Government Accounting

Quiz 6

Write the letter pertaining to best answer.

1. Philippine Economic Zone Authority purchases biometric machine for cash amounting to
P20,000. What is the entry to recognize the purchase of the machine? Ignore tax
implications.

a. Office Equipment 20,000

Cash-Modified Disbursement System, Regular 20,000

b. Office Equipment 20,000

Cash-Treasury/Deposit, Regular 20,000

c. Office Equipment 20,000

Cash-Disbursing Officer 20,000

d. Office Equipment 20,000

Cash in Bank-Local Currency 20,000

2. Philippine High School for the Arts transferred cash of P800, 000 to Philippine Science
High School for purchase of additional laboratory equipment. What is the journal entry of
Philippine Science High School upon receipt of inter-agency fund transfer?

a. Cash-Treasury/Agency Deposit/Trust 800,000

Cash-Modified Disbursement System, Regular 800,000
b. Cash-Collecting Officer 800,000
Due to Philippine High School for the Arts 800,000
c. Cash-Treasury/Agency Deposit/Trust 800,000
Due to Philippine High School for the Arts 800,000
d. Cash-Collecting Officer 800,000
 Cash-Modified Disbursement System, Regular 800,000

3. On June 1, the Department of Finance remit to the Bureau of Treasury cash amounting to
P100,000,000. What is the journal entry of the Bureau of Treasury (BTr) to recognize the
receipt of remittance of income of Department of Finance?

a. Cash-Treasury/Agency Deposit, Regular 100,000,000

Cash in Bank, Local Currency-Bangko Sentral ng
Pilipinas 100,000,000
b. Cash-Treasury/Agency Deposit, Regular 100,000,000
Cash-Collecting Officer 100,000,000
c. Cash in Bank, Local Currency-Bangko Sentral ng Pilipinas 100,000,000
Cash-Collecting Officer 100,000,000
d. Cash in Bank, Local Currency-Bangko Sentral ng Pilipinas 100,000,000
Cash-Treasury/Agency Deposit, Regular 100,000,000

4. Which of the following statements is not correct?

a. The depreciation period shall remain the same for a Betterment that enhances the
future economic benefits or service potential of a capital asset without increasing its
estimated useful life.
b. Betterments which meet the threshold of the applicable capital asset category are
expensed outright.
c. If Betterment increases the estimated useful life of a capital asset, its useful life shall
be changed.
d. If Betterment involves the replacement of an identifiable component of a capital
asset, the original cost of that component and the related accumulated depreciation
shall be derecognized.

5. On February 1, 2018, Department of Public Works and Highways have an obligation for
building upon signing of contract amounting to P280,000,000. Blitz Corporation – the
contractor, finished the construction of Highway 34 that connects Bacolod to Ilo-ilo
 without any delay on December 15, 2020. What is the entry to record the turnover and
acceptance of the public road?

a. Subsidy from National Government 280,000,000

Construction in Progress - Roads, Highways and
Bridges 280,000,000
b. Roads, Highways and Bridges 280,000,000
Construction in Progress - Roads, Highways and
Bridges 280,000,000
c. Public Infrastructures 280,000,000
Construction in Progress - Roads, Highways and
Bridges 280,000,000
d. No entry, posting in the appropriate registry only

6. Simmons Merchandising owner Jun Marquez is a philanthropist who bid on a project of

the Department of Social Welfare and Development with a vision to give free school bags
to less fortunate students in the remote area of Samar Island. As he wants to help in the
mission of the agency, he gave a generous trade discount of 30%, 25% and 20%. The
bags are sold on account with a list price of P500,000. What is the invoice price of the
merchandise?

a. P350,000
b. P500,000
c. P125,000
d. P210,000

7. The Metropolitan Manila Development Authority receives a Notice of Cash Allocation

for Trust Receipts Fund from the Department of Budget and Management amounting to
P1,000,000. What is the journal entry to record the receipt of Notice of Cash Allocation
for Trust Receipts Fund?

a. Cash-Modified Disbursement System, Trust 1,000,000

Subsidy from National Government 1,000,000
b. Cash-Modified Disbursement System, Trust 1,000,000
Notice of Cash Allocation, Trust 1,000,000
c. Cash-Collecting Officer 1,000,000
Subsidy from National Government 1,000,000
d. Cash-Modified Disbursement System, Trust 1,000,000
 Cash-Treasury/Agency Deposit, Trust 1,000,000

8. Which of the following is not correct with regards to the effects of changes in foreign
exchange rates?
a. A foreign currency transaction shall
be recorded, on initial recognition in
the functional currency, by applying
to the foreign currency amount the
spot exchange rate between the
functional currency and the foreign
currency at the date of the
transaction.
b. Foreign currency monetary items
shall be translated using the opening
rate.
c. An average rate for a week or a
month might be used for all
transactions in each foreign currency
occurring during that period.
However, if exchange rates fluctuate
significantly, the use of the average
rate for a period is inappropriate.
d. Nonmonetary items that are
measured at fair value in a foreign
currency shall be translated using the
exchange rates at the date when the
fair value was determined.

9. On December 2, 2018, the National Conciliation and Mediation Board purchase air-
conditioning unit for P14,500. On August 1, 2020, the unit’s condenser malfunctioned
and was repaired for P2,500. What is the entry to recognize repair of this air-conditioning
unit?

a. Repairs and Maintenance Expense-Semi-Expendable Office Equipment 2,500

Cash-Modified Disbursement System, Regular 2,500

b. Repairs and Maintenance Expense 2,500

Cash-Modified Disbursement System, Regular 2,500

c. Semi-Expendable Machinery and Equipment Expenses 2,500

 Cash-Modified Disbursement System, Regular 2,500
d. No entry, posting to appropriate registry only

10. On January 1, The Mines and Geo-sciences Bureau was granted cash advances to cover
the payment of salaries and wages of employees amounting to P2,800,000. On February
20, the Payroll Master of the agency liquidated the fund as follows:

Salary and Wages

Regular pay 2500000
PERA 300000 2800000
Salary Deductions
WTAX 140000
Life and Retirement Premiums 80000
Pag-ibig Premiums 40000
PhilHealth premiums 30000
GSIS Salary loan 50000 340000
Net Amount 2460000

What is the journal entry to record the liquidation of payroll fund?

a. Due to Officers and Employees 2,460,000

Advances for Payroll 2,460,000
b. Advances for Payroll 2,800,000
Due to Officers and Employees 2,800,000
c. Due to Officers and Employees 2,800,000
Advances for Payroll 2,800,000
d. Advances for Payroll 2,460,000
Due to Officers and Employees 2,460,000