CPA REVIEW SCHOOL 0F THE F!"{ILIPPIFIES MANILA
PRACTICAL ACCOUNTING PROBLEMS GUERRERO / GERMAN SIY / DE JESUS / tIM / FERRER
NGAS & $.{ON.PROFIT ORGANIZATION
II
New Government Acco u ntinqr$vetelE Bu,Jgeted accounts of appropriations and allotnrents are enterecj in tlte registry maintained Oy OeU (Department of Budget ancJ ilIanagement). Allotments and obligations are entered in the registry maintained hy the agency
The notice of cash allocation (NCA) receivecl hy the agelrlcy frcm the DBlvl is lournalized in the regular agency books (RA books). The ctner set of books of an agency is the national government books (NG books)for income items they are not authorized to tlse.
The obligations incurred by the agency registry, as follows. For Capital Outlay Fersonal Services Maintenance & Others Frnancial Expenses
dr{,.;
hot jcurnafized, but posted to the appropriate
- RAOCO - RAOPS
. F,AOMO . RAOFH
Generallyr, withheld taxes by the agenciv afe no longer remitied tc BtR, but retained and creciitecj to Subsidiary lncome from Naticnar Government (SING) under the Tax Remittance
Advrce (TRA) System. The NCA releasecl to the agency is reduced by the amount of estimated withholding taxes pentinent tc the alictment uove;'ed bv the cash allocation Asset/perpetual inventory method will be followed in the recording of expenditures if it applies to more than one periocl rcr when payrnent is for rnaterials for stock. The expense is taken up when the items are consurned. Costs of assets being constructed are dehiied to coi-rstruction in progress account (using construction period theory). This CIP account is closecl tn the eppropriate asset account upon cornpletion. Constructed Public lnfrastructures are not sl,own arficng tlre fixer: assets on the Statement of Financial i)osition, rather they aie dedu;teC flEr;, ql!r;,n1llerr. equrity (as Oart of CloSing entries) and transferred out tt: an appropr',ate regist:t Deprecration on frxed assets are taken up on the nrcrnth fcllcrrv:ng the month of purchase or completion of construction. A 1oo/o saiap value on tlie asset ir; always assumed and the estimated life is prescribed by COA.
lncome for vvirich tne agency is authorizec to use for its c,pera';iot't is recortJed in the regular agency books. lf the authority is wittr limitati,;rns, sircl-i a.i atil/ excr-si, is to be remitted to the National Treasury the collections shall first be recorrlet; in the 'egular agency books, the expensee joiirnalized, and the excess is io he renritteC io the lqationai Treasury and recorded in the agency's NG hrooks. Two trial balances are prepared: a) Pre-closing trial balance whicfr is aiso the a,Jrustccj trial tralance from which the slatement of incoirne arnd expense is prepareC. b) Post-clrrsing trial halance fron, which the stateinsrit of financial position is prepared.
.
AdjustinE etrtries at end of period are the sanle as those recoi'Jed in comniercial accounting
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Closing entries are similar to commercial accounting with some minor differences'
the NCA from RECORDS OF THE BTR (Burearr of Treasury). upon receipt of the copy of tt (RENREP) the DBIM, the BTR shatl enter it in the Regisiry of NCA and Replenishment MDS appropriate shall also enter the transfer of cash tlom iti bank account(s) to the account. is The obligation is recognized and will be entered in the appropriate nnp y!1 obligation (ALOBS) slips obligation incurred as evidenced-by the approved Allotment and
"Cash in the Treasury for Uporr receipt of the NCA, the Accountant shall journalize it as Modified Disbursement system (MDS)', and 'su'bsidy lncome from Natronal Government" which in effect identifies the share, of the Agency in the income of the National Government' made The Accountant shall credit "Cash, National Treasury-MDS" each time a payment is or asset paid either for, being charged against the NCA and debit the specific account expense account.
Note that there is a new expense ciassification, the financial expenses. They are categclzed separately from the MOOE since they are not operating expenses' lt shall for maintarn separate ,"gittry for leases from the Special Purpose Fund, the Registry Special Purpose Funds Appropriation (RESPFA)' and The DBM shall maintain the Registrv of Allotrnent and NCA (RANCA) for the allotments the of record the NCA issued to the agency. ih" nnruCA shall be the control and monitoring DBM, The DBM shall furnisn ihe Brireau of Treasury a copy of the NCA.
