What criteria must be met before revenues can be recognized on a modified accrual basis?
(On the modified accrual basis of accounting, revenues should be recognized when the underlying exchange has occurred and the resources are available.) Resources received before the underlying exchange has occurred should be reported as deferred revenues (liabilities).
What are the four categories of Nonexchange revenues?
GASBS 33 identifies four classes of nonexchange transactions: derived tax revenues; imposed nonexchange revenues; government-mandated nonexchange transactions; and voluntary nonexchange transactions.
What is the 60 day rule governmental accounting?
Revenues of governmental funds that accrue to the City, independent of when expenditures are incurred by the City (such as taxes, licenses, and permits), are considered “available” if the payer incurs the obligation to the City before year-end and payment is received within 60 days of year-end.
What is the difference between accrual basis and modified accrual basis?
Under accrual accounting, expenditures are recognized as soon as a liability is incurred regardless of the timing of related cash flows. However, under the modified accrual basis, GAAP provided modifications to the general rule in the areas of inventories and prepaid items.
What are the recognition rules for revenues and expenditures under the modified accrual basis of accounting?
Expenses are not recognized until they are paid and revenue is not recognized until payment has been received. That means that future obligations or anticipated revenues are not recorded in financial statements until the cash transaction has occurred.
What is the difference between exchange and Nonexchange transactions?
An exchange or exchange-like transaction is one in which each party receives and sacrifices something of approximate equal value. A non-exchange transaction is one in which one party receives something of value without directly giving value in exchange.
What are government mandated Nonexchange transactions examples?
Imposed nonexchange revenues – result from assessments imposed on nongovernmental entities, including individuals, (other than assessments imposed on exchange transactions). Examples are property taxes, fines, and seized property.
What GASB 33?
GASB Statement No. 33 provides accounting and reporting guidelines for nonexchange transactions. A nonexchange transaction is one in which a government receives (or gives) value without directly giving (or receiving) equal value in exchange.
Why do governments use modified accrual accounting?
Modified accrual accounting ticks those boxes. It enables government agencies to focus on short-term financial assets and liabilities. It also permits them to divide available funds into separate entities within the organization to ensure that money is being spent where it was intended.