Financial Instrument

Any contract that gives rise to both a financial asset

of one entity and a financial liability or equity instrument of
another entity. (PPSAS 28.9).

Financial Assets
Initially measured at fair value plus transaction costs,
except for financial assets at fair value through surplus or
deficit whose transaction costs are expensed.

Transaction Costs
Are incremental costs that are directly attribute to the
acquisition, issue, or disposal of a financial instrument.

a. Fees and commissions

b. Levies by regulatory agencies and security
exchanges
c. Transfer taxes and duties

Financial Asset – is any asset that is:

1. Cash
2. An entity instrument of another entity
3. A contractual right to receive cash or another
financial asset from another entity
4. A contractual right to exchange financial
instruments with another entity under conditions
that are potentially favorable
5. A contract that will or may be settled in the entity’s
own equity instruments

Unreleased checks are

reverted back to cash

Cash in Bank, Local

Currency-Current xx
Accounts Payable ( or other
liability account) xx

Cancelled checks ( e.g., stale, voided or

sppoiled) are reverted back to cash.

The cancelled check

pertains to:
Current
year
Cash-Modified Disbursement
System (MDS), Regular xx
Accounts
payable xx

Prior year
Accumulated
Surplus/(Deficit) xx
Accounts
payable xx

Petty Cash Fund

 Refers to the amount granted to duly designated
petty cash custodian for payment of authorized petty or
miscellaneous expenses which cannot be conveniently
paid through checks or authority to debit account (ADA).

The petty cash fund of a gov’t entity is:

1. Maintained using the imprest system.
2. Sufficient to defray recurring petty expenses
for 1 month.
3. Used for disbursements not exceeding
15,000 per transaction.
4. Replenished as soon as disbursements reach
at least 75% or as needed.

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.

Shorta
ge
Due from Officers and
Employyees xx
Advances for/to
account xx

Overag
e
Cash-Collecting
Officers xx
Miscellaneous
Income xx