MIDTERM EXAMINATION

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
b. Allotment
c. Approved Budget
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
b. DBM
c. Congress
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
b. CPC
c. eMDS
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
b. 215,000
c. (200,000)
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
b. Major fund
c. Regular 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
b. Non-exchange transactions
c. Non-reciprocal 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
b. Personnel services
c. Interest income
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
b. NIA
c. DOLE
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
b. Reliability
c. a and b
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
b. CDC
c. ADA
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
II. Allowance for Impairment-Accounts Receivable
III. Due to BIR
IV. Salaries and Wages-Regular
V. Advances for Payroll

a. II, V, III, I and IV

b. II, III, V, I and IV
c. V, II, III, 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), Regular xxx
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)
b. Advice to Debit Account (ADA)
c. Non-Cash Availment Authority (NCAA)
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
b. ₱2,000
c. ₱8,000
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
Travel Tax xxx
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.

Please, don’t cheat.

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