2018 WAEC Accounts – Principles of Accounts Theory 1) Differentiate between Public sector accounting and Private sector accounting 2) Sources of revenue for…

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Public Sector Accounting

Private Sector Accounting

Objective is to ascertain the efficiency of the collection and use of public funds.

Objective is to ascertain profitability or otherwise of the business.

Does not adopt matching concept. Here, expenditure is compared with the fund voted for that activity or sector.

Adopts the matching concept of accounting where expenses are compared with the associated income.

Accounts mainly prepared are the Revenue and Expenditure Accounts and the Statement of Assets and Liabilities (i.e. Statement of Financial Position).

Accounts prepared are the Statement of Comprehensive Income (Profit and Loss Account) and the Statement of Financial Position (Balance sheet).

Cost of fixed asset is written off immediately after purchase.

Cost of fixed assets is spread over the useful life of the asset.

Accounts are mainly prepared on cash basis of accounting. (Debtors and creditors are not recognized).

Accounts are prepared on accrual basis of accounting.(recognizes debtors and creditors).

Uses the fund and vote system of accounting.

Uses entity or proprietorship system of accounting.

Tangible fixed assets are not recorded separately and shown in the Balance Sheet.

Tangible fixed assets must be shown in the Balance Sheet together with the aggregate depreciation and net book value to date.

Accounts are prepared for the general public.

Accounts are prepared for owners/ shareholders and other stakeholders.

The preparation and presentation of accounts is regulated by the Constitution of the country as well as the Financial Administration Acts and Regulations.

The preparation of accounts is regulated by Company’s code, other Acts related to that specific business and International Accounting Standards.

There is no distinction between capital and revenue expenditure and income.

There is clear distinction between capital and revenue expenditure and income.