Difference between Government and Commercial Accounting

Government accounting and commercial accounting both are primarily concerned with record keeping of the financial transaction incurred by these institutions during a certain period. Principally,there is no difference among these two accounting systems,as both system follows the same rules,same principle for debiting and crediting the transactions.However,the objectives of government institutions and commercial undertakings are quite different.Therefore,accounting practices and procedures to be followed by these institutions,have been designed differently in order to meet their objectives. The objective of commercial undertakings is to earn profit,the objective of government institutions is to present the true picture of financial statement of the government offices, which includes presentation of annual budget,allocation and monitoring the expenditures to insure their best utilization for public welfare.Therefore,the practices and procedures followed by these two accounting system are quite different.The points of difference between government accounting and commercial accounting have been summarized below.

Government Accounting	Commercial Accounting
1. Government accounting is used to record transaction that takes place in government organizations.	1. Commercial accounting is used to record transactions in commercial organizations.
2.Government accounting in no way is related to show profit or loss of the government office.	2.Commercial accounting is concerned with profit or loss of the concern.
3.Government accounting is normally maintained in cash basis.	3.Commercial accounting is maintained in accrual basis.
4.Government accounting is maintained strictly following the provisions made in finance act and rules.It is rigid.	4.Commercial accounting is not necessarily bound to follow the finance act and rules.It is guided by its internal rules.It is liberal in practice.
5.Government accounting gives information concerned to receipt or transfer of funds and disposed off of government properties.	5.Commercial accounting provides information concerning their operating efficiency and performance result along with financial position of the concern.
6.In government account a separate bank accounts are operated for each kinds of fund operated.	In commercial account,unless necessary,only one account is operated.However,bank accounts in different banks may be operated simultaneously.
7.Government accounts are audited by a constituted body constituted by the government under constitutional law.	7.Commercial accounts are audited by professional having valid audit license.
8.Government accounting is based on budgeting principle.Thus it is controlled by budget.	8.Commercial accounts is not rigidly guided and controlled by budget.However,some control by budget is exercised.

Government Accounting Software

Reference: A Basic Course in ACCOUNTANCY by Ratna Man Dangol

For more information visit our website:   http://www.ezone.com.np/product/government-accounting-system-in-nepal

 Buy product from our store: http://store.ezone.com.np