Government Accounting Test Bank
Government Accounting Test Bank
Q5. These refer to the attributes of financial information that make them relevant to users.
Qualitative characteristics
Q6. These are authorizations programmed annually or for some other period prescribed by law which do not require
periodic action by Congress.
Automatic Appropriations
Q7. Which is true about the principles that govern financial transactions and operations of the government?
Government money shall be paid only when provided by law or other specific statutory authority.
Q8. The committee formed to harmonize conflicts between the Representatives and Senate versions of the General
Appropriations Bill is called
Bicameral Conference Committee
Q9. Arrange the following steps according to the sequence that they appear in the budget cycle.
I. Allotment
II. Appropriation
III. Incurrence of obligation
IV. Disbursement
II, I, III, IV
Q10. Which of the following is not one of the specific accounting systems of a government agency?
Deposit and withdrawal system
Q11. Which qualitative characteristic of financial reporting pertains to freedom from material errors and bias?
Neutrality
Q19. This is a budget that is prepared in such a way that estimated revenues exceed estimated expenditures.
Balanced budget
Q20. Which is not one of the aims of GAM?
Update principles in auditing utilization of government funds
Q21. Illustrate the Budget Cycle by drawing the different phases in accordance with the logical sequence. You can
elaborate more your answer with an explanation in paragraph form (not exceeding 200 words).
Q2. Which of the following statements best differentiates the government accounting process from the accounting process of a business
entity?
The government accounting process is similar to that of a business entity, except that it incorporates budgetary
controls, such as recording in the budget registries and preparing periodic budget accountability reports.
UACS
Q4. Which of the following statements best describes the various Registries maintained by government entities?
The Registries primarily serve as an internal control for controlling and monitoring the conformance of actual results
with the approved budget.
Financial Plan
Receivables – Disallowances/Charges
Q7. It is the process of analyzing, recording, classifying, summarizing and communicating all transactions involving receipt and
disposition of government funds and property and interpreting the results thereof.
Government accounting
Q11. One of the following principles is used to both commercial and government accounting.
Q12. This accounting concept is necessary so that users can use information in the financial statements in noting differences and
similarities between those information presented and information from other sources that the user may have.
Comparability
Q13. This is the authorization by a legislative body to allocate funds for specified purposes
Appropriation
Q15. It is the legislative consideration, review and approval of the national budget.
Authorization
Q16. This phase in the budgetary process deals with monitoring conformance of actual reports with planned targets.
Budget accountability
Project code
Budget execution
Q20. Which of the following statements in incorrect regarding the GAM for NGAs?
The DBM accounts for the cash, public debt and related transactions of the NG.
Q21. Responsibility accounting is a system that related the financial reports to a responsibility center. It is a system that measures the
plans and actions of each responsibility center.
Q22. It is a statement of estimated receipts and estimated expenses of the government which serves as basis for a general appropriation
bill.
Accrual basis
Q25. Government funds include public moneys of every sort and other resources pertaining to any agency of the government.
Government funds or property shall be spent or used solely for private purpose.
Q26. These are the appropriations for the purchase of goods and services the benefits of which extend beyond the fiscal year and which
add to the assets of the government.
Capital outlays
Q27. It is applied in the preparation of the national budget where the total estimated revenue must be more than estimated expenditures.
Balanced budget
Q28. This qualitative characteristic of financial reporting refers to freedom from material error and bias.
Reliability
Directly implementing the projects of, and performing the functions delegated by, the government
Q31. The coverage of the GAM for NGAs includes all of the following, except
Basic concepts used in auditing the accounts and financial reports of government entities
Q32. Which registry contains columns for allotments, obligations, unobligated allotments, and unpaid obligations?
RAOD
Q33. It is the basis for coding the object classification in the COA RCA.
Accrual accounting
Q34. It is a budget which covers items not adequately provided or not at all included in the general appropriation law.
Special budget
Q35. This report, required of government entities, shows the names of creditors, the amounts owed to them, and the number of days
these obligations are outstanding. This report is submitted to the COA and DBM within 30 days after the end of the year.
Physical plan
Q38. It is a budget that focuses on specific expenditures such as PERA, training expenses, and utility expenses.
