REVENUE and

OTHER RECEIPTS
 REVENUE and OTHER RECEIPTS
Learning Objectives:
1. State the sources of revenue of a government entity.
2. State the recognition and measurement of revenue
 What is Revenue?
Refers to the gross inflow of economic benefits or service
potential during the reporting period when those inflows result in
an increase in net assets/equity, other than increases relating to
contributions from owners.
 Fundamental Principles for Revenue
Sec. 4: All revenues accruing to the NGAs shall be governed by the
following fundamental principles:
a. All revenues accruing to an entity by virtue of the provisions of existing
law, orders and regulations shall be deposited/remitted in the National
Treasury and shall accrue to the General Fund of the NG, unless otherwise
specifically provided by law.
 Fundamental Principles for Revenue
b. All moneys and property officially received by a public officer
acting in any capacity or upon any occasion must be accounted
for as government funds and government property, unless
otherwise specifically provided by law.
c. Amounts received in trust and from business-type activities of
government may be separately recorded and disbursed in
accordance with such rules and regulations.
 Fundamental Principles for Revenue
d. Receipts shall be recorded as revenue of Special, Fiduciary or Trust Funds
or Funds other than the GF, only when authorized by law.
e. A collecting officer shall immediately issue an official receipts (OR) upon
collecting a payment of any nature.
f. Where mechanical devices (e.g. electronic official receipt) are used to
acknowledge cash receipts, the COA may approve, upon request,
exemption from the use of accountable forms.
 Fundamental Principles for Revenue
g. Temporary receipts shall never be issued to acknowledge the receipt of
public funds.
h. Pre-numbered ORs shall be issued in strict numerical sequence. Duplicate
copies shall be the exact copies of the original.
i. A collecting officer shall accept payments to the government in the form
of checks, upon proper endorsement and identification of the payee or
endorsee. The collecting officer shall not use government funds to encash
private checks.
 Fundamental Principles for Revenue
j. Receipts of government funds shall be acknowledge in accordance with
the law – indicating the date of receipt, from whom and on what account
the fund was received.
 Types of Funds
1. General Fund
2. Special Fund
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
a. Exchange Transactions (Reciprocal Transfers)
are transactions in which one entity receives assets or services, or has
liabilities extinguished, and directly gives approximately equal value
(primarily in the form of cash, goods, services, or use of assets) to
another entity in exchange. (Par. 11, PPSAS 9)
(e.g. Sale of goods, rendering of services and use by other entity of
assets yielding interest, royalties and dividends or similar
distributions.)
 Sources of Revenue
b. Non-exchange transactions (Non-Reciprocal Transfers)
 are transactions in which an entity either receives value from another
entity without directly giving approximately equal value in exchange,
or gives value to another entity without directly receiving
approximately equal value in exchange. (Par. 11, PPSAS 9)
(e.g. Tax Revenue, fines and penalties and gifts, donations and
goods/services In-kind)
 Recognition and Measurement of Revenue
from Exchange Transactions
Nature of Receipt Recognition
Sale of goods  Revenue is recognized when the following conditions
is met:
i. When significant risks and rewards are
transferred;
ii. Control is not retained;
iii. Inflow of economic benefits is probable; and,
iv. Revenue and related costs can be measured
reliably.
Rendering Services  Revenue is recognized on a straight line basis
 However, revenue is recognized by reference to the
stage of completion if this can be measured reliably.
 When the outcome cannot be estimated reliably,
revenue is recognized only to the extent of recoverable
costs.
 Recognition and Measurement of Revenue
from Exchange Transactions
Nature of Receipt Recognition
Interest  Recognized on a time proportion basis using the effective
interest method.
Royalties  Recognized based on the substance of the agreement.
Dividends  Recognized when right to receive payment is established.
Exchange of goods or services  If similar, no revenue is recognized.
 If dissimilar, revenue is recognized in order of priority:
1.FV of the asset received, adjusted by cash paid or
received
2.FV of the asset given up, adjusted by cash paid or
received
 Recognition and Measurement of Revenue
from Exchange Transactions
Nature of Receipt Recognition
Gifts, Donations, and Goods In- Kind  If without condition, recognized immediately.
 If with condition, initially recognized as liability until the
condition is satisfied.
Services In-Kind  Not recognized as revenue.
Debt forgiveness  Carrying amount of debt forgiven is recognized as revenue.
Bequest  Recognized as revenue measured at fair value, if asset
recognition criteria are met.
 Recognition and Measurement of Revenue
from Exchange Transactions
Nature of Receipt Recognition
Grant with condition  Initially recognized as liability until the condition is satisfied.

Pledges  Not recognized.

Concessionary Loans  Difference between the fair value and transaction price is
recognized as revenue, if non-exchange transaction.
Subsidy from NG and other NGAs  Recognized as revenue from assistance and subsidy.
 Recognition and Measurement of Revenue
from Exchange Transactions
Nature of Receipt Recognition
Receipts from excess cash advance,  Not recognized as revenue.
overpayment of expenses, performance
bonds and security deposits, collections
on behalf of other entities, and inter or
intra- agency fund transfers.
 END…..

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