Government Accounting Lecture Notes

Definition of Government Accounting

• Government accounting refers to the accounting system used by government offices to record and report financial transactions.
• It is concerned with the systematic and scientific recording of government revenue and expenditure.
• Records the financial transactions of the government offices, such as revenue, expenditure, penalties, subsidies, grants, and loans.
• Involves collecting, recording, classifying, summarizing, and interpreting financial transactions.
• It reveals how public funds are generated and utilized for public welfare.

Key Concepts

• Taxation: Government runs on taxes collected from the public and businesses, which are then expended for public welfare.
• Budgeting: Expenditure is controlled by annual budget allocations approved by the government.

Objectives of Government Accounting

1. Recording Financial Transactions
   • Record transactions related to the revenue and expenditure of government organizations.
2. Avoiding Excess Expenditures
   • Ensure government offices do not exceed budget limits.
3. Budget Head
   • Expenditures are made according to budget heads following government acts and rules.
4. Providing Financial Data
   • Government offices provide reliable data on public fund operations.
5. Banking Transactions
   • Conducted through banks to prevent cash misappropriation.
6. Information Provision
   • Provides historical financial data on revenue and expenditure.

Features of Government Accounting

1. Government Regulation
   • Maintained according to government rules and regulations.
2. Double Entry System
   • Based on the double entry system of bookkeeping (debit and credit).
3. Budget Head
   • Expenses are classified and made on approved budget heads.
4. Budgetary Control
   • Facilitates control over budget allocations.
5. Banking Transactions
   • Performed through the District Treasury Comptroller Office.
6. Auditing
   • Financial books are audited to prevent misuse and misappropriation.
7. No Profit and Loss
   • Focus on providing services rather than generating profit.

Differences Between Government and Commercial Accounting

• Use:
  • Government accounting is for government offices; commercial accounting is for business organizations.
• Basis:
  • Government accounting is cash-based; commercial accounting is accrual-based.
• Profit and Loss:
  • Government accounting does not show profit or loss; commercial accounting does.
• Control:
  • Government accounting is budget-controlled; commercial accounting is not rigidly controlled by budget.
• Government Rule:
  • Government accounting strictly follows government rules; commercial accounting does not, except for tax regulations.