REVISED CHART OF ACCOUNTS UNDER THE NGAS

Chart of Accounts is a list of account titles and codes that guides the bookkeeper in
the recording of government transactions. It provides the framework
within which the accounting records are constructed.
Standard Government Chart of Accounts (SGCA) is a list of general ledger
accounts prepared for the use of National, Local and Government Owned
or Controlled Corp design to achieve the objectives of uniformity in
accounting and reporting, facilitate in consolidating financial reports and
adaptability in computerization.
Coding the systematic assignment of number, letters or other symbols to distinguish
items within a given classification from each other.
Purposes: 1. To save time and clerical work in recording names of accounts, funds,
projects, allotments and expenditures.
2. To facilitate location of accounts in the general and subsidiary ledger.
3. To facilitate systematic arrangement and classifying of accounts; and
4. To comply with the requirements of mechanized accounting.
COA Circular No. 2013-002 dated January 30, 3013Adoption of the Revised Chart of Accounts for
National Government Agencies. The effectivity is January 1, 2014.
Objectives:
1. To provide new accounts for the adoption of the Philippine Public Sector Accounting
Standards (harmonized with IPSAS)
2. To provide uniform accounts for national government accounting and budget systems to
facilitate the preparation of harmonized financial and budgetary accountability reports
3. To expand the account code from three (3) digits in the NGAS Chart of Accounts to eight (8)
digits, to allow expansion or creation of new accounts as may be necessary to implement new
standards or policies and provide up to four levels of consolidation depending on the users
information needs.
Major Changes:
A. Coverage is limited only to all national government agencies and GOCCs receiving funds
constituted as Special Accounts in the General Fund (SAGF) from the National Government
B. Expanded account code structure - from three (3) digits to eight (8) digits

COA Revised Chart of Accounts ACCOUNT CODE STRUCTURE

0 00 00 00 0
Account Group -------------------------------Major Account Group -----------------------------Sub-Major Account Group ------------------------------General Ledger Accounts -------------------------------------General Ledger Contra-Accounts -----------------------------------ACCOUNT GROUPS

Codes are assigned to account groups to facilitate location of accounts in the general and
Subsidiary ledgers, to provide systematic arrangement and classification of accounts and
facilitate preparation of the consolidated financial reports as follows:
Code
1
2
3
4
5

Account Groups
Assets
Liabilities
Equity
Income
Expenses

C.. New accounts were provided for the implementation of the PPSAS.
D. Some accounts were deleted since these accounts are for use by local government units or
government-owned and/or controlled corporations, while other accounts are no longer
applicable to national government agencies.
E. Some accounts were either expanded or compressed. For instance, expense accounts for
Repairs and maintenance and depreciation of property, plant and equipment which were
Previously presented per asset account were compressed based on the major account
classification
COA Circular No. 2014-003 dated April 15, 2014Conversion from the Philippine Government Chart
of Accounts under the New Government Accounting System per COA Circular No. 2004
-008 dated September 20, 2004 as amended, to the Revised Chart of Accounts for National
Government Agencies under COA Circular No. 2013-002 dated January 30, 2013,
additional accounts/revised description/title of accounts and relevant Accounting Policies
and Guidelines in the Implementation thereof
COA Circular No. 2014- 003 dated April 15, 2014 Re: Conversion from the PGCA to RCA
PURPOSE:
1. Provide guidelines and procedures on the conversion of the PGCA to the RCA
2. Provide accounting policies and guidelines on the implementation of the RCA for NGAs
3. Provide additional and revised description title of accounts for proper implementation of the
new and revised accounting policies

Coverage:

Shall be adopted for all funds of NGAs and for Special Accounts in the General Fund
(SAGF) maintained by GOCCs
For agencies implementing the eNGAS , procedures on the Conversion of the eNGAS
databases to the RCA for NGAs shall be covered by separate guidelines
The Chart of Accounts for GOCCs and LGUs and its conversion shall be covered by separate
guidelines

Basis for Conversion Balance Sheet as of December 31, 2013

General Guidelines and Procedures

All NGAs and GOCCs with SAGF shall effect the conversion based on the Balance Sheet as
of December 31, 2013
The Chief Accountants/Heads of Accounting units shall be guided by the Matrix on the
Conversion of Accounts
The Chief Accountants/Heads of Accounting units shall carefully analyze the GL and SL
accounts before conversion
Any clarification or request for assistance shall be directed to the Government Accountancy
Sector (GAS), COA

Specific Guidelines/Procedures
1. Analyze balances as of December 31, 2013
2. Prepare JEVs to close the accounts and transfer to the appropriate account
3. Furnish COA Auditor and GAS copies of the JEVs

Specific Accounting Policies and Guidelines

1. Maintenance of NG books shall be discontinued. . A separate set of books shall be
maintained by fund. . All balances as of December 31, 2013 shall be transferred to the
appropriate new books.
a. Bases shall be the law creating the fund
b. Copies of the JEV shall be furnished the COA Auditor and the COA- GAS separately
2. Appropriate SLs shall be maintained for real accounts and for some income and expense
accounts

