Chapter 4: Revenues and Other Receipts

Revenue

Gross inflow of economic benefits or servic potential during the reporting period when those inflows result in an increase in equity, other than increases relating to contributions from owners.

Revenue

This includes only those that are received of receivable by the entity in its own account.

Receipts

This refer to actual cash collections from all sources during a period.

National Treasury; General Fund

All revenues of an entity shall be remitted to the blank and included in the blank of the National Government, unless another law specifically allows otherwise

government funds and government property, unless another law specifically states otherwise

All moneys and property received by a public officer, acting in any capacity or upon any occasion, shall be accounted for as blank.

separately recorded and disbursed in accordance with relevant rules

Amounts received in trust and from business-type activities of the government may be blank.

Special, Fiduciary or Trust Funds, or Funds other than the General Fund

Receipts shall be recorded as revenue of blank only when authorized by law.

official receipt (OR)

A collecting officer shall immediately issue a blank upon collecting a payment of any nature.

use of accountable forms

Where mechanical devices (e.g. electronic official receipt) are used to acknowledge cash receipts, the COA may approve, upon request, the exemption from the blank.

Temporary receipts

This shall never be used to acknowledge the receipt of public funds.

strict numerical sequence

Pre-numbered official receipts (ORs) shall be issued in blank. Duplicate copies shall be the exact copies of the original.

encash private checks

A collecting officer shall accept payments to the government in the form checks, upon proper endorsement and identification of the payee or endorsee. The collecting officer shall not use government funds to blank.

date of receipt, from whom and on what account the fund was received

Receipts of government funds shall be acknowledged in accordance with the law - indicating the blank.

General fund

Special fund

Trust (Fiduciary) Fund

Revenue fund

Depository fund

Special Account in the General Gund

Special purpose funds

Types of funds

General Fund

A fund which is available for any purpose other than those which other funds have been designated to.

Special fund

A fund designated for special purposes.

Trust fund (Fiduciary fund)

Fund held by a government agency or public officer acting as trustee, agent, or administrator for the fulfillment of a condition.

Revenue fund

Comprises all funds derived from the incon of any government agency and available for appropriation expenditure in accordance with the law.

Depository fund

Fund held in an authorized depository ban over which the recipient agency retains control for the law purposes for which the fund was received.

Special Account in the General Fund (SAGF)

Established to facilitate the funding of priority activities of the government. This is sourced from specific fees, grants and donation and other sources identified under the law.

a. All income and collections for Special and Fiduciary Fund shall be remitted to the Treasury and treated as SAGF.

b. The SAGF shall be considered as being automatically appropriated for purposes authorized by law, excep when the General Appropriations Act (GAA) provide otherwise.

c. SAGF shall be released to government agencies subject to the approval of the President.

Relevant Legal Provisions regarding the SAGF

Special Purpose Funds (SPFs)

Funds that the Presiden allocates for special programs and projects. Unlike for other funds, they are not under the accountability of any particula government agency/office or unit

special fund

All money collected on any tax levied for a special purpose shall be treated as a blank and paid out for such purpose only.

general funds

If the purpose for which a blank was created has been fulfilled or abandoned, the balance, if any shall be transferred to the blank of the Government.

Exchange transactions (reciprocal transfers)

Non-exchange transactions (Non-reciprocal transfers)

Sources of Revenue

Non-exchange transactions (Non-reciprocal transfers)

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.

Exchange transactions (Reciprocal transfers)

Transactions in which one entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value to another entity in exchange.

combination of exchange and non-exchange transactions

When the consideration transferred does not approximate the fair value of the resources received, the entity determines whether the transaction includes a blank. Each component shall be recognized separately.

substance

If it is not immediately clear whether a transaction is an exchange or non-exchange transaction, the blank of the transaction shall be examined to determine its type.

False - does not necessarily mean

True or false? The receipt of trade discounts, quantity discounts, or other reductions in price means that the transaction is a non-exchange transaction.

Exchange transactions

Determine whether the revenue arises from exchange or non-exchange transaction:

Sale of Goods or Provision of Services

Service Income in Exchange Transaction

Determine whether the revenue arises from exchange or non-exchange transaction:

Permit Fees, Registration Fees, Franchising Fees, Licensing Fees, Legal Fees, Passport and Visa Fees, Processing Fees, and the like.

Business Income in Exchange Transactions

Determine whether the revenue arises from exchange or non-exchange transaction:

School Fees, Examination Fees, Rent/Lease Income, Communication Network Fee, Income from Hostels/Dormitories, Sales Revenue, Hospital Fees, Share in the Profit of Joint Venture, and the like.

