When should revenues be recognized for commodities recognized as supplies inventories in governmental funds?

Revenues for commodities recognized as supplies inventories in governmental funds should be recognized when the commodities are received. This approach aligns with the modified accrual basis of accounting used in governmental funds, which focuses on the availability of resources rather than when the resources are consumed.

When commodities are received, the government entity gains control over these resources, and at this point, they are considered available for use. This is particularly important in the context of government accounting, which aims to provide a clear view of available resources and expected cash flows to meet current obligations.

Recognizing revenue upon receipt allows for a better match with the timing of related expenditures, as it helps ensure that the governmental entity's financial statements accurately reflect the resources it has at its disposal. When commodities are consumed, the expense would be recognized, thus providing a clear distinction between resource availability and consumption.