What are government financial statements used for and how is it different from for-profit financial statements?
The primary differences related to for profit and governmental financial reporting, are that for-profit financial statements are primarily used to provide investors and creditors with sufficient information to make business decisions. Whereas the primary reporting objectives for governmental organizations will be sustain accountability. Essentially, this indicates that citizens of a government have right to know how a government uses its resources.
Financial reports for governmental entities will primarily be used to:
1) Compare actual results with budgets
2) Assist in determining compliance issues
3) Assist in evaluating efficiency and effectiveness
4) Assess financial conditions and results of operations
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