Principles of the Government Accounting

The government activities are determined according to country requirements. The measurement of the expenditures is necessary to determine how much expense is needed to meet those activities. But to attain this a rule is required that’s why the principles of government accounting come to solve the problem.

Government accounting principles are kind of the environment to maintain the budget of the government. Every state has its own set of principles but the general standard is the same in most of the states. GASB government accounting standards board accepted the principles of the government accounting

This article is about the fundamentals of the governing principle? The framework of government accounting is discussed. The Basics of government accounting its objective and features are also described in this topic. Without the delay let’s get started with the discussion!

 Government accounting

Government accounting is the scientific process of collecting, classifying, registering, summarizing, and interpreting all financial transactions, including the income and expenditures of all government agencies, and keeping records of public funds. To understand the principle of government accounting it is necessary to have the proper information about government accounting.

 The major objective of the government accounting 

 The major objective of government accounting is described below:

  •    Statistics about income:

The prime responsibility of government accounting is to determine the affairs of the building and the collection of the income during the financial year. They also maintain the financial statement of the past data. Under the rule “right to Act” if someone wants to see it is mandatory to show the transaction of the government office.

  • Knowledge about expenses:

The expenditure is checked by the parliament of the central government and by the state legislature of the state government. So, determining the expenses that occur on various projects is the prime objective of the accounting government.

  • Loans and deposit information:

The loan and the deposit of the income have happened in the government. So, to give the information about how much loan is given or deposited is the responsibility of the government accounting.

  • Determine the availability of the cash:

The government account determines how much cash is present at a time and also gives the prediction of how much cash is going to be available in the future.

 Government accounting characteristics

 The characteristics of government accounting are given below:

  •    Double-entry system

Government accounting is the most organized way of the system of accounting. Therefore, it uses the double-entry describes the dual effect and records double entry.

  • Rules and regulations of the government

The rules and regulations are determined by government accounting. They have their principle regarding the accounting of the government which we discussed later.

  • Transaction through banks

The transaction of the expenditures of the government is done through banks. That’s why separate banks have been established for the transaction of the government.

  • Obligation to control the budget 

The public accounting department must control the budget. The expenses are fixed for the work of the government that’s why they must complete the task within the allocated budget.

  • Research the general ledger.

It is the responsibility of the accounting government to examine the book of which is specially registered for the rule related to accounting. So, no misunderstanding, and misconception remain related to accounts.

  • Disclosure of public funds

The job related to government accounting is bound to the rules. A mistake causes a mishap that’s why they are bound to not reveal the profit and loss of the accounts but they can show how public funds are given by the government.

  • Heads of the budget

The government expenses are all managed by the heads of the budget. All the sales and the expenses that occur in the government office are under the budget heads.

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What are the processes and principles of government accounting?

The principles of the accounting are described or as we ay summarized in the following way:

  1.     Accounting system

The country generally adopts a single-entry bookkeeping system, but in some cases (i.e., loans and credits), a double-entry bookkeeping system is used to check this arithmetic accuracy by preparing a balance sheet, and to do so. For balance, a dual record system must be considered.

  1.     Commercial enterprises of the public sectors

However, under the trading system, double-entry is administered for example the public sectors and commercial accounting. The balance sheet, the record of the loss and profit is necessary to determine the result of the public sectors. Moreover, in most of the cases, the process such as the analysis of the fund’s flow, cash flow, ratio flow, charts, and diagrams with the statistics of these are considered.

  1.     Categorizing of the expenses and incomes

The categorization of the expenditures and profit is needed for the government. From the services provided, they need to be classified into sub-heads and distinct heads.

 Subdivision of the incomes/revenue

The income/revenue is further divided into the sub-heads which are described below:

  • Tax revenue.
  • Non-tax revenue.

Tax revenue

The funds that have been collected as a profit from the taxes. Taxes on goods, sales social taxes, payroll taxes, taxes on the owners of the lands all are considered under tax revenue. The taxation system is the main source of revenue.

The tax revenue is classified further such as:

  •   Tax on incomes and expenses

taxes are determined by determining the correct rate of tax of the individuals or the company that has been received and spent on expenses before taxes. For example, the Income-tax is under the expenses.

