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Questions and Answers
Revenue is defined as the net inflow of economic benefits during the reporting period that results in an increase in net assets or equity.
Revenue is defined as the net inflow of economic benefits during the reporting period that results in an increase in net assets or equity.
False
All government funds must be kept in the Special Fund before they can be appropriated or expended.
All government funds must be kept in the Special Fund before they can be appropriated or expended.
False
Official Receipts must be issued in strict numerical sequence and pre-numbered to ensure proper documentation of cash receipts.
Official Receipts must be issued in strict numerical sequence and pre-numbered to ensure proper documentation of cash receipts.
True
Amounts received in trust can be recorded as revenue in the General Fund without any need for authorization by law.
Amounts received in trust can be recorded as revenue in the General Fund without any need for authorization by law.
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It is permissible for temporary receipts to be issued for cash transactions involving government revenue.
It is permissible for temporary receipts to be issued for cash transactions involving government revenue.
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Goods in-kind are recognized as assets when they are sold to the entity by a transferor.
Goods in-kind are recognized as assets when they are sold to the entity by a transferor.
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Gifts and donations are recognized as assets and revenue once it is confirmed that the future economic benefits are uncertain.
Gifts and donations are recognized as assets and revenue once it is confirmed that the future economic benefits are uncertain.
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Pledges can be recognized as assets because they represent future economic benefits.
Pledges can be recognized as assets because they represent future economic benefits.
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The fair value of gifts and donations must be measured reliably at the date of acquisition.
The fair value of gifts and donations must be measured reliably at the date of acquisition.
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The entity is required to recognize services in-kind as revenue and assets due to their certainty.
The entity is required to recognize services in-kind as revenue and assets due to their certainty.
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Cash overages must always be accounted for as a decrease in revenue for the collecting officer.
Cash overages must always be accounted for as a decrease in revenue for the collecting officer.
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Subsidies received from the National Government count as other receipts for NGAs.
Subsidies received from the National Government count as other receipts for NGAs.
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Refunds of excess cash advances granted to officers and employees are not recognized as revenues.
Refunds of excess cash advances granted to officers and employees are not recognized as revenues.
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Revenue from exchange transactions is recognized when effective control over the goods sold has been retained by the entity.
Revenue from exchange transactions is recognized when effective control over the goods sold has been retained by the entity.
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Non-exchange transactions occur when an entity gives value without receiving approximately equal value in return.
Non-exchange transactions occur when an entity gives value without receiving approximately equal value in return.
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Service income is not included in the recognition criteria for revenue from exchange transactions.
Service income is not included in the recognition criteria for revenue from exchange transactions.
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Interest revenue must be recognized on a straight line basis over the term of the associated asset.
Interest revenue must be recognized on a straight line basis over the term of the associated asset.
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Dividends are recognized as revenue when the right to receive them is established.
Dividends are recognized as revenue when the right to receive them is established.
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An entity must measure the costs incurred in a transaction reliably for revenue recognition to occur.
An entity must measure the costs incurred in a transaction reliably for revenue recognition to occur.
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The transfer of significant risks and rewards of ownership is irrelevant to the recognition of revenue from sales transactions.
The transfer of significant risks and rewards of ownership is irrelevant to the recognition of revenue from sales transactions.
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Royalties should be recognized at the end of the accounting period regardless of when they are earned.
Royalties should be recognized at the end of the accounting period regardless of when they are earned.
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Revenue from dissimilar goods or services is measured at Fair Value of the goods or services given up.
Revenue from dissimilar goods or services is measured at Fair Value of the goods or services given up.
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An impairment loss is recognized when there is uncertainty about the collectibility of an amount already included in revenue.
An impairment loss is recognized when there is uncertainty about the collectibility of an amount already included in revenue.
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Gifts and donations in cash or in kind should only be recognized as revenue when they do not provide future economic benefits.
Gifts and donations in cash or in kind should only be recognized as revenue when they do not provide future economic benefits.
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Fines collected in the capacity of an agent are recognized as revenue by the collecting entity.
Fines collected in the capacity of an agent are recognized as revenue by the collecting entity.
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Bequests are recognized as assets and revenue when future economic benefits are not probable.
Bequests are recognized as assets and revenue when future economic benefits are not probable.
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Tax revenue is recognized at net amount after deducting any cash equivalents transferred.
