College of Accountancy

First Grading Examination

ACCTG 156/8A
Instructions:
Make a summary of answers.
Show your solutions for problem solving.
Submit to my messenger account the picture of the summary of answer and solutions.
Multiple Choice
1. What is the legal basis of the COA in promulgating the GAM for NGAs?
a. Revised Penal Code, Art. 217
b. State Audit Code of the Philippines, P.D. No. 1445, Sec. 109
c. Article IX-D, Section 2 par. (2) of the 1987 Constitution of the Republic of the Philippines
d. R.A. 9298
2. The GAM for NGAs aims to update all of the following except
a. standards, policies, guidelines and procedures in accounting for government funds and property
b. coding structure and accounts
c. accounting books, registries, records, forms, reports and financial statements
d. rules and regulations regarding the filing and payment of taxes by government employees
3. Which of the following is one of the Fundamental Principles for Revenue under the GAM for NGAs?
a. No payment of any nature shall be received by a collecting officer without immediately issuing an
official receipt in acknowledgement thereof. The receipt may be in the form of postage, internal revenue
or documentary stamps and the like, officially numbered receipts, subject to proper custody,
accountability, and audit.
b. Temporary receipts may be issued to acknowledge the receipt of public funds; provided that, an official
receipt is issued within a short period of time as may be prescribed by the COA.
c. Money in the hands of the Collecting Officer may be utilized for the purpose of cashing private checks,
upon proper endorsement and identification of the payee or endorsee. Checks drawn in favor of the
government in payment of any such indebtedness shall likewise be accepted by the officer concerned.
d. All of these
4. Which of the following is not one of the Fundamental Principles for Disbursement of Public Funds under
the GAM for NGAs?
a. No money shall be paid out of any public treasury or depository except in pursuance of an
appropriation law or other specific statutory authority.
b. Government funds or property shall be spent or used solely for public purposes.
c. Trust funds shall be available and may be spent only for the specific purpose for which the trust was
created or the funds received.
d. Fiscal responsibility shall, to the greatest extent, be assumed solely by the Head of the government
agency.
5. Which of the following statements is incorrect regarding the GAM for NGAs?
a. The COA shall keep the general accounts of the Government and, for such period as may be provided
by law, preserve the vouchers and other supporting papers pertaining thereto, pursuant to Section 2,
par. (1), Article IX-D of the 1987 Philippine Constitution.
b. The financial reporting system of the Philippine government consists of accounting system on accrual
basis and budget reporting system on budget basis under the statutory responsibility of the NGAs,
Bureau of the Treasury (BTr), Department of Budget and Management (DBM), and the COA.
c. The objectives of general purpose financial statements (GPFSs) are to provide information about the
financial position, financial performance, and cash flows of an entity that is useful to a wide range of
users in making and evaluating decisions about the allocation of resources. Specifically, the objectives
of general purpose financial reporting in the public sector are to provide information useful for
decision-making, and to demonstrate the accountability of the entity for the resources entrusted to it.
d. The DBM accounts for the cash, public debt and related transactions of the NG.
6. Entity A, a government entity, has an unused NCA of ₱50,000 at the end of the current year. The entry to
record the reversion of unused NCA is
a. Subsidy from National Government
Cash-Modified Disbursement 50,000
System (MDS), Regular 50,000
b. Accumulated Surplus/(Deficit) 50,000
Cash-Treasury/Agency Deposit,
Regular 50,000
c. Subsidy from National Government 50,000
Cash-Collecting Officers 50,000
d. No journal entry.
7. Which of the following is not one of the registries maintained by a government entity?
a. Registries of Journals and Ledgers
b. Registry of Appropriations and Allotments
c. Registries of Allotments, Obligations and Disbursements
d. Registries of Budget, Utilization and Disbursements
e. All of these are maintained by a government entity

8. This accounting concept is necessary so that users can use information in the financial statements in
noting differences and similarities between those information presented and information from other
sources that the user may have.
a. Financial statement analysis and ratios
 b. Understandability
c. Comparability
d. Feedback value or confirmatory value
9. Which of the following statements is correct regarding the Fundamental Principles for Disbursement of
Public Funds under P.D. No. 1445?
a. No money shall be paid out of any public treasury or depository except through the issuance of
Modified Disbursement System Checks.
b. Generally accepted principles and practices of accounting as well as of sound management and fiscal
administration shall be observed and shall be presumed to have higher authority in cases where these
principles conflict with the law.
c. Trust funds shall be available and may be spent only for the specific purpose for which the trust was
created or the funds received.
d. All disbursements or dispositions of government funds or property shall invariably bear the approval
of the COA.
