Government Accounting Diagnostic Exercises – JULY 2023

PART 1: Theories
1. Statement I. The proposed budget for FY 2024 is P5.764 trillion.
Statement II. Based on FY 2023 sectoral budget, Debt Burden sector got the smallest slice in the national budget.
a. Only statement 1 is correct c. All statements are correct
b. Only statement 2 is correct d. All statements are incorrect

2. The following procedures that will fall under Budget Implementation phase, except
a. Submission of Agencies’ Accountability Reports
b. Early Procurement Activities
c. Submission of Budget Execution Documents
d. Allotment Release by DBM

3. Statement I. Each agency shall maintain accounting books and budget registries which are reconciled with the cash
records of the Bureau of Treasury and the budget records with COA and DBM.
Statement II. Presidential Decree No. 1445 is the legal basis of Commission on Audit for the performance of its function.
a. Only statement 1 is correct c. All statements are correct
b. Only statement 2 is correct d. All statements are incorrect

4. Statement I. A national government agency must incur obligations before it receives the allotment from DBM.
Statement II. The Development Budget Coordination Committee is tasked to come up with the harmonized/consolidated
version of General Appropriations Bill (GAB) subject for approval of both houses.
a. Only statement 1 is correct c. All statements are correct
b. Only statement 2 is correct d. All statements are incorrect

5. Arrange the following procedures according to the sequence under Budget Preparation and Presentation Phase.

I. The President’s Budget

II. Budget Call
III. Budget Priorities Framework
IV. Tier 2 Proposals and Deliberations
V. Tier 1 Proposals and Deliberations

a. II, III, V, IV and I c. II, V, IV, III and I

b. II, V, III, IV and I d. II, IV, V, III and I

6. Statement I: In accounting for petty cash fund, the replenishment shall be made as soon as disbursements reach at least
90% or as needed.
Statement II: The amount of unused/unutilized balance of the Petty Cash Fund (PCF) shall not be closed at year-end. It
shall be closed only upon termination, separation, retirement or dismissal of the PCF Custodian.
a. Only statement 1 is correct c. All statements are correct
b. Only statement 2 is correct d. All statements are incorrect

7. Statement I: The acquisition and corresponding issuance of semi-expendable office equipment is classified as Capital
Outlay.
Statement II: Under GAM for NGAs, the inventories of a government agency classified into held for sale, held for
consumption, held for manufacturing, and held for distribution.
a. Only statement 1 is correct c. All statements are correct
b. Only statement 2 is correct d. All statements are incorrect

8. Statement I: COA Circular No. 2022-004 increased the capitalization threshold for Property Plant and Equipment from
P15,000 to P50,000.
Statement II: The Circular also provided that the threshold for petty cash fund is also increased to P50,000.
a. Only statement 1 is correct c. All statements are correct
b. Only statement 2 is correct d. All statements are incorrect

9. A national government agency issued a check chargeable against the Bureau of Treasury. The journal entry to record the
disbursement involves a credit to which of the following accounts?
a. Cash-Treasury/Agency Deposit, Regular
b. Cash-Modified Disbursement System (MDS), Regular
c. Cash in Bank-Local Currency, Current Account
d. Cash-Collecting Officers

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 10. A government agency purchases 50 units of Communication Equipment at an invoice amount of P2,000,000. The entity
would most likely record the purchase as
a. Property, Plant and Equipment c. Semi-Expendable Property
b. Inventory Held for Consumption d. Inventory Held for Sale

PART 2: Problems
11. A national government agency had the following transactions relating to billings and collections for the month of
December 2022:
December 02 – The agency prepared the following billings for the month of November 2022: Rent/Lease Income –
P50,000; Power Supply System Fees – P150,000; Landing and Parking Fees – P20,000; and Waterworks System Fees –
P100,000.
December 09 – Collected all of the billings made on December 02, 2022 and issued Official Receipts.
December 10 – Remitted all collections made last December 09, 2022 to the Bureau of Treasury (BTr).

