Certified Government Financial Manager (CGFM) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

Contracts and grants are classified as intergovernmental revenues because they typically involve funding transferred between government entities or from a government to a nonprofit organization or other entity. These funds are often granted to support specific programs or services and are governed by agreements that outline the conditions and expectations for both parties involved.

Intergovernmental revenues include federal and state grants, as well as transfers from one governmental unit to another, which aligns well with the nature of contracts and grants, where the revenue is often dependent on receiving funding for designated projects or initiatives.

The other types of revenues mentioned, such as property, sales, and franchise revenues, do not capture the essence of funding that is provided under contractual or grant agreements, as they usually stem from different sources or types of financial arrangements. Understanding this classification helps to recognize the flow of funds within government operations and financial reporting.