3. Public Infrastructures and Reforestation projects shall be recorded in the appropriate fund
using PPE account
a. Based on acquisition cost showing the computed depreciation or appraised value
whichever is determinable
4. Revenue/Income shall be recognized by the revenue generating agency using the appropriate
revenue/income accounts whether authorized to use or not
5. For Revolving Funds, income and expenses shall be recognized, the net surplus of which
shall form part of the equity of said fund

Specific Guidelines/Procedures
ITEMS IN TRANSIT (284)
If the balance pertains to delivered items but not recorded, determine the reason for not recording the
ransaction and work for the gathering of the supporting documents to warrant the recording in the
books of accounts.
If the balance pertains to fixed assets that were converted to 284 upon implementation of the NGAS
and which remain undelivered as of December 31, 2013, close the said account to Government
Equity.
In conformity with PPSAS 1, the title of the following accounts shall be revised:
Account Government Equity (30101010) shall be changed to Accumulated Surplus/Deficit
(30101010).
Account Income and Expense Summary (30301010) shall be changed to Revenue and Expense
Summary (30101010).

Transitory Provisions
A. New account titles should be used in the implementation of the PPSAS
B. Accounts that have not been converted due to issues not settled as of the conversion date shall be
converted to the most appropriate account in the RCA until further defined

Responsibility
The Chief Accountants/Heads of Accounting units and Budget Officers/Heads of Budget Office/
units shall be responsible for the conversion of these accounts
COA Resolution No. 2014-003 dated January 24, 2014 Adoption of the Philippine Public Sector
Accounting Standards (PPSAS)

The Philippine Public Sector Accounting Standards (PPSAS)

Legal Basis Art. IX-D 1987 Philippine Constitution
To promulgate auditing and accounting rules and regulations so as to facilitate the keeping, and
enhance the information value of the accounts of the government.
COA Resolution No. 2014-003 dated January 24, 2014 Adoption of the Phippine Public
Sector Standards (PPSAS).
Functions of the Public Sector Accounting Standards Board(PSAcSB)
1. Assist the COA Commission Proper in formulating and implementing accounting standards for the
public sector.
2. Establish and maintain linkages with the international bodies, governing organizations and
academe on accounting related fields on financial management.
Basis of PPSAS:
Pronouncements issued by IPSASB, IASB< PICPA, International Organization of Supreme
Audit Institutions and others
Relevant factors, including best accounting practices, and
Capacity of agencies to comply with PPSAS.

Objectives
To set out the recognition, measurement, presentation and disclosure requirements for
financial reporting the Philippine government.
Scope:
1. PPSASs set out requirements dealing with transactions and other events in general purpose
financial reports.
2. PPSASs are designed to apply to the general purpose financial reports of all public sector
entities other than Government Business Enterprises (GBEs)
3. Applies to all NGAs, LGUs and GOCCs not classified as GBEs
PPSAS consists of:
1. International Public Sector Accounting Standards (IPSASs) (Accrual Based IPSASs per 2012
Handbook) developed by IPSASB and published by the International Federation of Accountants
(IFAC), and
2. Philippine Application Guidance (PAG)Philippine Application Guidance (PAG)
3. Provide supplementary guidance of IPSASs to suit the Philippine public sector situation.
4. States the reason for not adopting some paragraphs of the IPSASs.
PPSAS 1- Presentation of FS
Complete set of Financial Statements:
1. Statement of financial position
2. Statement of financial performance
3. Statement of changes in net assets/ equity
4. Cash Flow Statement
5. Notes, comprising a summary of significant accounting policies and other explanatory notes
6. Separate additional statements for comparison of budget and actual amounts shall be
prepared and submitted
PPSAS 2- Cash Flow Statement
Objective:
1. To set overall considerations for the:
2. Provisions of information about changes in cash and cash equivalents by means of a cash flow
statement.
3. Classifies cash flows during the period from operating, investing and financing activities
Salient Features
1. Cash flows for operating activities are reported using the direct method.
2. Cash flows exclude movements between items that constitute cash or cash equivalents.
3. Investing and financing transactions that do not require the use of cash shall be excluded from
the cash flow statement, but they shall be separately disclosed
PPSAS 3 - Accounting Policies, Changes in Accounting Estimates and Errors
Salient Features
1. Changes in Accounting Estimates
a. Follow transition requirements
b. If the change is voluntary, apply the new accounting policy retrospectively by
restating prior periods.
2. Effect of a change in estimate is accounted for by including it in net income or
comprehensive income as appropriate in:
a. The period of change if the change affects that period only.
b. The period of change and future periods if the change affects both
PPSAS 4 The Effects of Changes in Foreign Exchange Rates
Salient Features
1. Covers Foreign currency transactions and Foreign operations.
2. Translation should be done for foreign currency items into functional currency.
3. Initial recognition and measurement record the spot exchange rate

