government accounting part 2

68問 • 1年前

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Is a process of identifying the desired level of risk, identifying the actual level of risk and altering the latter to equal the former

risk management

is a method of offsetting a potential financial loss or the structing of a transaction to reduce risk involving financial instruments.

Hedging

Recognizes the offsetting effects on surplus or deficit of changes in the fair values of the hedging instrument and the hedged item

hedge accounting

A hedge of the exposure to changes in fair value of a recognized asset or liability or an unrecognized firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect surplus or deficit

Fair Value hedge

A hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability such as all or some future interest payments on variable rate debt or a highly probable forecast transaction and could affect surplus or deficit

Cash flow hedge

Hedging relationships

1. fair value hedge 2. cash flow hedge 3. hedge of a net investment in a foreign operations

Components of a hedging relationship

1. hedging instrument 2. hedged item

A designated derivative or a designated non-derivative financial asset or non-derivative financial liability whose fair value or cash flows are expected to offset changes in the fair value or cash flows of designated hedged item.

hedging instrument

An asset, liability, firm commitment, highly probable forecast transaction or net investment in a foreign operation that exposes that entity to risk of changes in fair value or future cash flows and is designated as being hedged.

hedged item

Are assets held for sale or distribution in the ordinary course of operations (finished goods) In the process of production for sale or distribution (work in process) in the form of materials or supplies to be consumed in the production process or distributed in the rendering of services(raw materials and supplies)

inventories

Inventories of a government entity consists of

1. inventory held for sale 2. inventory held for distribution 3. inventory held for manufacturing 4. inventory held for consumption 5. semi-expendable property

(eg. Medicines for sale in government pharmacies)

inventor held for sale

(eg. Rice and other welfare goods helf for distribution)

inventory held for distribution

(eg. raw materials, work in process)

inventory held for manufacturing

(eg. Office supplies inventory)

inventory held for consumption

Consist of machinery, equipment, furniture and fixtures and similar items that are not capitalized as PPE because their costs are below the ₱15,000 capitalization threshold for PPE (as of now 50,000)

semi-expendable property

Inventories are initially measure at

cost

Inventorymies are subsequently measure at (for goods held for sale)

lower of cost and net realizable value

Inventories are subsequently measured at (for goods held for distribution )

lower of cost and current replacement cost

Cost comprises

purchase cost direct costs

Cost excludes

1. abnormal amount of wasted materials, labor, and production overhead 2. selling costs 3. administrative overheads

Inventories received from nonexchange transactions are initially measured at

acquisition-date fair value

Agricultural produce are initially measured at

fair value less costs to sell at the point of harvest

Is estimated selling price less estimated costs of completion and estimated selling/disposal costs

Net Realizable Value (NRV)

Is the cost of the entity would incur to acquire the asset on the reporting date

current replacement cost

This shall be used for items that are not ordinarily interchangeable (ie unique) and those that are segregated for specific projects.

Specific Identification

This shall be used for large numbers of items of inventory that are ordinarily interchangeable. This shall be applied under________

Weighted Average cost perpetual inventory system

Under this formula, a new weighted average unit cost is computed after every purchase. The computed average costs are used in determining the cost of goods sold and inventory on hand.

weighted average cost

Government entities shall use the

Perpetual Inventory System

Under this system, purchases, sales, and other transactions affecting inventory are recorded in the “inventory” and “cost of sales” account, as appropriate. Moreover, stock cards and stock ledgers are maintained.

Perpetual Inventory System

The ________cost formula and the ________ are not used by government entities

FIFO Periodic Inventory System

The carrying amount of an inventory is recognized as _______ in the period it is sold, distributed, exchanged, or consumed. The write-down of inventory to its NRV or current replacement cost, as appropriate, is also recognized as expense

expense

Illustration: Entity A acquires inventory for ₱1,000 on account Provide journal entry for inventory held for sale

dr. merchandise inventory cr. accounts payable

Illustration: Entity A acquires inventory for ₱1,000 on account Provide journal entry for inventory held for distribution

dr. welfare goods for distribution 1k cr. accounts payable 1k

Illustration: Entity A acquires inventory for ₱1,000 on account Provide journal entry for inventory held for manufacturing

dr. raw materials inventory. 1k cr. accounts payable. 1k

Illustration: Entity A acquires inventory for ₱1,000 on account Provide journal entry for inventory held for consumption

dr. office supplies inventory. 1k cr. accounts payable. 1k

Illustration: Entity A acquires inventory for ₱1,000 on account Provide journal entry for inventory semi-expendable property

