Government Users Differ From Users Of Profitable Entities

1038 Words5 Pages
Due to the difference in user’s need of government financials, separate standards use. Government users differ from users of profitable entities. Government users require different information in the financial statements as compared to the business entities financial statement’s users. Operating environment of government differs from for-profit organizations. The difference in the operating environment also demands different accounting standards for government. Revenue sources for both government and for-profit organizations differ. For government revenue sources includes taxes and other payments from people. On the other hand, for-profit organizations increase their revenue from payment of buyers. The government provides information…show more content…
These standards are made to satisfy the diversified need of all stakeholders. All information related with the accounting information for all stakeholders is given in the standards. For the government, capital assets do not contribute to future cash flows. The notion of accountability used in the reporting entity. Broader accountability should be fulfilled by the government as compared to profitable entities. Government accounting standards are made to provide budgetary information to the users. For example, property tax is a need of government only. It is required by the government to provide information about property tax in its financial statements. Pension requirement for government and other business entities is same in the reporting standards. Why Is There an Ongoing Need to Set Additional Governmental Accounting and Financial Reporting Standards? Government environment has evolved with the passage. With the passage of time, new transactions have emerged in government. For satisfying the new demand of environment, there is a need to update existing standards. In order to provide consistent information, these government standards should be improved with a better addition to existing standards. With the passage of time, transactions are becoming more complex. To address the need for users of financial information in the present transactions, additional standards are
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