Public finance comprises any revenues or expenditures passing through state budgets, derived from whatever source and however spent. Public finance has to be accounted for within governmental budgets for it to qualify as public finance (Bailey, 2003). This paper will discuss the concept of public finance and its philosophy. There is a comparison of governmental accounting and nongovernmental accounting, and an explanation of the relationship between budgeting and financial reporting in government. Philosophy of Public Finance
Public finance allows for communities to function effectively and for the needs of the people within each community to be met. This requires an extensive application of financial planning, scrutiny by multiple entities and reporting that displays the realistic methods that were used in meeting public needs. The philosophy of public finance is based on raising funds for public purposes (Gaffney, 2008). Gaffney (2008) said there are three aspects on the basis of which public finance functions. These are as follows: * On the basis of different activities in which public sectors are involved and the way of their organization such as revenues and expenditures. * Anticipation and realization of the results of different governmental activities, * On the basis of assessment of alternative policies.
Public Budgeting 2
Contrast Governmental Accounting with Nongovernmental Accounting
Governmental and nongovernmental accounting is different for very good reasons. The driving force for governmental financial reporting is accountability. Accountability to citizens and taxpayers, legislative and oversight bodies, and holders of government debt. Governmental accounting is based on the accounting methods of public sector, and nongovernmental accounting is based on the accounting methods of private sector. Governmental accounting system focuses on the course of...