Lecture 1 Flashcards by Ma. Isabella Beatrice

What manual replaced the New Government Accounting System (NGAS) Manual that has been in use since 2002?
A) Financial Management Manual (FMM)
B) Government Accounting Manual (GAM)
C) Revised Accounting System (RAS)
D) Public Sector Accounting Manual (PSAM)

B) Government Accounting Manual (GAM)

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The revision of NGAS was prompted by the implementation of which standards?
A) International Financial Reporting Standards (IFRS)
B) Philippine Public Financial Sector Accounting Standards (PPSAS) and International Public Sector Accounting Standards (IPSAS)
C) Generally Accepted Accounting Principles (GAAP)
D) Corporate Accounting Standards (CAS)

B) Philippine Public Financial Sector Accounting Standards (PPSAS) and International Public Sector Accounting Standards (IPSAS)

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Which volume of the Government Accounting Manual contains the Revised Chart of Accounts?
A) Volume I
B) Volume II
C) Volume III
D) None of the above

C) Volume III

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What are the key sectors or agencies expected to adopt the GAM?
A) Local Government Units (LGUs)
B) National Government Agencies (NGAs)
C) Both LGUs and NGAs
D) Government-Owned and Controlled Corporations (GOCCs) only

C) Both LGUs and NGAs

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Which volume of GAM details Accounting Books, Registries, Records, Forms, and Reports?
A) Volume I
B) Volume II
C) Volume III
D) None of the above

B) Volume II

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What does the term “Accrual Basis” mean in accounting?
a) Recognizing transactions only when cash is received or paid
b) Recognizing transactions and other events when they occur, regardless of cash movement
c) Recognizing transactions only at the end of the fiscal year
d) Recording transactions only when they are legally documented

b) Recognizing transactions and other events when they occur, regardless of cash movement

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Which of the following best describes “Assets”?
a) Resources controlled by an entity from which future economic benefits or service potential are expected to flow
b) Obligations that arise from past events
c) Economic benefits distributed to owners
d) The financial plan of a government

a) Resources controlled by an entity from which future economic benefits or service potential are expected to flow

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Define “Entity” as used in this Manual.
a) A financial plan of a government
b) A government agency, department, or operating/field unit
c) The total economic benefits of an organization
d) The obligations of a government entity

b) A government agency, department, or operating/field unit

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How are “Contributions from Owners” defined?
a) Economic benefits provided by external parties that result in a liability for the entity
b) Economic benefits contributed to the entity that establish a financial interest in the net assets/equity of the entity
c) Economic benefits received by the entity from its operations
d) Funds that are distributed to owners as a return on investment

b) Economic benefits contributed to the entity that establish a financial interest in the net assets/equity of the entity

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What does “Distributions to Owners” refer to?
a) Contributions made by owners to the entity
b) Future economic benefits or service potential distributed to owners as a return on investment or as a return of investment
c) The gross inflow of economic benefits during the reporting period
d) Decreases in economic benefits or service potential

b) Future economic benefits or service potential distributed to owners as a return on investment or as a return of investment

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What are “Expenses”?
a) Resources controlled by the entity
b) Decreases in economic benefits or service potential that result in a decrease in net assets/equity
c) Contributions from owners
d) The residual interest in the assets of the entity

b) Decreases in economic benefits or service potential that result in a decrease in net assets/equity

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Which of the following describes “Government Accounting”?
a) The process of managing government budgets
b) The process of recording and communicating transactions involving government funds and property
c) The analysis of contributions from owners
d) The distribution of economic benefits to owners

b) The process of recording and communicating transactions involving government funds and property

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What does “Government Budget” refer to?
a) The net assets/equity of a government entity
b) A financial plan showing the resources and their use over a fiscal period
c) The gross inflow of economic benefits
d) The process of recording and classifying transactions

b) A financial plan showing the resources and their use over a fiscal period

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How are “Liabilities” defined?
a) Resources controlled by the entity
b) Future economic benefits distributed to owners
c) Firm obligations arising from past events expected to result in an outflow of resources
d) Economic benefits recognized when they occur

c) Firm obligations arising from past events expected to result in an outflow of resources

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What is meant by “Net Assets/Equity”?
a) The total resources controlled by an entity
b) The gross inflow of economic benefits during the reporting period
c) The residual interest in the assets of the entity after deducting all liabilities
d) The financial plan of a government for a fiscal year

c) The residual interest in the assets of the entity after deducting all liabilities

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What are “Revenue Funds”?
a) Funds derived from income available for appropriation or expenditure in accordance with law
b) Economic benefits distributed to owners
c) Obligations of the entity
d) The residual interest in the entity’s assets

a) Funds derived from income available for appropriation or expenditure in accordance with law

