Posting Revenues/receivables

Revenues, Receivables, & Cash

• Revenue Recognition

In grant accounts, revenue can only be recognized to the extent of expenses. Revenue is earned as expenditures are incurred.
Revenue accounts should never have a debit balance
Deferred Revenue (GL subcode 2501)
- Deferred revenue is used when grant funds are received up front, or in fixed increments that are not tied to an expenditure reimbursement scenario (ie equal payments on a semi‐annual basis). It is cash received that has not yet been “earned.”
- To receive cash and book deferred revenue, DR the appropriate clearing account, CR 2501 in the grant.
- To recognize revenue as expenditures are incurred, CR revenue, DR 2501.
- Only recognize revenue to the point that deferred revenue is depleted. There should never be a DR balance in 2501.
Receivables (GL subcode 1300)
- For reimbursement grants, cash is received as a reimbursement of periodically reported expenses.
- To create a receivable, DR 1300, CR revenue. Make sure to use the same date as the invoice or report, and reference the invoice number in the description.
- Make sure to list the receivable on the Restricted Accounting Receivables spreadsheet, so that the subsequent payment can be easily identified.
- To receive subsequent payment, DR the clearing account, CR 1300. Update the reconciliation to show that funds have been received and delete the receivable from the Restricted Accounting Receivables spreadsheet.
- There should never be a balance in receivables unless we are waiting for funds, or at year end when we are accruing revenue.
- In some accounts, payments will be rounded. If there is an immaterial under‐ or overpayment, write off the difference to 10‐0‐07001‐4812‐00.
Types of Revenue (GL group 4000)
- Grant revenues must be categorized by the source at the time the grant account is created.
  - Federal Revenue (GL subcode 4301) for federal grantors
  - State Revenue (GL subcode 4401) for state grantors
  - Local Revenue (GL subcode 4501) for local grantors like city and county
  - Private Revenue (GL subcode (4601) for private grantors and donors like foundations
  - Interest Revenue (GL subcode 4861). Interest revenue is rarely a component of grants, as it is prohibited by most governmental grantors.
- On occasion, private grantors may send deferred revenue and require that the cash be placed in an interest-bearing account.
- Use Texpool interest rates, and create a special tracking process to ensure that interest is accrued on the declining cash balance.
- All such interest revenue must be posted to 4861, and not to the grant revenue code.
- Interest earned must be spent before grant funds are spent.
- Set up a spreadsheet to track the monthly interest rates and month‐end cash balance. On a monthly basis, update the spreadsheet, post the accrued interest revenue, and increase the grant budget by the amount of interest posted.

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