Comparison of government accounting and business accounting;
1) Their financial statements are different because the motive for establishing commercial organizations is to collect profits and therefore the profit and loss statement is one of the basic financial statements of commercial institutions, while in the accounting of public institutions, receipts and payments or income and expenditure statements are satisfied. . Also, in commercial accounting, the balance sheet shows the status of assets, liabilities and equity on a given date, while in public accounting, fixed assets are recognized as expenses as soon as they are purchased and are not reflected in the balance sheet. It can show the financial position of the institution at a given date.
2) The need to observe budgetary control: In public accounting, the maintenance of income and expenditure accounts is mainly done to control the approved budget, so the importance of budget control in government organizations is no less than the importance of measuring special profits in commercial accounting. Budget control in commercial enterprises is not as significant as accounting in governmental enterprises.
3) The need to maintain independent accounts: In public accounting, each financial source is considered an independent account and is treated as an independent institution from the accounting point of view. The need to maintain independent accounts causes the accounting system used to change accordingly. Therefore, the accounting of independent accounts in the government is different from the accounting of businesses.
4) Difference in the way fixed assets are recorded: In public accounting, fixed assets are recognized at cost as soon as they are purchased, while in commercial accounting, assets are recognized at cost at the time of purchase and then gradually based on useful life. are reflected in the cost account.
5) Difference in accounting basis: In public accounting, cash or adjusted cash or semi-commitment basis is used, but in commercial accounting, in terms of observing the principle of expenditure status of a period, only full commitment basis is used from the revenues of the same period. . In the cash system, the receipt and payment of money is the basis for recording income or expenditure, while in the full obligation system, the collection of income or realization of expenditure is the basis for recording income or expenditure in the books and the time of receipt and payment of money is not taken into account.
Mehdi Koh Soltani (Financial Services; Accounting; Tax Financial Advisor):
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