Government Accounting

&
Accounting for non-profit organizations

by: ZEUS VERNON B. MILLAN

 Chapter 4
Revenues and Other Receipts
 

Learning Objectives
1. State the sources of revenue of a
government entity.
2. State the recognition and measurement
of revenue.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Fundamental Principles for Revenue  
• All revenues shall be remitted to the BTr
and included in the General Fund, unless
another law specifically allows otherwise.
Recording in other types of funds (e.g.,
Special Fund) shall be made only when
authorized by law.
• Receipts shall be properly acknowledged
through pre-numbered ORs. Receipts can
be in the form of checks.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Sources of Revenue  
Revenues may arise from exchange and non-
exchange transactions.
• Exchange transaction - examples: sale of
goods and rendering of services.
• Non-exchange transactions - examples: tax
revenue, fines and penalties and donations.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Sale of Goods
Revenue from the sale of goods shall be recognized
when all of the following conditions are satisfied:
a. Significant risks and rewards of ownership of the
goods are transferred to the buyer;
b. The entity does not retain continuing managerial
involvement or effective control over the goods sold;
c. It is probable that economic benefits will flow to the
entity;
d. Revenue can be measured reliably; and
e. Costs relating to the transaction can be measured
reliably. 

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Rendering of Services
• Revenue from rendering of services is recognized on a
straight line basis over the contact term.
• However, revenue is recognized by reference to the stage of
completion if the outcome of the transaction can be
estimated reliably, such as when all of the following
conditions are satisfied:
a. The stage of completion can be measured reliably;
b. It is probable that economic benefits will flow to the
entity;
c. Revenue can be measured reliably; and
d. Costs relating to the transaction can be measured
reliably.
• When the outcome cannot be estimated reliably, revenue is
recognized only to the extent of recoverable costs.
Interest, Royalties & Dividends
• Interest is recognized on a time proportion
basis that takes into account the effective yield
on the asset;
• Royalties is recognized as they are earned in
accordance with the substance of the relevant
agreement; and
• Dividends are recognized when the entity’s
right to receive payment is established.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
Measurement of Revenue from Exchange Transactions

• Revenue from exchange transactions are

measured at the fair value of the
consideration received or receivable.
• Any trade discounts and volume rebates shall
be taken into account.
• When cash flows are deferred, the fair value of
the consideration is the present value of the
consideration receivable.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
Exchanges of Goods or Services
• Similar – no revenue is recognized.
• Dissimilar – revenue is recognized, measured
using the following order of priority:
a. Fair value of the goods or services
received, adjusted by the amount of any
cash transferred.
b. Fair value of the goods or services given
up, adjusted by the amount of any cash
transferred.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Non-exchange Transactions
• Revenue from non-exchange transactions are
derived mostly from taxes, fines and penalties,
gifts, donations and goods in-kind.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Tax Revenue
Type of tax Taxable event
 Income tax  Earning of taxable income
 Value added tax  Undertaking of a taxable
activity
 Goods and services tax  Purchase or sale of taxable
goods or services
 Customs duty  Movement of dutiable
goods or services across
the customs boundary
 Death duty  Death of the owner of the
taxable property
 Property tax  Passage of the time period
for which the tax is levied
GOVT ACCTG & ACCTG FOR NPOs by:
Z.B.Millan
Gifts, Donations and Goods In-kind
- Recognized as revenue measured at fair value
when it is probable that future economic
benefits will flow to the entity.
- If without condition, recognized immediately
as revenue.
- If with condition, initially recognized as liability
and recognized as revenue only when the
condition is satisfied.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Others
• Services in-kind – not recognized as revenue.
• Debt Forgiveness – carrying amount of debt forgiven is
recognized as revenue.
• Bequests – (transfers made according to the provisions of
a deceased person’s will) recognized as revenue measured
at fair value, if asset recognition criteria are met.
• Grant with Condition – initially recognized as liability until
condition is satisfied.
• Pledges – (unenforceable promises to give) not recognized
as revenue.
• Concessionary Loans – (loans w/ below-market rate)
difference b/w fair value and transaction price is
recognized as revenue, if non-exchange transaction.
GOVT ACCTG & ACCTG FOR NPOs by:
Z.B.Millan
Impairment Losses and Allowance for Impairment Losses

• When an amount already recognized as

revenue becomes uncollectible, it is
recognized as expense (i.e., impairment loss)
rather than as an adjustment to the revenue
originally recognized.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Other Receipts
 Subsidy from NG and  Recognized as revenue
other NGAs from assistance and
subsidy.