Management Supervision
Q40. It is the authorization from the Department of Budget and Management to an agency to incur obligation up to a specified amount
that must be within the legislative appropriation.
Allotment
Q41. The RAOD shall be maintained to record allotments, obligations and disbursements. It shall show the allotment received for the
year, obligations incurred, and the actual disbursements made.
Q43. Under responsibility accounting, a cost is considered controllable at a given level of managerial responsibility if
The manager has the power to incur it within a given period of time
Q44. It is the expenditure authority derived from appropriation laws, government ordinances, and other decisions related to the
anticipated revenue or receipts for the budgetary period.
Approved Budget
Q46. It refers to a fund which is available for any purpose other than those which other funds have been designated to
General fund
Q47. The President’s explanation of the country’s fiscal policy and budget priorities is contained in a document called the
Q48. Which office maintains accounts of financial transactions of all national government offices, agencies, and instrumentalities?
Bureau of Treasury
Q49. These are intended to meet the needs of users who are not in a position to demand reports tailored to meet their particular
information needs.
Q50. It is the amount committed to be paid by the government arising from an act of a duly authorized administrative officer and which
binds the government to the immediate and eventual payment of money.
Allotment
Q52. This is the authority issued by the DBM to central, regional and provincial offices and operating units to cover their cash
requirements.
Q53. The UACS was jointly developed by the following departments except
Q54. Which of the following principles is not in accordance with the Basic Government Accounting and Reporting Principles under the
GAM for NGAs?
Liability account
Q57. The GAM for NGAs aims to update all of the following except
Rules and regulations regarding the filing and payment of taxes by government employees
Q58. In the RCA, this group represents classification within the major account
Land
Q60. It is the system of prescribing the procedures for recording, appropriations, allotments and obligations.
Budgetary accounting
08
Q62. It refers to an accounting entity for recording expenditures and revenues associated with a specific activity for which accounting
records are maintained and periodic financial reports are maintained.
Training expense
Due to BIR
Q65. What is the legal basis of the COA in promulgating the GAM for NGAs?
Article IX-D, Section 2 par. (2) of the 1987 Constitution of the Republic of the Philippines
Subsistence allowance
Q67. After the budget call, budget hearings are made whereby agencies defend their proposed programs and expenditures for the
upcoming year before the
DBM
Q68. In the context of responsibility accounting, government agencies are basically cost centers because
Their primary purpose is to render service to the public at the lowest possible cost
Q69. Which registry contains columns for allotment received, notice of cash allocation received and utilized, and balances for
unutilized notice of cash allocation and unfunded allotment?
RANCA
Q70. This refers to authorization programmed annually or for some other period prescribed by law which do not require periodic action
by Congress.
Automatic appropriations
Q71. The RAPAL shall be maintained to monitor appropriations and allotments charged thereto. It shall be maintained by COA to
ensure that allotment releases are valid.
Q72. Which of the following is not one of the registries maintained by a government entity?
Q73. It is a budgeting approach that uses performance information to assist in deciding where the funds will go.
Performance-informed budgeting
19902010
Q75. It represents the accounts classification as to assets, liabilities, equity, income and expenses.
Account group
Q76. After the incurrence of obligations, the next step in the budget cycle is
Disbursement authority
Land
Q78. Under this approach to budgeting, several parties participate in the budget preparation, starting from the lowest levels of the
government up to the highest levels
Bottom-up budgeting
Q79. Which of the following events or transactions requires recording in the books of accounts of a government entity?
Disbursement authority
Q80. It is a plan or program of activities together with the cost of undertaking them to meet goals or targets which emphasize on
expected results.
Performance budget
Q81. Government accounting aims to provide information concerning past operations and present conditions. It also aims to provide a
basis for guidance for future operations.
True
Q2. According to the GAM for NGAs, the Registries are (choose the incorrect statement)
Q4. Which of the following accounts is most likely credited when a government entity remits its collections to the National Treasury?
Q5. A disbursement authority issued by the DBM to DFA and DOLE to utilize their income collected/retained by the foreign service
posts to cover their operating requirements, but not to exceed the released allotment to the said post.
CDC
Q6. Both the ORS and RAOD are updated each time an obligation is incurred, a payable is recorded for the obligation incurred, and
disbursements are made to settle the recorded payables.
