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Now that the various classifications of revenue have been defined, it is important to identify what is revenue. Identifying what qualifies as revenue is critical not only from an accounting and financial reporting or audit standpoint, but also to ensure that the university is in full compliance with the TABOR reporting requirements. For example, one of the dangers the institution must constantly guard against is the tendency to describe a cash receipt as an “expense reimbursement” and account for it as a credit (reduction) of expense rather than as revenue. This is “netting revenue against expense” and is a violation of GAAP. The section of OUC's Accounting Handbook provides guidance on revenue accounting for CU.

The first task in identifying revenue is to look at every dollar received from an outside source, versus another FOPPS, and decide whether it is:

• Revenue,
• A balance sheet activity, or
• A credit to expense (reduction of expense).

Certain payments may need to be posted to a balance sheet account. Examples include:

• Accounts receivable—if this is a payment from a customer on account
• Loans receivable—if this is a principal payment on an outstanding loan due from a student or other
• Sales tax payable—if this is sales tax collected on a sale
• Unearned revenue—if this is payment from a customer in advance of you providing the goods/services
• Undistributed receipts—if the purpose of the payment is not evident and therefore has to be researched (this balance should be brought as close to zero as possible at month end and should be zero at year end)
• Deposits held in custody—if this is payment held as security for the issuance of something such as a lab tray, key, blueprints, agency fund deposits, etc. to be held and returned to the depositor upon the satisfactory return of the issuance

​If it is determined that the payment does not qualify under any of the above criteria, or with respect to any other balance sheet account, then the assumption should be that the payment is revenue. Select the proper revenue account based on the discussions above.

Sometimes, a department receives payment from an outside source in exchange for providing goods and services and wants to credit the payment against expense. The logic used by the department is that “the outside entity is just reimbursing us for our expense or the cost of providing the goods and services.” For example, a faculty person is working temporarily at another university, but the faculty is still on the CU payroll and the other university is “just reimbursing us for the salary and benefits of our faculty member.” It is not appropriate to use CU business processes to pay the expenses of an outside entity and then be reimbursed for those expenses. CU business processes are to be used only for CU business. Therefore, since the faculty member is still on the CU payroll, it must be assumed that the faculty is engaged in CU business and that, consequently, CU is selling faculty services to the other university. Thus, the payment must be recorded as revenue. This holds true for all other situations in which CU is incurring an expense by providing goods and services to an outside entity, and then that entity subsequently pays the university for those goods or services. The absence of a profit in the transaction does not change the fact that there is revenue.

Expenses should only be credited under the limited circumstances provided in the section of the OUC Accounting Handbook. Typically this occurs only when the university has returned goods and/or services to the vendor from which they were purchased, and the vendor has refunded the purchase price. Another situation that could result in crediting an expense is when a university employee uses university funds for personal expense. For example, if a faculty member used his/her procurement card at a restaurant for an official function and one of the meals provided was for his/her family member. This is a personal expense and should be credited.