Not for Profil Orqaniz
FINANCIAL STA"1"IMENTS
NOT FOR
REOUIRED FOR PRIVATE
PROFIT
ORGANIz.,TIONS
1. Stiltenrenl of Financial Fosition 2. Staiemertt of A:tivities 3. Stateritent of Cash Flovus 4. Specific for Voluntarir [iealti'i and \Nelfare
Organizations
-
Statement of Functional
Expenses
Statement
of
Financial Posrtlon "- shows assets anci liabilities similar
to
commercial
accounting. Net assets are classifteci into. 1 Unrestricted - no donor imposed restrictions Z l"emporarily restricted - with clonor imposed stipulations (expiration of time and fulfillment of use restrictions) 3 pprrnanently restricted - u;ith donr:r impcsecl restrictions that do not expire nor can be removed by I'IPO activitY.
Statement of Activities - show revenues, expenses, gains and losses aS well as reclassification among the different types i:f net assets. The change in net assets for each type is requirecl. Expeiises are requireci (reported) only in unrestricted net assets.
*
r
Staternent of Casir f:lows
r
Specific fuirtds us,.:o by not for S.rrcfit orgatrizations: 1. lJnrestricted frjnd - include ait ine resources that are available for use by authority of the Roard of Directcrs (even thougl-r designatecl for specific purposes) and are not restricteci by donors. 2 Restricted fund - accournts for assets available for current use but are not derived from the operations of the NPO's. These assets are transferred to unrestricted funds at the tirne the designated expenditure is made
similar tr: the Cash Flows prepared in commercial accounting
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Endowment fund Permanent - PrinciPal is it: be rnaintaineii indefiru'ieiy in revenue providing a. 'investments b. Term - principal rnay b,e expended after passage ot a period of time c. euasr- endowment - established by Boar"d of Llirectcrs under its control
4. Agency fund - used to account for assets held by I'lFll; as a custocian. 5. Others; like annuity funcJs, loss funds (for colteges) and plant funds Revenues and gains come from own principal and auxiliary a*trvities or from donors.
Contributions - contributions of cash ancl other assets are recogl"lized when received and credited to contributions revenue (Festncteij cr Unre*iricied). tlorrtribuied services and facilities are recognized both as expenses anC contributiolts revenue$, net of expenses Pleclges - unconditir:nal plectrges are reoognized as racei,rabies and ccntributions revenue (reslircteci or unrestricte,f) nf propi"iate;r provi',icns frr,;',Jo"tbii'ul cled,;e':s f,re ai:;o to lre set up' Expenses and losses
-
ali expenses cf th;; friF]0 are ;'ecr;gnizecl trr the: unr"ei;ti"icted fund
Expenses can be ciassified tnto. a) Progranr - actrvities that result irt the clistribtlli6lr of g:t'c}; "l;rri services t* beneficiaries' ali other activities othel than program fuitcl taising and rnembership Supporting deoreiol-rnent.
b)
-
.
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Rr'N
M
EN
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The Department of Health received ;1r". allot:re;ni frorn l]epartn]enl of Btidget and Management for Capitai Outlay P2,:100,C00; Mai:ttenance ancl other Operating Experises P740.000; and Personal Ser'.rices P'i,100,0r)0 Vl,ihat will he the entry of the DQH in its regular aEency books upon receipts ol allctnrenl?
A
Cash - NationaiTreasury, MDS Subsrdv lncome from National Gcvernmc:ni
B
Naitronal Clear:ng ,'\ccount
4,i 40,000 4,14CI,000
I
14r ,],00;',
4,14"0,*C0
Notice of Oash Allocatian
Z.
C.
Cash Collecting Cfficer Cash in Bant: - LCCA
D.
h4emo Entry
..,'!,1{l,CCO
a
140,00C
The Departrnent of Foreign Affarrs issued plri"cf,as* or;i::r lr.' tl':e ar;qllisiiiorl of office equipment costrng P1,920,00e . Tire (,(lr.iipnlenl v,i,:l3 1'1'"".;1,,,,ris.1 v'lith tl're charge invoice and was Jrbsequentiv paiei bi,che.:r., aftet rvii.r:r'.)itl;il!l ia,'tes cf 107o The DFA remitted the tax witnheld to Brirr:a- c':f lnterncil F',.i','e,ile lhrr.: an authorized government depository lrank. Vdhat rs I'h"* e;"rtrv cf Dh-A ii ie(,-',ci tir* payment'/
A
':,!20
Accounts payable Cash - Disbr-irsirig Offic;e," Due to EIR
(j'l)0
i, i 28.000 192,000
B
Office Equipment Cash - Disbursirg Offic*i" Due in Blfl
I
C.
