NGAS.pdf - AFAR – NGAS LECTURE NOTES Summary of Critical...

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Page 1 of 8AFARNGASLECTURE NOTESSummary of Critical Points1.Budgetary accounts of appropriations and allotmentsare entered in the registry maintained by DBM.Allotments and obligations are also entered inappropriate registries maintained by the agency.Under NGAS budgetary accounts are no longerjournalized.2.The notice of cash allocation (NCA) received by theagency from DBM is journalized in the regular agencybooks. (The other set of books of an agency is theNational Government books (NG).3.The obligations incurred by the agency are notjournalized, but posted to the appropriateregistry,as follows:For capital outlay- RAOCOPersonal Services- RAOPSMaintenance & Others- RAOMOFinancial expenses- RAOFE4.Generally, withheld taxes by the agency are nolonger remitted to BIR, but retained and credited toSubsidy Income from NG under the Tax RemittanceAdvice (TRA) System. The NCA released to theagency is reduced by the amount of estimatedwithholding taxes pertinent to the allotment coveredby the cash allocation.5.Asset/perpetual inventory method will be followed inthe recording of expenditures if it applies to morethan one period or when payment is for materials forstock. The expense is taken up when the items areconsumed.6.Cost of ending inventory of supplies and materialsshall be computed using the Moving Average method.7.Costs of assets being constructed are debited toconstruction in progress account (using constructionperiod theory). This CIP account is closed to theappropriate asset account upon completion.8.Constructed Public Infrastructures are not shownamong the fixed assets on the balance sheet, ratherthey are deducted from government equity (as partof closing entries) and transferred out to anappropriate registry. They are not subject todepreciation charges.9.Depreciation on fixed assets are taken up on themonth following the month of purchase or completionof construction. A 10% scrap value on the asset isalways assumed and the estimated life is prescribedby COA.10.Income for which the agency is authorized to use forits operation is recorded in the regular agency books.If the authority is with limitations, such as anyexcess is to be remitted to the National Treasury thecollections shall first be recorded in the regularagency books, the expenses journalized, and theexcess is to be remitted to the National Treasury andrecorded in the agency’s NG books.11.Two trial balance are prepared:a)Pre-closing TBwhich is also the adjusted TB.From this is prepared the statement of incomeand expense.b)Post-closing TBfrom this is prepared thebalance sheet.12.Adjusting entries at end of period are the same asthose recorded in commercial accounting.13.Closing entries are as follows:1.Reversion of the unused or unutilized SubsidyIncome from National Government at the end ofthe year.

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Term
Fall
Professor
EmilyBryan
Tags
Depreciation, Expense, Generally Accepted Accounting Principles, Government Equity

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