University of San Carlos

School of Business and Economics

Department of Accountancy

AC 518 Advanced Financial Accounting and Reporting, Part 3

Summer 2017 (3rd Hand-Out)

Income/Collections and Deposits System

This system covers the processes of acknowledging and reporting income/collections, deposits of
collections with Authorized Government Depository Bank (AGDB) or through the AGDB for the account
of the Treasurer of the Philippines, and recording of collections and deposits in the books of accounts of
the agency.

The sources of income and collections made by Agency are:

1. Taxes 4. Borrowings
2. Operating and Service Income 5. Miscellaneous Receipts
3. Grants and Donations

All collecting officers shall deposit intact all their collections with AGDB daily or not later than the
next banking day and shall record all the deposits made in the Cash Receipts Record.

Only National Government Agencies maintain one set of books:

1. Regular Agency books this shall be used to record the regular transactions of the agency
like the receipt and utilization of Notice of Cash Allocation (NCA), and collections
of income and other receipts which the agency are authorize to use. This shall
consist of journals and ledgers, as follows:
Journals:
Cash Receipts Journal (CRJ)
Cash Disbursement Journal (CDJ)
Check Disbursement Journal (CkDJ)
General Journal (GJ)

Ledgers:
General Ledger (GL)
Subsidiary Ledgers (SL)

Receipt and Collection Process

1. The Collecting Officer (CO) receives payment from creditors and issues Official Receipt.
2. The CO records collections in Cash Receipt Record.
3. The CO deposits collections.
4. The CO records deposit in Cash Receipt Record.
5. The CO prepares the Report of Collections and Deposits and forwards to accounting unit with
copies of official receipts and validated Deposit Slips.
6. The accounting unit prepares Journal Entry Voucher (JEV) and records in the Cash Receipts
Journal.

Types of collections as to authority to use:

1. Without authority to use.
2. With authority to use.
3. Authority with limitations
4. Income from sale of equipment.
5. Grants and donations intended for agency use.
6. Miscellaneous collections.

Illustrative Accounting Entries:

A. Without Authority to Use

As a general rule, all revenues regardless of amount and frequency of collection are to be
remitted to the National Treasury. NG books shall be discontinued.

1. Receipt of cash payment of hospital fees

1
 Cash collecting officers 10101010 xxx
Hospital fees 40202170 xxx

2. Remittance to the treasury

Accumulated Surplus/ (Deficit) 30101010 xxx

Cash-collecting officers 10101010 xxx

B. With Authority to Use (RA Bks)

For agencies which are authorized to use income for their operations, the collections shall be
recorded as income in the Regular Agency (RA) books

1. Collection of prior years receivables

Cash- collecting officers 10101010 xxx

Accounts Receivables 10301010 xxx

2. Issuance of bill for the rent of an office space.

Accounts Receivables 10301010 xxx

Rent/Lease income 40202050 xxx

3, Record collection of rent payment.

Cash collecting officer 10101010 xxx

Accounts Receivable 10301010 xxx

4. Record temporary deposit to the NT thru the AGDB bank.

Cash-Treasury/Agency Deposit Trust 10104010 xxx

Cash collecting officer 10101010 xxx

5Release of NCA by DBM after request is made to the Bu of Treasury to use the deposited
collections as augmentation of MOOE.

Cash MDS, Trust 10101060 xxx

Cash-Treasury/Agency Deposit Trust 10104010 xxx

6. Record disbursement for the repair (use of income).

Repairs and Maintenance Buildings

And Other Structures 50213040 xxx
Cash- MDS, Trust 10101060 xxx

C. Authority with Limitations

If the authority is subject to the limitation that any excess shall be remitted to the National
Treasury, such collections, ex.seminar and convention fees, the collections shall be recorded in
the RA books. The expenses shall be journalized, the balance/excess to be remitted to the
National Treasury.

1. Record collection of (ex.)seminar fees.

Cash collecting officer 10101010 xxx

Seminar/Training fees 40202040 xxx

2. Record deposit of collection.

Cash in Bank Local Currency Current Account 10102020 xxx

Cash collecting officer 10101010 xxx

3. Record payment of expenses.

2
 Office supplies expense 50203010 xxx
Cash in Bank Local Currency Current Acct 10102020 xxx

4. Record the unused collections.

Cash collecting officer 10101010 xxx

Cash in Bank Local Currency Current Acct 10102020 xxx

5. Record remittance of excess to the Bu of Treasury through the AGDB.

Accumulated Surplus/ (Deficit) 30101010 xxx

Cash-collecting officers 10101010 xxx

D. Cash from another agency to implement its project (Inter-agency Transferred Funds). Under
existing regulations, the collections made by an Implementing Agency (IA) of cash from a
source agency (SA) to implement the latters project shall be remitted by the recipient agency,
the IA, to the BTr. The IA shall request the necessary NCA from the DBM)

1. Receipt of the check from the SA.

Cash collecting officers 10101010 xxx

Due to NGAs (SA) 20201050 xxx

2. Remittance of cash to the BTr

Cash-Treasury/Agency Deposit Trust 10104010 xxx

Cash-Collecting officers 10101010 xxx

3. Receipt of NCA from DBM

Cash-, MDS, Trust 10104060 xxx

Cash-Treasury/Agency Deposit Trust 10104010 xxx

4. Purchase of technical equipment

Technical & Scientific Equipment 10605140 xxx

Cash- MDS, Trust 10104060 xxx
Due to BIR 20201010 xx

5. Submission of liquidation report to the SA.and remittance to BIR.

Due to NGAs 20201050 xxx

Due to BIR 20201010 xxx
Technical and Scientific Equipment 10605140 xxx
Cash- MDS, Trust 10104060 xxx

If there is still a balance of funds transferred.

Due to NGAs 20201050 xxx

Cash- MDS, Trust 10104060 xxx