Question

How does balancing the numbers relate to governmental accounting?

What are economic events? How do they relate to governmental accounting as versus financial accounting?

Answer 1

Introduction)-----------------------------Government accounting is a scientific procedure of collecting, classifying, recording, summarizing, and interpreting all the financial transactions including revenues and expenditures of all the government offices. It keeps the record of public funds.

1) Balancing the numbers related to governmental accounting-

Government accounting is a branch of accounting that records the revenue and expenditure of government institutions. It is used by government offices. It is different from commercial accounting which is used by other forms of organizations and business firms.

There are some important points to balance the numbers relate by governmental accounting-

1. Profit And Loss

Since government is a public institution, its main objective is to maintain law and order in the country. Therefore, the accounting system used by an institution is not supposed to reveal its profit and loss, but to reveal how public funds and properties have been used for that purpose.

2. Government Regulations

Government accounting is maintained according to government rules and regulations. The financial policies, rules and regulations determine the system of government accounting.

3. Double Entry System

Government accounting is based on the principles and assumptions of double entry system of book keeping. Accordingly, every government financial transactions are recorded showing their double effects. One aspect of the transaction is debited and the other aspect is credited for each government financial transaction.

4. Budget Heads

All the expenses of government offices are classified into different budget heads and expenditures are made only on approved budget heads.

5. Budgetary Control

Government accounting facilitates budgetary control. No government office can make expenditure more than the allocated budget amount.

6. Banking Transaction

Another feature of government accounting is that, all government transactions are supposed to be performed through banks.

7. Auditing

The concerned department of the government must audit the books of accounts maintained by government office so as to avoid misuse and misappropriation of public funds.

I hope this post is helpful to understand the features of government accounting system.

2) What are the economic event ?

All the events which can be measured in terms of money are classified as economic events and are recorded in the financial statements.It include all the events like purchase of materials, sales of goods, acquisition of machinery etc. Which are measured in monetary terms and are recorded in the financial statements.

3) Economic event relate to governmental accounting as versus finantial accounting by following ways----

Economic events reflected in the financial statements must be both relevant to the financial condition of a company and objectively measurable in monetary terms.

In accounting, an economic event is referred to as Transaction. An accounting event is a transaction that is recognized in the financial statements of an accounting entity. In accounting, a transaction includes such things as recording the depreciation of an asset or payment of dividends.

A company must record in its accounting records any economic event that impacts the company's finances. Examples of accounting events include such things as recording the depreciation of an asset, the payment of dividends to investors, the purchase of materials from a supplier, and the sale of goods to a customer.

In accounting, an economic event is referred to as Transaction. An accounting event is a transaction that is recognized in the financial statements of an accounting entity. In accounting, a transaction includes such things as recording the depreciation of an asset or payment of dividends. Accounting events can be either external or internal.