Accounting for Government & Non-Profit Organizations Overview

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Questions and Answers

What does Government Accounting involve?

  • Only recording financial transactions
  • Exclusively summarizing transactions
  • Analyzing, recording, and communicating transactions involving government funds (correct)
  • Only interpreting the results of financial transactions

Which of the following is NOT a Basic Government Accounting Principle for National Government Agencies (NGAs)?

  • Reporting financial transactions based on budgetary records
  • Maintaining single entry bookkeeping system (correct)
  • Using accrual basis of accounting
  • Following generally accepted government accounting principles

What type of Financial Statements are General-Purpose Financial Statements (GPFSs)?

  • Reports meeting the needs of users with specific demands
  • Reports exclusively designed for government agencies
  • Tailored reports for specific user needs
  • Intended for users not specifically demanding tailored reports (correct)

Which principle requires National Government Agencies to use the Revised Chart of Accounts (RCA)?

<p>Budget basis for presentation of budget information (B)</p> Signup and view all the answers

In Government Accounting, what method is used for presenting budget information in financial statements?

<p>Budget basis (D)</p> Signup and view all the answers

What type of accounting standards are National Government Agencies required to follow?

<p>Philippine Public Sector Accounting Standards (PPSAS) (B)</p> Signup and view all the answers

What is the primary purpose of general-purpose financial reporting in the public sector?

<p>To provide information for decision making and demonstrate accountability (A)</p> Signup and view all the answers

Who is responsible for the preparation of financial statements for an individual entity or department?

<p>The head of the entity/department central office and the head of the finance/accounting unit (D)</p> Signup and view all the answers

Which of the following is NOT a component of the complete set of General-Purpose Financial Statements (GPFSs)?

<p>Statement of Profit and Loss (B)</p> Signup and view all the answers

Who is responsible for the preparation of financial statements for the National Government (NG) as a single entity?

<p>The Chairman of the Commission on Audit (COA) (D)</p> Signup and view all the answers

Which of the following is a component of the complete set of General-Purpose Financial Statements (GPFSs) according to the text?

<p>Statement of Comparison of Budget and Actual Amounts (B)</p> Signup and view all the answers

Who is responsible for the preparation of financial statements for a department or entity as a single entity?

<p>The head of the entity/department central office and the head of the CO finance unit (A)</p> Signup and view all the answers

What are the qualitative characteristics of financial reporting?

<p>Understandability, relevance, reliability, comparability (B)</p> Signup and view all the answers

Which statement best describes liabilities?

<p>Liabilities are firm obligations of the entity (C)</p> Signup and view all the answers

What is net assets/equity?

<p>The residual interest in the assets after deducting liabilities (D)</p> Signup and view all the answers

What do revenues refer to as defined in Section 3 of PD 1445?

<p>All funds derived from the income of government agencies (A)</p> Signup and view all the answers

What are expenses in the context of accounting?

<p>Outflows or consumption of assets during the reporting period (B)</p> Signup and view all the answers

What do expenses relate to?

<p>Decreases in net assets/equity (D)</p> Signup and view all the answers

Where should transactions not recorded in the Special Journals be recorded?

<p>General Journal (GJ) (D)</p> Signup and view all the answers

In financial reporting, which element is defined as resources controlled by an entity as a result of past events?

<p>Assets (D)</p> Signup and view all the answers

Which ledger summarizes all transactions recorded in the General Journal and special journals?

<p>General Ledger (GL) (A)</p> Signup and view all the answers

Who maintains the Cash Receipts Journal in an organization?

<p>Accounting Division/Unit by fund cluster (A)</p> Signup and view all the answers

Which journal is used to record disbursements made through checks?

<p>Check Disbursements Journal (CkDJ) (D)</p> Signup and view all the answers

In which journal should the Report of Collection and Deposit be recorded?

<p>Cash Receipts Journal (CRJ) (C)</p> Signup and view all the answers

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Study Notes

Government Accounting Basics

  • Government Accounting involves financial reporting and budgeting for government agencies and entities.

Financial Statements and Reporting

  • General-Purpose Financial Statements (GPFSs) are financial statements intended to meet the needs of a wide range of users.
  • The primary purpose of general-purpose financial reporting in the public sector is to provide information about the government's financial performance, position, and cash flows.
  • National Government Agencies (NGAs) are required to follow the accounting standards prescribed by the Commission on Audit (COA).
  • The method used for presenting budget information in financial statements is the Budget and Other Financing Sources (BOFS) format.

Preparation of Financial Statements

  • The head of the entity or department is responsible for the preparation of financial statements for an individual entity or department.
  • The Commission on Audit (COA) is responsible for the preparation of financial statements for the National Government (NG) as a single entity.

Components of General-Purpose Financial Statements

  • The complete set of General-Purpose Financial Statements (GPFSs) includes:
    • Statement of Financial Position
    • Statement of Financial Performance
    • Statement of Changes in Net Assets or Equity
    • Statement of Cash Flows
    • Notes to the Financial Statements

Qualitative Characteristics of Financial Reporting

  • The qualitative characteristics of financial reporting include:
    • Relevance
    • Reliability
    • Comparability
    • Consistency
    • Verifiability
    • Timeliness
    • Understandability

Elements of Financial Statements

  • Liabilities refer to present obligations of the entity to transfer resources.
  • Net assets/equity refers to the residual interest or claim on the entity's assets after deducting its liabilities.
  • Revenues refer to inflows or other enhancements of assets or settlements of liabilities.
  • Expenses refer to outflows or other using up of assets or incurrences of liabilities.

Journalizing and Posting

  • Transactions not recorded in the Special Journals should be recorded in the General Journal.
  • The General Ledger summarizes all transactions recorded in the General Journal and special journals.
  • The Cash Receipts Journal is maintained by the Cashier.
  • Disbursements made through checks are recorded in the Cash Disbursements Journal.
  • The Report of Collection and Deposit should be recorded in the Cash Receipts Journal.

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