USA Accounts Receivable Question


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Hello folds
what would the accounting entries be for a government entity that uses GAAP in the following scenario :

my agency is putting a conference that begins june 28 and ends june 30
the total charge is 500$ will be billed and paid in July after the fiscal year ends.
what would the entry be on june 30th using GAAP ?
 
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Werner Reisacher

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The Accounting rules for government entities are The Government Accounting Standards Board (GASB). It is recognized as the official source of GAAP for state and local governments. Such entities are using the "modified accrual accounting system".

Modified accrual accounting is an alternative bookkeeping method that combines accrual-basis accounting with cash basis accounting. It recognizes revenues when they become available and measurable and, with a few exceptions, records expenditures when liabilities are incurred. So, it depends on which fiscal year your government agency has planned to hold this conference in its approved budget. Using this mixed-method allows more transparency in comparing discrepancies between approved budgets against actual results of each project.
 

kirby

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So, it depends on which fiscal year your government agency has planned to hold this conference in its approved budget. Using this mixed-method allows more transparency in comparing discrepancies between approved budgets against actual results of each project.

The above says the budget is the deciding factor that determines the accounting year in which to record the entries. And it is said that the purpose is to align the year holding the actual expense with the related budget year.

Not so. Not at all. Never.

That violates a very basic accounting principle: the revenue recognition principle.
That principle says (right out of the accounting book) Revenue occurs when realized and when earned.
Since the conference occurs entirely in June then the revenue is earned in June and the related expense is also to be recorded in June.
Any uncollected revenue is recorded through accounts receivable and any unpaid expenses are recorded as accounts payable. In June.
 
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Werner Reisacher

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Kirby, with all due respect. I suggest you do your research on (GASB). We all can have different opinions on any topic, and communicate our opinions in a professional manner. I believe, that such behavior is in the spirit of a "professional forum". Otherwise, we can go on Twitter or Facebook and start flaming.
Thank you for your consideration.
 

kirby

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Please re-read my post. It contains no personal comments toward you.

I doubt there is a GASB rule stating you should record a revenue event in an accounting year specifically to match the budget year but if you are sure of this please provide a cite referencing where that is written. Thanks.
 
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Hello folds
what would the accounting entries be for a government entity that uses GAAP in the following scenario :

my agency is putting a conference that begins june 28 and ends june 30
the total charge is 500$ will be billed and paid in July after the fiscal year ends.
what would the entry be on june 30th using GAAP ?
Hello Wartson,

You need to recognize the upcoming conference revenue according to GAAP.

Hence, in this case, invoice should be issued. Upon creating an invoice to customer, you will recognize the revenue that will received on July.
Double entry for the invoice should be like this:

Debit Account Receivable (customer) $500
Credit Revenue account $500

Hope this help.
 
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