True
Q7. Entity A, a government entity, made disbursements for the travelling expenses of its personnel. This is classified as
Q8. The remittance of amount withheld to the other government agencies, such as the BIR, BOC, GSIS, PhilHealth, and PAG-IBIG is
done through the TRA.
False
Q10. Which of the following records is technically not considered an accounting book?
Q11. Which of the following is (are) affected when a government entity makes disbursements to settle recorded obligations?
All of these
Q12. The entry to record the reversion of unused NCA at the end of the period is the exact opposite of the entry to record the receipt of
NCA.
True
Q13. The various registries maintained by government entities primarily serve as internal control for controlling and monitoring the
conformance of actual results with the approved budget.
True
Q14. According to the RCA, the “Subsidy from National Government” account is a/an
Revenue account
Capital outlays
Q16. Which of the following accounts is credited when the government entity remits contributions to the GSIS, PhilHealth, and PAG-
IBIG?
Q17.
In MNOP’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and Balances, how much is shown as
“unpaid obligations”?
P2B
Asset account
Closing entries
Q22. The “Subsidy from National Government” account is debited when recording
Q23. The GAM for NGAs requires the Collecting Officer to issue an official receipt to acknowledge the receipt of the NCA.
False
RAPAL
Allotment
Q26.
Allotment
Q27. Which of the following accounts is debited when the government entity remits its collections to the National Treasury?
Q28. Which of the following is charged with the responsibility of keeping the general accounts and related documents of the
government?
Commission on Audit
Q29. Which of the following is credited when a government entity receives the NCA?
Q30.
In MNOP’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and Balances, how much is shown as
“unobligated allotments”?
P5B
Q31. Obligation recorded in the registries but not yet in the accounting books are referred to as
Q32. The entry to record the receipt of NCA by a government entity includes a debit to
Q33.
In MNOP’s first quarter Statement of Appropriations, Allotments, Obligations, Disbursements and Balances, how much is shown as
“unreleased appropriations”?
P180B
Q34. At the end of each year, an adjustment is made to revert any unused NCA of a government entity.
True
Q35. Both the ORS and RAOD are updated each time an obligation is incurred, a payable is recorded for the obligation incurred, and
disbursements are made to settle the recorded payable.
True
Q36. The 8-digit Revised Chart of Accounts (RCA) Code for the account “Subsidy from National Government” starts with number
RANCA
Q38. The 8-digit RCA code for expenses starts with number
Q39. Technically, only the Journals and ledgers are considered accounting records and the Registries are budget records.
True
Q40. The various registries maintained by government entities are technically considered as
Budget records
Q41. A journal entry with a credit to “Cash - Modified Disbursement System (MDS), Regular” account is recorded in the
Q42. Which of the following accounts is credited when the government entity remits taxes withheld to BIR?
Q43. Government entities and business entities use the term obligation or the phrase “incurrence of obligation” similarly.
False
Q44. The incurrence of an obligation for future delivery or performance by the obligee is recorded by a government in the
TRA
Personnel services
Q47. Separate accounting records and budget registries are maintained for each fund cluster.
True
Q48.
Appropriation
Q49. Which of the following is (are) affected when a government entity incurs obligations?
Q51. In reference to the government accounting cycle, a government entity can incur obligations after receiving
Allotment
Statement 2: When goods or services are exchanged or swapped for goods or services are of a similar nature and value, the
exchange is regarded as a transaction which generates revenue.
Both statements are false.
Q11. According to the GAM for NGAs, an exchange of goods or services of similar nature and value between entities
Does not give rise to revenue
Q12. According to the GAM for NGAs, which of the following may never give rise to revenue for a government entity?
Services in-kind
Q13. Which of the following receipts of a government entity will give rise to revenue recognition?
Receipt of subsidy from the national government or other national government agencies
Q14. All revenues shall be remitted to the BTr and included in the Special Fund, unless another law specifically requires otherwise.
False
Q15. Gifts, donations and goods in-kind with condition are recognized
Initially as liability and recognized as revenue only when the condition is satisfied
Q16. Government entities and business entities use the same accounting treatment for all of the following except
Remittance of taxes withheld to the BIR
Q17. According to the GAM for NGAs, revenue includes only those that are received or receivable by the entity in its own account.
