The term nonexchange transaction has only recently gained wide use in government accounting and financial reporting, so governmental financial statement readers may at first think that this chapter will not have broad applicability. However, once the term is understood, it becomes clear that nonexchange transactions include accounting and financial reporting requirements for a significant part of a governmental entity’s typical revenue transactions.

GASB Statement No. 33, “Accounting and Financial Reporting for Nonexchange Transactions” (GASBS 33), divides all transactions into two categories.

1. Exchange transactions, in which each party to a transaction receives and gives up something of essentially the same value (e.g., a government sells a homeowner water.)
2. Nonexchange transactions, in which a government gives or receives value without directly receiving or giving something equal in value in the exchange (e.g., a taxpayer pays his or her real estate taxes)

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.

Taken From : Governmental Accounting Made Easy

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