The journal entry to recognize the remittance to BTr on December 10, 2022 includes a
a. debit to Cash – Treasury/Agency, Deposit, Regular: P320,000
b. debit to Cash – Treasury/Agency, Deposit, Trust: P320,000
c. debit to Cash – Collecting Officer, P320,000
d. debit to Cash-in Bank, LCCA, P320,000

12. A government agency had the following items for disbursements:

Electricity Expenses P448,000

Telephone Expenses 112,000
Janitorial Services 224,000
Office Supplies Inventory 56,000
Office Equipment 134,400

How much is the total amount credited to 1-01-04-040 (Cash – MDS, Regular account) for the above disbursements?
P915,200

13. Using the same information in No. 12, how much is the total amount for remittance to the BIR thru the Tax Remittance
Advice (TRA)? P59,200

14. The following account balances were taken from the books of a government agency: Salaries and Wages-Regular,
P6,000,000; PERA, P425,000; Office Supplies Expense, P600,000; Water Expenses, P90,000; Electricity Expenses,
P100,000; Telephone Expenses, P45,000; Traveling Expenses, P150,000; Representation Allowance and Transportation
Allowance (RATA), P250,000; Honoraria, P120,000; Subsidy from National Government, P11,000,000; Interest Income,
P100,000; Interest Expenses, P150,000; Bank Charges, P7,500, Retirement and Life Insurance Premiums, P750,000;
Pag-IBIG Contributions, P200,000; Phil-Health Contributions, P150,000; Employees Compensation Insurance
Premiums, P80,000; Semi-Expendable Machinery and Equipment Expense, P80,000; Representation Expenses,
P450,000; Depreciation Expense, P250,000; Amortization Expense, P200,000 and Impairment Loss-PPE, P100,000.

How much is the total amount of expenses under Personnel Services? P7,975,000

15. Using the same information in No. 14, how much is the total amount of expenses under Maintenance and Other
Operating Expenses (Cash Expenses)? P1,515,000

16. On April 25, 2023, a national government agency purchased and delivered 40 units of ACER Laptop for distribution to
various offices at a invoice amount of P1,660,000. These items are available for use on May 14, 2023. The equipment
has a useful life of 5 years.

How much is the depreciation expense for the FY 2022? ZERO

(because this is a semi-expendable item, as computed the cost per unit per COA Circular 2022-004: P1,660,000 / 40
units = P41,500 per unit)

17. Office of the President (OP) ordered office supplies for P400,000 through DBM-Procurement Service on November 15,
2021 for the 1st Quarter requirement of FY 2022. The office supplies were available & delivered by the DBM as
indicated on the Purchase Request on January 11, 2022.

The entry to recognize advance payment to DBM includes a debit to

a. Due from GOCCs, P400,000
b. Accounts Receivable, P400,000

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 c. Due from Local Government Units, P400,000
d. Due from National Government Agencies (NGAs), P400,000

18. DPWH had the following transactions related to a construction project of school building worth P28,000,000 during the
year 2023:

January 25. Payment of mobilization fee equivalent to 15% of the contract price.
March 10. Received 1st progress billing from the contractor at 40% completion based on contract price.
March 25. Paid the amount due to the contractor for the 1st progress billing. Deductions are:
• Recoupment of advances based on % of completion (deducted upon payment)
• Retention, 5% of the billings
• Withholding taxes (EWT & Final VAT)

The entry to recognize the payment of mobilization fee includes a:

a. Debit to Advances to SDO, P4,200,000
b. Debit to Advances to Officers and Employees, P4,200,000
c. Debit to Advances to Contractors, P4,200,000
d. Debit to Accounts Receivable, P4,200,000

19. Using the same information in No. 18, compute the net amount due to the contractor. P8,260,000

20. The entry to recognize the payroll liability includes a

a. Debit to Salaries & Wages, Regular - P 16,040,000
b. Credit to Cash in Bank -LCCA - P 16,040,000
c. Credit to Due to Officers and Employees - P 16,040,000
d. Credit to Cash – MDS, Regular - P 16,040,000

21. The entry to record the payment of payroll includes a credit to

a. Cash in Bank - Local Currency Current Account, P 16,040,000
b. Cash - MDS Regular, P 16,040,000
c. Advances to Special Disbursing Officer, P 16,040,000
d. Advances for Payroll, P 16,040,000

22. Determine the total amount payable to GSIS. P3,520,000