Government accounting

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Avatar for lanzjoseg
3 years ago

Why should the State not pursue profit purposes and expenses should be equal to revenues at the end of the fiscal year.

Because the State (Government) is not a company or a person with its own profit interests, it is as I once read; the State is a legal entity that works by and for the citizens of a nation. It is a political structure that has clear goals and objectives, a mission in sight, and within its entire structure profit for selfish purposes from theory is not one of them. There may or may not be corruption on the part of those who make up the government in any nation, but the mission of every state on the planet is and will be to satisfy public needs, as well as to watch over the socio-economic interests of a country.

 That is to say, there is no profit motive; the State serves without profit motive, it does it for the collective. There is a purpose to manage the economic resources of the economic agents within the nation (companies and families) to redistribute the income obtained through taxes or other activities, in the case of Venezuela, oil revenues, non-tax revenues, among others and also to comply with public expenditures, whether investments in infrastructure, education, health, among other services throughout the national territory.

 Now looking at governmental accounting or state accounting, it should be mentioned that its main objective is not profit. There is no profit or loss, everything is redistributed again. What is not spent, is returned to the competent bodies assigned to those tasks of allocating resources. Because there is a principle in governmental accounting, which mentions that the income and expenses of the State must be equal at the end of the fiscal year. The good reason, in the Venezuelan case, in accordance with Article 311 of the Constitution of the Bolivarian Republic of Venezuela, is that the national budget (public revenues and expenditures) must comply with certain principles such as: efficiency, solvency, transparency, responsibility and fiscal balance.

 Then the last principle is called fiscal balance, it says: "all public income must be sufficient to cover all public expenditure", in other words, there must be balance, i.e., both expenditure and income must be equal. In addition, at the beginning, the State, together with its competent bodies at the national, state and municipal levels, had to have budgeted the expenditures. With the income obtained in the current fiscal year, where in a few months before the beginning of the next fiscal year; they should make a list of the redistribution of economic resources (public budget). Each expense with name and surname as they would say and the estimated amount, with its maximum limit, because the idea is to use effectively and efficiently the public income to cover its corresponding expenses.

 

Because at the end of the day, the public budget for the following year will be made with the available resources. You cannot spend more than what you have, it is a principle, or at least it is not the duty to be, in order to prevent the State from getting into debt with other countries. It is important to avoid public indebtedness, and external financing, as well as the commitment of international reserves, are elements that must be taken care of in public finances. As a good entity or organizational structure, it is important to remember that, do not spend if you do not have the necessary resources. And do not spend resources for unnecessary expenses, for expenses that do not benefit the country, that do not benefit the collective. There are priorities.

 

Examples of this are: political propaganda, uniforms for the armed forces, spending on armaments or war equipment. It is necessary to know how to allocate public expenditures well, allocate them to priority sectors such as education, health (hospitals, medicines). To inject to the main sectors (public investment spending). And to reduce the current or operating public expenditure, which are generated for example through transfers (the so-called "carnet de la patria" bonds) that generate price instability, as well as harmful effects for the economy, that is a real example that Venezuela has been suffering for some time now, hyperinflation; due to precisely that, a correct redistribution of economic resources (public income) is not applied.

 

This frames the incorrect application of constitutional, economic and administrative principles in order to carry out harmonious and interrelated economic policies that result in a good fiscal, financial and economic control and management in the country. In addition to reactivate the productive apparatus in general, not only at the level of income derived from oil activities, but also in different ways; that there be a diversification of resources, not only taxes and oil. In the past, it was not heeded, sow oil to diversify, however, it is not too late to regret it. It is time to reinvent ourselves as always, and we must continue telling the truth: "Venezuela is still a rich country with many potentialities".

It should also be noted that this State accounting or professionally known as government accounting, is a branch of accounting referring to the records, procedures and accounting and legal standards that are applied to the entities or agencies belonging to the public sector at national, state or municipal level in order to plan, manage and control public revenues and expenditures for each fiscal period (from January 1 to December 31 of each year) in order to verify year after year the budgetary relationship. In this way always looking for the public or collective welfare; to execute in the same way the most appropriate economic policies to properly manage public finances or the nation.

 

To culminate I have to say that accounting is very important, and it exists to help; how does it help Manuel? Well, accounting, historically and until today, which is reinventing itself, is that art that helps you to make financial-economic decisions in any entity. Remembering that the State, together with companies and families, is and will be an economic agent (an entity) of vital importance in the economic circuit of any country, even though it does not seek to make a profit, but to help redistribute wealth within the same circuit.

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Avatar for lanzjoseg
3 years ago

Comments

Greetings friend, good article, with pleasure I just shared it on my social media account

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2 years ago

You always encourage the business💟

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3 years ago