance of taxes withheld to the BIR

8. A government entity recognizes revenue from exchange or non-exchange transactions. Which of the following may not give rise to revenue
by a government entity?
a. Receipt of military equipment as donation from a foreign government.
b. Receipt of cash donation from an international organization.
c. Receipt of free trainings and seminars regarding process technology on farming from an international organization.
d. Receipt of a bequest from the king of a foreign realm.

9. All of the following give rise to the recognition of revenue from non-exchange transaction except
a. sale of goods c. fines and penalties
b. taxes d. donation of goods in-kind

10. According to P.D. 1445, all revenues of an entity shall be remitted to the National Treasury and included in the
a. General Fund c. National Fund
b. Special Fund d. Official Fund

11. Remittances of collections to the National Treasury are recorded as a debit to which of the following accounts?
a. Cash – Collecting Officers
b. Cash-Treasury/Agency Deposit, Regular
c. Cash-Modified Disbursement System (MDS), Regular
d. Subsidy from National Government

12. The national government received a foreign grant conditioned on the construction of a public infrastructure. Entity A was chosen as the
implementing agency. When the national government received the grant, the entry in the BTr’s books included a
a. credit to the “Subsidy from National Government” account.
b. debit to the “Cash – Modified Disbursement System (MDS), Regular” account.
c. credit to the “Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas” account.
d. credit to the “Other Deferred Credits” account.

DISBURSEMENTS
1. Which of the following reflects a Non-Cash Availment Authority (NCAA) mode of disbursement?
a. Accounts Payable xxx
Cash-Constructive Income
Remittance xxx
b. Accounts Payable xxx
Cash – Modified Disbursement
System (MDS), Regular xxx
c. Accounts Payable xxx
Subsidy from National Government xxx
 d. None of these.

2. Entity A makes payment through bank transfer. This mode of disbursement is most likely through the use of a(an)
a. MDS check
b. Commercial check
c. Advice to Debit Account
d. Credit Card

3. Which of the following shall certify the availability of allotment before obligations can be incurred and disbursements are made?
a. Budget Officer
b. Head of Agency
c. Chief Accountant
d. COA Auditor

4. Which of the following shall certify the availability of funds and completeness of supporting documents before the Head of Agency or his/her
authorized representative can enter into contracts that obligate the government for the eventual payment of government funds?
a. BTr
b. Budget Officer
c. Chief Accountant
d. COA Auditor, jointly with DBM

5. All Disbursement Vouchers (DVs) or Payroll shall be approved by the

a. Budget Officer
b. Head of Agency
c. Chief Accountant
d. COA Auditor

6. Which of the following is not one of the modes of disbursements by a government entity?
a. check
b. credit card
c. online payment
d. payment through Short Messaging System (SMS)

7. Payments of checks that are chargeable against the Treasury Account are credited to the
a. Modified Disbursement System Checks
b. Commercial Checks
c. Advice to Debit Account
d. Cash-Modified Disbursement System (MDS) account

8. According to the GAM for NGAs, cash disbursements are made through
a. cash advances to authorized personnel
b. direct cash payments by the Head of Agency to the payees
c. direct cash payment by Collecting Officers to payees
d. any of these

9. Which of the following statements regarding the disbursement of government funds is incorrect?
a. No additional cash advance shall be given to any official or employee unless the previous cash advance given to him is first
liquidated.
b. Transfer of cash advance from one officer to another is prohibited.
c. A cash advance shall not be used to encash checks or to liquidate a previous cash advance.
d. Officials and employees authorized to travel shall be granted cash advance to cover traveling expenses. The amount granted shall be
accounted for as “Due to Officers and Employees.”