10. During the period, Entity A, a government entity, withheld ₱100,000 taxes from its payments to employees
and suppliers. On September 14 of the current year, Entity A remitted the taxes withheld to the BIR
through Tax Remittance Advice. The entry to record the remittance includes
a. Cash-Tax Remittance Advice 100,000
Due to BIR 100,000
b. Subsidy from National Government 100,000
Cash-Tax Remittance Advice 100,000
c. a and b
d. None of these.
11. Which of the following principles is not in accordance with the Basic Government Accounting and Budget
Reporting Principles under the GAM for NGAs?
a. modified accrual basis of accounting in accordance with the PPSAS
b. budget basis for presentation of budget information in the financial statements (FSs) in accordance
with PPSAS 24
c. RCA prescribed by COA
d. financial statements based on both accounting and budgetary records
e. fund cluster accounting
12. The “Cash – Treasury/Agency Deposit, Regular” account is used in which of the following transactions?
a. Collections from customers are made through direct deposit in the entity’s account maintained with a
Government Servicing Bank (GSB).
b. Taxes withheld are remitted to the BIR.
c. A disbursement authority in the form of Cash Disbursement Ceiling is received.
d. Collections of revenue are remitted to the BTr.
13. The NGAs are responsible for
a. promulgating accounting and auditing rules and regulations.
b. implementing the national budget with the goal of attaining the nation’s socio-economic objectives.
c. receiving and keeping national funds and managing and controlling the disbursements thereof.
d. directly implementing the projects of, and performing the functions delegated by, the government.
14. The receipt of a disbursement authority in the form of Non-Cash Availment Authority (NCAA) is debited to
which of the following accounts?
a. Cash-Constructive Income Remittance
b. Cash-Modified Disbursement System (MDS), Regular
c. Accounts Payable
d. Subsidy from National Government
15. Which of the following events or transactions requires recording in the books of accounts of a government
entity?
a. Appropriation
b. Allotment
c. Disbursement Authority
d. Incurrence of Obligation
e. None of these
16. No journal entry is made for the receipt of this type of disbursement authority.
a. NCA
b. NCAA
c. CDC
d. None of these.
17. The basis of accounting required by the GAM for NGAs is
a. Budget basis
b. Modified accrual basis
c. Cash basis
d. Accrual basis
18. The President’s explanation of the country’s fiscal policy and budget priorities is contained in a document
called the
a. National Expenditure Program
b. President’s Budget Message
c. President’s Fiscal Policy and Priorities
d. Budget of Expenditures and Sources of Financing
19. After the incurrence of obligations, the next step in the budget cycle is
a. Allotment b. Disbursement
 c. Appropriation d. Disbursement authority
20. It is the expenditure authority derived from appropriation laws, government ordinances, and other
decisions related to the anticipated revenue or receipts for the budgetary period.
a. Notice of Cash Allocation c. Approved Budget
b. Allotment d. General Appropriations Bill
21. After the budget call, budget hearings are made whereby agencies defend their proposed programs and
expenditures for the upcoming year before the
a. COA c. Congress
b. DBM d. BTr
22. Under responsibility accounting, a cost is considered controllable at a given level of managerial
responsibility if
a. the manager has the power to incur it within a given period of time.
b. the cost is non-recurring, can be measured with sufficient reliability and is not immaterial
c. the cost is a fixed cost, such that its incurrence is reasonably certain.
d. all of these.
23. No journal entry is made for a disbursement under this mode of disbursement.
a. LDDAP-ADA c. eMDS
b. CPC d. None of these
24. Entity A, a government entity, had the following transactions during the period:
 Received Notice of Cash Allocation (NCA) amounting to ₱430,000.
