Professional Documents
Culture Documents
Submitted by:
CHRISTINE H. LEAL
Submitted to:
June 9, 2021
TABLE OF CONTENTS
I. INTRODUCTION 1
V. ILLUSTRATIVE PROBLEM 16
I. INTRODUCTION
revenue. We will explore the different types of accounts that are directly and
indirectly related to the Revenue & other Receipts of the Government. I am pretty
sure that, At the end of this book review you would be able to Understand the
financial statements.
how the government and non-profit organization recognized and measure the
revenue and other receipts that occurs in the government agency and non-profit
organization. They will also be enlightened where the sources of revenue are coming
from and how they manage and utilized the revenue and other receipts.
spend and use the revenue and other receipts of the government efficiently and
effectively.
2
This book review primarily focused on the assessment of revenue and other
receipt of the government and non-profit organization. It does not cover other
chapters in Government Accounting topics. The creator of this book review aims to
discuss and elaborate the sources of revenue of the government and how it is
comprehend and understand. The main source or references of this book review is
the book for Government Accounting and Accounting for Non-profit organization of
In every study, there are some limitations to be considered to mainly know the focus
1. The topic only focuses on the sources of revenue and underlying principles other
3. The topic only talks about the sources, recognition and measurement of the
To further explore the topic you are also recommended to research and look for
other references that might help you to understand and appreciate the topic: revenue
the reporting period when those inflows result in an increase in equity, other than
Revenue includes only those that are received or receivable by the entity in its
own account. Receipts refer to actual cash collections from all sources during a
period.
a. All revenues of an entity shall be remitted to the National Treasury and included
in the General Fund of the National Government unless another law specifically
allows otherwise.
b. All moneys and property received by a public officer, acting in any capacity or
upon any occasion, shall be accounted for as government funds and government
Funds other than the General Fund only when authorized by law.
acknowledge cash receipts, the COA may approve, upon request, the exemption
funds.
i. A collecting officer shall accept payments to the government in the form checks,
collecting officer shall not use government funds to en cash private checks.
– indicating the date of receipt, from whom and on what account the fund was
received. (P.D. No. 1445 & Chapter 2, Sec. 4 of GAM for NGAs)
TYPES OF FUND
1. General fund – a fund which is available for any purpose other than those which
4. Revenue fund - comprises all funds derived from the income of any government
agency and available for appropriation or expenditure in accordance with the law.
5. Depository fund - fund held in an authorized depository bank over which the
recipient agency retains control for the 1awful purposes for which the fund was
received.
funding of priority activities of the government The SAGF is sourced from specific
fees, grants and donation and other sources identified under the law. The following
a. All income and collections for Special and Fiduciary Fund shall be
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the President.
7. Special Purpose Funds (SPFs) - are "funds that the President allocates for
special programs and projects. Unlike for other funds, SPFs are not under the
» All money collected on any tax levied for a special purpose shall be treated as
a special fund and paid out for such purpose only. If the purpose for which a
special fund was created has been fulfilled or abandoned, the balance, if any,
shall be transferred to the general funds of the Government. (Art. VI, Sec. 29(3),
Philippine Constitution)
transactions.
which an entity either receives value from another entity without directly giving
When the consideration transferred does not approximate the fair value of the
determine its type. For example, the sale of goods is normally an exchange
(PPSAS 23.11)
the following:
entities.
Examples:
Revenue, Hospital Fees Share in the Profit of Joint Venture, and the like.
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II. Use by other entity of assets yielding interest, royalties and dividends or similar
distributions.
Examples:
b. Royalties – fees paid for the use of the entity's assets such as
Sale of Goods:
Revenue from the sale of goods shall be recognized when following conditions are
satisfied:
the buyer;
II. The entity does not retain continuing managerial involvement or effective
Rendering of Services:
Revenue from the supply of services is recognized on a straight line basis over
estimated reliably, such as when all of the following conditions are satisfied:
be measured reliably;
of acts over a specified time frame, revenue is recognized on a straight line basis
over the specified time frame unless there is evidence that some other method
When the outcome of the transaction involving the rendering of services cannot
a. Interest is recognized on a time proportion basis that takes into account the
b. Royalties are recognized as they are earned in accordance with the substance
established.
are rendered, except when this is not practicable, in which case, revenue is
when fees are billed, or if not practicable, when fees are collected. (GAM for
Revenue from exchange transactions are measured at the fair of the consideration
received or receivable. Any trade discounts and volume rebates shall be taken into
account.
length transaction.
