The term nonexchange transaction may sound to some as being some esoteric type of transaction that might not be frequently encountered, so governmental financial statement preparers may at first think that this chapter will not have broad applicability.
However, once it is understood that taxes are nonexchange transactions, it becomes clear that nonexchange transactions include accounting and financial reporting requirements for a significant part of a governmental entity’s typical transactions.
GASB Statement 33 (GASBS 33), Accounting and Financial Reporting for Nonexchange Transactions, divides all transactions into two categories:
- Exchange transactions, in which each party to a transaction receives and gives up something of essentially the same value.
- Nonexchange transactions, in which a government gives or receives value without directly receiving or giving something equal in value in the exchange.
As will be more fully described below, nonexchange transactions therefore include very significant items of revenues and expenditures for governmental activities, such as taxes (including property, sales, and income taxes) as well as revenues provided by federal and state aid programs.