Explanation:
Differentiate between Public sector accounting and Private sector accounting


SN Public Sector AccountingPrivate Sector AccountingObjective is to ascertain the efficiency of the collection and use of public funds. Objective is to ascertain profitability or otherwise of the business. 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. 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). Cost of fixed asset is written off immediately after purchase. Cost of fixed assets is spread over the useful life of the asset. 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). Uses the fund and vote system of accounting. Uses entity or proprietorship system of accounting. 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. Accounts are prepared for the general public. Accounts are prepared for owners/ shareholders and other stakeholders. 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. 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