Accordingly, receipts on behalf of another entity are
Recorded as liability
Q18. All of the following give rise to the recognition of revenue from non-exchange transaction except
Sale of goods
Q19. According to P. D. 1445, all revenues of an entity shall be remitted to the National Treasury and included in the
General Fund
Q20. Which of the following is a non-exchange transaction?
Collection of taxes
Q21. The constructive remittance of taxes withheld through the TRA gives rise to the recognition of revenue.
True
Q22. The receipt of a performance bond or a security deposit is credited to
Liability account
Q23. Statement 1: Revenue from non-exchange transactions shall be measured at the amount of the increase in net assets
recognized by the entity, unless it is also required to recognize a liability.
Statement 2: Revenue from exchange transactions shall be measured at fair value of the consideration received or receivable.
Both statements are true.
Q24. According to the GAM for NGAs, all of the following criteria must be met before a government entity recognizes revenue from
the sale of goods, except
The stage of completion can be measured reliably
Q25. Revenues received by the NGAs from exchange transactions are derived from the following except
Taxes, gifts and donations, goods in-kind, and fines and penalties
Q26. According to the GAM for NGAs, the receipt of concessionary loans by government entities may give rise to revenue recognition.
True
Q27. These are transactions in which one entity receives assets or services, or has liabilities extinguished, and directly give
approximately equal value to another entity in exchange.
Exchange transactions
Q28. Statement 1: Interest shall be recognized as they are earned in accordance with the substance of the relevant agreement.
Statement 2: Dividends or similar distributions shall be recognized when the shareholder’s or the entity’s right to receive
payment is established.
Only statement 2 is true.
Q29. The taxable event for income tax is the passage of the time period for which the tax is levied.
False
Q30. It is type of fund held by a government entity that is designated for special purposes.
Special fund
Q31. Which of the following is not true?
When the inflow of cash or cash equivalents received or receivable is deferred, the fair value of the consideration is
equal to the nominal amount of cash received or receivable.
Q32. According to the GAM for NGAs, interest revenue is recognized
On a time proportion basis using effective interest method
Q33. These are economic benefits or service potential received or receivable by NGAs from an individual or other entity, as determined
by a court or other law enforcement body, as a consequence of the individual or other entity breaching the requirements of laws or
regulations.
Fines
Q34. Which of the following is not one of the fundamental principles for revenue under P.D No. 1445?
All collections of revenue must be in the form of cash
Q35. According to the GAM for NGAs, when the outcome of a service contract cannot be estimated reliably, revenue is recognized
Only to the extent of costs that are expected to be recovered
Q36. The receipt of which of the following may not give rise to revenue by a government entity?
Inter-agency fund transfer
Q37. Remittances of collections to the National Treasury are recorded as a debit to which of the following accounts?
Cash – Treasury/Agency Deposit, Regular
Q38. These do not meet the definition of an asset because the recipient is unable to control the access of the transferor to the future
economic benefits or service potential embodied in the item pledges. These are unenforceable undertakings to transfer assets to the
recipient entity.
Pledges
Q39. According to the GAM for NGAs, revenue from exchange transactions are measured at the amount of the cash received.
False
Q40. When an uncertainty arises about the collectability of an amount already included in revenue, the uncollectible amount, or the
amount in respect of which recovery has ceased to be probable, is recognized as
An impairment loss
Q41. Entity A sells goods with a list price of 100,000 on account. The credit term is 20% and 10%. The journal entry to recognize the
revenue includes all of the following except
A debit to sales discount for 28,000
Q42. A government entity collects fees for the processing of certain permits. The processing of a permit would normally take a few
minutes. The processing fee is collected upon issuance of the permit. This government entity would normally recognize revenue from
permit fees
Upon collection of the fee
Q43. Which of the following does not give rise to revenue from assistance or subsidy?
Inter-agency fund transfer
Q44. The main source of revenue for the government is taxes.
True
Q45. Taxes are compulsory payment, imposed on person or activities intended to provide revenue to the government. Taxes include
fees, fines and penalties.
