*[History]{.underline}: At the IRC meeting 10/1/1998, it was suggested
that changes be made to the definitions for USSGL accounts 1410,
"Advances" and 1450, "Prepayments" to clarify the difference between
them. During the review, it was determined that if changes were to be
made to 1410 and 1450, reciprocal USSGL accounts 2310 and 2320 should be
included.*

**Account Title**: Advances to Others

**Account Number**: 1410

**Normal Balance**: Debit

**Definition**: Payments made in contemplation of the future performance
of services, receipt of goods, incurrence of expenditures, or receipt of
other assets [where the full amount of the expenditure is not known at
the time of the advance payment. Advances are expenditures that are
often not recurrent in nature.]{.underline} Common examples are travel
advances ~~made in contemplation of future travel expenses~~ or advances
to contractors. ~~made in contemplation of future receipt of inventory
or fixed assets.~~

**Account Title**: Prepayments

**Account Number**: 1450

**Normal Balance**: Debit

**Definition**: ~~Expenditures that provide future benefits. Prepayments
often are recurrent in nature and cover items such as rent, taxes,
royalties, commissions, insurance, and supplies~~ [Payments made to
cover certain periodic expenses before those expenses are incurred.
Prepayments are expenditures that are recurrent in nature. Common
examples are rent and insurance payments]{.underline}.

***Justification: To clarify the distinction between advances and
prepayments.***

**Account Title**: Advances From Others

**Account Number**: 2310

**Normal Balance**: Credit

**Definition**: ~~The balance of amounts advanced by other Federal and
non-Federal entities for goods and services to be furnished.~~ [Payment
received in advance of performance of reimbursable activities for which
revenue has not been earned.]{.underline}

**Account Title**: Deferred Credits

**Proposed Title: Deferred Revenue**

**Account Number**: 2320

**Normal Balance**: Credit

**Definition**: ~~Revenue or income received but not yet earned~~.
[Revenue (payment) received in advance for certain recurrent payments
such as rent that has not been earned. This includes fees received in
advance for loan applications or forfeited personal property before
sale.]{.underline}

***Justification: To match the reciprocal asset accounts 1410 and
1450.***

*As a result, the IRC (2-2-2006), the following changes were decided.
These changes were emailed to the IRC on 2-3-2006 for final comment.*

**Account Title**: Advances and Prepayments

**Account Number**: 1410

**Normal Balance**: Debit

**Definition**: Payments made in contemplation of the future performance
of services, receipt of goods, incurrence of expenditures, or receipt of
other assets. [Advances are expenditures that are often not recurrent in
nature.]{.underline} Common examples are travel advances ~~made in
contemplation of future travel expenses~~ or advances to contractors.
~~made in contemplation of future receipt of inventory or fixed
assets.~~ [Also included are payments made to cover certain periodic
expenses before those expenses are incurred. These prepayments are
expenditures that are generally recurrent in nature. Common examples are
rent and insurance payments]{.underline}.

**Delete:**

~~**Account Title**: Prepayments~~

~~**Account Number**: 1450~~

~~**Normal Balance**: Debit~~

~~**Definition**: Expenditures that provide future benefits. Prepayments
often are recurrent in nature and cover items such as rent, taxes,
royalties, commissions, insurance, and supplies.~~

***Justification: To clarify the distinction between advances and
prepayments in the definition and streamline the accounts.***

**Account Title**: ~~Advances From Others~~ [Unearned
Revenue]{.underline}

**Account Number**: 2310

**Normal Balance**: Credit

**Definition**: ~~The balance of amounts advanced by other Federal and
non-Federal entities for goods and services to be furnished.~~ [Payment
received in advance of performance of activities for which revenue has
not been earned.]{.underline}

**Delete:**

~~**Account Title**: Deferred Credits~~

~~**Account Number**: 2320~~

~~**Normal Balance**: Credit~~

~~**Definition**:~~ ~~Revenue or income received but not yet earned~~.

***Justification: To match the reciprocal asset account 1410.***

*The comments received in response to the IRC proposal:*

  ---------------- ------------------------ ------------------------------
  **Agency**       **Name**                 **Comment**

  Transportation   Ester Martin             Agree with consolidating 1410
                                            and 1450, but prefer not to
                                            consolidate 2310 and 2320
                                            (Unearned revenue is not the
                                            same as an advance).

  Main Treasury    Joe McAndrew             Agrees with consolidating.
                                            Further states that the
                                            current F&C Balance Sheet
                                            requirements do not make a
                                            distinction.

  Main Treasury    Dale Tarter              Does not agree with
                                            consolidating 1410 and 1450.
                                            Instead redefine the SGLs
                                            along the lines of long/short-
                                            term. (Joe replied to Dale
                                            that this distinction should
                                            be made in agency specific
                                            sub-accounts or attributes.

  Treasury - IRS   Ellen Waterhouse         Does not agree with
                                            consolidating 1410 and 1450.
                                            Points out the difference
                                            between the two. Maintains
                                            should remain separate
                                            accounts.

  Agriculture      David Surti              Agreed with the consolidation
                                            of both sets, but requested a
                                            title change for 2310,
                                            "Advances Payable -- Unearned
                                            Revenue" to be more in line
                                            with the proposed title for
                                            1410, "Advances and
                                            Prepayments."
  ---------------- ------------------------ ------------------------------

*Proposal:*

1)  *The IRC proposal from 2-2-06 stands. These changes will be made to*

*the fiscal 2007 USSGL Chart of Accounts.*

2)  *See if the IRC prefers title for 2310 proposed by Agriculture.*