Accounts payahrle Due to BIR Cash * Collecting Cftil;*r
I,3.
,il2:i
iJLIC)
1,728,000 192,000 u,ilrJ0
192,000 .-.'/
,,., .^ i'"t *, 1,, -- t'.(!"{l i i.) i Ft r\v'
I 728.000
Accounts payable Due to BIR Cash - National TreasurY
1,920,000
-
192,000 1,728,000
MDS
of Department of Public \A/orks and Highways transfers cash was The_project project. Park p5,400,000 to Department of Tourism for a Peoples' 17, 2012 What completed by the implementing agencyidepartment on December of the project? is the entry of source agency/department to recorrj the completion
on July 2s, 2A12,
5,400,000 5,400,000
A. Peoples' Park Project Cash-Check Dtsbursements-MDS
B
5,400,000 5,400,000
Peoples' Park Pro.;ect -t Cas h-irlational reasury-lvl DS
5,400,000 5,400,000
C. Peoples' Parl< Project Duoo
fronr t'{i:tional Government- DOT
5,400,000 5,400,000
D. Peoples' Par"k Project
Due to National Government- DOT
4. The Depari:ment of Education
Corp' signecl a construction contract with ABC Builders
of the contact for the construction of Building, pz,soo,000. The agency paid 20% from ABC billing first its price. After 6 months. the Depifiment of Education received paid the first company Builders ctorp. g0% of the contact prrce cn the 7il' month, the on department the of entry brllrng less P1 500 000 withholding tax \A/hat will be the its books upon recelving the first billing?
A
Building Accounts PaYable
6,750,000
B
Accounts PaVaPle Cash National TreasurY Due to BIR
6,750,000
C. Constructicn Acclitnts
6,750,000
5,250,000 1,500,000
fu1DS
6,750,000
itr Progre$s PaYable
5,250,000 1,500,000
Advances front contractors 6,750,000
D. Construction in Progress
1,500,000 5,250,000
Advances to contractors Accounts PaYable
5,
tax by the What is the entry to recorcl the collection of P3,250,000 corporate income Bureau of lnternal Re';enue rn its national government books?
A
Cash NationalTreasurY MDS lncome tax - CorPoration
B
Cash
3,2s0,000 3,250,000
-
3,250,000
C. Cash in bank -
LCCA lncome tax - CorPoratien
3,250,000
D.
lncome tax - CorPoraiion Cash * Disbursing offic'er
3,250,000
Collecting officer lncome tax -- CorPoration
3,250,000
3,250,000
3,250,000
?
^
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6. The Department of Labor and Enrployrrrerrt recerveri an allotment from the Department of Budget and Management amounting to P25,000,000 which is accompanied by a notice of cash allocation of 90% of the aliotment. Lluring the year, the agency incurred an obligation of 90% of the aiiocation but oniy 40% of these obligation were paid by the agencv. 1"he entry to record the unused NC,{ is:
A
Subsidy lncome fronr l.Jational Governnient 12,150.C00 Cash - Nationai Treasury, ['lDS 12,150 000
B
Subsidy lncome from NG Cash - NT, MDS
C.
Cash
D 7.
Cash
*
-
1rl 400,000 14,.400,000
NT, MDS Subsidy lncome f:'crn
NG
NT, MDS} Subsidy lncome fro:'rr
ttlG
:2
;bi) 0riC 1:j,15Q,C00
i4,400,000 14 400,000
The Department of Justice proviied travelling experise,s i{:-, cnc rf i'l,s oFficers, Mr. Ping fcr an amount of P25,000. T'he travellinpj rxprsyls45 was ,;rrintt",cl to Iu4r. Ping on February 1.2013. Subsequently fir PinE llaurlrJatrrci itc cash advance in the amouni of P20,000. -Ihe excess lvere :elirr;red to DC,.l hy !',*r lrr,"'g The entry to record the granttnq cf ca-qh actrvance tc
A.
Due from Officers and
cash
B
-
eriirlsyses fLrlDS
C. Cash Disbursing officer
-
i:S,ilf"tfl
25,000
-
N-:-,
?.i:,i"\Qli
25,,10{l
?5,000
Mf':S
N"f,
D. Cash Collecting officer Cash
Pingi ,vz:s.
t'lT,
Travelling expenses - local Cash -- f\lT. f'-4Dg Cash
I'lr
?'
