Revenue and Other Receipts

Revenue-gross inflow resulting increase in equity other than contributions from owners

Receipts- actual cash collections

Fundamental Principles of Revenue

1. All revenue shall be submitted to NT & included in GF of NG, unless…

2. All money and property received by PO are accounted as govt funds, unless…
3. Amounts received in trust and business-type activities of gov`t are separately recorded and
disbursed.
4. Receipts are recorded as revenue of Special, Fiduciary or rust Funds, or Funds other than GF
5. CO shall immediately issue an OR upon collection
6. Where mechanical devices are used, COA may approve exemption from use of accountable forms
7. Temporary receipts are not allowed to acknowledge receipts
8. Pre-numbered ORS are issued in strict numerical sequence.
9. CO shall accept payments in checks.
10. Indicate date of receipt, from whom and on what account the fund was received

Types of Funds

1. General Fund- available for any purpose

2. Special Fund- for special purpose
3. Trust Fund (Fiduciary Fund)
4. Revenue Fund
5. Depository Fund
6. Special Account in the General Fund (SAGF)
7. Special Purpose Funds (SPFs)

Sources of Revenue

1. Exchange Transactions (Reciprocal transfers)

2. Non-exchange Transactions (Non-reciprocal transfers)

Exchange Transactions

1. Sale of Goods or Provision of Services

a. Service Income
b. Business Income
2. Use by other entity of assets
a. Interest Income
b. Royalties
 c. Dividends

Recognition of Revenue from Exchange Transactions

Sale of Goods –Straight line basis

1. Transfer of significant risk and rewards to buyer

2. No retention of continuing managerial involvement
3. Probable economic inflow
4. Revenue can be measured reliably; and
5. Cost can be measured reliably

Rendering of Services—Stage of completion

1. Stage of completion can be measured reliably

2. Probable inflow
3. Revenue can be measured reliably; and
4. Cost can be measured reliably

**Performed by an indeterminate number of acts over a specified time—straight line basis

Interest, Royalties and dividends

1. Interest—Time proportion basis

2. Royalties—When earned in accordance with substance of agreement
3. Dividends—Right to receive payment is established

Measurement of Revenue from Exchange Transactions

@fair value less trade discounts and volume rebates

If deferred: FV = FCF using imputed rate of interest

Interest revenue = FV – Nominal Amount

If advance: Initial = Liability

Subsequent = Revenue

Exchanges of Goods or Services

a. Similar nature and value do not give rise to revenue

b. Dissimilar nature and value give rise to revenue measured using order of priority
1. FV of good or services rendered, adjusted by amt of any cash transferred
2. FV of goods or services given up, adjusted by amt of any cash transferred

Non-exchange Transactions

1. Taxes
 2. Fines and Penalties
3. Gifts, Donation and Goods/Services in Kind

Recognition of Revenue from Non-exchange Transactions

Cash basis

When collected or when measurable and legally collectible

1. Tax Revenue
 @ gross amt
 Expenses paid thru the tax system – ignored
 Not grossed up for amount of tax expenditures

Taxable event
Income Tx Earning of taxable income
VAT Undertaking of a taxable activity
Goods and services tax Purchase or sale of taxable goods or services
Customs duty tax Movement of dutiable goods or services across
customs boundary
Death duty Death of owner of taxable property
Property tax Passage of time which tax is levied

2. Transfers
a. Fines and Penalties—income in the year of collection
**in capacity of an agent – not revenue
b. Gifts, Donations and Goods in-kind-- probable
**without condition – revenue
**with condition—liability
c. Services In-kind—not revenue but disclosure
d. Debt Forgiveness—revenue equal to CA of deb forgiven
**controlling entity cancelled debt of a wholly owned controlled entity – not revenue, but
contribution from owners
e. Bequests—revenue @FV of resources received or receivable
f. Grant with Conditions—initially, liability and subsequently, revenue
JE:

NG- BTr Government Agency

Receipt of grant Cash in Bank-Local Currency, BSP Cash-MDs, Regular
Other deferred credits Subsidy from NG
Disbursement Subsidy from NG Construction In Progress-Infrastructure
Cash in Bank-Local Currency, BSP Assets
Cash-MDS, Regular
Completion of project Other deferred credits Flood Control System
Income from grants and donations in Construction In Progress-Infrastructure
cash Assets
 g. Pledges – not revenue
**subsequent transfer to entity – gift or donation
**disclosure as contingent assets
h. Concessionary Loans
**no present obligation: Revenue = FV of loan – Transaction price (loan proceeds)
**has present obligation: Liability, only revenue if obligation is satisfied
i. Impairment of Losses and Allowance for Impairment Losses—expense, not adjustment to
revenue

Measurement of non-exchange transactions

1. Asset-- @fair value on acquisition date

2. Liabilities-- @PV, if effect of time value is material
3. Revenue-- @amt of increase in net assets

Other receipts

1. Receipt of Subsidy from National Government

a. Notice of Cash Allocation
b. Tax Remittance Advice
c. Non-cash Availment Authority
d. Cash Disbursement Ceiling
2. Receipt of Subsidy or Assistance from other govt agencies including LGUs and GOCCs
XX-XX Cash-Collecting Officers
Subsidy from NGAs
Assistance from LGUs
Assistance from GOCCs
XX-XX Cash- Treasury/Agency Deposit, Trust
Cash-Collecting Officers

3. Receipt of excess cash advance granted to officers and employees

4. Receipt of refund of overpayment of expenses
XX-XX Cash-Collecting Officers
Appropriate Expense Account
XX-XX Cash- Treasury/Agency Deposit, Trust
Cash-Collecting Officers

5. Receipt of performance bond or security deposit

XX-XX Cash-Collecting Officers
Guaranty/Security Deposits Payable
XX-XX Cash- Treasury/Agency Deposit, Trust
Cash-Collecting Officers
6. Collections made on behalf of another entity
7. Intra-agency and Inter-agency fund transfers
XX-XX Cash-Collecting Officers
Due to (Central Office, Regional Office, Operating Units or Other Funds)
 XX-XX Cash- Treasury/Agency Deposit, Trust
Cash-Collecting Officers
8. Inter-agency fund transfers (transfer between different agencies)
XX-XX Cash-Collecting Officers
Due to (NGAs, LGUs or GOCCs)
XX-XX Cash- Treasury/Agency Deposit, Trust
Cash-Collecting Officers

Measurement of non-exchange transactions

4. Asset-- @fair value on acquisition date

5. Liabilities-- @PV, if effect of time value is material
6. Revenue-- @amt of increase in net assets

1. F
2. F
3. F
4. T
5. T
6. T
7. T
8. F
9. F
10. T

1. B
2. B
3. A
4. A
5. D
6. B
7. C
8. C
9. C
10. D

1. D
2. B
3. D
4. C
5. C
6. D
7. B
8. A
9. A
10.