FINALS GOVERNMENT ACCOUNTING

MODULE 7: Cash and Related Transactions

- These are not the usual cash related transactions. These are miscellaneous transactions or
nonrecurring transactions affecting cash.
Cash – comprises cash on hand, cash in bank and cash treasury accounts.
Cash Equivalents – only debt instruments acquired within 3 months before their scheduled maturity date
can qualify as cash equivalents
Accounting for some transactions involving cash are:
- Petty Cash Fund including shortage or overage. Petty Cash Custodian and Cash Collecting
Officer can both incur cash overage and cash shortage.
- Unreleased and Cancelled Checks. Stale MDS and commercial checks wherein the issuer is the
government agency. Cancelled and dishonored check wherein the Government Agency is the
recipient.
- Disallowances and refund of overpayments. Affects cash in a way there are expenditures that
have been paid but upon the audit of the commission on audit it has been disallowed.

PETTY CASH FUND

 Refers to the amounted granted to duly designated Petty Cash Fund. Responsibility of Petty Cash
Custodian which is a disbursing officer.
 Custodian for payment of authorized petty or miscellaneous expenses which cannot be
conveniently paid through checks/LDDAP-ADA
 The Perry Cash Fund of a government entity is
 Maintained using the imprest system
 Sufficient to defray recurring petty expenses for 1 month
 Used for disbursement not exceeding P15,000
 Replenished as soon as disbursements reach at least 75% or as needed.
In this case the petty cash custodian has the accountability of P30,000. There was a replenishment
amounting to P29,800 and the P200 has been reverted back to the fund of government agency upon
retirement of the petty cash fund custodian.

Accounting for Cash Shortage/Overage

 The disbursing Officer is liable for any cash shortage while any cash overage that he cannot
satisfactorily explain to the auditor is forfeited in favor of the government
Shortage: Shortages of collecting and disbursing officer maybe due of robbery, theft, fire or other causes.
Cash shortage discovered during the cash examination by the auditors is reported through the report of
cash examination. In case of shortage of property the auditor issues and audit report (relief report from the
accountability). As soon as the shortage is definitely established, the auditor shall issue a memorandum
pertaining to it, and the accountant shall draw a journal entry voucher to record the shortage as a
receivable from the accountable officer concerned.
Due from Officers and Employees xx
Advances for/to (appropriate account) xx
Overage: Any collections that has been established as an overage should be treated as miscellaneous
income and be forfeited in favor by the government.
Cash – Collecting Officers xx
Miscellaneous Income xx

OVERAGE: Assuming the cash collecting officer received P15,000 for a receivable that amounts only
for P10,000. P5,000 hindi na pinapabalik cinondoned na, there is cash overage here.
Entry: Cash Collecting Officer 10,000
Accounts Receivable 10,000
The overage wala pang entry, upon audit na. Once may audit eto na entry
Cash Collecting Officer 5,000
Miscellaneous Income 5,000
Then reremit mo na sa BTr, nasa taas ung entry. Once remitted in the BTr, BTr, the
corresponding book entry sa BTr ay
Cash In Bank – BSP (LCSA) 5,000
Cash Treasyury Agency Regular 5,000

SHORTAGE: Another example, accountability ng Collecting officer 10,000, pero rinemit niyalang ay
8,000. Entry
Cash Collecting Officer 10,000
 AR 10,000
Upon remittance ang entry ay
Cash-Treasury/Agency 8,000
Cash – Collecting Officer 8,000
Pag inaudit, don palang madidiskubre ung 2,000. Any shortage is treated as receivable from the
accountable na mandurukot na officer. Ang entry ay yung nasa taas
Due from Officers and Employees 2,000
Cash Collecting Officer 2,000
Then apply lang ung nasa taas