Why did governmental accounting practices develop with a focus on the sources and uses of expendable funds rather than on net income?
A) The government wants to keep the earnings discrete
B) Net income is solely for private organizations
C) Tax and other non exchange revenues are not equivalent to sales
D) Net income is solely for public organizations

Question

Quizplus · Accepted Answer

Governmental accounting practices developed with a focus on the sources and uses of expendable funds rather than on net income because tax and other non-exchange revenues are not equivalent to sales. Government entities do not operate to earn a profit, and their sources of revenue are fundamentally different from those of private organizations. Therefore, it is not appropriate to use net income as the main focus of governmental accounting practices. Instead, the focus is on understanding and managing the sources and uses of expendable funds, which are primarily from taxes and other non-exchange revenues.

Why Did Governmental Accounting Practices Develop with a Focus on the Sources