dr. semi-expendable machinery. 1k cr. accounts payable

Entity A recognizes the cost of inventory of ₱800 as expense Provide for the journal entry for inventory held for sale

dr. cost of sales. 800 cr. merchandise inventory 800

Entity A recognizes the cost of inventory of ₱800 as expense Provide for the journal entry for inventory held for distribution

dr. welfare goods expense cr. welfare goods for distribution

Entity A recognizes the cost of inventory of ₱800 as expense Provide for the journal entry for inventory held for consumption

dr. office supplies expense. 800 cr. office supplies inventory. 800

Entity A recognizes the cost of inventory of ₱800 as expense Provide for the journal entry for semi-expendable property (to recognize the issuance of semi expendable machinery to end users

dr. semi-expendable machinery and equipment expenses. 800 cr. semi-expendable machinery 800

Entity A recognizes the cost of inventory of ₱800 as expense Provide for the journal entry for inventory held for manufacturing (to recognize transfer of raw materials, direct labor and manufacturing overhead to production process)

dr. work-in-process inventory. 2k cr. raw materials inventory 800 cr. direct labor. 900 cr. manufacturing overhead 300

To recognized transfer of completed units to finished goods

dr. finished goods inventory. 2k cr. work-process-inventory. 2k

To recognize cost of sales of finished goods

dr. cost of sales. 2k cr. finished goods inventory. 2k

Inventories costing ₱200 are found to have net realizable value of ₱150 and current replacement cost of ₱180 Provide for the journal entry to record for inventory held for sale

dr. impairment loss-inventory cr merchandise inventory

Inventories costing ₱200 are found to have net realizable value of ₱150 and current replacement cost of ₱180 Provide for the journal entry to record for inventory held for distribution

dr. impairment loss-inventory 20 cr. welfare goods for distribution 20

End users prepare the __________ form to request for the purchase of items not available on stock. It is the basis in preparing the purchase order

Purchase Request (PR)

Refer to the individuals who will actually be using the items.

End-users

The authorized official prepares the __________

purchase order (PO)

Is a document issued to the supplier when making a purchase. It indicates the specifications, quantities, and agreed prices of the items being purchased. It also serves as the contract between the entity and the supplier

Purchase Order (PO)

When the purchased items are delivered, the __________ signs the “received” portion of the Delivery receipt (DR) and prepares the _______

Property/supply division Inspection and Acceptance Report (IAR)

Will be used by the Property Inspector in inspecting and accepting the delivered items

IAR

The Property/supply division forwards the DR, IAR and PO to the ____

Property Inspector

Inspects the conformance of the delivered items with the specifications in both the PO and DR and indicates the result of the inspection in the IAR. Rejected deliveries will be returned to the supplier.

Property Inspector

The property inspector forwards the copies of DR, IAR and PO to both

Property/Suppy Division and accounting Division

Records the accepted deliveries in the Stock Card (SC)

Property/Supply Division through stock card keeper

Shows the quantities of all receipts and issuances of inventory, as well as the availbale balance at any given point of time

Stock Card

Records the accepted deliveries in the books of accounts and in the _________

Accounting Division Supplies ledger card

Shows both the quantities and monetary amounts of all receipts and issuances of inventory, as well as the available balance at any given point of time

Supplies Ledger Card

Prepares the disbursement voucher (DV) then forwards it, together with supporting documents, to the accounting division for processing of payment

Property/Supply division

End users prepare the ________ to request for the issuance of items available on stock. The _________ shall approve the RIS. The approved RIS is then forwarded to the property/supply division.

Requisition and Issue Slip (RIS) Head of the requesting individual

The property/supply division prepares the ____________. The RSMI will be used by the stock card keeper in updating the SC and the accounting division in journalizing the items issued.

Report of Supplies and Materials Issued (RSMI)

The ____records the items issued in the books of accounts and updates the SLC.

Accounting division

Documents used in the disposition of inventories

1. waste materials report 2. report on the physical count of inventories 3. report of accountability for accountable forms 4. inventory custodian slip

Prepared by the Property or supply custodian to report wasted materials, such as destroyed spare parts and other spoilages.

Waste Materials Report

Used in reporting the results of physical counts. It shows the balance of inventory, as well as any shortages or overages

Report on the physical count of inventories

Used to report the movement and status of accountable forms in the possession of an officer

Report of accountability for accountable forms

Prepared when issuing semi-expendable property

inventory custodian slip

HBO

Charles Jaojao · 26問 · 1年前

HBO