COC
25,*0:l
t'4nS
25 000
8. The Department
of Social Welfare and tr)eveloprnerrt s ir[:ii$i;i:i.;n r:t re:nt fr.:i four years arnounted to 375,000 The eritr-yr {e recorcj thlr: triensacricn wouif tr*:
A.
Prepaid
Rent Cash
3'5 OCil
-N]",MI-;S
B
Memorandum Entry in RAOMO
C.
Rent
Expense Cash
*
N1".
375 00C
3IS,000
MLrS
-1,21,000
D. Prepaid Rent
375,110J
Cash Disbr"rrsing Cfficer
9.
3,7",000
The Department of Trade and lndustry ,r;as grarrieri advtnces i'cr pav.oll amounting to P1,5C)0,000 The entry woukJ he.
A.
Casl'i Disbursing
B
Cash _NT,
Officer Payroll
MDS Cash Drsbursing
C
^i,bC:,LC0
'i 5C0,00C ,!
Officer
50Ci (li){l
i
Memorandunr Entry in RACPS
D. Cash DisbursinE Officer Cash -NT, MDS
aOC 00C
rle.i*7,4oq 1,50C,r.'t0il
1.53[t 000
(/
10.
Agency ABC collected cash of P2C0,00C for services rendered. The collectton was deposited to PSBank. What is the entry to record the deposit?
A.
Cash in Bank -LCCA Cash - Disbursing officer
B
Cash - NT Cash
- MDS -
Collecting
officer
C
Cash in Bank -LCCA Cash - Collecting officer"
D
Cash-- NT Cash
- MDS - Disbursing officer
200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
11. The entry to record brank charges of P10,000
A.
Bank
Charges payable
10,000
Charges Cash-NT-MDS
10,000
10,000
Accounts
B. C. D.
Bank
Bank Charges Cash in Bank
10,000 10,000
- LCCA
Bank Charges Cash Disbursing Officer
10,000 10,000 10,000
NON.PROFIT ORGANIZATIOH
1.
QPS Hospital had the following cash receipts and disbursements for the year ended December 31 , 2013.
'
Collections from patients Contributicn for an establishrnent of term endowmt-ri:i Tuition from nursing school Interest received from investment in permanent endowments Dividends received from investment in term endowments Payment of supporting expenses Payment of program expenses
P2,500,000 500,000 '1,000,000
17s,000 200,000 750,000 1,075,000
The interest recetved from perrnanent endowment is restricted by the donor for acquisition of medical equipment. How much is the net cash provided by operating activities?
A B c D
P1,675,000
Pi,875,000 P2,050,000 P2,175,000
Px2^7@?
2.
NPC University, a private not-for-profit university, had the fcllowing r:ash inflows during the year ended June 30, 2013.
/ ,r
P4,000,000 from students for tuition. P2,250,0C0 from a donor who stipulrrted tfrat the n:oney be invested indefinitely. P1,4.00,000 from a donor who stipulated that the rnoney be spent in accor"dance with the wishes of NPC's gcvernrng board.
On NP University's staternent r:f cash flcws for rhe yeai endec Jtlne 3ti, 20i3, lvhat arnount of these cash flows should be reported as financing activitres?
A B c D
P1,400 000 P3,650,000 P5.400,000 P2,25C,000
NGC College, a private noi-for-pr*fii cclle;e recei'aed p.i,8itC,C'00 from Dr. Wu on May ?-5,2Q1S. Or Wu stipuiated that his rc:-itributiofi |;e r.rseil to sLjpool-i facuity r"esearch and
3
bookwritingsemrnaisciuringthefiscaiyearbeglnningtin'i:'li'''';:a'ilonJuly15'2013'
adrninistrators of NGO Cc,llege awarCe,i seininar ai'id iraining grants totaiing P3,900,000 to several faculty mernbers in ai:corciarrce n'ith the wtshes or t:ltl tJorior.
Fo.'the )rear ended June,30,2013.
lriGCr College
sh:ultl
repCIrt
the
P4,800,000
contribution as
A B
C.
n
Temporarily restrictecl revenuee on the siatemer:t rf acttvities Unrestricted revenue on the staterrrent of activities Temporarily restrictecl deferred re,renlre r,'n the ottt,rnlent c;f activtttes An inc;'ease trr fun,J balar';ce cn th:: statet'rle:lt ii{ !i;r.t"lc;el 6.iu:hitinn
VPS College, a private not-fcr-prr:fit *r:ilege, re,.le:\ici:, tne fnlln'anng contributions during 201 3.
r
P3,125,000 from CHED for far:r.rlt3- aeadenric adi'.i,'icem#nls s,tar"ting acnciemic year
z
2C'14.
