Question

Governmental Accounting is different than financial accounting. What are some differences?

So, how does governmental accounting relate to other business areas?

Why is it important that businesses be aware of how government does their accounting, or is it important to businesses?

Answer 1

Difference between Governmental Accounting and Financial Accounting-

Ser.	Basis of difference	Governmental Accounting	financial accounting
01	Discrimination between capital expenses and revenue expenditures	In governmental accounting, we do not discriminate between capital expenses and revenue expenditures.	In financial accounting, we discriminate capital expenses and the revenue expenditures.
02	Sources of revenue	In governmental accounting, Most government revenues are raised through involuntary taxes	In financial accounting Sources of revenue a willing exchange of comparable value between two parties in a typical business transaction.
03	Reporting	In governmental accounting, reporting serves a broader group of stakeholders than profit businesses, including taxpayers, citizens, elected representatives, oversight groups, bondholders, and others in the financial community.	In financial accounting, reporting serves the financial community only.

Governmental accounting relate to other business areas Like-

1. To follow GAAP, a widely accepted set of accounting standards whose main objective is to ensure that financial information is reported on effectively and efficiently.

2. To prepare the Annual Financial Report for their stakeholders.

3. To summarize assets, and liabilities, showing the net assets of the organization or agency.

Governmental accounting is important for businesses and they must be aware of how government does their accounting because-Governmental accounting is an integral part of the budget and financial reporting process which can give a systematic idea and framework to business to plan, prepare and report their business transactions in better ways.

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