Question

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Compare FIVE ways in which the financial statements of Governmental entities are different from financial statements of For-Profit entities

Answer 1

These are the difference between financial statements of government entities from financial statements of profit entities :

1. Government serves a broader group of stakeholders than a profit bussineses including tax payers, citizens,elected representatives, oversight groups ,bond holders and others in the financial community.

2. Most government revenue are raised through involuntary taxes rather than a willing exchange of comparable value between two parties in atypical bussiness transactions.

3. Monitering actual compliance with budgeted public policies priorities is central to government public accountability reporting

4. Government exists longer than for profit bussineses and are not typically subject to bankruptcy and dissolution.

5. Both government entities and profit entities k st follow GAAP but government entities must also follow GASB ( Government Accounting Standards Board )