 Earned total revenue of ₱40,000 from billings and collections of unbilled income.
 Incurred total expenses of ₱240,000.
 Remitted total taxes withheld of ₱37,000 to the BIR through Tax Remittance Advice (TRA).
 The “Cash-Modified Disbursement System (MDS), Regular” has an unused balance of ₱52,000 at the
end of the period.
How much is the surplus (deficit) for the period?
a. 230,000 c. (200,000)
b. 215,000 d. 178,000
25. The entry to record the granting of cash advance for payroll fund is
a. Salaries and Wages, Regular xxx
Personal Economic Relief Allowance (PERA) xxx
Due to BIR xxx
Due to GSIS xxx
Due to Pag-IBIG xxx
Due to PhilHealth xxx
Due to Officers and Employees xxx
b. Advances for Payroll xxx
Cash-Modified Disbursement
System (MDS), Regular xxx
c. Due to Officers and Employees xxx
Advances for Payroll xxx
d. Cash-Collecting Officers xxx
Advances for Payroll xxx
26. Which of the following transactions is not recorded through a credit to the “Cash-Modified Disbursement
System (MDS), Regular” account?
a. Reversion of unused NCA at the end of the period.
b. Payment of accounts payable wherein the tax portion is withheld.
c. Granting of cash advance for payroll.
d. Constructive remittance of taxes withheld to the BIR.
27. Which of the following statements best differentiates the government accounting process from the
accounting process of a business entity?
a. The government accounting process involves numerous complicated steps or procedures that are
beyond the understanding of a mere JPIA member, but not for a CPA.
b. The government accounting process involves procedures that are not generally acceptable for business
entities.
c. The government accounting process is similar to that of a business entity, except that it incorporates
budgetary controls, such as recording in the budget registries and preparing periodic budget
accountability reports.
d. Unlike for the accounting process of business entities which ends in the preparation of general
purpose financial statements, the government accounting process ends with the audit by the COA.

28. This report, required of government entities, shows the names of creditors, the amounts owed to them,
and the number of days these obligations are outstanding. This report is submitted to the COA and DBM
within 30 days after the end of the year.
a. List of Not Yet Due and Demandable Obligations
b. Aging of Due and Demandable Obligations
c. Percentage of Obligations Report
d. Report on Allotments, Obligations and Disbursements
29. Under this approach to budgeting, several parties participate in the budget preparation, starting from the
lowest levels of the government up to the highest levels.
a. Bottoms-up budgeting b. Zero-based budgeting
 c. Incremental budgeting d. Bottom-up budgeting
30. A government entity recognizes revenue from exchange or non-exchange transactions. In which of the
following transactions does a government entity need not recognize revenue?
a. Exchange of goods or services of dissimilar nature and value.
b. Receipt of an unconditional grant from a foreign government.
c. Receipt of equipment as donation from a good-hearted, private individual.
d. Receipt of a pledge.
31. A government entity remitting collections to the BTr will debit this account to record the remittance.
a. Cash-Treasury/Agency Deposit, Regular
b. Cash – Collecting Officers
c. Cash-Modified Disbursement System (MDS), Regular
d. Subsidy from National Government
32. According to P.D. 1445, government entities shall acknowledge receipts of revenue
a. through temporary receipts; provided a prior approval by COA is obtained.
b. through the issuance of properly endorsed checks.
c. through duplicate copies which shall not be the exact copies of the original.
d. through pre-numbered official receipts.
33. It refers to a fund which is available for any purpose other than those which other funds have been
designated to
a. General fund c. Regular fund
b. Major fund d. All-purpose fund
34. These refer to transactions in which one entity receives assets or services, or has liabilities extinguished,
and directly gives approximately equal value to another entity in exchange.
a. Exchange transactions c. Non-reciprocal transactions
b. Non-exchange transactions d. External events other than transfers
35. This refers to charges for the use of cash or cash equivalents, or amounts due to the entity.
a. Financial expenses c. Interest income
b. Personnel services d. Capital outlays
36. A government entity records a transaction by debiting an account with a Revised Chart of Account (RCA)
Code that starts with “1” and crediting an account with an RCA Code that starts with “4.” This transaction
is most likely a
a. constructive remittance of taxes withheld to the BIR through TRA.
b. remittance of collection to the National Treasury.
c. payment of accounts payable.
d. receipt of inter-agency fund transfer.