PSAS 5 Borrowing Costs

Salient Features
1. Borrowing costs shall be charged to expenses in the period when they are incurred.
(Benchmark treatment)
2. Borrowing costs directly attributable to the acquisition, construction, or production of a
qualifying asset shall be capitalized as part of the cost of that asset. (Allowed Alternative
Treatment)
3. For borrowing costs pertaining to loans borrowed by the National Government (NG) which
are recorded by the Bureau of the Treasury, the benchmark treatment shall be
used. However for loans borrowed directly by the NGAs and LGUs, the allowed
alternative treatment shall be used
PPSAS 6 Consolidated and Separate Financial Statement
Salient Features
Prescribes requirements for preparing and presenting consolidated FS for an economic entity
under the accrual basis of accounting.
A controlled entity is an entity controlled by another entity, known as the controlling entity.
Balances, transactions, revenue and expenses between entities within the economic entity
are eliminated in full
PPSAS 8 Interests in Joint Ventures
Salient Features
1. The key characteristic of a joint venture is a binding arrangement whereby two or more
parties are committed to undertake an activity that is subject to joint control.
2. Joint ventures may be classified as jointly controlled operations, jointly controlled assets
and jointly controlled entities. Different accounting treatments apply for each type of
joint venture
PPSAS 9 - Revenue from Exchange Transactions
Salient Features
1. Applies to revenue arising from the following exchange transactions and events:
2. The rendering of services.
3. The sale of goods, and
4. The use of others of entity assets yielding interest, royalties and dividends.
5. Revenue shall be measured at the fair value of the consideration received or receivable
PPSAS 12 Inventories
Salient Features
1. Inventories are measured at the lower of cost and net realizable value.
2. If acquired through a non exchange transaction, their cost shall be measured as their fair value
as at the date of acquisition.
3. Cost is determined on weighted average basis
4. Write-downs to net realizable value are recognized as an expense. Reversals arising from
an increase in net realizable value are recognized as reduction of the inventory expense in the
period in which they occur
PPSAS 13 Leases
Salient Features
1. Lease is classified as a Finance lease if:
(a) The lease transfers ownership of the asset to the lessee by the end of the lease term.
(b) The lessee has the option to purchase the asset at a price that is expected to be
sufficiently lower than the fair value.
(c) The lease term is for the major part of the economic life of the asset.
2. Operating lease does not transfer substantially all the risks and rewards incidental to
ownership of the asset.
PPSAS 14 Events After the Reporting Date
Definitions
1. Adjusting events after the reporting date- events that provide evidence of conditions
that existed at the reporting date.

2. Non-Adjusting events after the reporting date - those that are indicative of conditions
that arose after the reporting date.
An entity shall disclose:
1. The date its financial statements were authorized for issue, and
2. Who gave that authorization
PPSAS 16Investment Property
Salient Feature
1. Investment property- is property (land or a building or part of a building, or both) held
to earn rentals for capital appreciation, or both, rather than for:
a) Use in the production or supply of goods or services, or for administrative purposes;
or
b) Sale in the ordinary course of operations.
2. Investment Property- Shall be measured initially at cost. If acquired through non-exchange
transaction- Fair value as at date of acquisition
PPSAS 17 Property, Plant and Equipment
Salient Features
1. Initial recognition is at cost, its cost is its fair value as at the date of acquisition.
2. Infrastructure assets are accounted as PPE
3. The carrying amount of an item of property, plant and equipment shall be derecognized:
a) On disposal; or
b) When no future economic benefits or service potential is expected from its use or disposal
PPSAS 19 Provisions, Contingent Liabilities and Contingent Assets
Salient Features
Recognize a provision only when:
1. A past event has created a present legal or constructive obligation.
2. An outflow of resources to settle the obligation is probable, and
3. There is a reliable estimate of the obligation
PPSAS 19 Provisions, Contingent Liabilities and Contingent Assets
Salient Features
Contingent Liability arises when there is:
4. Possible obligation to be confirmed by a future event that is outside the control of the entity;
or
A present obligation may, but probably will not require an outflow of resources, or
A reliable estimate cannot be made.
Contingent liabilities require disclosure only (no recognition). If the possibility of outflow is remote,
then no disclosure.
PPSAS 19 Provisions, Contingent Liabilities and Contingent Assets
Salient Features
1. Contingent asset arises when the inflow of economic benefits or service potential is probable,
but not virtually certain, and occurrence depends on an event outside the control of the
entity.
2. Contingent assets require disclosure only (no recognition). If the realization of revenue is
virtually certain, the related asset is not a contingent asset and recognition of the asset and
related revenue is appropriate
PPSAS 20- Related Party Disclosures
Salient Features
1. Related Parties are parties that control or have significant influence over the reporting entity
and parties that are controlled or significantly influenced by the reporting entity.
2. Requires disclosure of:
3. Relationship involving control, even when there have been no transactions in between;
Related party transactions; and
4. Management compensation

