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Governmental accounting systems are different from business accounting systems, Why? Funds used in state and local government accounting and financial reporting are classified into three categories: (1) governmental funds, (2) proprietary funds, and (3) fiduciary funds. What measurement focus is used for each of these three categories, and what types of assets and liabilities are reported for each measurement focus? Revenues and expenditures are reported in governmental funds, and revenues and expenses are reported in proprietary funds. How do revenues and expenditures in governmental funds differ from revenues and expenses in proprietary funds? Why are a municipality’s general capital assets and general long-term liabilities accounted for through nonfund accounts rather than within one of its governmental funds, such as the General fund? In what funds and nonfund accounts are (a) capital asses and (b) long-term liabilities accounted for? Under what circumstances should a government use a Special Revenue Fund? A Capital Projects Fund? A Debt Service Fund?
Expert Answer
2-1)Government accounting systems are different from business accounting systems. why explain
The governmental accounting differs from the business accounting in many ways:
1) The governmental accounting system is maintained governmental while business accounting is maintained by Business organization.
2) The main objective of Government accounting to know the position of public fund and the objective of business accounting is to know the profit or loss and the financial position of the business.
3) Government accounting is prepared on cash basis while Business accounting is prepared on cash as well as accrual basis.
4) The government budgeting system need to be followed by government accounting while business accounting is not required to follow government budgeting system.
5) The government accounts books are audit by an auditor general office. The business accounting is audit by a professional auditor.
6) The financial rules and provisions of government accounting are need to be followed strictly while Business accounting follow the rules and principles of ‘Generally Accepted accounting Principal .(GAAP)
