Professional Documents
Culture Documents
Basic Accounting policies that are normally applied in Local Government Units:
1) Accrual Accounting – Modified Accrual Accounting basis developed by the International Public-Sector
Accounting Standards Board (IPSASB).
2) One Fund Concept – Shall be done only when specifically required by the law or by a donor agency or when
otherwise necessitated by circumstances subject to prior approval of the commission.
3) Special Accounts in the General Fund – transactions of this category are supported by subsidiary ledgers.
Examples include;
i. Public utilities and other enterprises
ii. Loans, interest, bonds issued and other contributions for specific purposes
iii.Development projects funded from the share in the internal Revenue collections; and
iv.Other special accounts, which may be created by law of ordinance
4) Chart of Accounts and Account codes – a coding structure and a chart of accounts with three-
digit account numbering system shall be adopted.
Journals
1. Cash Receipts journal
2. Cash Disbursement journal
3. Check disbursement journal
4. General journal
Ledgers
i. General ledger
ii. Subsidiary ledgers
a.Cash
b.Receivables
c.Inventories
d.Investment
e. Property, Plant and Equipment
f. Liabilities
g. Income
h. Expenses
a. Balance sheet
b. Statement of Revenue and expenses
c. Statement of cash flows
d. Statement of Government Equity
II. Registry of Appropriations, Allotments and Obligations – Maintenance and other operating
expenses (RAAOMO)
8) Perpetual inventory of supplies and materials – Supplies and materials purchased for stock shall
be recorded using the perpetual inventory system.
9) Valuation of inventory – valued at cost and computed using the moving average method.
10) Public Infrastructures – maintained under specific registries of public infrastructures (RPI’s) such
as:
a) RPIB – Bridges
b) RPIR – Roads
12) Reclassification of Assets – assets officially declared as obsolete and unserviceable are classified
as “other Assets”
13) Recognition of Liabilities - recognized at the time goods and services are accepted or rendered
and supplier/creditor bills are received
14) Accounting for Borrowings and Loans – shall be recorded directly to appropriate liability
accounts.
Accounting for Special Education fund.
Illustration: January 2009, Municipal ABC set up its special education tax receivable of P500,000 of
which 50% is the provincial share. P200,000 of the amount, were collected and deposited with ADB.
Accordingly, Provincial share of P100,000 was appropriately remitted by municipality ABC.
Municipal ABC’s allotments for the period are: Personnel services - P50,000, Maintenance and other
operating expenses – P20,000 and capital outlay – P30,000. In addition, Fund transfer from General fund to
its subsidy was received worth P50,000.
Salaries and wages – P30,000 (Composition; cash grant – P25,000, Withholding tax – P1,050, deductions:
GSIS – P2,850, PAG-IBIG – P600, Phil health – P500)
Obligated items for the Maintenance & Other operating expenses and Capital outlay:
A. MOOE; Traveling expenses - P500, Electricity – P800, Office supplies – P500
B. Capital outlay; office equipment – P30,000 (Useful life = 5 yrs @10% residual value based on cost)
Journal entries