10. It is an authority issued by an agency’s Central Office to its regional and operating units to cover the latter’s cash requirements.
a. Notice of Cash Allocation (NCA)
b. Tax Remittance Advice (TRA)
c. Cash Disbursement Ceiling (CDC)
d. Notice of Transfer of Allocation (NTA)

11. According to the GAM for NGAS, disbursements for salaries and wages shall be supported by
a. Disbursement vouchers
b. Payroll
c. Petty cash vouchers
d. Official receipts

12. Which of the following government agencies will most likely be able to obtain a disbursement authority in the form of Cash Disbursement
Ceiling (CDC)?
a. BIR
b. DPWH
c. NFA
d. DFA

FINANCIAL STATEMENTS
1. 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?
a. The classification of cash flows according to operating, investing and financing activities.
b. The presentation of cash flows from (used in) investing and financing activities at gross amounts of receipts and disbursements, unless
the conditions for presenting at net amounts are met.
c. The presentation of statement of cash flows in comparative form, with cross-referencing to the notes whenever deemed relevant to
the understanding by users of financial statements.
d. 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.
2. A government entity recognizes the effect of this item in surplus or deficit rather than directly in equity.
a. Receipt of Notice of Cash Allocation
b. Correction of a prior period fraudulent transaction that is discovered in the current year
c. Change in accounting policy
d. The increase in the fair value of an investment that is classified as available-for-sale financial asset

3. Which of the following information is not reported in the statement of changes in net assets/equity?
a. Surplus or deficit for the period
b. Items of revenue and expense that are recognized directly in equity
c. Effects of changes in accounting estimates.
d. The balance of accumulated surpluses or deficits at the beginning of the period and at the reporting date, and the changes during the period.

4. Changes in accounting policies are accounted for

a. using the transitional provision, if any.
b. by retrospective application.
c. by prospective application
d. any of these

5. 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.
a. Basis Differences
b. Permanent Differences
c. Timing Differences
d. Entity Differences

6. The GAM for NGAs requires all of the following information to be displayed prominently and repeatedly on the face of the financial statements,
except
a. Name of the related Registries used
b. The reporting currency
c. The level of rounding-off of amounts
d. Name of fund cluster

7. Which of the following does not lead to the classification of a liability as current?
a. Expected to be settled in the entity’s normal operating cycle.
b. Held primarily for trading.
c. Due to be settled within 12 months after the reporting date.
d. 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.

8. A government entity presents payments for purchases of items of PPE in the statement of cash flows
a. under financing activities.
b. net of withholding taxes.
c. gross of withholding taxes.
d. as footnote disclosure only.

9. 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
a. capital outlays
b. depreciation expense
c. amortization expense
d. employee benefits expense

10. According to the GAM for NGAs, government entities shall present expenses in the statement of financial performance according to the
a. function of those expenses
b. nature of those expenses
c. a or b, as a matter of accounting policy choice
d. neither a nor b

11. According to the GAM for NGAs, the statement of financial position is presented in comparative form and in
a. a condensed format
b. a detailed format
c. a classified format
d. all of these

12. According to the GAM for NGAs, the responsibility over financial statements rests with the entity’s management, particularly the
a. Head of the Entity
b. Head of Finance/Accounting
c. COA Auditor
d. a and b

13. Which of the following is not among the other reports required to be submitted by government entities to the COA?
a. Pre-closing trial balance
b. Schedules showing the regional breakdowns of income and expenses
c. Post-closing trial balance
d. A completed 14-column worksheet in yellow color

14. The effect of which of the following is recognized directly in equity rather than in surplus or deficit
a. correction of current period errors
b. effect of changes in accounting estimates
c. gains or losses on remeasuring available-for-sales financial assets
d. all of these
NON-PROFIT ORGANIZATIONS
1. Which of the following statements is correct?
a. Although the PFRSs are designed to be applied by business entities, they can also be applied by non-profit organizations.
b. The PFRSs are not applicable to non-profit organizations.
c. The financial statements of non-profit entities need not be audited.
d. The preparation of a complete set of financial statements is optional for non-profit organizations.

2. It is an organization that carries out socially desirable needs of the community or its members without the intention of making profit.
a. NPO
b. NFP
c. NCO
d. All of these

3. According to the Preface to International Financial Reporting Standards, non-profit entities

a. may find the IFRSs appropriate
b. are prohibited from using the IFRSs
c. are discouraged from using the IFRSs
d. none of these

4. Which of the following principles used by the business entities is not applicable to non-profit organizations?
a. Accrual basis of accounting
b. Disclosure of earnings per share
c. Going concern
d. Use of fair value measurement

5. The operating activities section of the statement of cash flows of a non-profit entity is prepared using
a. the direct method
b. the indirect method
c. a or b
d. not prepared