PPSAS 21 Impairment of Non-Cash-Generating Assets

Definition
Cash - generating assets - are assets held with the primary objective of generating a
commercial return.
Non-cash - generating assets- are assets other than cash-generating assets.
Impairment - a loss in the future economic benefits or service potential of an asset, over and
above the systematic recognition of the loss of the assets future economic benefits or
service potential through depreciation
Salient Features
1. A non-cash-generating asset is impaired when the carrying amount of the asset exceeds its
recoverable service amount.
2. An impairment loss shall be recognized immediately in surplus or deficit.
3. After the recognition of an impairment loss, the depreciation charge for the asset shall be
adjusted in future periods.
PPSAS 23 Revenue from Non-Exchange
Transactions (Taxes and Transfers)
Non-Exchange transactions
Examples:
(a) Taxes; and
(b) Transfers (whether cash or non-cash)
1. An asset acquired through a non exchange transaction shall initially be measured as its fair
value as at the date of acquisition.
2. An entity shall recognize an asset in respect of taxes when the taxable event occurs and the
asset recognition criteria are met
PPSAS 24 Presentation of Budget Information in Financial Statements
Salient Features
PPSAS 24 requires:
1. Presentation of budget information in the financial statements when the reporting entity is
publicly accountable for its budget.
2. Disclosure of an explanation of the reasons for material differences between the budget and
actual amounts.
To ensure that the public sector entities discharge their accountability obligations and enhance the
transparency of their financial statements.
PPSAS 26 Impairment of Cash Generating Assets
Definition
Cash-Generating Assets (CGA) - Assets held with the primary objective of generating a
Commercial return.
Impairment - a loss in the future economic benefits or service potential of an asset.
An impairment loss of a cash- generating asset - is the amount by which the carrying amount of
an asset exceeds its recoverable amount.
PPSAS 27 Agriculture
Salient Features
Prescribes the accounting treatment and disclosures related to agricultural activity.
Agricultural activity - management by an entity of the biological assets for sale, or for distribution
at no charge or for a nominal charge or for conversion into agricultural produce
or into additional biological assets.

PPSAS 28 Financial Instruments Presentation

Prescribes principles for classifying and presenting financial instruments as liabilities or net
assets/equity, and for offsetting financial assets and liabilities
IPSAS 29 Financial Instruments: Recognition and Measurement
Established principles for recognizing, derecognizing and measuring financial assets
and financial liabilities.
IPSAS 30 Financial Instruments: Disclosure
Prescribe disclosures that enable financial statement users to evaluate the significance of
financial instruments to an entity, the nature and extent of their risks, and how the entity
manages those risks.
PPSAS 31 Intangible Assets
Salient Features
1. Intangible Asset is an identifiable non-monetary asset without physical substance.
2. An intangible asset, whether purchased or self-created, is recognized if:
- It is probable that the future economic benefits or service potential that are attributable
to the asset will flow to the entity and
3. The cost or fair value of the asset can be measured reliably.
4. All research costs are charged to expense when incurred
PPSAS 32 Service Concession Arrangements: Grantor
Grantor- public sector entity grants service concession arrangements.
Operator - private sector which manages the service concession asset
Service concession arrangement- sets performance standards, mechanism for adjusting prices ,
and arrangements for arbitrating disputes.
Service concession assets - turned over to the grantor
PPSAS 32 Service Concession Arrangements: Grantor
1. Recognize liability when the grantor recognizes a service concession asset
2. Initial measurement - same amount as the asset adjusted by any consideration given by
the grantor or the operator or from the operator to the grantor.
3. The operator is compensated for its service over the period of the service concession
arrangement
When the people become involved in their government, government becomes more
accountable,
and our society is stronger, more compassionate, and better prepared for the challenges of the
future.
ARNOLD SCHWARZENEGGER

ACCOUNTING FOR DISBURSEMENTS AND RELATED TRANSACTIONS

Most of the transactions in the government involve the receipt and disbursement of cash. The
cash transactions affect every classification within the financial statements assets, liabilities, residual
equity, income and expenses.by check. Thus it is essential that cash transactions are recorded correctly
for reliability in the financial statements. .
Disbursements constitute all cash paid out during a given period either in currency (cash) or by
check. It may also mean the settlement of government payables/obligation by cash or by check. It shall
be covered by Disbursement Voucher (DV), Petty Cash Voucher, or Payroll.
How to Distinguish Disbursement from Expenditures?
Expenditures are the obligations incurred by the Agency. It includes both the amount actually
paid and those incurred and recorded as liabilities to be paid in the future.
While Disbursements are payments made for such government obligations by cash or check.
Typical transactions for disbursements include the following major classes of payments:
A. Current Operating Expenses
1. Personal Services
- Salaries and wages
- Other Compensation
- Personnel benefits
- Other personnel benefits
2. Maintenance and Other Operating Expenses
- travelling expenses
- training and scholarship program
- supplies and material expenses
- repairs, etc.
3. Financial Expenses
- bank charges
- commitment fees
- documentary stamps
- interest and other financial charges
B. Capital Expenditures these expenditures need allotment for CO. As
opposed to the current operating expenses, this involves
investments and procurement of assets that is expected to be used
for a longer period of time.
C. Inter-agency fund transfers - this covers the transfer of funds to other
agencies for the implementation of specific projects. This is taken
up in the books under Due to by the receiving agency and Due
from by the releasing agency.
Basic Requirements for Disbursement:
1. Existence of a lawful and sufficient allotment certified as available by the budget officer.
2. Existence of a valid obligation certified by the Chief Accountant/Head of Acctg. Unit;
3. Legality of transactions and conformity with laws, rules and regulation.
4. Approval of the expense by the Chief of Officer or by his duly authorize representative; and
5. Submission of proper evidence to establish the claim.
Disbursement System involves the preparation and processing of disbursement voucher; preparation
and issuance of check, payment of cash, granting, utilization, and liquidation/replenishment of cash
advances.
All disbursement of the government require the certification as: 1) to validity, propriety, legality
of the claim by the head of office who has control of the funds , and 2) certification that funds are
available for the purpose.

