Module 4. Revenues and Other Receipts

REVENUES AND OTHER RECEIPTS
REVENUE - is the gross inflow of economic benefits or service potential during the reporting period
when those inflows result in an increase in in equity, other than increase relating to contributions.
FUNDAMENTAL PRINCIPLE FOR REVENUE
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 monetary and property received by public officer, acting in any capacity or upon any
occasion, shall be accounted for as government funds and government property, unless another
law specifically states otherwise.
c. Amounts received in trust and from business-type activities of the government may be
separately recorded and disbursed in accordance with relevant rules.
d. Receipts shall be recorded as revenue of Special or Trust funds or Funds other than General
Fund only when authorized by law.
e. A collecting officer shall immediately issue an official receipt (OR) upon collecting any payment
of any nature.
f. Where mechanical devices are used to acknowledge cash receipts, the COA may approve, upon
request the exemption from the use of accountable forms.
g. Temporary receipts shall never be used to acknowledge the receipt of public funds.
h. Pre-numbered Official receipts shall be used in strict numerical sequence. Duplicate copies shall
be 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.
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
 GENERAL FUNDS – a fund which is available for any purpose other than those which fund have
been designated to.
 SPECIAL FUNDS – a fund designated for special purposes
 TRUST FUNDS – 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 income of any government agency and
available for appropriation or expenditure in accordance with the law.
 DEPOSITORY FUND - fund held in an authorized depository bank over which the recipient
agency retains control for the lawful purposes for which the fund was received.
 SPECIAL PURPOSE FUND – are funds that the President allocates for special programs and
projects.
 SPECIAL ACCOUNT IN THE GENERAL FUND – (SAGF) – established to facilitate the funding of
priority activities of the governments.
SOURCES OF REVENUE
 Revenues may arise from exchange and non- exchange transactions
EXCHANGE TRANSACTIONS – are transactions in which one entity receives assets or services, or has
liabilities extinguished, and directly gives approximately equal value to another entity in Exchange.
NON-EXCHANGE TRANSACTIONS – 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.
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.
EXAMPLE: Entity A sells goods with a list price of P10,000 on account, with the following credit term
10%, 10%, and 5%. How do we recognized the revenue?
Accounts Receivable 7,695

Sales Revenue 7,695
To recognized sale of good on account
RECOGNITION of REVENUE from Non-Exchange Transactions
 Revenue from non-exchange transactions are recognized on a cash 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.
TAX REVENUE – Tax revenue is recognized at a gross amount and not reduced for expenses paid through
the tax system.
FINES and PENALTIES – are recognized as income in the year they are collected. However, fines are
recognized as revenue when the receivable meets the criteria for asset and are measured at the best
estimate of inflow of resources to the entity.
GIFTS, DONATIONS AND GOODS IN KIND – are recognized as revenue when it is probable that the
economic future benefits or service potential will flow to the entity.
- Those are received without condition are recognized immediately as revenue.

- Those with conditions are initially recognized as liability and recognized as revenue only when
the conditions are satisfied.
SERVICE 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.
- Service in-kind may be disclosed in the notes.
NOTES:
 Assets, Liabilities and revenue arising from non-exchange transaction are measured:
 If Asset – at the acquisition-date fair value
 If Liabilities – at present value, when the effect of time value of monetary is material.
 If Revenue – at the amount of increase in net assets.
CHAPTER SUMMARY:
***END OF MODULE***

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Module 4. Revenues and Other Receipts

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REVENUES AND OTHER RECEIPTS

FUNDAMENTAL PRINCIPLE FOR REVENUE

 Revenues may arise from exchange and non- exchange transactions

MEASUREMENT of REVENUE FROM EXCHANGE TRANSACTIONS

Accounts Receivable 7,695

RECOGNITION of REVENUE from Non-Exchange Transactions

- Those are received without condition are recognized immediately as revenue.

- Service in-kind may be disclosed in the notes.

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