False
Q46. When an amount already recognized as a revenue becomes subsequently uncollectible, it is
Recognized as an expense
Q47. Statement 1: All revenue accruing to the departments, offices and agencies by virtue of the provisions of existing laws, orders and
regulations shall be deposited in the National Treasury or in a duly authorized depository of the government and shall accrue to the
general fund of the government…
Statement 2: Only when authorized by law and following such rules and regulations as may be issued by the Permanent
Committee…
Both statements are true.
Q48. When cash flows are deferred, the fair value of the consideration receivable is its present value.
True
Q49. According to P. D. 1445 (5)...
Amounts received in trust and from business-type activities of government may be separately recorded.
Q50. Revenues of a government entity arise from exchange transactions only.
False
4. According to the GAM for NGAs, cash disbursements are made through
Cash advances to authorized personnel
5. When a government agency pays an account and withholds tax, the journal entry includes a credit to
Due to BIR
6. Statement 1: Due to strict internal control measures, a government entity can only disburse funds via cash or
check
Statement 2: Checks can be MDS or commercial checks
Only statement 2 is true
7. Statement 1: No additional cash advance shall be given to any official or employee unless the previous cash
advance given to him/her is first liquidated.
Statement 2: Liquidation of cash advance for foreign travel should be done 30 days upon return to workstation.
Only statement 1 is true
8. All of the following are considered valid cashless disbursements except:
Payment to a supplier through GCash
9. Statement 1: The Non-Cash Availment Authority (NCAA) is a disbursement authority issued to a government
agency with foreign service posts.
Statement 2: The Department of Foreign Affairs has this kind of disbursement authority.
Both statements are false
10. Statement 1: Disbursements through the Cash Disbursement Ceiling (CDC) results in the recognition of a loan
payable in the books of accounts of the BTr.
Statement 2: Since liability is recognized, the Cash Disbursement Ceiling (CDC) involves cash inflow to the BTr.
Both statements are false.
11. Statement 1: Entity A may acquire equipment from a supplier, on account and a lender settles the account of A by
directly paying the supplier the proceeds of a loan payable that is recorded in the BTr’s books
Statement 2: this transaction is called Cash Disbursement Ceiling (CDC).
Only statement 1 is true.
12. A certification on the availability of allotment is required before a disbursement of government funds is made.
According to the GAM for NGAs, who shall issue the certification?
Budget officer
13. Which of the following results in the recognition of payroll?
Liquidation of cash advance for travel
14. Which of the following shall certify the availability of funds and completeness of supporting documents before
the Head of Agency or his/her authorized representative can enter into a contract that obligate the government for
the eventual payment of government funds?
Chief accountant
15. Which of the following is not used in processing disbursements?
ORs
16. Statement 1: All disbursements shall be made through Disbursement Vouchers (DV) or payroll.
Statement 2: The head of the requisitioning unit shall approve any disbursements.
Only statement 1 is true
17. According to the GAM for NGAs, accounting for Petty Cash shall be done using
Imprest system
18. Statement 1: Under the Automatic Debit Arrangement (ADA) mode of disbursement, payments from a
government entity are directly debited to the accounts of the payees through fund bank transfers.
Statement 2: Automatic Debit Arrangement (ADA) works like a check, hence, once notified, the payee can go to
the bank to withdraw the cash by presenting the notification.
Both statements are false
19. Which of the following is not one of the modes of disbursements by a government entity?
Payment thru Gcash
Payroll
39. The following disbursements are excluded from payment using LDDAP-ADA except
Payment of government employee salaries
40. Which of the following results to the recognition in the books of accounts classified as Personnel Services?
Set up of payable for payroll
41. Which of the following is true regarding disbursement through electronic Modified Disbursement System
(eMDS)?
The disbursement is made via an online transaction.
42. It is an authority by an agency’s Central Office to its regional and operating units to cover the latter’s cash
requirements.
Notice of Transfer of Allocation (NTA)
43. A government entity makes constructive remittance of taxes withheld to the BIR through Tax Remittance Advice
(TRA). The entry in recording the transaction includes a
Debit to Due to BIR
44. This is used to recognize in the books of national government agencies, the constructive remittance to BIR and
BOC of taxes and customs’ duties withheld.