Modes of disbursement in the government:

1. by check thru MDS checks or commercial checks
2. by cash cash advances granted to disbursing officer and petty cash fund.
3. Advices to Debit account
Disbursement by Checks Checks shall be drawn only on duly approved DV or PCV. These shall be
reported and recorded in the books of accounts only when actually released to the respective payees.
Two types of checks are being issued by government agencies:
1. Modified Disbursement System (MDS) checks issued by government agencies chargeable
against the account of the Treasurer of the Phil which are maintained with different MDS
Governemnt Servicing Banks. These are covered by Notice of Cash Allocation, an authorization
issued by the DBM to all government agencies to withdraw cash from the National Treasury
through the issuance of MDS checks or other authorized mode of disbursements.
2. Commercial checks issued by government agencies chargeable against the agency checking
account with GSBs. These are covered by income/receipts authorized for deposits with AGDBs
and funding checks received by RO/OUs from CO/ROs respectively.
All checks issued including cancelled checks shall be recorded chronologically in the Check
Disbursement Record (CKDR) and indicate the date checks were actually released.
All checks actually released to the claimants including the cancelled ones shall be included in the
Report of Checks Issued, which shall be prepared daily by the Cashier. All unreleased and cancelled
as of the report date shall be enumerated in the List of Unreleased Checks to be attached to the
RCI.
The agency received Notice of Cash Allocation for payment of its obligations. It maybe either
for payment of prior years or current year, the same is recorded as:
10104040
40301010

Cash MDS
Subsidy Income from NG

XXXX
XXXX

Disbursement by Cash - shall be made from cash advance drawn and maintained in accordance
with COA rules and regulations.
Cash payments are to be based on duly approved
payrolls/disbursement vouchers. May either for:
1. personal services or salaries and wages
2. travels
3. miscellaneous expenses, which shall be recorded in separate cashbooks.
For Personal Services/payroll fund, the cash advance shall only be equal to the net amount due
the officials and employees. The cash advance for the payroll shall be fully liquidated within five
(5) days after the pay period. Any unclaimed wages shall be remitted and receipted to close the cash
advance account.
Cash advances granted for travel shall be accounted for as Due from Officers and Employees and
these are subject to liquidation upon completion. For liquidation of travel where the amount of cash
advance is equal to or more than the travel expenses incurred, the Liquidation Report form shall be
prepared by the officers/employees concerned and submitted to the accounting unit as basis for JEV
preparation. This shall close the receivable account.
The excess cash advance shall be refunded and an OR shall be issued to acknowledge receipt
thereof and shall be noted in the Liquidation Report. In the case the amount of cash advance is less
than the travel expenses incurred, a Liquidation Report shall be submitted to liquidate the cash
advance previously granted and a DV shall be prepared to claim reimbursement of the deficiency in
amount.
The Report of Disbursement shall serve as the liquidation report of the cash advance granted to
the Disbursing Officer.

