RA 7160 and Local Government Accounting System Practice Flashcards

These flashcards cover the vocabulary and key concepts of RA 7160 and the Local Government Accounting System, including capitalization thresholds, roles of officials, and required financial books.

Republic Act No. 7160

Also known as the Local Government Code of $1991$, this law grants autonomy to Local Government Units (LGUs) and establishes rules for their administration and financial management.

Local Government Accounting System (LGAS)

The system used by LGUs to record financial transactions, monitor government funds, prepare financial statements, and ensure accountability of public funds.

Accountant

The official responsible for maintaining accounting books, recording transactions, preparing financial statements, and ensuring compliance with COA rules.

Treasurer

The official responsible for collecting revenues, receiving money, making authorized payments, and keeping cashbooks.

Books of Original Entry

Accounting records where transactions are first recorded, including the General Journal, Cash Receipts Journal, and Cash Disbursements Journal.

Books of Final Entry

Records that summarize transactions from the journals, specifically the General Ledger.

Chart of Accounts (COA)

A complete list of all accounts used by an LGU to classify assets, liabilities, equity, income, and expenses to ensure uniform recording.

Subsidiary Records

Detailed information supporting control accounts maintained for assets, liabilities, equity, public utilities, economic enterprises, and special accounts.

Cashbooks

Records maintained by the Treasurer and Disbursing Officer to monitor cash receipts, disbursements, and balances.

General Purpose Financial Statements (GPFS)

A complete set of financial statements including the Statement of Financial Position, Statement of Financial Performance, Statement of Changes in Net Assets/Equity, Cash Flow Statement, and Notes to Financial Statements.

Capitalization Threshold

The cost limit of $₱50,000$ used to determine if an item is recognized as Property, Plant and Equipment (PPE).

Property, Plant and Equipment (PPE)

Resources recognized as assets if the cost is $₱50,000$ or more and the useful life is more than $1$ year.

Semi-Expendable Property

Items that cost below $₱50,000$ and are classified as an expenditure rather than PPE.

Assets

Resources owned by the LGU, such as cash, equipment, and buildings.

Liabilities

Obligations owed by the LGU, such as loans and accounts payable.

Equity

The residual interest after liabilities are deducted from assets, expressed as $\text{Assets} = \text{Liabilities} + \text{Equity}$.

Revenue

Money earned or collected by the LGU, such as taxes, fees, and permits.

Expenses

Costs incurred in delivering government services, such as salaries, utilities, and office supplies.

SCBCG

A mnemonic for the features of the accounting system: Subsidiary Records, Chart of Accounts, Books of Accounts, Cashbooks, and General Purpose Financial Statements.

50 + 1 Rule

A mnemonic for PPE capitalization: a cost of $₱50,000$ or more and a useful life of more than $1$ year.