%. 1 1 (S—,a .", a , h ail •■ • v r • v v • v .v.

arising from past events.

P
ROBLEM 1-2: MULTIPLE CHOICE
1. Which of the following is a unique requirement of government
accounting that is not required in the accounting for business
entities?
a. The use of double-entry recording system.
b. The use of single-entry recording system.
c. The use of accrual basis of accounting.
d. The presentation of budget information in the financial
statements.

2. What is the legal basis of the COA in promulgating the GAM for
NGAs?
a. P.D. No. 1445, State Audit Code of the Philippines
b. The Philippine Constitution
c. R.A. 9298, The Philippine Accountancy Act of 2004
d. Philippine Public Sector Accounting Standards (PPSAS)

3. Which of the following is tasked in keeping the general

accounts of the government, supporting vouchers, and other
documents?
a. COA c. NGAs
b. DBM d. Congress

4. The Bureau of Treasury,(BTR) is responsible for

a. promulgating accounting and auditing rules
regulations.
b. the formulation and implementation of the national
budget with the goal of attaining the nation's
cio-
so economic objectives.

c. receiving and keeping national funds and managing and

controlling the disbursements thereof.
d. directly implementing the projects of the government.

According to the GAM for NGAs, the basis of accounting to

applied by government entities is the
a. Cash basis c. Modified accrual basis
b. Accrual basis d. Any of these as a policy choice

t. Government resources must be utilized efficiently ani

effectively in accordance with the law. According to P.D. No.
1445, who is directly responsible in implementing this policy?
 a. All employees who are entrusted with the possession of
government resources.
b. The head of the government agency.
c. The COA.
d. All elected officials.

7. The transfer of government funds from one officer to another

requires the prior authorization of the
a. Commission on Audit
b. Head of the Agency
c. The President of the Republic of the Philippines
d. Bureau of Treasury

8. Mr. A, a government employee entrusted with the custody of

government funds, was instructed by Mr. B (a politician) to
release funds for the acquisition of a car as a birthday gift for Mr.
B's daughter who will be having her 18th birthday next week.
To relieve Mr. A from any liability, what should Mr. A do?
a. Mr. A shall not release the fund but rather notify Mr. B, in
writing, that his instruction is illegal.
b. Mr. A shall release the fund and then notify Mr. B, in
writing, that his instruction is illegal.
c. Mr. A shall release the fund but retains 20% commission.

d. Mr

e the
. A shal l releas

ut requires Mr. to promise, e returned to the government

fund b shall h
at the car
in wri ting, th
thday.
hter's bir
atter h is daug

government employee entrusted with ,the custody of

Mr. C, a to
nt orce
governme funds, has lost the government funds him in a f
majeure. What should Mr. C do to relieve him

from liabi lity? Agency after

hould immediately notify the I-lead of
a. Mr. C s
30 days.
ediately notify the COA within 30 days.
b. Mr. C should imm
immediately notify the Bureau of Treasury
c. Mr. C should
within 30 days.
 event a secret and wait for next
d. Mr. C should keep the
funds to arrive.

on useful to
10. These refer to the attributes that make informati
users.
a. Usefulness characteristics
b. Quantitative characteristics
c. Qualitative characteristics
d. Fundamental principles

11. Information loses this qualitative characteristic if it is n

reported on a timely basis.
a. Relevance
b. Reliability
c. Neutrality
d. Materiality
 12. Which of the following qualitative characteristics doeens tiatny
most likely would need to make some trade-offs?
a. Faithful representation and Substance over formb.
Mate riality and Relevance
c. Relevance and Reliability
d. Understandability and Comparability

13. An entity recognizes an estimated loss from the decline in value of a property. Which of the following is
most likely the qualitative characteristic being applied by the entity?

a. Reliability c. Faithful representation

b. Substance over form d. Prudence

14. Which of the following is not one of the fund clusters of a

government entity?
a. Regular Agency Fund
b. Foreign Assisted Projects Fund
c. Special Account-Locally Funded/Domestic Grants Fund
d. Business Related Funds
e. Petty Cash Fund

15. To achieve a proper balance between relevance and reliability,

the overriding consideration is
a. how users' needs are best satisfied.
b. relevance is always more important than reliability.
c. reliability is always more important than relevance.
d. greater weight shall be given to relevance compared to
reliability.

