FANNIE GAIL C. PAILAGAO
BS ACCOUNTANCY 3
CHAPTER 4
REVENUE AND OTHER RECEIPTS
REVENUE
 Gross inflow of:
o Economic benefits
o Service potential
 Inflow increases equity
o Not contributions from owners
o
FUNDAMENTAL PRINCIPLES FOR REVENUE
1. All revenues are remitted to the National
Treasury
 Included in the government fund of
NG
2. All moneys and properties received by public
officer are government funds and properties
3. Amounts from trust and business-type
activities of government
 separately recorded
 disbursed according to relevant laws
4. Receipts  recorded as revenue of:
 Special Fund
 Fiduciary Fund
 Trust Fund; or
 Other than General Fund
o Only when authorized by law
5. Collecting officer  issue OR upon collecting
payments
6. Mechanical devices (e-OR) are used to
acknowledged cash receipts
 COA  may approve (upon request)
exemption from the use of accounting
forms
7. Temporary receipts  not used to
acknowledge receipt of public funds
8. Pre-numbered ORs  issued strictly in
numerical sequence
 Duplicate copies = exact copies of
original
9. Collecting officers shall accept payments in
checks
 Conditions:
o Proper endorsement
o Proper identification of payee
or endorsee
 Shall not use government funds to
encash private checks.
o only in the banks
10. Receipt of government funds
 acknowledged in accordance by the
law, includes:
o Date of receipt
o From whom
o On what account the fund
was received  purpose
XAVIER UNIVERSITY – ATENEO DE CAGAYAN
TYPES OF FUNDS
1. General Fund
 Available for any purpose
2. Special Fund
 For special purpose
 Collection/income  SAGF
3. Trust Fund (Fiduciary Fund)
 Held by government agency/officer
 For the fulfillment of a condition
 Collection/Income  SAGF
4. Revenue Fund
 All funds from income of government
agencies
 Available for appropriation or
expenditure  follow Law
5. Depository Fund
 Held in authorized depository bank
 Recipient agency
o retains control for lawful
purposes
6. Special Account in the General Fund (SAGF)
 Facilitate funding of priority activities
 Sourced from the ff:
o Specific fees
o Grants
o Donations
 Relevant legal provisions of SAGF:
o All income/collections from
Special and Fiduciary Fund
 remitted to Treasury
and
 Treated as SAGF
o SAGF is automatically
appropriated and authorized
by law
 Except  GAA
provides otherwise
o SAGF is released to
government agencies
 Subject to President’s
approval
NOTE!!
Money collected for special purpose  Special fund
Excess of Special fund due to purpose
fulfilled/abandoned  transferred to General Funds
FANNIE GAIL C. PAILAGAO
BS ACCOUNTANCY 3
SOURCES OF REVENUE
1. Exchange Transactions
2. Non-exchange Transactions
Transferred Consideration not equal to Fair Value 
entity determines the ff whether:
 Transactions include a combination of
exchange and non-exchange
o Recognized separately
 If not clear if exchange/non-exchange
o Examine substance of transaction
 Sale of Goods = exchange
 If transaction price is
subsidized = non-exchange
 Does not signify non-exchange:
o Receipt of trade discount
o Receipt of quantity discounts
o Other reduction in price
EXCHANGE TRANSACTIONS
 One entity receives assets/services/liabilities
extinguished gives approximately equal value
to another
o Sale of Goods
o Rendering Services


Sale of Goods or Provision of Services to
third parties
a. Service Income
 Permit fees
 Registration Fees
 Franchising Fees
 Licensing Fees
 Legal Fees
 Passport and Visa Fees
 Processing Fees
b. Business Income
 School Fees
 Examination Fees
 Rent/Lease Income
 Communication Network Fee
 Income from Hostel/Dorms
 Sales Revenue
 Hospital Fees
 Share in Profit of Joint
Venture
Use by other entities of assets yielding the ff:
a. Interest Income
 Charges for use of cash or its
equivalents
 Amounts due to entity
b. Royalties
 Fees for the use of entity’s
asset
XAVIER UNIVERSITY – ATENEO DE CAGAYAN
1.
2.
3.
4.
Trademarks
Patents
Software
Copyrights
c. Dividends
 Share of NG from its
investment in GOCCs or other
entities
RECOGNITION OF REVENUE FROM EXCHANGE
TRANSACTIONS
A. Sale of Goods  all conditions are satisfied:
 Significant risk and rewards are
transferred
 Entity does not retain control
 Inflow of Economic benefit is
probable
 Revenue and cost can be measured
B. Rendering Services
 Recognized  straight line basis
 Reference  Stage of Completion
(Percentage of Completion Method)
i. Only if outcome can be
measured reliably
 Outcome can be measured reliably
under the ff conditions:
i. Stage of completion, Revenue
and Cost can be measured
reliably
ii. Probable inflow of economic
benefits
Services over a period of time 
revenue is recognized on a straight line basis  practical purpose
Outcome of Rendering Service cannot
be measured reliably  revenue is
only to extent of recoverable expense
C. Interest
 Recognized on time proportion basis
 Consider effective yield on the asset
D. Royalties
 Recognized as they are earned
 Accordance with substance of
agreement
E. Dividends
 Right to receive payment is
established
FANNIE GAIL C. PAILAGAO
BS ACCOUNTANCY 3
Government entity recognizes revenue in the ff:
Service Income
 when services are rendered
 if not practicable  when fees are collected
Business Income (except sales of goods)
 when fees are billed
 in not practicable  when fees are collected
MEASUREMENT OF REVENUE FROM EXCHANGE
TRANSACTION
 measured at fair value
 trade discounts and volume rebates shall be
taken into account.
Fair Value  value which an asset can be exchange or
value a liability can be settled
Deferred Consideration
 Fair value is LESS than nominal account
 Fair Value is determined using an imputed
rate of interest/ effective interest rate.
 Interest Revenue  FV – Nominal Account
Advance Consideration
 Initial  Liability
 Subsequent  Revenue
EXCHANGE OF GOODS OR SERVICES
Similar Nature and Value  no revenue
Dissimilar Nature and Value  revenue
Measuring Revenue following the order of priority
 FV of goods/services RECEIVED
a. Adjusted by amount of cash
transferred
 FV of goods/services GIVEN UP
a. Adjusted by amount of cash
transferred
XAVIER UNIVERSITY – ATENEO DE CAGAYAN

