Government Accounting

Posted: August 26th, 2021

Government Accounting

Name

Institutional Affiliation

Government Accounting

Difference between Exchange and Non-Exchange Transactions

 Exchange transactions are ones in which each of the involved parties receive and sacrifices something that is approximately equal in value. On the other hand, a non-exchange transaction is one in which one of the parties receives a valued item without directly giving in exchange for a product or service that is equal in value. According to Jensen (2017), grants can either be an exchange or non-exchange transactions. Governments do engage in either issuing or receiving grants; a clear indicator that they indeed engage in both exchange and non-exchange transactions. Besides grants, other forms of non-exchange transactions include fines and penalties imposed on behalf of the government by the relevant agencies(Jensen, 2017). Government donations also constitute another category of non-exchange transactions that governments around the world do engage in. the common type of exchange transaction that governments engage in is the sale of used assets, like old vehicles on selected auction days.

Meaning and Use of General Fund by Small Governments

            A general fund is a primary fund that is used by a given government entity. In this fund, all resource inflows and outflows that are related to the special purposed fund are usually recorded (Vella, 2014). It is important to note that the activities that are paid for through the general fund usually constitute the core administrative and operational tasks of the government agency in mind. As such, all the ongoing expenses of a state or country are paid for by money from the general fund. Small developing countries oftentimes find themselves constrained in the execution of sensitive tasks such as the provision of quality education, affordable health, and transportation(Jensen, 2017). Therefore, general funds can work perfectly fine for these kinds of governments since the general fund will act as a safeguard against the downsideas regards the economic performance of these countries.

References

Jensen, G. R. (2017). Reporting government obligation. In Innovations in governmental accounting (pp. 203-215). Springer, Boston, MA.

Vella, M. A. (2014). Accounting for revenue by the government of Malta (Master’s thesis, University of Malta).