Tax revenue is recognized at net amount after deducting any cash equivalents transferred.
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Goods in-kind received without conditions are recognized as revenue when they are measurable at fair value.
Goods in-kind received without conditions are recognized as revenue when they are measurable at fair value.
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Assets arising from fines are determined by the exact amount collected by the entity.
Assets arising from fines are determined by the exact amount collected by the entity.
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Study Notes
Revenue Definition and Funds
- Revenue: Gross inflow of economic benefits or service potential increasing net assets/equity (excluding owner contributions).
- Revenue funds: Funds from agency income, available for appropriation/expenditure as per law.
Fundamental Principles for Revenue (General Rules)
- Deposits/remittances to the National Treasury (NT) or authorized depositories accrue to the General Fund (GF), unless otherwise specified by law.
- All officially received money/property must be accounted for as government funds/property.
- Amounts received in trust and from business-type activities may be separately recorded/disbursed (if authorized by law and regulations).
- Receipts recorded as revenue for Special, Fiduciary, Trust Funds, or funds other than the GF only with legal authorization.
- Mandatory issuance of Official Receipts (ORs). Exceptions for mechanical receipt devices allowed with COA approval.
- Temporary receipts are prohibited.
- Pre-numbered ORs issued sequentially.
- Collection officers accept payments for government obligations via checks with proper endorsement/payee identification. Rules/regulations are set by COA and DOF.
Accounting Standards for Revenue and Other Receipts
- PPSAS 9 (Revenue from Exchange Transactions) and PPSAS 23 (Revenue from Non-exchange Transactions) govern revenue accounting.
- Exchange transactions involve approximately equal value exchange between entities.
- Non-exchange transactions lack approximately equal value exchange. Substance over form applies to determination.
Revenue from Exchange Transactions
- Includes service income, business income, interest, royalties, and dividends.
- Revenue from goods sale recognized when: significant risks/rewards transferred to purchaser; no continuing managerial involvement/effective control retained; revenue reliably measurable; probable economic benefit inflow; costs reliably measurable.
- Revenue from service supply recognized on a straight-line basis unless another method better reflects completion.
- Interest recognized on a time proportion basis considering effective yield.
- Royalties recognized as earned per agreement.
- Dividends recognized when the right to receive payment is established. Fair Value (FV) is the basis for consideration.
- Exchanges of similar goods/services of similar nature and value are not revenue. Dissimilar exchanges result in revenue measured at FV of goods/services received (adjusted by cash/cash equivalents transferred). If FV cannot be reliably measured, it's measured at the FV of goods given up (adjusted accordingly).
- Impairment losses recognized as expenses for uncollectible amounts or amounts where recovery is improbable.
Revenue from Non-Exchange Transactions
- Includes tax revenue, fines, penalties, shares, grants, and donations.
- Inflow of resources satisfies a present obligation (liability).
- Cash basis and FV on acquisition date used for recognition and measurement.
- Tax revenue recognized at a gross amount.
- Gifts/donations (excluding services in kind) recognized as assets/revenue when future economic benefits are probable, measured at FV.
- Goods in-kind (without conditions) are recognized as revenue immediately.
- Cash or in-kind donations are recognized as revenue.
- Fines are recognized as revenue when receivable meets asset criteria. Fines collected as an agent are not revenue for the collecting entity. Assets from fines measured at the best inflow estimate of resources.
- Bequests are recognized as assets/revenue when future benefits are probable and FV is reliably measurable; measured at FV of resources received/receivable.
- Gifts/donations (excluding services in kind) are recognized as assets and revenue when future benefits are probable, and FV is reliably measurable. Goods in-kind are recognized upon receipt or binding arrangement. Initial recognition is at acquisition date FV.
- Services in-kind recognition is not required, but disclosure of received services is encouraged.
- Pledges aren't recognized as assets or revenue; disclosure as contingent assets is warranted. If transferred, it is recognized as a gift or donation.
Accounting for Cash Overage/Shortage
- (Details not provided in the source text)
Other Receipts
- Include subsidies from the National Government, subsidies/assistance from other entities, and refunds of excess cash advances. Recognition details weren't fully specified in the provided text.
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Description
This quiz covers the fundamental principles and definitions related to revenue and revenue funds within governmental frameworks. It highlights the rules for accounting and the management of various funds, including the General Fund. Test your understanding of these essential financial concepts and their legal implications.