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Who is primarily responsible for ensuring that government resources are managed, expended, or utilized according to laws and regulations?
a) The financial officer of the agency
b) The chief or head of the government agency concerned
c) The Commission or its representative
d) The auditor concerned

b) The chief or head of the government agency concerned

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According to the policy, who shares fiscal responsibility within a government agency?
a) Only the chief or head of the agency
b) The Commission or its representative
c) All those exercising authority over the agency’s financial affairs
d) The auditor and external reviewers

c) All those exercising authority over the agency’s financial affairs

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What must an officer do if a loss of government funds or property occurs while in transit or due to other causes like fire or theft?
a) Immediately replace the lost funds or property
b) Notify the Commission or auditor immediately and present an application for relief within 30 days or as allowed
c) Report the loss only if it exceeds a specific amount
d) Only inform the superior officer about the loss

b) Notify the Commission or auditor immediately and present an application for relief within 30 days or as allowed

What is the responsibility of persons entrusted with the possession or custody of government funds or property under an agency head?
a) They are directly responsible to the government’s Commission
b) They are responsible to the agency head, without prejudice to the liability of either party to the government
c) They are accountable to external auditors only
d) They are responsible solely to the financial department of the agency

b) They are responsible to the agency head, without prejudice to the liability of either party to the government

What is required of every officer who possesses or has custody of government funds or property?
a) They must be personally bonded in accordance with law
b) They must keep funds in a private account
c) They must ensure that all transactions are approved by the superior officer
d) They must report to the external auditor quarterly

a) They must be personally bonded in accordance with law

What happens if an accountable officer (AO) fails to notify a superior officer in writing about the illegality of a payment or disposition of funds?
a) The AO is relieved of liability for the funds
b) The AO is held primarily liable, while the superior officer is secondarily liable
c) The AO is not held liable under any circumstances
d) The superior officer is primarily liable, while the AO is secondarily liable

b) The AO is held primarily liable, while the superior officer is secondarily liable

How should the transfer of government funds from one officer to another be handled?
a) It can be done without prior authorization if the outgoing officer approves
b) It must be done only upon prior direction or authorization of the Commission or its representative
c) It should be done based on verbal agreements between officers
d) It is exempt from regulations as long as it is documented

b) It must be done only upon prior direction or authorization of the Commission or its representative

What personal liability does an official face for expenditures of government funds or uses of government property in violation of law or regulations?
a) No personal liability is incurred
b) They are personally liable for the expenditure or use
c) Liability is shared with the agency head
d) Liability is transferred to the Commission or auditor

b) They are personally liable for the expenditure or use

What happens if an officer fails to comply with the requirements for reporting a loss of government funds or property? a) The officer may still receive credit for the loss b) The officer will be relieved of liability c) The officer will not be relieved of liability or allowed credit for any loss in the settlement of accounts d) The officer will be given additional time to resolve the issue

c) The officer will not be relieved of liability or allowed credit for any loss in the settlement of accounts

What documentation is required when government funds or property are transferred from one accountable officer (AO) to another? a) A general report of the funds and property b) An itemized invoice and receipt supporting the clearance c) A letter of authorization from the head of the agency d) A summary of financial transactions

b) An itemized invoice and receipt supporting the clearance

What does the term "Materiality" refer to in the context of financial statements? a) The process of summarizing financial transactions b) The importance of an item to the overall financial statements c) The requirement for each item to be reported in detail d) The total value of assets and liabilities combined

b) The importance of an item to the overall financial statements

How should material classes of similar items be presented in financial statements? a) They should be aggregated with dissimilar items b) They should be presented separately c) They should be disclosed only in the Notes to the Financial Statements d) They should be combined into a single line item

b) They should be presented separately

When can dissimilar items be aggregated in financial statements? a) When they are of similar nature b) When they are immaterial c) When they are specifically required by a PPSAS d) When they reflect the substance of the transaction

b) When they are immaterial

According to Section 20, what is the requirement for a specific disclosure in a PPSAS if the information is not material? a) The specific disclosure requirement must always be met b) The disclosure requirement need not be satisfied c) The information must be disclosed in detail d) The information must be presented in a separate note

b) The disclosure requirement need not be satisfied

What should be done with a line item that is not material? a) It should be presented separately on the face of the financial statements b) It should be disclosed only in the Notes to the Financial Statements c) It should be aggregated with other items either on the face of the financial statements or in the Notes d) It should be omitted from the financial statements

c) It should be aggregated with other items either on the face of the financial statements or in the Notes