Tax Remittance Advice (TRA)
45. When a government entity remits its collections to BTr, the journal entry to record the remittance includes a
Debit to Cash-Treasury/Agency Deposit, Regular
46. Entity A acquires an equipment on account and settles the account by debiting accounts payable and crediting
subsidy from national government. The mode of disbursement used is most likely a/an
Non cash availment authority
47. Statement I: Under the ADA mode of disbursement, payments from a government entity are directly debited to
the accounts of the payees through fund/bank
Statement II: ADA works like a check, hence, once notified, the payee can go to the back to withdraw the cash by
presenting the notification
Both statements are false
48. Which of the following is not a form of a disbursement authority?
CBC
49. Entity A wants to make disbursements online. Which of the following should Entity A do so that it can make
valid disbursements online?
Enroll with the eMDS of the LBP
50. All Disbursement Vouchers (DVs) or Payroll shall be approved by the
Head of agency
51. Which of the following shall certify the availability of allotment before obligations can be incurred and
disbursements are made?
Budget officer
52. A certification of availability of funds and completeness of supporting documents is required before a
disbursement of government funds is made. According to the GAM for NGAs, who shall issue this certification?
Chief accountant
3. Which among the following does not require a separate disclosure in the notes to financial statements?
All of these
4. Closing entries
Remove the balances from the agency’s temporary accounts
5. The following are responsible for the preparation of financial statements except
Cashier
6. According to the GAM for NGAs, government entities shall present expenses in the statement of financial
performance according to the
Either function or nature of expenses as a matter of accounting policy choice
7. Which of the following is a peculiar general purpose financial statement of government entities?
Statement of Comparison of Budget and Actual Amounts
8. Which of the following is an adjusting event?
Sale of inventories that evidences the correct NRV of inventories at the reporting date
9. Financial statements are free from material error and bias and can be depended on by users to represent faithfully
that which it purports to represent or could reasonably be expected to represent.
Reliability
10. These are financial statements that are required to be prepared at any given period or at a financial reporting
period without closing the books of accounts.
Interim reports
11. Statement 1: According to the GAM for NGAs, government entities shall present financial statements annually.
Statement 2: However, government entities are also required to prepare interim financial statements on quarterly
basis.
Both statements are true
12. The closing of the ‘Cash – Treasury/Agency Deposit, Regular” account to the “Accumulated Surplus (Deficit)”
account is presented in the statement of changes in equity
Under the “Adjustment of net revenue recognized directly in net assets/equity” line item
13. Which of the following is not one of the components of a complete set of general purpose financial statements?
Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
14. Which of the following does not lead to the classification of a liability as a current?
It is cash or a cash equivalent, unless it is restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting date
15. These refer to financial statements intended to meet the needs of users who are not in a position to demand reports
tailored to meet their particular information needs
General Purpose Financial Statements
16. This is also termed as the adjusted trial balance
Pre-closing trial balance
17. Finance lease payments pertaining to the reduction of the outstanding finance lease liability are classified in the
statement of cash flows as
Financing activities
18. According to the GAM for NGAs, the statement of financial position is presented in comparative form and in
All of these
19. The NCA is least likely to be reported in which of the following financial statements?
Statement of financial position
20. A government entity presents payments for purchases of items of PPE in the statement of cash flows
Net of withholding taxes
21. Entity A presents its cash flows from operating activities using the direct method. Entity A holds foreign
currencies. These are appropriately translated to the spot exchange rates at the reporting date. How should entity
A present the translation difference in the statement of cash flows?
As a reconciliation of the cash and cash equivalents at the beginning and end of the period,
presented separately from the operating, investing, and financing activities
22. Statement 1: Government entities present information on other comprehensive income just like business
entities. Statement 2: Under GAM for NGAs, correction of prior period errors is recognized directly in equity.
Only statement 2 is true
23. Statement 1: In the statement of financial position of a government entity, current assets include those held
primarily for trading.
Statement 2: In the statement of financial position of a government entity, current liabilities include those due to
be settled within 18 months after reporting date.
