Question

Write on the similarities and differences between the following terms

Public Accounts                                            Private Accounts                                          

Government Accounting                            Commercial Accounting                              

Cash Accounting Basis                                Accrual Accounting Basis                             

Revenue                                                        Income                                                           

Tax Revenue                                                 Non Tax Revenue                                         

The Executive                                               The Legislative                                              

Government Budget                                    Incremental Budget                                     

Recurrent Expenditure                               Capital Expenditure                                     

Internal Audit                                               External Audit   

IPSAS 1                                                           IAS 1                                                               

Answer 1

The following are the differences between the tems:-

1) Public accounts vs private accounts:-

Essentially, public accounting is being part of an independent/third party company who do the accounting for other companies, whereas private accounting is working for a particular company and involves setting up systems and recording the transactions that make up the financial statements.

2) Government accounting vs Commercial Accounting:-

a) Government accounting is prepared on cash basis. Commercial accounting is prepared on cash as well as accrual basis.

b) Government accounting has the system of central level and operating level accounting. Commercial accounting has no provision of central level and operating level accounting.

c) Government accounting is strictly maintained by following the financial rules and provisions of government. Commercial accounting is maintained by following the rules and principles of 'Generally Accepted Accounting Principles.

3) Cash accounting Vs Accrual accounting basis:-

The basic difference between the two approaches to bookkeeping of an entity is in timing, i.e. in cash accounting, the recording is done when there is an inflow or outflow of cash. On the other hand, in accrual accounting, it records the income and expense immediately when it arises.

4) Revenue vs Income :-

For a business, income refers to net profit i.e. what remains after expenses and taxes are subtracted from revenue. Revenue is the total amount of money the business receives from its customers for its products and services. For individuals, however, "income" generally refers to the total wages, salaries, tips, rents, interest or dividend received for a specific time period.

5) Tax revenue Vs Non tax revenue:-

Tax revenue is the income gained by the government through taxation, or taxing working individuals. Non-tax revenue is income that the government makes from sources other than taxes, like bonds or issued profits from state-owned companies. The difference between the two is that one is solely from taxation paid by tax-payers (tax revenue), and the other is generated from items other than regular taxes (non-tax revenue).

6) The Executive vs The legislative:-

Legislature- The legislature is meant for making laws. The Parliament comes in legislature, they make and amend rules on which country will work. They are answerable to the public.

Executive- The executive enforce laws. The government comes in executive they are answerable to the legilature. They confirm the rule of law is established in a country

7) Government Budget vs Increment Budget:-

An incremental budget is a budget prepared using the previous period’s budget or actual performance as a basis with incremental amounts added for the new budget. The allocation of resources is based upon allocations from the previous accounting year. Here, the management assumes that the levels of revenues and costs incurred during the current year will also be reflected during the next year. Accordingly, it will be assumed that revenues and costs incurred during the current year will be the starting point for estimations for the next year.

The following are the similarities between the tems:-

1) Public accounts vs private accounts:-

a) Customer service oriented – Both sectors are very customer oriented. The customer for the private company is one that has agreed to pay for their services, where the customer for the public sector is its citizens as it relates to public service. Although the customer base is different, the operations are very customer-focused. They value their respective customers immensely because they evaluate (and re-evaluate) their efforts to ensure a high level of customer service. Their operations are focused on how they can improve and ensure that resources are used in an effective manner.

b) Open to change – With technology and the workforce changing by the day, it is nice to see that both public and private environments are open to change. This is true for changes related to technology, changing the way that business is done, or even just a simple process change at a lower level. The willingness to listen to new ideas and explore new possibilities is refreshing and opens the possibilities of improving business operations. The openness to change is important to the growth of the organizations.

2) Government accounting vs Commercial Accounting:-

a) The governmental accounting has no final account. They do not aim ateither loss or profit. They are revenues lists either automatic or continuous from the finance ministry. They are balanced according to commercial sections, groups and kinds. Moreover, there are no asset accounts as in the commercial accounts. The asset accounts of the governmental bodies are recorded in the statistic books and not the books whose values are in book groups. Despite the fact that the situation differs from the theory of units (Seif’s Original
Budget), the cash accounts are accumulated to all the assets of the governmental accounting unit. It is posted from a year to another. Moreover, it displays all the assets of the governmental accounting unit. It is the account that makes these assets as it is previously shown.Further, the governmental accounts do not include personal accounts. Dealings are always paid in cash and not verbal accounts like the accounts of sales and purchased goods. They are not unreal accounts like the reputation of a shop or any asset accounts.

3) Cash accounting Vs Accrual accounting basis:-

Cash method and accrual method are accounting methods that vary depending on the timing of when expenses and revenues are predictable. When a company implements cash method accounting, it identifies revenues when cash is essentially earned and expenses at the time they are paid. Using accrual accounting, income is predictable at the time revenue is gained .

4) Revenue vs Income :-

Income and revenue are often believed to be the same concept, as they both refer to positive incoming cash flow. However, that is where their similarities end. For accountants and corporate entities, income and revenue each represent a separate type of incoming cash, and each result in different placement on a company's financial statements.