Exchange Transactions

Determine whether the revenue arises from exchange or non-exchange transaction:

Interest income which are charges for the use of cash or cash equivalents, or amounts due to the entity

Exchange transaction

Determine whether the revenue arises from exchange or non-exchange transaction:

Royalties or fees paid for the use of the entity's assets such as trademarks, patents, software, and copyrights;

Exchange transaction

Determine whether the revenue arises from exchange or non-exchange transaction:

Dividends or share of the National Government from the earnings of its capital/equity investments in Government Owned or Controlled Corporations (GOCCs) and other entities.

Sale of Goods or Provisions of Services to third parties or other government entities AND use by other entity of assets yielding interest, royalties and dividends or similar distributions.

Revenues from exchange transactions arise from blank and blank.

i. Significant risks and rewards of ownership of the goods are transferred to the buyer;

ii. The entity does not retain continuing managerial involvement or effective control over the goods sold;

iii. it is probable that economic benefits will flow to the entity;

iv. Revenue can be measured reliably; and

V. Costs relating to the transaction can be measured reliably.

Revenue from the sale of goods shall be recognized when all of the following conditions are satisfied...

straight line basis

Revenue from the supply of services is recognized on a blank basis over the period the services are rendered.

stage of completion (e.g., percentage of completion method)

Revenue is recognized by reference to the blank if the outcome of the transaction can be estimated reliably, such as when all of the following conditions are satisfied:

i. The blank of the transaction at the reporting date can be measured reliably;

ii. It is probable that economic benefits will flow to the entity;

iii. Revenue can be measured reliably; and

iv. Costs relating to the transaction can be measured reliably.

straight line basis

For practical purposes, when services are performed by an indeterminate number of acts over a specified time frame, revenue is recognized on a blann basis over the specified time frame unless there is evidence that some other method better represents the stage of completion.

the expenses recognized that are recoverable

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognized only to the extent of blank.

Interest

This is recognized on a time proportion basis that takes into account the effective yield on the asset;

Royalties

They are recognized as they are earned in accordance with the substance of the relevant agreement;

Dividends

They are recognized when the entity's right to receive payment is established.

fees are collected

A government entity normally recognizes revenue from service income when the services are rendered, except when this is not practicable, in which case, revenue is recognized when blank. Similarly, revenue from business income (except sale of goods) is recognized when fees are billed, or if not practicable, when blank.

fair value of consideration received/receivable

Revenue from exchange transactions are measured at the blank of the consideration received or receivable. Any trade-discounts and volume rebates shall be taken into account.

interest revenue

When cash flows are deferred, the fair value of the consideration may be less than its nominal amount. In this case, the fair value of the consideration receivable is determined by discounting all future cash flows using an imputed rate of interest The difference between the fair value and the nominal amount of the consideration is recognized as blank.

liability

When the consideration is received in advance, it is initially recognized as a blank and subsequently recognized as revenue only when the revenue recognition criteria are met

False - do not give rise to revenue

True or false? Exchanges of goods or services with similar nature and value give rise to revenue.

Fair value of the goods or services received, adjusted by the amount of any cash transferred

AND

Fair value of the goods or services given up, adjusted by the amount of any cash transferred.

Exchanges of goods or services with dissimilar nature and value give rise to revenue measured using the following order of priority...

non-exchange transactions

Revenue from blank are derived mostly from taxes, fines and penalties, gifts, donations and goods in-kind. These are received without directly providing something of equal value in return.

Taxes

Compulsory payments intended to provide revenue to the government. They do not include fines and penalties

Fines and penalties

They are monetary sanctions received as a consequence of breach of laws.

Gifts, Donations and Goods/Services In-kind

They are voluntary transfers of assets and services that one entity makes to another, normally free from stipulations.

cash basis

Revenue from non-exchange transactions are recognized on a blank basis until a reliable measurement model is developed. Accordingly, the asset and revenue or liability arising from a non-exchange transaction are recognized when collected or when these are measurable and legally collectible.

gross amount

Tax revenue is recognized at a blank and not reduced for expenses paid through the tax system.

Expenses paid through the tax system

Those expense which should be paid irrespective of whether the taxpayer pays taxes, or uses a particular mechanism to pay taxes.

False - shall not be grossed up

True or false? Tax revenue shall be grossed up for the amount of expenditures.

Tax expenditures

They are preferential provisions of the tax law that provide certain taxpayers with concessions that are not available to others. They are foregone revenue, not expenses.

Transfers

They are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes.

Transfers

They include fines, gifts, donations and goods and services in-kind, debt forgiveness, bequests, and grants. All of these transactions transfer resources without approximate equal value in exchange and are not taxes but some are with conditions.

Non-exchange transaction

Determine whether the revenue arises from exchange or non-exchange transaction:

Tax revenue

Non-exchange transaction

Determine whether the revenue arises from exchange or non-exchange transaction:

Fines and penalties

Non-exchange transaction

Determine whether the revenue arises from exchange or non-exchange transaction:

Gifts, Donations and Goods/Services In-kind

True - 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 resources to the entity.

True or false? Fines and penalties are recognized as income in the year they are collected.