Only statement 1 is true
24. The GAM for NGAs requires all of the following information to be displayed prominently and repeatedly on the
face of the financial statements, except
Name of the related registries used
25. A government entity recognizes the effect of this item in surplus or deficit rather than directly in equity.
Receipt of notice of cash allocation
26. Which among the following are included in the computation of surplus or deficit for a period?
The effect of changes in accounting estimates
27. Additional disclosures shall be made in the notes if an entity presents expenses by
Function
28. A government entity presents payments for purchases of inventories in the statement of cash flows
Net of withholding taxes
29. Changes in accounting policies are accounted for
Any of these
30. Which of the following is an objective of the general purpose financial statements of government entities?
To demonstrate the accountability of the entity for the resources entrusted to it
31. Which of the following is most likely applicable to a government entity but not to a business entity?
Presenting a statement of financial position in a detailed format
32. It serves as the covering letter in transmitting the agency’s financial statements to the COA, DBM, and other
oversight agencies and parties.
Statement of management responsibility
33. According to the GAM for NGAs, the responsibility over financial statements rests with the entity’s management,
particularly the
Head of the entity and head of finance/accounting
34. Amounts in the statement of financial position show
Cumulative balances from the formation of the entity up to the reporting date
35. Statement 1: The statement of comparison of budget and actual amounts shows the variances between actual
results of the current and previous years.
Statement 2: The inclusion of statement of comparison of budget and actual amounts in a complete set of financial
statements of a government entity enhances the transparency of financial reporting of the government.
Only statement 1 is true
36. When an entity presents expenses in the statement of financial performance by function, it shall provide
additional disclosures in the notes that include all of the following except
Capital outlays
37. These differences between the ‘actual amounts on comparable basis’, presented in the statement of comparison of
budget and actual amounts, and amounts presented in the other components of financial statements occur when
the approved budget is prepared on a basis other than the accounting basis.
Basis Differences
38. Which of the following cash flows is presented in the financing activities section of a statement of cash flows?
Amortization of a finance lease liability
39. The statement of financial performance of a government entity differs from the statement of profit or loss of a
business entity in which of the following respects?
The use of the term “surplus or deficit” rather than “profit or loss”
40. Which of the following information is not reported in the statement of changes in net assets/equity?
Effects of changes in accounting estimates
41. Statement 1: Non-adjusting events are never recognized but are always
disclosed. Statement 2: Prior period errors are corrected by retrospective
restatement.
Only statement 2 is true
42. Statement 1: The statement of financial position is dated as at the reporting date.
Statement 2: The government entity has the prerogative of choosing either condensed and detailed statement of
financial position.
Only statement 1 is true
43. Statement 1: The statement of changes in net assets/equity shows in comparative form the changes affecting
“Accumulated Surplus/(Deficit)”.
Statement 2: The statement of changes in net assets/equity shows the effects of changes in accounting policies and
corrections of errors.
Both statements are true
44. The effect of which of the following is recognized directly in equity rather than in surplus or deficit?
Gains or losses on remeasuring available-for-sale financial assets
45. Statement 1: The GAM for NGAs requires government entities to present expenses in the statement of financial
performance according to the function of those expenses.
Statement 2: The statement of financial performance is presented in comparative, condensed, and detailed
formats.
Only statement 2 is true
46. The presentation requirements for statement of cash flows of government entities differ from the requirements of
a business entity in which of the following respects?
The presentation of cash flows from (used in) operating activities using the direct method only; the
choice of using the indirect method is not available.
47. The GAM for NGAs requires which of the following methods of presenting cash flows from operating activities
in the statement of cash flows?
Direct method
48. Statement 1: The statement of financial performance of a government entity is the exact equivalent of the
statement of comprehensive income of a business entity.
Statement 2: The statement of financial performance of a government entity is prepared for different fund clusters.
Only statement 2 is true
49. The inclusion of a degree of caution in the exercise of judgments needed in making the estimates required under
conditions of uncertainty, such that assets or revenue are not overstated and liabilities and expenses are not
understated.
Prudence
50. Omission or misstatement of information could influence the decision of users or assessments made on the basis
of the financial statements.
Materiality
51. Statement 1: The objectives of general purpose financial reporting in the public sector should be to provide
information useful for decision making, and to demonstrate the accountability of the entity for the resources
entrusted to it.
Statement 2: Financial statements have a predictive or prospective role, providing information useful in predicting
the level of resources required for continued operations, the resources that maybe generated by continued
operations, and the associated risks and uncertainties.
Both statements are true