calculating receipts & Revenue Expenses

Q&A: Calculating Receipts & Revenue Variances

These questions and answers are a compilation of the participant Q&A from YPTC and Network for Good’s webinar on Feb. 15, 2021.

Are gross receipts considered as of the date received, or the date they were earned?

Gross receipts are all revenue in whatever form received or accrued (in accordance with the entity’s accounting method, i.e., accrual or cash) from whatever source, including sales of product or services, interest, dividends, rents, royalties, fees or commissions, reduced by returns and allowances, excluding net capital gains and losses.

Is it 25% reduction in revenue or receipts?

It is Gross Receipts which is generally all revenue in whatever form received or accrued (in accordance with your entity’s accounting method).

Someone donated a piano to our church that was valued at $3000, is that to be included in gross receipts?

Yes, in-kind donations of goods are included in gross receipts.

Are Gifts In Kind included?

Gifts of donated services are not included for purposes of calculating the 25% revenue reduction for the PPP Second Draw.  Gifts of property would, however, be included.

Would you include stimulus funds received during 2020 as income?

Don’t include PPP or EIDL.  Others are still awaiting clarification.

What if you received a grant that is a restricted fund and cannot be used for any operating expenses?

As of now, restricted funds are included in gross receipts.   The AICPA has asked SBA to consider amending.

Should gross receipts include donations received on behalf of an organization we are fiscal sponsors for?

Yes, as a fiscal sponsor, your entity retains discretion and control over the funds so the donations are recorded as contributions – and thus includable as a gross receipt – by the fiscal sponsor.

We are a community organization that raised COVID-relief funds to provide assistance to those in need in our communities.  These are considered donor-restricted funds that will be de facto passed through to individual recipients.  Will those ‘relief funds’ raised have to be included in the ‘gross revenue’ numbers?

Yes, it sounds like these are treated as contributions to your organization so they would be included in the gross receipts calculation.

If the quarter that I’m using to show 25% reduction in revenue is the period in which we received our 1st PPP loan, do we subtract that loan amount from our gross receipts?

Yes, do not include the PPP received in the calculation.

Does the first PPP loan need to be included in our gross 2020 income total?

No, you have to subtract it. See previous question.

Can a grant that was received from another organization be considered as part of your gross receipts?

Yes, all contributions and grants are currently included in the gross receipts calculation.

Are we required to list cares act funds that we have received through our county or local United Way as a part of our revenue?

We are awaiting guidance from the SBA and Treasury as to whether other CARES Act funding should be included in the gross receipts calculation.

We have a program that housed the homeless in hotels to mitigate COVID. The reimbursement was for the cost of the hotel expenses. Can we take our revenue for the reimbursement of these hotels and deduct the expense of the hotels to arrive at our revenue figures. If we do not do this, the program grossly inflates our revenue.

Unfortunately, no.  Gross receipts are just that – they must be shown “gross” without subtracting costs or expenses.

Can we use Quarterly Financial statements from QuickBooks?

Yes, as long as you sign the first page and initial the others.

Will internally generated comparative QuickBooks income statements be acceptable as proof of the year over year income decline?

Yes, as long as the first page is signed and the others are initialed.

My non-profit’s accountant tells us that our reduction in revenue is 24%.  We are greatly disappointed as we did receive a PPP in the first draw and it was incredibly helpful. The accountant is quite thorough but is there anything I should ask to make sure we have looked in every corner to calculate this critical number?

Confirm whether any of your donations or grants contain donor-imposed conditions.  If so, they should not be recorded as revenue until the conditions have been met or waived by the donors.

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