37. 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. DA c. DOLE
b. NIA d. DENR
38. Entity A, a government entity, bills ₱200,000 for Communications Network Fees. Which of the following is
the correct entry for the billing?
a. Cash-Collecting Officers 200,000
Communications Network Fees 200,000
b. Cash-Modified Disbursement System (MDS), Regular 200,000
Communications Network Fees 200,000
c. Accounts receivable 200,000
Subsidy from National Government 200,000
a. Accounts receivable 200,000
Communications Network Fees 200,000
39. A government entity will report surplus in its statement of financial performance in which of the following
instances?
a. The revenue and expense summary account is credited when closing to the accumulated surplus
(deficit) account.
b. The total debits in the statement of financial performance columns in the worksheet exceed the total
credits.
c. The total debits in the statement of financial position columns in the worksheet exceed the total
credits.
d. All of these.
40. The best estimate for a loss is ₱100,000. However, the entity deliberately overstated the loss to ₱120,000.
Which of the following qualitative characteristics is violated?
a. Prudence c. a and b
b. Reliability d. Nothing is violated
41. During the period, Entity A, a government entity approved a ₱400,000 payroll and granted the Disbursing
Officer a cash advance of ₱280,000, net of withholding taxes and contributions to GSIS, PhilHealth and
Pag-IBIG. The pro-forma entry to record the liquidation of the payroll fund is
a. Salaries and Wages, Regular xxx
Personal Economic Relief Allowance (PERA) xxx
Due to BIR xxx
Due to GSIS xxx
Due to Pag-IBIG xxx
Due to PhilHealth xxx
Due to Officers and Employees xxx
b. Advances for Payroll xxx
 Cash-Modified Disbursement
System (MDS), Regular xxx
c. Due to Officers and Employees xxx
Advances for Payroll xxx
d. Cash-Collecting Officers xxx
Advances for Payroll xxx
42. Which of the following modes of disbursements would result to the recognition of a loan payable in books
of the BTr?
a. NCAA c. ADA
b. CDC d. AWAN
43. The receipt of an inter-agency fund transfer is recorded as

a. Cash-Collecting Officers xxx

Subsidy from National Government xxx
b. Cash-Modified Disbursement System (MDS), Regular xxx
Due to (Central Office, Regional Office, xxx
Operating Units or Other Funds)
c. Cash-Collecting Officers xxx
Due to (Central Office, Regional Office, xxx
Operating Units or Other Funds)
d. Cash-Modified Disbursement System (MDS), Regular xxx
Accumulated Surplus (Deficit) xxx
44. Arrange the following accounts in the sequence they appear in the trial balance.
I. Permit Fees III. Due to BIR
II. Allowance for Impairment-Accounts IV. Salaries and Wages-Regular
Receivable V. Advances for Payroll
a. II, V, III, I and IV c. V, II, III, I and IV
b. II, III, V, I and IV d. II, V, I, III and IV
45. The entry to close the “Cash-Treasury/Agency Deposit, Regular” account at the end of the period is
a. Accumulated Surplus/(Deficit) xxx
Cash-Treasury/Agency Deposit, Regular xxx
b. Subsidy from National Government xxx
Cash-Treasury/Agency Deposit, Regular xxx
c. Cash-Collecting Officers xxx
Cash-Treasury/Agency Deposit, Regular xxx
d. None of these. The account is not closed.
