Question

Explain what is meant by the sentence, "A fund is a fiscal and an accounting entity."

Why are the accounts additions and deductions used in place of revenues and expenses in a government's statement of changes in fiduciary net position?

Answer 1

Fund is a Fiscal and an accounting entity this statement is true and correct. Fund is created with a specific purpose for carrying specific activities and attaining certain objects. It records all financial data and maintains high level of accounting which is regulated by various acts and regulations. Fiscal in my understanding something related to Finance and Accounting means recording all financial transactions into books of accounts. So we can say that Fund is a Fiscal and an Accounting Entity because it is created with financials objects and recording thereof.

Accounts additions and deductions are used in place of revenues and expenses in a government's statement of changes in fiduciary net position because the purpose of Government is not to earn Income and incur any expense. These are the terms which are generally used with respect to business transactions and here the object of government is not doing business. Governement take care of all these transaction for social welfere not for personal purpose. It has to report the progress of Fiduciary net position to the people in terms of additions and deductions. This all are the reasons of using accounts additions and deductions in place of revenues and expenses in a government's statement of changes in fiduciary net position.