Describe the types of government transactions

 Government accounting is a handling of governments’ financial affairs. Government accounts prepare financial statements, budgets and provide accurate information pertaining to financial practices.

Basically, this account shows the activities of the government, likely to affect the rest of the economy. Unlike most private sector organizations, governmental entities must be responsible for to a number of different groups and organizations, including elected officials, other units of government, investors, creditors, and citizens that are focused on monitoring their activities. All forms of monitoring include collecting and interpreting data, and this oversight function is often performed through information provided in governmental reports.

Govt. transactions are summarized into five groups, revenue, grants, expenditure, net lending and financing.

 

·        Revenue includes all non-repayable receipts, required and unrequited, other than grants from other governments and international intuitions. Revenues can be divided into current and capital; the latter includes only receipts from the sale of capital assets. Current revenue embraces all tax revenue and current non-tax revenue. Taxes are compulsory, unrequited, non-repayable contributions exacted for public purposes.

·        Grants are defined as unrequited, non-repayable, non-compulsory receipts from other governments or international institutions.

·        Expenditure consists of all non-repayable payments by government, whether requited or unrequited and whether for current purposes. Only requited payments contribute directly to production, consumption and capital formation, while unrequited expenditures or transfers redistribute the effective demand among the different sectors of the economy.

·        Financing is equal to the balance of revenue, grants expenditure and net lending. It covers all transactions involving the government’s holding or currency and deposits, government liabilities and any financial assets held by the government for the purpose of financial management rather than public policy.