Evaluate the Philosophy of Public Finance - 275 Words

Evaluate the Philosophy of Public Finance (Term Paper Sample) Content: Evaluate the philosophy of public financePublic investment can be explained to be the provision of public goods by a government, collection of taxes from those benefiting from the program and utilization of the collected funds towards further production and distribution of the public goods. Public finance is concerned with how the government raises money, its expenditure and the effects of these activities on the economy. The savings and expenditure of government determine the overall performance of its economy. The Government provides public facilities such as roads. Public citizens have no incentive to pay for the services. The government can correct undesirable effects of a market economy. Public finance also allows it to pass programs that moderate and redistribute incomes of the wealthy to the less wealthy. The government imposes taxes such as capital tax, sales tax, and income tax that go towards funding these programs. The government spending is classified into two categories: exhaustive spending and transfer spending. Exhaustive spending involves the purchases made in the production of public goods whereas transfer involves income transfer to people who need support. The latter is further classified into cash or in-kind services.Compare government accounting vs. nongovernment accountingFirst, the government entities are not concerned with making a profit as compared to non-governmental organizations. However, individual departments account for the profit realized from certain activities to determine whether it is viable. The government entities thus have the responsibility of fiscal accountability. Second, government accounting incorporates fund accounting, a practice that does not exist in private accounting. Fund accounting involves creating a set of separate, self-balancing accounts for a particular purpose. In addition, government accounting focuses on the flow of financial resources as opposed to economic resources. In this regard, it is easy to identify revenue earned to liquidate liabilities and also tell the magnitude of expenditure. Lastly, there is a difference in the internationally accepted financial reporting rules and standards for government and non-government accounting practices. For instance, Generally Recognized Accounting Practices (GRAP) is mainly used in the public sector of many countries. However, the International Financial Reporting Standards are mainly used in the private sector (Conradie, 2015).Evaluate the relationship between budgeting and financial reporting in the government.The similarity of both processes is that they are fiscal measures. ...