PROBLEM 1-3: FOR CLASSROOM DISCUSSION

ting
1. How does government accounting differ from the accoun
for business entities?
is on profit-
a. Government accounting places more emphas
making.
lex that only highly
b. Government accounting is. very comp
•intellectual individuals can understand it.
r emphasis on
c. Government accounting places greate sources and utilization of
cordance with the er government
funds in ac law and management's stewardship ov
resources entrusted to the entity.
 ve ent accounting is specialized in nature that th, s entities
d. Go Governm busines
are 6.
n

les applicable to bu
princip
ble to government entities.
applica

ch of the following is not a source of revenue for thi

2. Whi
ent?
governm
a. Taxes
b.
c.
cted by government agencies
Fees colle
d donations from of her governments contracts awarded t,
Grants an rnment
rice on gove
d. Contract p
anies.
private comp 7.

government agency) is entrusted with govemmen: to P.D. 1445, who is directly

3. Entity A (a resources. According
responsibly ive utilization of these resources?
for the efficient and effect

yees who have custody over the

a. The government emplo
resources.
b. The Head of Entity A.
c. The COA staff stationed in Entity A. 8
d. The Foot of Entity A.

4. Which of the following is not charged with government

accounting responsibility under the GAM for NGAs?
a. COA c. NGAs
b. DBM
d. House of Representatives

5. The Department responsible for

a. promulgating regulations.
b.

of Budget and Management (DBM) is

accounting and auditing rules and 1

 the formulation and implementation of the national
budget with the goal of attaining the nation's
i
soc o-economic objectives.

d.c. receiving and keeping national funds and managicnog ntraondlling the disbursements thereof.
directly implementing the projects of the government

6. Which of the following is not one of the objectives of the GAM for
NGAs?
a. to harmonize government accounting standards with
international standards.
b. to update the coding structure and accounts
c. to update accounting books, registries, records, forms,
reports and financial statements.
d. to update government accounting standards to be
consistent with the provisions of U.S. GAAP.

All of the following are requirements peculiar to a

government entity. Which is not?
a. Presenting budget information in the financial statements.
b. Fund cluster accounting.
c. Incorporating budgetary controls in the financial reporting
system.
d. Accrual basis of accounting.

8. Which of the following qualitative characteristics is, improved

when information is reported on a timely basis?
a. Relevance c. Understandability
b. Reliability d. a and b

9. The best estimate for a loss is P100,000. However, the entity-

deliberately overstated the loss to P200,000. Which of the
following qualitative characteristics is violated?
a. Prudence c. a and b
b. Reliability d. Nothing is violated

10. Which of the following financial statements is peculiar to a

government entity?
a. Balance Sheet
b. Statement of Cash Flows
Statement of Comparison of Budget and Actual Amounts Statement of Changes in Equity

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.

r to the
6. The principles in the GAM for NGAs are simila
principles in the PFRSs.

d by the Philippine Congress it

7. The GAM for NGAs is promulgate under the authority conferred to
under the Philippine
Constitution.

g requirement of government
A unique financial reportin
cluster accounting. Under fund
entities is the use of fund
books and reports are prepared
cluster accounting, separate for
ld by a government entity.
each type of fund he

promulgated primarily to harmonize standards

he GAM for NGAs is vernment accounting
with the U.S. GAAP.

BLEMS:
PRO

BLEM 2-1: TRUE OR FALSE

PRO
dget preparation in the Milli
1. the bu

es Lisperseapailrbact)itotonms_tuap, e lowti,1s1
ppin wn to th
nder this approach, the budget ro he highest levels of the
the U mt f
government do
levels.
 -, tity prepares its budget by simplY rolling-over
An en
et in the previous year and adjusting each line item
budg

the

;i
ement to reflect inflation. This process is described
10% incr
d budgeting.
zero-base

the proposed budget ,,,

3. After the budget call from the DBIVI,
iately to the Office r,
immed
are submitted
various agencies the
view.
President for re

gations after receiving notice of it,

4. An entity can incur obli
the allotment.
appropriation but before receiving

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.

rA government entity can make disbursements ee

ven before it
ceives a disbursement authority.
8. At

9•

opriation is also called obligation& authority. the DBM CA) is The Notice of

Cash Allocation (N
to cen
tral, regional
an auth
ority issued by
operating units to cover the and p
ir cas
h req
rovincial offices and uire
 ment
s.

