Can you think of more differences between the private sector and the public/government sector concerning accounting?
Suggested answers to practice activity 1.5
More differences between the private and government sectors with respect to accounting are discussed as follows.
Finance: Private sector organisations are financed by individuals’ capital. The government funds the public sector organisations.
Revenue: Private sector organisations derive revenue from inventory sold or services rendered for cash or on credit to customers. Government organisations derive income from the tax, fees, and earnings on investments, grants, and aid. Also, they generate income from other legitimate sources of revenue as stipulated by relevant laws or legislation guiding government accounting practice.
Share of profits: Private sector organisations pay dividends to shareholders. The private sector organisation is owned by an individual (a sole trader or proprietor). In addition, the individual can draw from profits. Public sector organisations do not pay dividends to anyone.
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