What does "Offsetting" refer to in financial statements? a) The combination of assets and liabilities b) The presentation of revenues and expenses in a combined format c) The practice of reducing one line item by the amount of another d) The separation of dissimilar items in the financial statements

c) The practice of reducing one line item by the amount of another

When is offsetting allowed according to Section 21? a) Whenever it simplifies the financial statements b) When specifically required or permitted by a PPSAS c) When it reflects the nature of the transaction or event d) Only if it involves related parties

b) When specifically required or permitted by a PPSAS

What is the general rule for offsetting assets and liabilities, and revenue and expenses, in financial statements? a) They can be offset at any time b) They should be presented separately unless required or permitted otherwise c) They must be aggregated regardless of materiality d) They should be combined into a single line item

b) They should be presented separately unless required or permitted otherwise

Which statement best describes the requirement for presenting items of a dissimilar nature or function in financial statements? a) They should be aggregated if not material b) They should be presented separately unless immaterial c) They should be combined into a single item for simplicity d) They should be reported only in the Notes to the Financial Statements

b) They should be presented separately unless immaterial

What should be done if offsetting reflects the substance of a transaction or event? a) It should be reported separately in the Notes to the Financial Statements b) It should not be allowed under any circumstances c) It should be allowed d) It should be reported on the face of the financial statements only

c) It should be allowed

What information does the Statement of Cash Flows (SCF) provide? a) Details on the entity’s budget and actual amounts b) Information to assess the entity’s ability to generate cash and cash equivalents and how it utilizes funds c) Comparative information for previous periods d) Narrative descriptions of financial statements

b) Information to assess the entity’s ability to generate cash and cash equivalents and how it utilizes funds

Which items must be included in the Statement of Financial Performance (SFPer)? a) Only revenue and expenses b) Revenue, expenses, and net surplus or deficit for the period c) Net assets/equity changes and cash flow details d) Budget comparisons and narrative descriptions

b) Revenue, expenses, and net surplus or deficit for the period

How should the financial statements and each component be presented in a published document? a) They should be included with other relevant information without distinction. b) They should be clearly identified and distinguished from other information in the same published document. c) They can be mixed with narrative sections as long as they are labeled. d) They should be presented in a separate document altogether.

b) They should be clearly identified and distinguished from other information in the same published document.

What is the requirement for presenting comparative information in financial statements? a) Comparative information is optional for narrative and descriptive information. b) Comparative information is required only for the Statement of Financial Position. c) Comparative information must be disclosed for all amounts reported, including narrative and descriptive information relevant to understanding the current period's financial statements. d) Comparative information is required only for revenue and expense items.

c) Comparative information must be disclosed for all amounts reported, including narrative and descriptive information relevant to understanding the current period's financial statements.

What classifications must be presented separately on the face of the Statement of Financial Position (SFP)? a) Assets and liabilities only b) Revenue and expenses c) Current and non-current assets, as well as current and non-current liabilities d) Net surplus or deficit

c) Current and non-current assets, as well as current and non-current liabilities

What does the Statement of Changes in Net Assets/Equity (SCNA/E) need to present? a) Net Income or Deficit, revenue and expenses recognized directly in net assets/equity, total revenue and expenses, and effects of changes in accounting policies and corrections of errors b) Only net income or deficit for the period c) Only revenue and expenses for the period d) The detailed breakdown of cash flows and budget comparisons

a) Net Income or Deficit, revenue and expenses recognized directly in net assets/equity, total revenue and expenses, and effects of changes in accounting policies and corrections of errors

What is the purpose of the Notes to Financial Statements? a) To provide a summary of the financial statements. b) To include narrative descriptions, disaggregation of items, and information about items that do not qualify for recognition in the financial statements. c) To present comparative information for the previous period. d) To provide the structure and content of financial statements.

b) To include narrative descriptions, disaggregation of items, and information about items that do not qualify for recognition in the financial statements.

Why is the Statement of Comparison of Budget and Actual Amounts (SCBAA) important? a) It summarizes cash flow details. b) It provides transparency by comparing budgeted and actual amounts, enhancing financial reporting. c) It details net surplus or deficit. d) It discloses changes in net assets/equity.

b) It provides transparency by comparing budgeted and actual amounts, enhancing financial reporting.

Which statement is true regarding the structure and content of financial statements? a) The structure of the financial statements is flexible and can be adjusted as needed. b) Each component of the financial statements should be clearly identified and distinguished from other information. c) Financial statements do not need to follow a specific structure as long as they are accurate. d) The content should be combined with other financial disclosures without distinction.

b) Each component of the financial statements should be clearly identified and distinguished from other information.

How should narrative and descriptive information be handled in financial statements? a) They should be combined with the financial data if they are immaterial. b) They should be included only if they provide relevant context for understanding the current period’s financial statements. c) They should be omitted if they are not directly related to financial figures. d) They should be presented in a separate section unrelated to financial statements.

b) They should be included only if they provide relevant context for understanding the current period’s financial statements.