10. Responsibility accounting

45

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.

PROBLEM 2-2: MULTIPLE CHOICE

1 Which of the following does not properly describe the budget
process used in the Philippines?
a. Bottom-up budgeting
b. Top-down budgeting
c. Zero-based budgeting
d. Non-incremental budgeting

2. Arrange the following steps according to the sequence that they appear in the budget cycle.

I. Allotment
II Bicameral deliberations
III. Budget 'accountability reports
IV.President's enactment of the GAA
V. Budget hearings with the DBM

a. V, IV, II, I and IIIc. II, V, II, I and HI

b. V, II, IV, I and III d. V, I, II, IV and III
Arrange the following steps according to the sequence that ey appear in the budget cycle.

Allotment
isbursement authority isbursement
propriation
rence of obligation

c.

nd III
V, II a

I, II, V and III

a. IV,
I, V, III and II
b. IV,
V, 1111 and III
d. iv, that esti rilat,

nditures•
type of budget is prepared in such a way
4. This e
s exceed estimated exp ligations budget
revenue c. Ob
anced budget dget meal
a. Bal d. Bu
ss budget
b. Exce

ummarizes an agency's fiscal year plans

5. This s a
ts. It shows the agency's physical
performancence targe
anc
stimate of month;
lan, monthly cash program, e
financial p
list of obligations that are not yet due anc
income, and
demandable.
n Documents (BEDS)
a. Budget Executio
elease Order
b. Special Allotment R
c. Statement of Approved Budget,
Disbursements and Balances
ions
d. Aging of Due and Demandable Obligat

6. It is an authorization issued by the DBM to NGAs to inc.:-

obligations. It is also referred to as Obligational Authority.
a. Appropriation
b. Allotment
c. Budget call
d. Budget hearings

7. It refers to the amount contracted by a duly authorized

administrative officer for which the government is held liable.
a. Appropriation
 b. Allotment
c. Obligation
d. Disbursement

d. It
is a notice received from ihe Conffess that cash is
allocated for the payment of planned expenditures.

9. Disbursements by governmenl
entities are most commonly
made through
a. MDS Checks c. Petty Cash Fund
b. Cash d. Credit Card

10. Responsibility accounting requires all of the following except

a. separate books of accounts to segregate controllable and
non-controllable costs
b. identification of responsibility centers
c. distinction between controllable and non-controllable
costs
d. coding structure for responsibility centers

PROBLEM 2-3: MULTIPLE CHOICE

Fact pattern:
A legislation approves the allocation of P100B funds to support the operations of Entity A (a
government agency) in the current year. At the start of first quarter, Entity A receives authorization to It
incur obligations for a maximum amount of 1 45B in that quarter. Entity A extends half of that
on
authorization to its lower operating units. During the quarter, Entity A receives monthly authorizati
A extends
to c urse funds not to exceed P15B per month. Entity half of those monthly authorizations to
ting units. amounted to
its lower opera At the end of the quarter, total obligations incurred P4OB while
5B.
total disbursements amounted to P3

tity A is referred to as
The all 'on of the P100B funds to En
Allotment c. Obligation
A•proptOtion d. Sub-allotment

he unds to Entity A is authorized by t (DBM)

allocation tif t 1 100B f Budget and Managemen

Audit (COA)
b. Commission on
ry (BTr)
c. Bureau of Treasu
 d. Congress

tion is referred to as
3. The P45B authoriza
a. Allotment c. Obligation
b. Appropriation d. Sub-allotment

ceived by Entity A from

4. The P45B authorization is re
a. DBM c. BTr
b. COA d. Congress

by Entity A
5. The half of the P45B authoriza tion extended
erred to as
(Central Office) to its lower operating units is ref
a. Allotment c. Obligation
b. Appropriation d. Sub-allotment

