REVENUE - 8210

(Revised: 07/2021)

Revenues provide the major source of financing for the state. Generally, revenues are derived from taxes, licenses, fees, fines, and receipts from the federal government or investment earnings.

General Revenue Recognition Policy

Revenues of governmental funds are recognized on a modified accrual basis of accounting. Under this basis of accounting, amounts must be earned, measurable, and available. Measurable is the ability to quantify the amount of the revenue and receivable and available means the amount is collectible within the next fiscal year.

Government Code section 13302 requires that an agency’s/department’s system of accounting provide, with respect to the General Fund and other governmental funds as follows:

• For the accrual of revenues at year-end if the underlying transaction has occurred as of the last day of the fiscal year,
• The amount is measurable, and the actual collection will occur either during the current period or after the end of the current period but in time to pay current year-end liabilities.

The method to record revenues is as follows:

1. During the fiscal year, an agency/department may account for revenues on a cash basis as of the date the remittances are received or amounts transferred from other funds are determined to be earned. Agencies/departments can also record revenue accruals on a monthly basis if it is appropriate to do so as long as it is done consistently, and the accruals at year-end are in accordance with the revenue accrual policies in the State Administrative Manual.

    

2. At fiscal year-end, agencies/departments will accrue revenue earned whether billed or unbilled, but not collected as of June 30, if they are measurable and estimated to be received within the next fiscal year. 

    

3. Amounts earned but not estimated to be collected within the ensuing fiscal year will be fully deferred and will not be accrued as revenue.

 

Revenues of proprietary and fiduciary funds are recognized on a full accrual basis of accounting. Under this basis of accounting, amounts must be earned, regardless of when collection occurs. See SAM section 13400.

 

Revenue Recognition Criteria-When Cash Received is Considered Earned

 

Unless otherwise provided, cash received is earned as follows:

 

1. Fees for an original or renewal registration, license, permit, or certificate are earned upon registration or issuance unless a renewal receipt is issued in a fiscal year which precedes the first day of the renewal year. Agencies/departments will account for the issuance of renewal receipts as follows:
   1. Credit the revenue account of the fiscal year in which the renewal receipt is issued if the renewal receipt is issued in the same fiscal year as the renewal year.
   2. Credit a revenue collected in advance account if the renewal receipt is issued in a fiscal year which precedes the first day of the renewal year.
2. An application fee, filing fee, or other fees which by law or administrative practice is not subject to refund is earned when the remittance is received.
3. A fee for a specific service is earned upon the performance of the service.