Petty Cash Fund(PCF) - another mode of disbursement and the fund shall be sufficient for
emergency and petty expenses of the agency. As such, all replenishment shall be directly charged to
the appropriate expense accounts and at all times, the PCF shall be equal to the total cash on hand
and the unreplenished expenses.
The PCF shall not be used to purchase regular inventory items for stock nor for the liquidation of
outstanding cash advances. It shall be used only for disbursements which cannot be conveniently
paid by check.
Disbursement through Petty Cash Fund - shall be through the PC Voucher which shall be approved
by authorized officials and signed by the payee to acknowledge receipt of the amount from the
PCCustodian. A DV shall be prepared to replenish the fund.
At the end of the year, the PCC shall submit to the Accounting unit all outstanding PCVs. In
case the fund could not be replenished for lack of funds, a JEV shall be prepared to recognize all
unreplenished expenses in the books and the PCF account shall be credited. At the start of the year,
as soon as cash becomes available, the fund shall be replenished by a debit to account Petty Cash
Fund and credit to the appropriate Cash in Bank account to restore the fund to its original
amount.
In case the PCC resigns or ceases as the custodian of the fund, full accounting/liquidation shall
be made. Any excess cash shall be refunded and all the PCVs together with the original supporting
documents shall be surrendered to the Accounting Unit which shall prepare a JEV to take up the
expenses in the books and credit account Petty Cash Fund. In no case shall the remaining cash of
the former custodian be transferred to the incoming PCC.
The Petty Cash Fund record shall be used to record all the PCs received by the PCC as well as
reimbursements received for expenses paid. All PCV shall be supported with valid documents to
prove the propriety of disbursements, such as ORs, invoices, etc.
Advice to Debit Account (ADA) This is a system by which no check is issued to the payee in
payment of government obligations, but instead, the current account number of the payee in the bank
where the government maintains a deposit, shall be obtained by the accounting unit. If payment is to
be made, the ADA shall be issued by the Accounting Unit of the agency to the bank where it
maintains an account. All payments shall be made to the credit of the payees account and a debit to
the account maintained by the government agency in the same bank. A JEV shall be prepared to
record the transaction in the GJ.
Property and Inventory accounting System - consists of the system of monitoring, controlling and
recording of acquisition and disposal of property and inventory.
The system starts with the receipt of the purchases inventory items and equipment. The
requesting office need of the inventory items and equipment after determining that the items are not
available in stock shall prepare and cause the approval of the Purchase Request (PR). Based on the
approved PR and after accomplishing all the required procedures adopting a particular mode of
procurement, the agency shall issue a duly approved Purchase Order. Procedures relative to the
obligation of the purchase order and payment of the deliveries follow the procedures in the
obligation accounting system and disbursement system.
The sub-system are as follows:
1. Receipt, Inspection, Acceptance and Recording Deliveries of Inventory Items and
Equipment,
2. Requisition and Issuance of Inventory Items
3. Requisition and Issuance of Equipment
Perpetual Inventory Method purchase of supplies and materials for stock regardless of whether
or not they are consumed within the accounting period, shall be recorded as Inventory account.
Under the perpetual inventory method, an inventory control account is maintained in the General
Ledger on a current basis.

Regular purchases shall be recorded under the Inventory account and issuance thereof shall be
recorded based on the Report of Supplies and Materials Issued. Purchases out of Petty Cash Fund
shall be charged immediately to the appropriate expense accounts.
The accounting Unit shall maintain perpetual inventory records, such as the Supplies Ledger
Cards for each inventory stock, Property, Plant and Equipment Ledger Cards for each category of
plant, property and equipment including work and other animals, livestock, etc. The subsidiary
ledger cards shall contain the details of the General Ledger accounts.
For check and balance, the Property and Supply Officer/Unit shall maintain Property Cards (PC)
for property, plant and equipment, and Stock Cards (SC) and for inventories. The balance in
quantity per PC and SC should always reconcile with the ledger cards of the Accounting Unit.
The Moving Average Method of costing shall be used for costing inventories. This is a method
of calculating cost of inventory on the basis of weighted average on the date of issue. The
Accounting Unit shall be responsible in computing the cost of inventory on a regular basis.
Property, Plant and Equipment and Inventory Accounts acquired through purchase shall include
all costs incurred to bring them to the location necessary for their intended use, like transportation
cost, freight charges, installation costs, etc. These are recorded in the books of accounts as Asset
after inspection and acceptance of delivery.
During the construction period , property, plant and equipment shall be classified and recorded as
Construction in Progress with the appropriate asset classification. As soon as these are completed,
the Construction in Progress account shall be transferred to the appropriate asset accounts.
ILLUSTRATIVE JOURNAL ENTRIES FROM SAMPLED TRANSACTION
A. NEDA paid the salaries of their employees. The following are the information taken from the
June14 payroll, salaries and wages and its mandatory deduction.
a) Salaries and wages regular
P 485,000
b) PERA
30,000
c) Withholding taxes
32,000
d) Retirement and Life (GSIS)
40,000
e) Pag-ibig premium
28,700
f) PhilHealth premium
12,000
The agency paid their counterpart of the mandatory deductions. The agency contributed P 1,500
for ECC. Withholding taxes were remitted to BIR 2 weeks after end of the month.
Journalize the above transaction:
1. Obligate the P515,000 salaries and wages for the month of June, 2014 and posted in the
Registry of Allotment, Obligation and Disbursement in the obligation column of PS.
2. To record the expenses and establish the liabilities
50101010 Salaries and wages regular
485,000
50102020 PERA
30,000
20201010
Due to BIR
32,000
20201020
Due to GSIS
40,000
20201030
Due to Pag-ibig
28,700
20201040
Due to PhilHealth
12,000
20101020
Due to Officers and Employees
402,300
3. To record check issuance for ATM employees accounts.
20101020
10104040