True

True or false? An entity collecting fines in the capacity of an agent shall not treat those fines as revenue.

True

True or false? 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.

liability

Those gifts that are received without conditions are recognized immediately as revenue. Those with conditions are initially recognized as blank and recognized as revenue only when the conditions are satisfied.

Services In-kind

True or false? Services In-kind are recognized as revenue due to the uncertainties affecting the entity's ability to control those services and measure them at fair value.

services in-kind

Include technical assistance from foreign bodies, community services rendered by persons convicted of offenses, volunteer services, and the like. Blank received may be disclosed in the notes.

at the acquisition-date fair value

Assets, liabilities and revenue arising from a non-exchange fransaction are measured as follows:

Assets

at present value, when the effect of time value of money is material

Assets, liabilities and revenue arising from a non-exchange fransaction are measured as follows:

Liability

at the amount of increase in net assets

Assets, liabilities and revenue arising from a non-exchange fransaction are measured as follows:

Revenue

revenue

If the non-exchange transaction is initially recognized as a liability, the subsequent reduction in that liability (e.g., because the condition is satisfied) is recognized as blank.

carrying amount of the debt forgiven

When a lender cancels the debt of a government entity, the debtor recognizes revenue equal to the blank.

contribution from owners

When a controlling entity cancels the debt of a wholly owned controlled entity, the cancelled debt is treated as blank and not revenue.

Bequests

They are transfers made according to the provisions of a deceased person's will.

True

True or false? A bequest that satisfies the recognition criteria for asset is recognized as revenue, measured at the fair value of the resources received or receivable.

True

True or false? An asset received under a grant with condition is initially recognized as liability and recognized as revenue only when the condition is satisfied.

Pledges

Blank are unenforceable undertakings to transfer assets to the recipient entity.

False - 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.

True or false? Pledges are recognized as revenue.

gift or donation

If the pledged item is subsequently transferred to the recipient entity, it is recognized as a blank. Pledges may warrant disclosure as contingent assets.

Concessionary loans

Loans received by an entity at below market terms.

Revenue except if a present obligation exists, in which case the difference is recognized as a liability and recognized as revenue only when the obligation is satisfied.

The entity considers whether the difference between the transaction price (loan proceeds) and the fair value of the loan initial recognition is a non-exchange transaction. If it is so, the difference is recognized as blank.

expense (impairment loss)

When an amount already recognized as revenue becomes uncollectible, it is recognized as blank rather than as an adjustment to the revenue originally recognized.

allowance

Entities shall evaluate the collectability of accounts receivable on an ongoing basis based on historical bad debts customer/recipient credit-worthiness, current economic trends and changes in payment activity. A blank is provided for known and estimated bad debts.

i. Notice of Cash Allocation (NCA)

ii. Tax Remittance Advice

iii. Non-Cash Availment Authority

iv. Cash Disbursement Ceiling

Other receipts include Receipt of subsidy from the National Government (ie. disbursement authority), such as receipt of..

official receipt (OR)

Receipt of subsidy or assistance from other government agencies including LGUs and GOCCs. The Collecting Officer shall issue a blank upon receipt of any of these subsidies/assistance.

Cash-Collecting Officers

Appropriate expense account

AND

Cash-Treasury/Agency Deposit, (Regular, Special Account or Trust)

Cash-Collecting Officers

Journal entries for Receipt of refund of overpayment of expenses

performance bond

A blank is a security deposit required from a contractor or supplier to guaranty the full and faithful performance of a contract. It may be in the form of cash or certified check.

Cash - Collecting Officer

Guaranty/Security Deposits Payable

AND

Cash-Treasury/Agency Deposit, Trust

Cash-Collecting Officers

Journal Entries for Receipt of performance bond or security deposit.

"Due to NGAs"; "Trust Liabilities"

For collections made on behalf of another entity, the collecting entity records the collection as a credit to the blank account. Upon receipt of remittance, the recipient entity records the collection as a credit to the blank account.

Cash-Collecting Officers

Due to (Central Office, Regional Office, Operating Units or Other Funds)

AND

Cash-Treasury/Agency Deposit, Trust

Cash-Collecting Officers

Journal entries for Intra-agency Fund Transfer (transfers within same agency)

Cash-Collecting Officers

Due to (NGAS, LGUs or GOCCS)

AND

Cash-Treasury/Agency Deposit, Trust

Cash-Collecting Officers

Journal entries for Inter-agency Fund Transfer (transfers between different agencies)

True

True or false? Exchange transactions involve giving and receiving resources while non-exchange transactions involve either giving or receiving but not both.

time proportion basis

Interest is recognized on a blank basis using effective interest method

False - not recognized as revenue

True or false? Receipts from excess cash advance, overpayment of expenses, performance bonds and security deposits, collections on behalf of other entities, and inter or intra-agency fund transfers are recognized as revenue.