Chapter 6.

SPECIAL ACCOUNTS

Sec. 105. Special Accounts in the General Fund. – Local

government units shall maintain special accounts in the General Fund
for public utilities and other economic enterprises, loans, interests,
bond issues, and other contributions for specific purposes; and
development projects funded from the share of the local government
concerned from the internal revenue collections and development of
national wealth and such other special accounts which may be
created by law or ordinance.

Sec. 106. Objectives for the Maintenance of Special

Accounts. – Accounting procedures for the operation of the special
accounts are adopted in order to:

a. Determine whether the income generated by the

public utilities or economic enterprises are
sufficient to meet their respective operating costs.

b. Provide adequate information as to the assets,

liabilities and equity of each special account.

Sec. 107. Special Accounts Subsidiary Ledger. – Special

accounts shall be maintained through the use of complete subsidiary
ledger. In case the local government unit maintains a number of the
same economic enterprise, each shall have its own set of subsidiary
ledger (e.g. 8 markets - 8 subsidiary ledgers for the market).

Sec. 108. Sub-codes for the Special Accounts. – The

following shall be the sub-codes for the special accounts:

SPECIAL ACCOUNT SUB-CODE

General Fund Proper 01
Market Operation 02
Slaughterhouse Operation 03
Waterworks System 04
Electric, Light and Power System 05
Telephone System 06
Toll Roads, Bridges and Ferries 07

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 SPECIAL ACCOUNT SUB-CODE
Transportation System 08
Hospital 09
School 10
Sports Center 11
Recreational Center 12
Housing Projects 13
Convention/Conference Center 14
Parking Space 15
Ice Plant 16
Cemetery 17
20% Development Fund 18
80% Share from Energy Sources 19
Share from Development of National Wealth 20
Loans 21
Interests 22
Bond Issues 23

Sec. 109. Profit from Operation. – Profits or income

derived from the operation of public utilities and other economic
enterprises, after deduction of the cost of improvement, repair and
other related expenses of the public utility or economic enterprises
concerned, shall first be applied for the return of the advances or
loans made therefor, any excess shall form part of the general fund of
the local government unit concerned.

Sec. 110. Reporting. – At the end of the year, post-closing

trial balance shall be prepared for each special account. Also, the
following financial statements shall be prepared:

a. Balance Sheet
b. Statement of Income and Expenses
c. Statement of Cash Flows

These reports shall form part of the schedules of the General

Fund trial balance.

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 Sec. 111. Pro-forma Accounting Entries.

Acct.
Transaction Code Debit Credit

a. Receipt of Share from IRC for P100,000.

Cash in Bank – LCCA 110 100,000
Cash in Bank –LCCA (01) P80,000
(18) 20,000
Share from Internal Revenue Collections (IRC) 746 100,000
Share from IRC (01) 80,000
(18) 20,000

b. Receipt of collections for P148,500.

Distribution:
RPT- Basic 58,500 (net of 10% discount)
Market fees 40,000
Bus. Tax 50,000

Cash in Treasury 101 148,500

Cash in Treasury (01) 108,500
Cash in Treasury (02) 40,000
Discount on RPT 937 6,500
Discount on RPT (01) 6,500
RPT Receivable 124 65,000
RPT Receivable (01) 65,000
Business Taxes & Licenses 723 50,000
Business Taxes & Licenses (01) 50,000
Receipts from Markets 783 40,000
Receipts from Markets (02) 40,000

c. Requisition of Office Supplies for the following:

Operation of Market P10,000 No accounting entry
Programs under the 20% Dev. Fund 2,000
Office of the Treasurer 8,000

d. Obligation of the requested supplies. Entry in the RAAOMO

e. Payment of Office Supplies for the following:

Operation of Market P10,000
Programs under the 20% Dev. Fund 2,000
Office of the Treasurer 8,000
Total 20,000
Less: Withholding tax 1,000
Net 19,000

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 Acct.
Transaction Code Debit Credit

Office Supplies Inventory 149 20,000

Office Supplies Inventory (01) 8,000
Office Supplies Inventory (02) 10,000
Office Supplies Inventory (18) 2,000
Cash in Bank – LCCA 110 19,000
Cash in Bank - LCCA (01) 7,600
Cash in Bank - LCCA (02) 9,500
Cash in Bank - LCCA (18) 1,900
Withholding Taxes Payable 410 1,000
Withholding Taxes Payable (01) 400
Withholding Taxes Payable (02) 500
Withholding Taxes Payable (18) 100

f. Report of Utilization of Office Supplies

Operation of Market 2,000
Office of the Treasurer 3,000
20% Dev. Fund 1,000

Office Supplies Expenses 849 6,000

Office Supplies Expense (01) 3,000
Office Supplies Expense (02) 2,000
Office Supplies Expense (18) 1,000
Office Supplies Inventory 149 6,000
Office Supplies Inventory (01) 3,000
Office Supplies Inventory (02) 2,000
Office Supplies Inventory (18) 1,000

g. Request for procurement of office equipment

of the following offices.
Office of the Accountant 5,000 No accounting entry
Office of the Market Master 4,000

h. Obligation of the requested equipment Entry in the RAAOCO

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 Acct.
Transaction Code Debit Credit

i. Payment of the procured equipment:

Office of the Accountant 4,800
Office of the Market Master 4,000
Gross 8,800
Withholding Tax 440
Net 8,360
Office Equipment 222 8,800
Office Equipment (01) 4,800
Office Equipment (02) 4,000
Withholding Taxes Payable 410 440
Withholding Taxes Payable (01) 240
Withholding Taxes Payable (02) 200
Cash in Bank – LCCA 110 8,360
Cash in Bank – LCCA (01) 4,560
Cash in Bank – LCCA (02) 3,800

j. Obligation of Subsidy to the Operation of the

Market from the GF Proper for P12,000 Entry in the RAAOMO

k. Transfer of the funds for P12,000.

Subsidy to Special Accounts 898 12,000
Subsidy to Special Accounts (01) 12,000
Cash in Bank – LCCA 110 12,000
Cash in Bank – LCCA (01) 12,000

l. Receipt of the transferred funds.

Cash in Bank – LCCA 110 12,00
0
Cash in Bank – LCCA (02) 12,000
Subsidy from Special Accounts 606 12,000
Subsidy from Special Accounts (02) 12,000

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