1) Differentiate between Public sector accounting and Private sector accounting
2) Sources of revenue for a local government
3) Items of expenditure of a local government
Explanation
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Differentiate between Public sector accounting and Private sector accounting
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Public Sector Accounting |
Private Sector Accounting |
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Objective is to ascertain the efficiency of the collection and use of public funds. |
Objective is to ascertain profitability or otherwise of the business. |
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Does not adopt matching concept. Here, expenditure is compared with the fund voted for that activity or sector. |
Adopts the matching concept of accounting where expenses are compared with the associated income. |
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Accounts mainly prepared are the Revenue and Expenditure Accounts and the Statement of Assets and Liabilities (i.e. Statement of Financial Position). |
Accounts prepared are the Statement of Comprehensive Income (Profit and Loss Account) and the Statement of Financial Position (Balance sheet). |
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Cost of fixed asset is written off immediately after purchase. |
Cost of fixed assets is spread over the useful life of the asset. |
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Accounts are mainly prepared on cash basis of accounting. (Debtors and creditors are not recognized). |
Accounts are prepared on accrual basis of accounting.(recognizes debtors and creditors). |
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Uses the fund and vote system of accounting. |
Uses entity or proprietorship system of accounting. |
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Tangible fixed assets are not recorded separately and shown in the Balance Sheet. |
Tangible fixed assets must be shown in the Balance Sheet together with the aggregate depreciation and net book value to date. |
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Accounts are prepared for the general public. |
Accounts are prepared for owners/ shareholders and other stakeholders. |
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The preparation and presentation of accounts is regulated by the Constitution of the country as well as the Financial Administration Acts and Regulations. |
The preparation of accounts is regulated by Company’s code, other Acts related to that specific business and International Accounting Standards. |
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There is no distinction between capital and revenue expenditure and income. |
There is clear distinction between capital and revenue expenditure and income. |
Sources of revenue for a local government
- Property/tenement rates
- Court fines
- Market tolls
- Lorry park levies
- Television and land licenses
- Subventions from central/federal government
- Donations/Grants from donor agencies
- Business operating permits
- Building permits
- Proceeds from sale of land
- Births and deaths registration fees
- Poll tax
- Customary court fines
- Rent
- Marriage registration fees
- Revenue from stool lands
- Burial permits
- Entertainment permits
- Interest on investments
(c) Items of expenditure of a local government
- Educational projects
- Health projects
- Honorarium
- Wages and salaries /personal emoluments
- Rent and rates
- Bank charges
- Protocol expenses
- Maintenance of roads
- Payment for utilities
- Repairs and maintenance
- Sanitation and environmental expenses
- General Office expenses – stationery
- Donations and grants
- Investments
- Repayment of debts