P625,000 from a donor who stipulated that tlre coririL,utien be l:lvi:ste:cj in perpetuity and thatthe earnings be used for rencvation *f tfie nrain iiL;rery As r:t December 31,2013, earnings from investrnent amountecl to Pli1,25li
For the year ended Decem'cer 31, ?t113, *,,!:ai anrilul'i c( ilts:se i.:*-,r;irrk)ut;ons should be reported as temporarily restrictecl revenueE on tlre stal*inont of ;"rctlrritres?
A B c D
P31,250 P3 156,250 P3,125,000 P3,781,250
'/KB hosprtal, a Not for profrt
hersprlat ai,:liairl{ i';iih a r*lr:J!(: followirrg informatiorr for the year ended Decentbei ii1, l"il i3
Gross patient service renclered Bad debts expense Contractrral adjustments with thlrd partv piiyflr1 Charuty r:are Courtesy allowances to hospitai oITrpl6rysr:u
Jf {irc',n I'}ported ':
12,000,000 ?5C,000 t,cOc,000 750,000 '+5C,ilO0
Net patient service revenues fcr YKB hosp,t,;l for the )'sar srrl,jt){j Iierenrher 1]1, 2013 is
A B c D
P 11,250,000 P10,550,000 P9,800,000 P9,550,000
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During 2013, ZT{i i-lospital purcl-rased medictnes for hospital use totaling P1,000,000. lncluded in the P1,000,000 was an invoice of P100,000 that was canceled in 2013 by the vendor becau,le the ,rendor wished to donate this medicine to ZTS. The donation should be recorded a.,
A. An increase
of P100,000 to Fatient Service Revenue Non - Operating Revenue Revenue Operating to Other of P100,00C An increase C Revenue Operating Non Other D. A decrease of P100,000 to -
B. An increase of P100,000 to Other
Fund estiiblished at a puhrlic college by donors who have stipulated that the principal is nonexpenciable, but that the income generated nray be expended by current operating funds, would be accounteo for in the Annuity fund Temporarily restricted fund Pure-endovr;ment fund Current-f und restricted
B D
Which of the {r'rllou.'ing is most likely to be classified as other operating revenue?
A.
Unrestricted gift
B. State rri.qerllcf-; 9l3ot C. Dividerrri income D. ParkinE fee The statement of financia! position for JDS Library, a private nonprofit organization, should repoft separate, amounts for the library's net assets according to which of the following classlfications?
A.
Unrestricted and perrtanently restricted
B. Temporarily restriciect and permanently restricted C. Unrestricted and tempcrarily restricted D. Unrestricted, temporarily restricted, and permanently restricted
10. On the statement of activities for a private not-for-profit performing arts center, expenses should be deducted from Unres:tricted revenue Temporarily restricted revenues Pei"nt ".: nentii' i-r:siricted reven ues
I
il
ill
B
l, li anci ili Both I and il
C
! only
D
li onili
A
11. OBT Museum, a private nonprofit organizatron, has both regular and term endowments. On the rn'-i$eum's statement of financial position, how should the net assets of each type of endornirient bc repr:,rted?
A.
!J C ti
Term Endowrnenis_ Temporarily restricteci Permanentiy restricteti Unrestricted Temporarily restricted
lTe,eular Endowment Permanently restricted Permanently restricted 1-ern porarily restricted Temporarily restricted
PkT-740q
oI 12 Revenue
frem room changes for telephone calls anC teievision croct':eds florn cafeterias, gift shops and snack bars of not for proflt hosprtals are reccrded as:
A.
B C D
13.
Patient service revenue - Unrestricted Resident Service revenue - Unrestricteci Other operating revenue - Unrestricted Non - operating revenue - Unrestricted
During the year ended December 31,2A13 a not for profit pedoi-ming arts entity received the foliowing donor-restricted contributiort and investment income.
o o
Cash contribution of P1,35C,000 to be permanently investeo. Cash dividends and interest of P75,000 to be used fcrr the acquisition of theatre equiprnent.
As a result of these cash receipts, the statenrent oi cash flcws for the year ended December 31,2013 would report an rnrrease of
A.
B C D
P1,425,000 frcm operating actrv,ities P1,425,000 fr..:nr finarrctng activtties P75 000 from operatrrrg activltles and arr inerease e'i P'1,350,000 from financing activities F1,350,000 from operating activiiies and an lnoreese of P75,urO0 from financing activities
"end
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