46. This account is debited when government entities remit collections to the National Treasury.
a. Cash-Modified Disbursement System (MDS), Regular
b. Cash-Collecting Officers
c. Cash-Treasury/Agency Deposit, Regular
d. Cash-Tax Remittance Advice
47. All of the above involves the physical transfer of cash except
a. Remittance of taxes through the Tax Remittance Advice
b. Remittance of collections of revenue to the National Treasury
c. Remittance of employee contributions to GSIS, Pag-IBIG and PhilHealth
d. Remittance of excess cash advance by an officer
48. Entity A, a government entity, has withheld a total of ₱800,000 from the salary payments to its employees
representing contributions to the GSIS, Pag-IBIG and PhilHealth. The pro-forma entry to record the
remittance of the contributions to the GSIS, Pag-IBIG or PhilHealth is
a. Due to GSIS/ Pag-IBIG/ PhilHealth xxx
Cash-Tax Remittance Advice xxx
b. Due to GSIS/ Pag-IBIG/ PhilHealth xxx
Cash-Collecting Officers xxx
c. Due to GSIS/ Pag-IBIG/ PhilHealth xxx
Cash-Modified Disbursement System (MDS), xxx
Regular
d. No journal entry.
49. The budget preparation in the Philippines
a. starts with the Budget Call from the BTr.
b. uses a “zero-bottoms-up” approach.
c. ends with the issuance of the “Bicam Version” by the Bicameral Committee.
d. uses a non-incremental approach.
50. Choose the correct statement.
Type of tax Taxable event
a. Income tax  Purchase or sale of taxable goods or services
b. Value added tax  Earning of taxable income
c. Customs duty  Undertaking of a taxable activity
d. Property tax  Passage of the time period for which the tax is levied
51. 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 mode
of disbursement is called
a. Cash Disbursement Ceiling (CDC) c. Non-Cash Availment Authority (NCAA)
b. Advice to Debit Account (ADA) d. Notice of Transfer of Allocation (NTA)
52. Under this type of disbursement authority, disbursements are made out of the entity’s own bank account
rather than through the Treasury Single Account.
a. Disbursement through Advice to Debit Account (ADA)
b. Disbursement through Cash Disbursement Ceiling (CDC)
c. Disbursement through electronic Modified Disbursement System (eMDS)
d. Disbursement through Non-Cash Availment Authority (NCAA)
53. The entry to record the receipt of a disbursement authority in the form of Cash Disbursement Ceiling (CDC) is
a. Cash-Constructive Income Remittance xxx
Subsidy from National Government xxx
b. Accounts Payable xxx
Subsidy from National Government xxx
c. Accounts Payable xxx
Cash-Modified Disbursement System (MDS), Regular xxx
d. Cash-Modified Disbursement System (MDS), Regular xxx
Subsidy from National Government xxx
54. An entity accrues salaries and wages after approval of payroll. The entry is

a. Salaries and Wages, Regular xxx

Personal Economic Relief Allowance (PERA) xxx
Cash-Modified Disbursement System (MDS),
Regular xxx
b. Salaries and Wages, Regular xxx
Personal Economic Relief Allowance (PERA) xxx
Advances to Officers and Employees xxx
c. Salaries and Wages, Regular xxx
Personal Economic Relief Allowance (PERA) xxx
Due to BIR xxx
Due to SSS xxx
Due to Pag-IBIG xxx
Due to PhilHealth xxx
Due to Officers and Employees xxx
d. Salaries and Wages, Regular xxx
Personal Economic Relief Allowance (PERA) xxx
Due to BIR xxx
Due to GSIS xxx
Due to Pag-IBIG xxx
Due to PhilHealth xxx
Due to Officers and Employees xxx
55. Entity A, a government entity, grants a ₱10,000 cash advance for the travelling expenses of an employee.
The employee liquidates ₱8,000 of the cash advance and remits the excess cash advance of ₱2,000. After
recording the grant of cash advance and the liquidation thereof but before adjustment for the collection of
the excess cash advance, how much is the recorded expense in the books of accounts?
a. ₱0 c. ₱8,000
b. ₱2,000 d. ₱10,000
56. Entity A, a government entity, receives its Notice of Cash Allocation amounting to ₱5,000,000 for the year.
The journal entry to record this event is
a. Cash-Modified Disbursement System (MDS), Regular 5,000,000
Subsidy from National Government 5,000,000
b. Cash-Collecting Officers 5,000,000
Subsidy from National Government 5,000,000
c. Cash-Tax Remittance Advice 5,000,000
Due to the National Government 5,000,000
d. No journal entry.