 Receipts from:  Not recognized as

a. excess cash advance; revenue.
b. overpayment of
expenses;
c. performance bonds and
security deposits;
d. collections on behalf of
other entities; and
e. inter or intra-agency fund
transfers.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Appendix 29

CASH RECEIPTS RECORD

Entity Name : _______________________________ She e t No. : _________________

Fund Cluste r : ______________________________ Ye ar : _____________________

_______________________ _____________________________ ______________

Accountable Officer Official De signation Station
UACS Code
Reference
Nature Undeposited
Date No./OR Payor Collection Deposit
MFO/PAP Object Code of Collection Collection
No./DS

CER TIFICATION

I hereby certify on my official oath that the foregoing is a correct and complete record
of all collections and deposits had by me in my capacity as _____ (Designation)___________ of
________(Name of Agency)___________ during the period from _________________ to
_______________, inclusives, as indicated in the corresponding columns.

Name and Signature

Session 2: Applying Accounting Policies Date

GAM: Accounting and Procedures on Revenue and Other
Receipts
 Appendix 26

REPORT OF COLLECTIONS AND DEPOSITS

Report No. : _______________

Entity Name : _________________________________ Sheet No. : ________________
Fund Cluster : ________________________________ Date : ____________________

Official Receipt/ Report of Amount

Collections by Sub- Responsibility Breakdown of Collections
Collector Payor Particulars MFO/PAP Total per
Center Code Taxes Fees
OR
Date Number 40101010 40201010

Total

Summary:
Undeposited Collections per last Report P xxx.xx
xxx.xx
Collections per OR Nos. __________to____________
Deposits
Date: ________________ P xxx.xx
Date: ________________ xxx.xx xxx.xx
Undeposited Collections, this Report P xxx.xx

CERTIFICATION
I hereby certify on my official oath that the above is a true statement of all collections
and deposits had by me during the period stated above for which Official Receipt Nos.
____________ to ___________ inclusive, were actually issued by me in the amounts
shown thereon. I also certify that I have not received money from whatever source
without having issued the necessary Official Receipt in acknowledgement thereof.
Collections received by sub-collectors are recorded above in lump-sum opposite their
respective collection report numbers. I certify further that the balance shown above
agrees with the balance appearing in my Cash Receipts Record.

Session 2: Applying
Name andAccounting Policies
Signature of the Collecting Officer
GAM: Accounting and Procedures on Revenue and
_________________________ Other
Receipts
Official Designation Date
 Appendix 2

CASH RECEIPTS JOURNAL

Month _________________

Entity Name : _______________________________

Fund Cluster : ______________________________ Sheet No. : __________

COLLECTIONS DEPOSITS

RCD/ CREDIT DEBIT

Name of Collecting
Date CRReg JEV No. SUNDRY SUNDRY
Officer
No. DEBIT UACS UACS CREDIT
Object P Amount Object P Amount
Code Code

Totals
AO 5-14-02
Recapitulation:
Amount
Account Code P
Debit Credit

Total

Certified Correct:

Session 2: Applying Accounting Policies (Signature over Printed Name)

GAM: Accounting and Procedures on Revenue and Other Chief Accountant/Head of Accounting
Receipts Division/Unit
OPEN FORUM
QUESTIONS????
REACTIONS!!!!!

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 APPLICATION OF CONCEPTS
 

PROBLEM 4-3: FOR CLASSROOM DISCUSSION

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 END

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan