Government Accounting
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Government accounting is the system of accounting used by governments and other public sector entities. It is designed to provide information about the financial activities of government entities and to ensure that these entities are using their resources efficiently and effectively.
Government Accounting Standards
Government accounting standards are set by the Government Accounting Standards Board (GASB). GASB is a private-sector organization that develops and issues accounting standards for state and local governments. GASB's standards are based on the principles of accrual accounting, which means that revenues are recognized when they are earned and expenses are recognized when they are incurred. This is in contrast to the cash basis of accounting, which recognizes revenues only when cash is received and expenses only when cash is paid.
Financial Statements
Government entities produce three basic financial statements: the balance sheet, the income statement, and the statement of cash flows. The balance sheet provides a snapshot of the government's financial position at a specific point in time. The income statement shows the government's revenues and expenses over a period of time. The statement of cash flows shows how the government's cash has changed over a period of time.