57. Entity A, a government entity, receives notice of its ₱10M appropriation for the year. The journal entry to
record this event is
a. Cash-Modified Disbursement System (MDS), Regular 10,000,000
Subsidy from National Government 10,000,000
b. Cash-Collecting Officers 10,000,000
Subsidy from National Government 10,000,000
c. Cash-Tax Remittance Advice 10,000,000
Due to the National Government 10,000,000
d. No journal entry.
58. Entity A, a government entity, receives its ₱9M allotment. The journal entry to record this event is
a. Cash-Modified Disbursement System (MDS), Regular 9,000,000
Subsidy from National Government 9,000,000
b. Cash-Collecting Officers 9,000,000
Subsidy from National Government 9,000,000
c. Cash-Tax Remittance Advice 9,000,000
Due to the National Government 9,000,000
d. No journal entry.
59. The journal entry to record the collection of unbilled tax revenue (e.g., Travel Tax) through direct deposit
in Authorized Agent Banks is
a. Accounts Receivable xxx
 Travel Tax xxx
b. Cash-Modified Disbursement System (MDS), Regular xxx
Travel Tax xxx
c. Cash-Collecting Officers xxx
Travel Tax xxx
d. Cash-Treasury/Agency Deposit, Regular xxx
Travel Tax xxx
60. 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.
61. It is a report that is prepared for the purpose of bringing the balances of cash per records and per bank
statement into agreement.
a. bank reconciliation statement c. bank balance report
b. bank statement d. all of these
62. If the unadjusted balance of cash per bank statement is greater than the adjusted balance and there no
other reconciling items or errors, the difference would most certainly be caused by a
a. Credit memo c. Deposits in transit
b. Debit memo d. Outstanding checks
63. Which of the following does not qualify as cash equivalent for a government entity?
a. Money market placement with an original term of 1 year but matures within 3 months after the
reporting date.
b. Money market placement with an original term of 3 months.
c. Temporary investments in stocks that are expected to be sold within 1 month after the reporting date.
d. All of these qualify as cash equivalents.
64. Entity A estimates a risk of loss on a recognized asset at 20%. However, Entity A can only accept a risk of
5%. Entity A then enters into a forward contract to offset the excess risk of 15%. This process is best
described as
a. Risk management c. Hedge accounting
b. Forward hedging d. Process risk hedge
65. Which of the following may not be included as part of cash in the note disclosures?
a. Post-dated checks drawn
b. Unreplenished petty cash fund consisting of only the coins and currencies held as at the reporting
date
c. Issued checks that were cancelled because they became stale
d. Treasury bills acquired 3 months before maturity date
66. The entry to record a disbursement from the petty cash fund is
a. Expense accounts xxx
Cash-Modified Disbursement System
(MDS), Regular xxx
b. Expense accounts xxx
Petty Cash xxx
c. Expense accounts xxx
Cash-Collecting Officers xxx
d. Expense accounts xxx
Cash-Treasury/Agency Deposit, Regular xxx
e. None of these.
67. According to the GAM for NGAs, government entities shall prepare bank reconciliations
a. on a daily basis
b. on a monthly basis
c. only at year-end
d. only as needed
68. Which of the following statements is incorrect regarding the accounting for unreleased checks by a
government entity?
a. Unreleased checks are reverted back to cash.
b. Unreleased checks are physically cancelled.
c. The accounting procedures for unreleased checks prescribed under the GAM for NGAs apply only to
commercial checks.
d. At the start of the year, a reversing entry is made for the unreleased checks in the previous year.
69. All of the following may cause the cancellation of a check drawn by a government entity except
a. The check becomes stale.
b. Wrong spelling or unnecessary markings on the check.
c. The check is dishonored.
d. The check is prepared using a pen with red ink.

70. It is a hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized
firm commitment, or an identified portion of such an asset, liability or firm commitment, that is
attributable to a particular risk and could affect surplus or deficit.
 a. Fair value hedge
b. Hedge of a recognized asset or liability
c. Cash flow hedge
d. Hedge of a net investment in a foreign operation

“Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will spend its
whole life believing that it is stupid.”
– Albert Einstein
==============================================END OF
EXAMINATION=============================================