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“Interperiod equity” is explained as follows:
… interperiod equity is a significant part of accountability and is fundamental to public administration. It therefore needs to be considered when establishing financial reporting objectives. In short, financial reporting should help users assess whether current-year revenues are sufficient to pay for services provided that year and whether future taxpayers will be required to assume burdens for services previously provided.
Two major elements of accounting terminology are “deficit” and “debt.” Define each of these terms and describe how each term applies in the description and explanation of “interperiod equity.” This is a governmental accounting question; please do not introduce political arguments in your attempt at an answer.
Expert Answer
First talking about the deficit. Deficit means lacking something. So, here in interperiod equity, when government doesn’t have enough funds to pay for the services, it is in deficit of funds I.e. shortage of funds. So, to fulfill that government would require support from its future taxpayers. That would mean taking debt from them I.e. the additional money to provide services. So, the government takes debt from future taxpayers to provide services.