Example:
Entity A sells goods with a list price of 10,000, on account, with the following
When cash flows are deferred, the fair value of consideration may be less
than its nominal amount. In this case the fair value of the consideration receivable
interest. The difference between the fair value and the nominal amount of the
II. Dissimilar nature and value give rise to revenue measured using the
a) Fair value of the goods or services received, adjusted by the amount of any
cash transferred. ii. Fair value of the goods or services given up, adjusted by
NON-EXCHANGE TRANSACTIONS
Revenue from non-exchange transactions are derived mostly from taxes, fines and
penalties, gifts, donations and goods in-kind. These are received without directly
breach of laws.
assets and services that one entity makes to another, normally free from
stipulations.
or when these are measurable and legally collectible. (GAM for NGAs, Chapter 5,
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Sec. 12)
Tax revenue
Tax revenue is recognized at a gross amount and not reduced for expenses paid
Expenses paid through the tax system are those expenses which should
Tax revenue shall not be grossed up for the amount of tax expenditures.
Tax expenditures are preferential provisions of the tax law that provide
certain taxpayers with concessions that are not available to others. Tax
Transfers
Transfers are inflows of future economic benefits or service potential from non-
Transfers include fines, gifts, donations and goods and services in-kind, debt
without approximate equal value in exchange and are not taxes but some are with
conditions.
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Fines and penalties are recognized as income in the year they are collected.
However, fines are recognized as revenue when the receivable meets the
recognition criteria for asset and are measured at the best estimate of inflow of
An entity collecting fines in the capacity of an agent shall not treat those fines as
revenue.
Gifts, donations and goods in-kind are recognized as revenue when it is probable
that future economic benefits or service potential will flow to the entity. Those that
with conditions are initially recognized as liability and recognized as revenue only
Services In-kind Services In-kind are not recognized as revenue due to the
uncertainties affecting the entity's ability to control those services and measure
them at fair value. Examples of services in-kind include technical assistance from
volunteer services, and the like. Services in-kind received may be disclosed in the
notes.
Measurement
measured as follows:
material.
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Debt Forgiveness
controlled entity, the cancelled debt is the contribution from owners and not
revenue.
Bequests
person's will. A bequest that satisfies the recognition criteria for asset is
receivable.
Pledges
entity. Pledges are not recognized as revenue because they do not meet the
recognition criteria for asset, i.e., at present, the entity has not yet obtained
control over the item pledged. If the pledged item is subsequently transferred to
Concessionary Loans
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The entity considers whether the difference between the transaction price (loan
proceeds) and the fair value of the loan on initial recognition is a non-exchange
transaction.
OTHER RECEIPTS
V. ILLUSTRATION PROBLEM
Assume that on July 16, 2014, Entity A sold accounting manuals on account
with a list price of P100,000 less trade discounts of 10%, 10% and 5%.
Compute the invoice price of the merchandise and give the journal entry of the
transaction.
2015, Entity X paid cash in settlement of its note. Provide the accounting
entries.
the construction of a flood control system which must be completed within the
next 2 years, otherwise, the grant must be returned to the grantor. The
90,000
81,000
81,000
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Less: 5% x 81,000
4,050
Total
P 76,950
81,000
Less: 5% x 81,000
4,050
Total
P 76,950
81,000
Less: 5% x 81,000
4,050
Total
P 76,950
81,000
Less: 5% x 81,000
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4,050
Total
P 76,950
Less 5% X 81,000 (4,050)
Total 76,950
To recognize the sale of the accounting manuals when the inflow of cash or cash
may be less than the nominal amount of cash received or receivable. The fair
using an imputed rate of interest. The difference between the fair value and
3. Receipt of grant
VII. OBSERVATION
At the end of this paper I observed that, unless otherwise specifically provided
by law, all revenue (income) accruing to the departments, offices and agencies by
virtue of the provisions of existing laws, orders and regulations shall be deposited in
the NT or in the duly authorized depository of the Government and shall accrue to
the xxx General Fund of the Government: Provided, that amounts received in
recorded and disbursed in accordance with such rules and regulations as may be
of Special, Fiduciary or Trust Funds (TF) or Funds other than the GF, only when
authorized by law and following such rules and regulations as may be issued by
and the Secretary of the Budget and the Chairman, Commission on Audit, as
members. The same Committee shall likewise monitor and evaluate the activities
and balances of all Funds of the NG other than the GF and may recommend for
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the consideration and approval of the President, the reversion to the GF of such
amounts as are: (1) no longer necessary for the attainment of the purposes for
which said Funds were established, (2) needed by the GF in times of emergency, or
(3) violative of the rules and regulations adopted by the Committee: provided, that
the conditions originally agreed upon at the time the funds were received shall be
return for the resources received, but that consideration does not approximate the
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fair value of the resources received, the entity determines whether there is a