Due to Officers and Employees

Cash-MDS-Regular

402,300
402,300

4. To record remittance of mandatory deductions.

20201010
20201030
20201040
10104040

Due to GSIS
Due to Pag-ibig
Due to PhilHealth
Cash- MDS, Regular

40,000
28,700
12,000
80,700

5. To obligate the government counterpart of the mandatory deductions, P92,200, recording in

the obligation column of the Registry.
6. To record payment and remittance of the corresponding counterpart.
50103040
50103010
50103020
50103030
10104040

EC Insurance Premiums
1,500
Ret. And Life Insurance Premium 50,000
Pag-ibig Contributions
28,700
PhilHealth Contribution
12,000
Cash MDS, Regular

92,200

7. To record remittance to the BIR supported with the approved TRA from DBM.
20201010 Due to BIR
32,000
40301010
Subsidy from National Government

32,000

B. The Regional Director of NEDA 7 was directed to attend and Executive Committee Conference
in Manila NEDA Central Office. The travel was for 3 days but it was cut short due to an
emergency meeting at the regional office with the RDC 7. An itinerary of travel was prepared
showing the following information:
Transportation expenses (1st and last day) and other incidental
Expenses during the duration of the travel period. . . . . . . . . . . .
P 1,600
Per diem (1,200 x 3 days)
......................
3,600
Plane fare
...................
5,000
An amended itinerary was made and showed a reduction of the
Per diem equivalent to . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .

1,500

Journalize the following travelling expenses transactions:

1.

Obligate and post P10,200 to the obligation column of the registry for MOOE.

2. To grant cash advance for the travel.

10305020
10104040

Due from Officers and Employees

Cash MDS , Regular

10,200
10,200

3. To recognize the actual travelling expenses and record liquidation of the

Cash advance.
50201010
10305020

Travelling expenses local

Due from Officers and Employees

8,700
8,700

4. To record the refunded amount made upon return from travel.

10101010
10305020

Cash collecting officer

Due from Officers and Employees

1,500
1,500

5. To remit the refunded amount to the national treasury.

40301010
10101010

Subsidy from National Government

Cash collecting officer

1,500
1,500

6. To adjust the obligation by posting a negative entry of P1,500 in the obligation

Column of the Registry. The obligation was 10,200 for travelling expenses
but the actual travelling expenses was only 8,700.
7.

For additional claim of travelling expenses maybe due to an extended official stay, request
for an obligation for the equivalent amount of the extended stay and it has to be processed
in the accounting office for payment/reimbursement. It has to be an official travel duly
supported with proper documentation.
If the travel is not fully supported, the auditor will disallow the claim upon post-audit of
said transaction.

C.

Petty Cash Fund P10,000 was maintained by the agency under the imprest system. As of
December 31, 2014, the used petty cash supported with receipts amounting to P8,200 remained
unreplenished. The receipted use of PC consisted of the following expenses:
Office supplies expense
4,000
Repairs and maintenance OE 3,200
Other General Services
1,000
Record the transaction: 1) Granting of cash advance
2) Replenishment/liquidation of the expenses at the end of the
Accounting period.
3) Journal entry to be prepared at the beginning of the following year
considering the availability of funds, in order to return back
the balance of the PCF.
1.

To obligate the PCF to be established amounting to P10,000 to be posted in the obligation

column of MOOE in the Registry of Allotment, Obligation and Disbursement.

2.

Granting of PCF
10101020
10104040

Petty Cash
Cash MDS, Regular

10,000
10,000

3. To record the unreplenished expenses and partially closing the equivalent petty cash account.
50203010
Office supplies expenses
4,000
50213050
Repairs and Maintenance-Office Equipt
3,200
50212990
Other General Services
1,000
10101020
Petty Cash
8,200
( not obligated because the original PC was already obligated)
4. Obligate the PC of P8,200 the following year to return the original petty cash of P10,00.
10101020
10104040

Petty Cash
Cash MDS, Regular

8,200
8,200

E, The agency process their 6 months requisition of office supplies amounting to P500,000.
The purchase was made to the Procurement Service of DBM, hence, no bidding was
conducted, while P150,000 purchase of equipment (2 air-conditioning units) was made
to outside supplier or to SM Appliance Center considering the lowest bid offer and no
available stock in the Procurement Service Office.. There is enough allotment balance
in obligating the purchase. A week after the delivery, P220,000 of office supplies were
used in operation and recorded by the accountant supported by MRSMI.
Purchase (Procurement Service)
1.

Obligate P500,000 and post under the obligation column in the registry for MOOE.