  •    Services and artifacts/products

Goods and services tax (GST) is defined as any tax on the manufacture, profit, sale, transfer, lease, or delivery of goods and the provision of services or the use of goods or licenses or activities for the use of goods. They mainly include sales tax and value-added tax.

  •        Properties taxes and transactions

Taxes on the transitions occur in a way that when every time a thing is sold a small fixed tax which is applicable it must be paid. The tax on every asset varies. The tax on the property is calculated by multiplying the assessed rate with the market rate.

 Non-tax revenue

The revenue is gained by the government other than the taxes source. Such as the railway services, hospitals services, capital expenses, social services, community services the income generated from these are under the non-tax revenue.

The classification of the non-tax revenue is:

  • Interest receipts

Income interest refers to all amounts related to the subject matter (except any amount of the subject matter) received by the issuer in the form of interest if all or part of these amounts is changed to ZAR or any currency incurred for any costs following the barter agreement or the time agreed in other ways. All interest withdrawal payments (except the amount of the underlying event) received from the issuer following the swap agreement shall be determined by the calculation agent.

  • Profits and dividends

Dividends are that are shared among the shareholders when they are in a partnership with some company. After paying the taxes the profit is distributed among the shareholders.

Subdivision of the expenses/expenditures

The expenditures are further divided into subheads that are discussed below:

 General services

The general services include insurance, medical, payroll, personality, and security services that are not under any division or department. These are the expenses that the government has to pay and they fulfill the requirement by the taxes they collected.

 Social services

The responsibility of the social service is to give safety and promote the welfare for the needed children, adults, homeless persons, etc., they provide them assistance with the help of the social workers.

Subdivision of the general services

The general services are also divided into subcategories such as:

 Administrative services

Administrative services include human resources, salary, real estate management, social welfare, human resource management, financial planning, document and case management, contract and subcontract management, facility management, quotation, supply chain planning. The supply is used for production, product distribution, and disposal requirements.

 Defense services

The defense service is responsible to control the exportation of the physical and technical data. They also regulate the military training services. They implement the government policies to the defense and security matters.

 Economics services

In economics and marketing, a service is an economic activity (such as work) provided as a product. Although the service (i.e., activity) is an intangible commodity, the result it produces may be a tangible commodity, depending on the service.

Grant-in-aid and contributions

The payments that are given to the other government as donations, assistance, or as we say contributions to some other government, enterprise, institute, or individuals. The state government and the union government give the grant-in-aid to agencies, individuals, etc. as well. The services are used to manage the operating expenses and also create capital assets.

  1.     Consolidate transactions

Though the transaction related to the government is saved or records of different sub-heads but they also arrange to determine the transactions of the particular period so that the data remain in case of mishaps.

Technical accounts

The double entry system is established to manage the technical accounts which are journals and ledger. The ledger and journal prepare the balance in a scientific way that contains the record of all the transactions.

The single-entry system also maintains the balance but the purpose of the double-entry system is precision. Both for the state and the central government the journal and the ledger are prepared by the controller of the general accountants. With the help of these accounts the annual sheet or as we say summary is prepared.


Journals contain both the opening and the closing balance of the year along with all the transitions that occurred during the particular year.

Method to manage the transactions

  • The income and the receipt of the sundry account’s Dr (the accounts that are not fit under any balance sheet) of the month.
  • Expenditures services for distributing over the month for the sundry account Dr.
  • The whole amount of the journal column is managed at the month-end.


The ledger has information about the financial statements. It includes liability, assets, expenses, equity, revenue. General ledger accounts are divided into several categories, for example:

  • Open and close the header, which is the government balance.
  • Income receipt is the sum of transactions under the headings of income, expenses, and equity in the income statement.
  • Service costs.
  • Investment (outside the income account).
  • Debt deposits and cash transfer administrators close to the state.
  • Balance deposits and debt transfers.
  • Receipts in the custody of the chief accountant Personal accounts (including local internal transfers, as well as the following owners: department adjustment accounts, conversion account summary, checking account, and transfer summary).


The government accounts are used to organize the transactions of the accounts which are held by the governments. It has different objectives and features which are needed to be recognized if someone wants to know the principles of government accounting. This article contains information on Principles of Government Accounting. I considered that it is useful for those who are reading this article and solving their issues.

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