Implementing the

GOVERNMENT ACCOUNTING MANUAL

(For National Government Agencies)

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 1
on Revenue and Other Receipts
 Session 2

Applying Accounting Policies and

Procedures for Revenue and
Other Receipts

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 2
on Revenue and Other Receipts
 SESSION OVERVIEW

Recognition and measurement of revenue and other

receipts;
Forms and reports to be prepared and maintained; and
 Procedures, accounting entries as well as the
disclosure requirements.

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 3
on Revenue and Other Receipts
 LEARNING OBJECTIVE

At the end of this session, you will be able to apply

the accounting policies, procedures, recording and
reporting of revenue and other receipts in
accordance with the provisions of the GAM, PPSAS 9-
Revenue from Exchange Transactions, PPSAS 23-
Revenue from Non-exchange Transactions and the
Revised Chart of Accounts.

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 4
on Revenue and Other Receipts
 Revenue

• Gross inflow of economic benefits or

service potential during the reporting period
• Inflows result in an increase in net
assets/equity

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 5
on Revenue and Other Receipts
 Definition of Terms

Exchange
Transactions
• entity receives assets or services, or has
liabilities extinguished from another
entity, and
• directly gives approximately equal value
to said entity in exchange

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 6
on Revenue and Other Receipts
 Definition of Terms

Non-exchange
transactions

• Entity 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 return

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 7
on Revenue and Other Receipts
 Definition of Terms

• Asset could be exchanged, or a liability

settled
Fair value • Between knowledgeable, willing parties in
an arm’s length transaction

Gifts, Donations • Voluntary transfers of assets from one

and Goods In- entity to another, free from stipulations
kind

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 8
on Revenue and Other Receipts
 REVENUE SOURCES

Exchange Non-Exchange
Transactions Transactions
Tax Revenue
Sale of Goods
Fines and
Penalties
Provisions of
Services Shares, Grants
and Donations
Use by others of Present obligation
entity assets recognized as a
liability is satisfied

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 9
on Revenue and Other Receipts
 OTHER RECEIPTS

• Notice of Cash Allocation

• Non-cash Availment Authority
• Cash Disbursement Ceiling
• Tax Remittance Advice
• Subsidy/Assistance from other NGAs, LGUs, GOCCs
and Other Funds
• Refund of Cash Advances
• Performance bond/security deposits
• Refund of overpayment expenses
• Collections made on behalf of another entity or non-government/private
organizations
• Intra-agency and inter-agency transfers
Session 2: Applying Accounting Policies and Procedures
GAM: Accounting Slide 2 - 10
on Revenue and Other Receipts
 RECOGNITION

Exchange Transactions
• Future economic benefits or service potential flow to the entity
• Such benefits can be measured reliably

Non-Exchange Transactions
• When collected
• Measurable and legally collectible

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 11
on Revenue and Other Receipts
 RECOGNITION
(Exchange Transactions)

Sale of Goods
Provisions of Services
Transfer of significant Use by others of
risks and ownership of Straight line basis entity assets
the goods. over the specified
Retains neither period of the Interest – effective yield
managerial services. on the asset
involvement nor control Stage of completion Royalties – as earned
over the goods sold. of the transaction at Dividends – right to
the reporting date. receive payment is
established

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 12
on Revenue and Other Receipts
 RECOGNITION
(Non-Exchange Transactions)

The cash basis of accounting shall be applied by all

government agencies until a reliable model of
measurement is developed.

Taxation Revenue – future economic

determined at gross benefits or service
amount potential flow to the
entity
Gifts and Donations (other
than services in kind)
Fair value of the
Goods in-kind without assets can be
condition – recognized measured reliably
immediately as received
Session 2: Applying Accounting Policies and Procedures
GAM: Accounting Slide 2 - 13
on Revenue and Other Receipts
 Recognition Criteria of Asset through Transfers

An entity shall recognize an asset in respect of transfers when :

1. The transferred resources meet the definition of an asset

Transfers meet the definition of an asset when the entity controls the
resources as a result of past event (the transfer), and expects to receive
future economic benefits or service potential from those resources

2. Satisfy the criteria for recognition as an asset

Transfers satisfy the criteria for recognition as an asset when it is

probable that the inflow of resources will occur, and their fair value
can be reliably measured

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 14
on Revenue and Other Receipts
Grant with Condition

If conditions are attached to a grant, a liability is

recognized, which is reduced and revenue
recognized as the conditions are satisfied.

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 15
on Revenue and Other Receipts
Sample Accounting Entries

The NG received a foreign grant amounting to P10 million for

the construction of a railroad system. Under the terms of the
grant, the construction project shall be completed within a
period of two years from the receipt of the grant, otherwise,
the money shall be returned to the grantor. The money can
only be used as stipulated and the NG is required to include a
note in the financial statement detailing how the money was
spent. The Department of Public Works and Highways (DPWH)
will be the implementing entity.