Monetary sanctions due to breach of law
Gifts, Donations and Goods/Services in-Kind
 Voluntary transfers of assets and services
 Free from stipulations
RECOGNITION OF REVENUE FROM NON-EXCHANGE
TRANSACTIONS
 Recognized  cash basis
 Recognized when collected OR when
measurable and legally collectible
TAX REVENUE
 Recognized  gross amount
 Not reduced for expenses paid through the
tax system
 Shall not be grossed up for the amount of tax
expenditures
EXPENSES PAID THROUGH THE TAX SYSTEM
 Expenses which should be paid whether
taxpayer pays taxes or uses a particular
mechanism to pay taxes
TAX EXPENDITURES
 Preferential provisions of the tax law
 Provide certain taxpayers grant not available
for others
 Forgone revenue  not expense
Type of Tax
a. Income Tax
b. Value Added Tax
c. Goods and Services
tax
d. Customs Duty
e. Death duty
NON-EXCHANGE TRANSACTIONS
Mostly derived from the ff:
 Taxes
 Fines and Penalties
 Gifts
 Donations
 Goods in-kind
Taxes
 Compulsory payments
 Revenue to the government
 Do not include fines and penalties
Fines and Penalties
f. Property Tax
`Taxable Event
Taxable income
Payment for taxable
activity
Purchase or sale of
taxable goods or
services
Movement of dutiable
goods/services across
the customs boundary
Death of the owner of
taxable property
Passage of the time
period for which the tax
is levied.
TRANSFERS
 Inflows of future economic benefits or
services
 From non-exchange transactions
 Includes the following, except taxes:
o Fines
o Gifts
o Donations and Goods
o Service in-kind
FANNIE GAIL C. PAILAGAO

BS ACCOUNTANCY 3
o Debt forgiveness
o Bequests
o Grants
Transfers are transaction where resources are
without approximate value
FINES AND PENALTIES
 Income as they are collected
 Measured at best estimate
 Revenue only IF meet the criteria for asset
 Entity Collecting Fines
o Not treat fines are revenue
GIFTS, DONATIONS AND GOODS IN-KIND
 Revenue only when probable future economic
benefits or service will flow
 Received w/o conditions
o immediate revenue
 Received w/ conditions
o Initial: Liability
o Subsequent: Revenue
 When obligation is satisfied
SERVICES IN-KIND
 Not revenue  uncertain control of entity
 Cannot be measured reliably at Fair value
o Technical Assistance from foreign
bodies
o Community services by convicted
person
o Volunteer services
 Disclosed in the notes
MEASUREMENTS OF NON-EXCHANGE
TRANSACTIONS
 Asset  acquisition date FV
 Liabilities  present value using Effective
Interest Rate
 Revenue  amount increase in net asset
o Initial: liability
o Subsequent reduction = Revenue
DEBT FORGIVENESS
LENDER
 Lender cancels debt  debtor recognize
revenue = CA of Debt forgiven
CONTROLLING ENTITY
 Cancels debt of a whole owned and controlled
entity  entity recognizes contribution from
owners
o Not revenue
BEQUEST
XAVIER UNIVERSITY – ATENEO DE CAGAYAN


Transfer made according to a deceased
person’s will
If satisfy asset recognition  revenue
measured at FV
GRANTS WITH CONDITIONS
 Initial recognition  liability
 Subsequent  revenue
PLEDGES
 Unenforceable undertaking to transfer assets
to the recipient entity
 NOT Revenue
 If transferred  recognized as gift/donation
 Warrant disclosure as contingent assets
CONCESSIONARY LOANS
 Loans below market terms
 Entity determines if:
 Transaction Price (Loan Proceeds) – FV of
Loan = Non-Exchange Transaction
o If non-exchange  REVENUE
 Except: there is a present
obligation
 Initial: Liability
 Subsequent: Revenue
IMPAIRMENT LOSSES AND ALLOWANCES FOR
IMPAIRMENT LOSSES
 Recognized when revenue becomes
uncollectible  expense
 Evaluation of collectability of accounts:
o Historical bad debts
o Customer/recipient credit worthiness
o Current economic trends
o Changes in payment activity
 Allowance  provided for Estimated Bad
Debts
OTHER RECEIPTS
A. Receipt of Subsidy from National Government
B. Receipt of Subsidy/Assistance from the
Government Agencies including LGUs, and GOCCs
C. Receipt of Excess Cash Advance granted to officers
and employees
D. Receipt of refund of overpayment of expenses
E. Receipt of performance bond or security deposits
F. Collections made on behalf of another entity
G. Intra and Inter Agency Fund Transfers