6. Which of the following best describes the P15B monthly

authorizations?
a. Allotment
b. Obligation authority (e.g. Notice of Cash Allocation 'NCA')
c. Disbursement authority (e.g., Notice of Cash Allocation
'NCA')
d. Disbursement authority (e.g., Notice of Transfer of Allocation
'NTA')

7. The P15B monthly authorizations are received by Entity A

from
a. DBM
b. COA
c. BTr
d. Congress

8. The half of the P15B monthly authorizations extended by

Entity A (Cw
referred to AID
.al Office) to its lower operating units is
 a. Cash Disbursement Ceiling
b. Non-Cash Availment Authority
c. Notice of Cash Allocation (NCA)

d. Notice of Transfer of Allocation (NTA) 9.

AIn Entity A's first quarter Statement of Approprllotmen tia oni s,
is sh mts, Obligations, Disbursements and
Balances, how uch
ow
st,

a. P65B
n as "unreleased appropriations?"
b. P60B c. P55B

d. P45B
se

10. In Entity A's first quarter . Statement of Appropriations,

Allotments, Obligations, Disbursements and Balances, how much is
shown as "unobligated allotments?"
a. P6B b. P5B

V
c.1 1OB d. P15B

11. In Entity A's first quarter Statement of Appropriations, Allotments, Obligations,

Disbursements and Balances, how much
is shown as "unpaid obligations?"
a. P6B b. P5B c. PlOB d. P15B

PROBLEM 2-4: FOR CLASSROOM DISCUSSION

1. All disbursements of government entities must be in
conformance with the law and the
a. National budget c. PPSASs
b. COA audit findings d. PFRSs

2. An entity prepares its budget for the upcoming year from scratch. It scrutinizes each
item in the budget irrespective of
dget. This
whether the item was included in the previous bu process is called
a. zero budgeting c. scratch budgeting
g
b. incremental budgetin d. zero-based budgeting

ach to budgeting, several parties participate levels

Under this appro — from the lowest
of
 preparation
in the budget
o the highest levels, and sometimes even citizen- articipate in the budget
overnment t eholders p
preparation.

p budgeting
a. bottoms-u
ed budgeting
b. zero-bas

uence
4. What is the correct seq
budget process?
I. Budget Legislation
II. Budget Accountability
III. Budget Preparation
IV. Budget Execution

a. II, III, I and IV

b. III, I, IV and II

2
Chapter The 8

-down budgeting
c. top
ttom-up budgeting
d. bo

e following steps in the

of th

V,IandII
and IV d.m,I 9.

in the Congress are

5. After deliberations in both houses
onize any conflicts
finished, a committee is fowled to harm
te versions of the
between the Representatives and Sena
e is called the
General Appropriations Bill. This committe
a. Adjudication Conference Committee 10.
b. Bicaramel Conference Committee
c. Referee Conference Committee
d. Bicameral Conference Committee

6. It is the authorization made by a legislative body to allocate

funds for purposes specified by the legislative or similar
authority.
a. Appropriation c. Obligation
b. Allotment d. Disbursement
7. These are the authorizations programmed annually or for some other period prescribed by law, by
virtue of outstanding legislation which does not require periodic action by Congress.

a. Automatic Appropriations
b. New General Appropriations
c. Continuing Appropriations
d. Supplemental Appropriations

S. Entity.- A, a government entity, wants to make disbursements.

Arrange the following events in the correct sequence before
Entity A can make valid disbursements.
I. Allotment
El. Disbursement Authority
III. Appropriation
IV. Incurrence of obligation

a. II, III, I, and IV c. Ill, I, II, and IV

b. III, I, IV, and II d. IV, I, and II

9. This is necessary before government entities can enter into

contracts that bind the government for the eventual
disbursement of government funds
a. Disbursement authority c. Allotment
b. Notice of cash allocation d. Incurrence of obligation

10. Under responsibility accounting, a manager's performance is

evaluated
a. based on all resources under his custody
variables, that he
b. only in terms of the costs, or other
controls.
c. on the basis of both con trollable and non-controllable
costs.
d. only at year-end.