GENERAL
Generally Accepted Accounting Principles (GAAP) require the State to recognize revenues in its government-wide financial statements in the fiscal year in which the earnings process is complete, or virtually complete. Revenues collected in advance of the earnings process must be recorded as deferred revenues, a liability account, for financial statement purposes.
PROCEDURE FOR THE CURRENT FISCAL YEAR
a. Licenses, Permits, and Fees (GAAP Revenue Object Code 0050).
b. Charges for Sales of Services and Commodities (GAAP Revenue Object Code 0200).
With each cash deposit, calculate the unearned portion of each STARS revenue object code subject to deferral in (2) above.
Use Transaction code 207, Receipt-Deferred Revenue, to deposit cash to be classified as deferred revenue in the current fiscal year. This transaction code debits Cash and credits the deferred revenue account, Other Revenues Collected in Advance. See Example.
PROCEDURES FOR BALANCES BROUGHT FORWARD FROM THE PRIOR FISCAL YEAR
"Other Revenues Collected in Advance" is a liability account (General Ledger Account 223). Its balance, therefore, automatically carries forward from one fiscal year to the next. The balance in this account appears on the CSA 458, Interim Balance Sheet report.
Use Transaction code 055, Reclassify Deferred Revenue, to reclassify as revenue those amounts that were classified as deferred revenue when deposited. This transaction code debits Other Revenues Collected in Advance and credits Revenues. See Example.
Exception:
The procedures in this section of the STARS Agency User’s Manual do not apply to revenues collected and deposited in the State’s Budgetary General Fund. Therefore, amounts budgeted as revenues in the State’s Budgetary General Fund for the current fiscal year should not be processed on STARS as deferred revenue. Instead, your agency is responsible for contacting the Central State Financial Reporting Division to discuss alternative procedures for reporting deferred revenue for GAAP purposes.
You may view Sample documents illustrating deferred revenue transactions by click on the links below.
JOURNAL VOUCHER - RECLASSIFY DEFERRED REVENUE
DISBURSEMENT VOUCHER - REFUND OF DEFERRED REVENUE
IMPACT OF TRANSACTIONS ON GENERAL LEDGER
Transaction |
|
Reclassify Deferred Revenue Debit: GLA 223 Other Revenues Collected in Advance Credit: GLA 300 Revenue |
|
Receipt Deferred Revenue Debit: GLA 101 Cash Credit: GLA 223 Other Revenues Collected in Advance |
|
Refund Deferred Revenue Debit: GLA 223 Other Revenues Collected in Advance Credit: GLA 101 Cash |
Trans |
Transaction |
General |
Ledger |
Reclassify Deferred Revenue Receipt Deferred Revenue Refund Deferred Revenue |
300 |