6. Which of the following financial statements are prepared by non-profit organizations?

I. Statement of financial position
II. Statement of activities
III. Statement of cash flows
IV. Notes
a. I and II
b. I, III and IV
c. I, II and IV
d. All of these

7. In current practice, the financial reporting for non-profit organizations (choose the incorrect statement)
a. is essentially similar to that of business entities
b. focuses on the reporting entity concept
c. adopts PFRS principles
d. focuses on fund accounting

8. The statement of cash flows of a non-profit entity classifies cash flows into
a. operating, investing, and financing activities
b. program services and support activities
c. unrestricted, temporarily restricted, and permanently restricted
d. direct and indirect

9. Which of the following is not applicable to non-profit entities?

a. The statement of cash flows classifies movement in cash and cash equivalents during the period into operating, investing and financing activities
b. Use of accrual basis of accounting
c. Presenting cash flows from operating activities in the statement of cash flows using either direct or indirect method.
d. Measuring investments in equity securities using the lower of cost and market value.

10. Which of the following is not applicable to non-profit organizations?

a. Accounting for combinations of entities using principles provided under PFRS 3 Business Combinations.
b. Measuring investments in marketable securities at fair value and recognizing changes in fair value as unrealized gains and losses in the statement
of activities.
c. Use of present value techniques for financial assets and financial liabilities.
d. Treating organizations costs as assets to be amortized over a period not exceeding 5 years.

11. Which of the following may appropriately be applied by a non-profit organization when accounting for a lease contract that does not qualify as
donation?
a. SFAS No. 116
b. SFAS No. 117
c. PFRS 16
d. All of these

12. According to SFAS No. 116, restricted contributions received by an NPO are recognized
a. as restricted revenues
b. when the performance of the condition is reasonably certain
c. only in the notes
d. as liabilities
PROBLEM: BASIC RECORDING DRILLS
Instruction: Provide the journal entry to record each of the independent transactions or events below. If no journal entry is needed, state
the registry or other document where the transaction or event is recorded.
1. Receipt of P1,000,000 NCA.
2. Remittance to the BIR of P100,000 taxes withheld.
3. Receipt of P1,000,000 Allotment
4. Receipt of P1,200,000 Appropriation
5. Entering into a purchase contract for future delivery. The contract price is P500,000.
6. Entering into employment contracts worth P200,000.
7. Billing of P250,000 revenue for Affiliation Fees, subsequent collection of P200,000 therefrom, and full remittance of the collection
to the BTr.
8. Reversion of P50,000 unused NCA.
9. Receipt of office equipment purchased on account for P100,000.
10. Payment of accounts payable from purchase of office supplies worth P60,000. Tax withheld amount to P3,000.

Solutions:
1. Journal entry
Date Cash-Modified Disbursement System (MDS), Regular
Subsidy from National Government 1,000,000
To recognize receipt of NCA from DBM 1,000,000
2. Journal entry (in the entity’s books):
Date Cash-Tax Remittance Advice 100,000
Subsidy from National Government 100,000
To recognize the constructive receipt of NCA for TRA
Date Due to BIR 100,000
Cash-Tax Remittance Advice 100,000
To recognize constructive remittance of taxes withheld to the BIR
through TRA
3. Recording in the RAPAL and appropriate Registries of Allotments, Obligations and Disbursements (RAOD) maintained by object
of expenditure.
4. Recording in the Registry of Appropriations and Allotments (RAPAL).
5. Recording in RAOD and Obligation Request and Status (ORS).
6. Recording in RAOD and Obligation Request and Status (ORS).
7. Journal entry:
Date Accounts receivable 250,000
Affiliation Fees 250,000
To recognize billing of income
Date Cash – Collecting Officers 200,000
Accounts Receivable 200,000
To recognize collection of billed income
Date Cash-Treasury/Agency Deposit, Regular 200,000
Cash – Collecting Officers 200,000
To recognize remittance of income to BTr
8. Journal entry:
Date Subsidy from National Government 50,000
Cash-Modified Disbursement System (MDS), Regular 50,000
To recognize reversion of unused NCA
9. Journal entry:
Date Office Equipment 100,000
Accounts Payable 100,000
To recognize delivery of office equipment
10. Journal entry:
Date Accounts Payable 60,000
Due to BIR 3,000
Cash – Modified Disbursement System (MDS), Regular 57,000
To recognize payment of accounts payable