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 16
on Revenue and Other Receipts
Sample Accounting entries for Grant with Condition
Books of the NG - BTr

Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas 10102010 P10,000,000

Other Deferred Credits 20501990 P10,000,000

To recognize receipt of grant directly credited to the account of the NG maintained by the BSP

Books of the Implementing NGA – DPWH

Cash-Modified Disbursement System (MDS), Special Account 10104050 P10,000,000

Subsidy from National Government 40301010 P10,000,000

To recognize receipt of the NCA for the construction of a railroad system

Slide 2 - 17
Sample Accounting entries for Grant with Condition
Books of the Implementing NGA - DPWH

Construction in Progress-Infrastructure Assets 10699020 P10,000,000

Cash-Modified Disbursement System (MDS), Special Account 10104050 P10,000,000

To recognize payment for the materials and labor for the construction of a railroad system

Books of the NG - BTr

Subsidy to National Government 40301010 P10,000,000

Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas 10102010 P10,000,000

To recognize replenishment of MDS checks issued for payment of the materials and labor for the construction
of a railroad system

Slide 2 - 18
Sample Accounting entries for Grant with Condition
Books of the NG - BTr

Other Deferred Credits 20501990 P10,000,000

Income from Grants and Donations in Cash 40402010 P10,000,000

To recognize the income from grants and donations representing payment for expenses in connection with
the grant agreement.
Books of the Implementing NGA - DPWH

Railway Systems 10603100 P10,000,000

Construction in Progress-Infrastructure Assets 10699020 P10,000,000

To recognize the turnover and acceptance of completed railway system.

Slide 2 - 19
 MEASUREMENT

Exchange Transactions
• Fair value of the consideration received or
receivable

Non-exchange Transactions
• Asset - fair value as at the date of acquisition
• Liability - present value of the amount expected to
settle the obligation
Session 2: Applying Accounting Policies and Procedures
GAM: Accounting Slide 2 - 20
on Revenue and Other Receipts
 MEASUREMENT
(Transferred Assets)

Debt forgiveness and Assumption of liabilities – carrying

amount of the debt forgiven

 Fines – best estimate of the inflow of resources

 Bequests – fair value of the resources received or receivable

 Gifts, Donations, Goods In-kind – fair value as at the date of

acquisition
Session 2: Applying Accounting Policies and Procedures
GAM: Accounting Slide 2 - 21
on Revenue and Other Receipts
 DISCLOSURE
(Exchange Transactions)

 Accounting policies and methods adopted

 Amount of each significant category of revenue

recognized during the period

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 22
on Revenue and Other Receipts
 DISCLOSURE
(Non-Exchange Transactions)

 Accounting policies and methods adopted

 Amount of each significant category of revenue

recognized during the period

 The nature and type of major classes of revenue

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 23
on Revenue and Other Receipts
 COLLECTIONS AND DEPOSITS THROUGH THE COLLECTING OFFICER

Cash/Treasury Unit
• cASJ Accounting Unit
Collecting Head of Cash/ Designated Accounting Head of
Treasury Unit Bookkeeper
Officer Staff Staff accounting unit

1.Receives Cash 1.Reviews 1.Records the 1. Receives 1. Prepares 1. Reviews

2.Issues OR and signs the RCD in original JEV based on and signs
3.Records in the RCD the logbook of RCD the RCD ‘Certified
the CRRec maintained
4.Prepares DSs 2. Records Correct by’
by the unit
5.Deposit receipt portion of
Collections in the the JEV
6.Prepares the logbook
RCD

Session 2: Applying Accounting Policies and Procedures

GAM: Accounting Slide 2 - 24
on Revenue and Other Receipts
 COLLECTIONS THROUGH AAB/AGDB

Accounting Unit
Receiving/
Bookkeeper Head
Releasing Staff

1. Receives the
1. Prepares JEV 1. Reviews
Consolidated
based on the and signs
Report of
CRDC ‘Certified
Daily
Correct by’
Collections
portion of the
(CRDC) from
JEV
the AAB/AGBD
2. Records
receipt in the
logbook
Session 2: Applying Accounting Policies and Procedures
GAM: Accounting Slide 2 - 25
on Revenue and Other Receipts
 Appendix 29

CASH RECEIPTS RECORD

Entity Name : _______________________________ She e t No. : _________________

Fund Clus te r : ______________________________ Ye ar : _____________________

_______________________ _____________________________ ______________

Accountable Office r Official De s ignation 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 and Procedures
GAM: Accounting Date Slide 2 - 26
on Revenue and Other Receipts
 Appendix 26

REPORT OF COLLECTIONS AND DEPOSITS

Re port No. : ___________________

Entity Name : _________________________________ She e t No. : ____________________
Fund Cluste r : ________________________________ Date : ________________________

Official Re ce ipt/ Re port of Amount

Colle ctions by Sub- Re sponsibility Breakdown of Collections
Colle ctor Payor Particulars MFO/PAP Total per
Ce nte r 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.

Name Accounting
Session 2: Applying and Signature of Policies
the Collecting
andOfficer
Procedures
GAM: Accounting _________________________ Slide 2 - 27
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 SUNDRY SUNDRY
Date CRReg JEV No.
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 and Procedures(Signature over Printed Name)

GAM: Accounting Slide 2 - 28
on Revenue and Other Receipts Chief Accountant/Head of Accounting
Division/Unit
 Session 2: Applying Accounting Policies and Procedures
GAM: Accounting Slide 2 - 29
on Revenue and Other Receipts