2. To record advance payment of the purchase to the Procurement Service Office.

10303010
10104040

Due from NGAs

Cash MDS, Regular

500,000
500,000

3. To record acceptance of the delivery of office supplies.

10404010
10303010

Office supplies inventory

Due from NGAs

500,000
500,000

4. To record issues of office supplies to different requisitioner as per report.

50203010
10404010

Office supplies expense

Office supplies inventory

220,000
220,000

(Purchase ( Other Supplier)

1. After the conduct of bidding/canvass, the purchase will be awarded to the lowest
bidder/supplier after a demo is being conducted and a Purchase Order is being prepared to be
signed by both the agency and supplier.
2. Upon delivery of the equipment, obligate the amount, P150,000, for the purchase of
equipment to an outside supplier supported by the PO and posted to the registry under the
obligation column for MOOE.
3. To record the delivery and acceptance of the delivered equipment.
10605020
20201010
20101010

Office Equipment
Due to BIR
Accounts Payable

P150,000
6,250
143,750

4. To record payment of office equipment

20101010
10104040

Accounts Payable
Cash MDS, Regular

143,750
143,750

5. To record remittance to BIR supported with approved TRA.

20201010
40301010

Due to BIR
6,250
Subsidy from National Government

6,250

( If the purchase was charged to a trust account and not come from an NCA when paid,
No obligation is necessary and payment shall be charged to the cash in bank- lcca account)
F. . The agency received their bills of the following:
PLDT
P 12,000
Water
5,000
Electricity
18,000
Rental (1 yr, 6/1/14-5/31/15) 24,000
Payment was made a month after it was processed.
Record the transaction.
1. Obligate the billed accounts and post under the obligation column of MOOE.
2. Record the bills

19902020
50205020
50204010
50204020
20101010
3.

Prepaid rent
24,000
Telephone expenses 12,000
Water expense
5,000
Electricity exp
18,000
Accounts Payable

59,000

To record the payment of the above bills.

20101010
20201010
10104040

Accounts Payable
Due to BIR
Cash MDS, Reg

59,000
3,235
55,765

4. To record remittance to BIR supported with approved TRA.

20201010 Due to BIR
3,235
40301010
Subsidy from National Government 3,235
G. The agency wanted to expand its building. The project was included in the approved budget
amounting to P7,500,000. It was awarded to a financially capable contractor and made to start
in May 15, 2014 to be finished four months after. However, constant rain caused the delay
in the completion, which made the agency charged a liquidating damages totalling P 55,000.
There were deficiencies noted during the inspection conducted when it was 35% completion and
claimed the payment of its first billing after being processed. The 2nd billing followed when it
was 60% completion and final billing when it was 100% completion..
Journalize the following transactions.
1. Obligate P7,500,000, construction of an expansion and post in the obligation column of the
registry for CO.
2. To record receipt of cash from the contractor paid as performance bond (cash bond 5%).
10101010
20401040

Cash collecting officer

Guaranty/Security Deposits Payable

375,000
375,000

3. To record the temporary deposit of the performance bond to the National Treasury.
10104010
10101010

Cash Treasury/Agency Deposit Regular

Cash collecting officer

375,000
375,000

4. To record the 15% of the contract amount as advances to contractor.

19902010
10104040

Advances to Contractors
Cash MDS, Regular
(P7,500,000 x 15% = 1,125,000)

1,125,000
1,125,000

5. To record the 1st progress billing, 35% completion.

10610030
20101010
19902010

Construction in Progress Building and

Other Structures
Accounts Payable
Advances to Contractors

2,625,000
2,231,250
393,750

6. To record payment of the 1st billing;

20101010
10104040
20401040
20201010

Accounts Payable
2,231,250
Cash MDS, Regular
Guaranty/Security and Deposit Payable
Due to BIR

1,736,625
262,500
232,125

7. To record the receipt of the 2nd billing:

10610030
20101010
19902010

Construction in Progress-Building
And Other structures
Accounts Payable
Advances to Contractors

2,250,000
1,912,500
337,500

8. To record payment of the 2nd billing

20101010
10104040
20401040
20201010

Accounts Payable
Cash-MDS, Regular
Guaranty/Security and Dep Payable
Due to BIR

1,912,500
1,489,250
225,000
198,250

9. To record the receipt of the final billing:

(cost 7,500,000 - LD 55,000 Advances 393,750)
10610030 Construction in Progress Building
And Other Structures
20101010
Accounts Payable
19902010
Advances to contractor

2,570,000
2,176,300
393,700

10. To adjust obligation by negative entry in the obligation column of the Registry for CO
Reducing the original amount by P55,000 liquidating damages.
11. To record final payment:
20101010
10104040
20401040
20201010

Accounts Payable
Cash-MDS, Regular
Guaranty/Security and Dep Payable
Due to BIR

2,176,300
1,692,350
262,500
221,450

12. To record the turn-over and acceptance of the building extension:

Contract amount
Less: Liquidating damages
Net cost

P7,500,000
55,000
P7,445,000

========
10604010
10610030

Building
Construction in Progress Building
And Other Structures

7,445,000
7,445,000

13. To record remittance of withholding taxes thru TRA.

20201010
40301010

Due to BIR
Subsidy from National Government

651,825
651,825

14. To record receipt of NCA for deposited performance bond.

10104040
20401040

Cash MDS, Regular

Guaranty/Security Deposits Payable

375,000
375,000

15. To record release of performance bond:

20401040
Guaranty/Security Deposits Payable
10104040
Cash MDS, Regular

375,000

16. Refund of retention fees to contractor:

20401040
Guaranty/Security Deposits Payable
10104040
Cash MDS, Regular

750,000

375,000

750,000