Professional Documents
Culture Documents
MISCELLANEOUS EXPENSES
These are the transactions that are unique and not recurring in the ordinary course of
government operations. These seldom take place or should not happen at all.
2. Depreciation for Property, Plant, and Equipment. The cost of property, plant and equipment are
allocated to the periods benefited through the provision of accumulated depreciation.
Depreciation is the systematic and gradual allocation of the depreciable amount of assets over
its useful life.
Example #1.
DSWD purchased an equipment costing P 25 000 last 05/12/2015. The usefulness of the
equipment was determined for 6 years. Compute the depreciation as of 09/30/2018. No
depreciation was recognized and recorded in prior years from the date of purchase.
Depreciation as of 09/30/2018:
Example #2.
On December 31, 2018, the agency transfers the equipment to other region.
Requirement:
(1) Journal entry recording the transferred equipment.
(2) Journal entry to be made by the receiving agency.
Transferor Book
Transferee Book
3. Bad Debts. Bad debts shall be recorded for uncollectibles from trade/business receivables. The
determination of bad debts expense is derived from percentage and aging of accounts
receivables as follows:
1 to 60 days 1%
61 to 180 days 2%
181 days to 1 year 3%
More than one year 5%
Example #3.
A national government agency has a total accounts receivable of P 50 000 which remained
outstanding for 3 years and was approved by COA for write-off.
To remit:
To remit:
6. Accounting for Cash Overage. In case the cash examination of the auditor disclosed an
overage, the amount shall be forfeited in favor of the government and an official receipt shall be
issued by the cashier. The cash overage shall be taken up as Miscellaneous Income.
To remit
7. Accounting for stale checks. A check may be cancelled when it becomes stale. The depository
bank considers a check stale, if it has been outstanding for over six months from date of issue or
as prescribed.
A stale check shall be marked cancelled on its face and reported as follows:
(1) Unclaimed stale checks which are still with Cashier shall be cancelled and reported in
the List of Unreleased Checks as cancelled. The List of Unreleased Checks is attached
to the RCI.
(2) For stale checks which are in the hands of the payees or holders in due course and
requested for replacements, new checks maybe issued upon submission of stale checks
to the accounting unit. A certified copy of the previously paid DVs shall be attached to
the request for replacement. A JEV shall be prepared to take up the cancellation. The
replacement check shall be reported in the RCI.
Stale MDS checks issued in the current year for replacement, P 15 000.
Check cancellation:
Adjust obligation (check what type of expenditure being paid and the RAOD).
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Check cancellation:
Check Replacement:
Stale commercial checks issued in the current year and prior years for replacement, P 5 000.00.
Check cancellation:
Check Replacement:
8. Accounting for loss of cash and property. This may be due to malversation, theft, robbery,
fortuitous event or other causes. Cash shortage discovered during cash examination conducted
by auditors is reported through the Report of Cash Examination. The Auditor issues and audit
report in case of shortage in property accountability. As soon as a shortage is definitely
established, the auditor shall issue a memorandum pertaining thereto and the accountant shall
draw a JEV to record the shortage as a receivable from the accountable officer concerned.
In case of loss of property due to other causes like theft, force majeure, et cetera, a report
thereon shall be prepared by the accountable officer concerned for purposes of requesting relief
from accountability. No accounting entry shall be made but the loss shall be disclosed in the
notes to financial statements pending result or request for relief from accountability.
9. Grant of Relief from Accountability. When a request for relief from accountability for shortage or
loss of funds is granted, a copy of the decision shall be forwarded to the Chief Accountant who
shall draw a JEV to record the transaction. The loss shall be debited to the Loss of Assets
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account and credited to the appropriate receivable account. In case the request for relief is
denied, immediate payment of the shortage shall be demanded from the AO. Restitution shall
be acknowledged by the issuance of an official receipt.
In case the request for relief from accountability for loss of property caused by fire, theft, et
cetera, is granted a copy of the decision shall likewise be forwarded to the Chief Accountant for
the preparation of the JEV. The loss shall be debited to the Loss of Assets account and credited
to the appropriate asset account. If request for relief is denied, the loss shall be taken as
receivable from the accountable officer and shall be credited to the appropriate asset account.
10. Accounting for Disallowance. Disallowances shall be taken up in the books of accounts only
when they become final and executory. The accountant shall prepare the JEV to take up the
Receivable-Disallowance/Charges and credit the appropriate expense account for the current
year or Prior Year’s Adjustment account if pertaining to expenses of previous years.
Cash settlement for disallowances shall be acknowledged through the issuance of an official
receipt and reported by the cashier in the RCD.
The preparation of the bank reconciliation statements for “Cash in Bank” and “Cash – Modified
Disbursement System (MDS)” accounts including the proposed adjusting entries.
Definition of Terms:
(1) Bank charges. Charges imposed by the bank for various services rendered excluding
interest charges. This also includes cost of checkbooks, penalties and surcharges on
overdrafts.
(2) Bank Reconciliation. A settlement of differences contained in the bank statement and the
cash account in the agency’s/entity’s books of accounts.
(3) Bank Statement. It reflects the transactions in the agency’s/entity’s (depositor’s) bank
account for a period such as deposits made to the account as well as checks/ADAs
drawn on the account, bank charges, returned items, et cetera.
(4) Canceled Check/ADA. Checks/ADAs issued and chargeable to the agency bank
account but was later voided due to expiration of validity, and other valid reasons.
(5) Credit Memorandum. A document issued by the bank informing an increase in the
depositor’s (agency’s/entity’s) account, such as previous bank debit errors and
collection directly deposited to the agency’s/entity’s bank account.
(6) Debit Memorandum. A document issued by the bank informing a decrease in the
account, such as previous bank credit errors or service charges and fees.
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(7) Deposits–in–Transit. Amounts of agency/entity deposits in the bank but which are yet to
be recorded by the bank until the next period. These usually pertain to late deposits in
the last day of business for a period.
(8) Lapsed NCAs. NCAs which are no longer valid or its validity has expired but remain
unadjusted by the bank or the agency/entity.
(9) Notice of Cash Allocation. Authority issued by the DBM to central, regional and
provincial offices and operating units to cover the cash requirements of the
agency/entity.
(10) Outstanding Checks. Checks the agency/entity has issued and recognized but which
have not been presented to the bank for payment.
(11) Returned Check. A check returned by the bank due to errors or deficiencies in the
maker’s or agency’s/entity’s account.
(12) Unrecorded Deposits. Collections of the agency/entity which are directly deposited by
the debtor/client to the bank account of the agency/entity but remain unrecorded by the
agency/entity as at the period under reconciliation.
OBJECTIVES.
This shall be used in the reconciliation of bank and treasury accounts maintained with
Government Servicing Bank (GSB).
The monthly BRS shall be prepared by the chief accountant /designated staff for each of the
bank accounts maintained by the agency/entity using the Adjusted Balance Method. Under
this method, the book balance and the bank balance are brought to an adjusted cash
balance that must appear on the Statement of Financial Position.
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(a) Unrecognized or understatement of notice of cash allocation (NCA) for regular and special
account with allotment release order.
(b) Unrecognized/Understatement of NCA for special account without allotment release order
and trust account.
(d) Understatement of “Cash in bank” account due to erroneous recording of amount of checks
issued.
For regular and special account without allotment release order and trust account,
(f) Overstatement of “Cash in Bank” account due to erroneous recording of the amount of
checks issued.
For regular and special account without allotment release order and trust account,
. . . nothing follows . . .