Budget and Corporate Accounting: What’s the Difference? Accounting is the economic management work that reflects and supervises the economic business of a unit. In domestic enterprises, the key role of accounting is to supervise, manage and reflect on the financial situation, and operating results. And cash flow of the enterprise, to maximize profits. While domestic budget accounting focuses on The use, reflection, and supervision of financial funds of financial institutions, administrative departments, and public institutions belong to an accounting structure that does not aim at profit. There are fundamental differences between budget accounting and corporate accounting in essence.
Here are the articles to explain, budget accounting, and corporate accounting, with their differences
Budget accounting and corporate accounting are important components of the domestic accounting system. Enterprise accounting mainly focuses on the cycle of accounting funds, focusing on profit maximization. And applies to all domestic enterprises; budget accounting belongs to government financial institutions at all levels. Their administrative departments and institutions are at all levels, with currency as the key calculation unit. It is a financial management work that implements accounting, reflection, and supervision on the operation of financial funds and its results, and promotes the successful completion of my country’s fiscal revenue and expenditure.
Analysis of essential differences between budget accounting and corporate accounting
Accounting mainly uses currency as an important calculation scope, based on vouchers, and uses advanced technology and methods to carry out comprehensive, centralized, continuous, and scientific accounting and supervision of the economic business of specific entities, and regularly provides a part of accounting data to relevant departments. economic management tasks. The above accounting concepts include budget and enterprise. It is not difficult to find that, in a sense, budget accounting and enterprise accounting are two branches of the same branch. They have the same root, but there are certain differences.
Essentially speaking, they are the same in several aspects. Such as the determined goals and basis, basic premise, accounting method, and applied words. The essential difference between the two is the conceptual “specific subject”. If the subject is a unit that emphasizes interests, it is in the category of enterprise accounting. If the subject is a non-profit-oriented institution, administrative department, or financial institution, it is in the category of budget accounting. . From this, it is not difficult to find that the most fundamental difference between the two is the difference in the main body. The difference in the main body has caused the obvious difference in the financial treatment methods between the two.
The difference between financial accounting
(1) Differences in financial accounting elements
Domestic corporate accounting divides financial elements into multiple elements. Such as assets, liabilities, owner’s equity, income, cost, and profit. While financial elements in budget accounting only divide into capital, liabilities, net capital, income, and expenditure. Even if the names of the financial elements in the classification between the two are similar. There are obvious differences in their fundamental meanings. Which will determine the differences in financial accounting between corporate accounting and budget accounting.
- The difference between capital elements and the “assets” in enterprise accounting mainly refers to the resources generated by the past transactions or events of the enterprise, which are managed by the enterprise, and are expected to bring economic benefits to the enterprise; but the financial elements in budget accounting ” “Assets” mainly refer to the financial management and control of governments at all levels, economic resources that can be measured in currency and integrated into budgetary control, which cannot create expected economic benefits.
- The difference between liability elements; The concept of “liability” in corporate accounting refers to the real-time obligations arising from past transactions or events of an enterprise that are expected to cause economic benefits to flow out of the enterprise. The “liabilities” mentioned in budget accounting mainly refer to debts that can be measured in currency and are required to be repaid with assets and services.
- Differences in income elements; The “income” in enterprise accounting mainly refers to the total inflow of economic benefits that occur during the operation of the enterprise, which will increase the rights and interests of the owners, and have nothing to do with the investment of the owners. However, the “income” referred to in budget accounting mainly emphasizes the non-reimbursable expenses obtained by the law for business practice.
(2) Differences in financial accounting basis
Enterprise financial standards emphasize that domestic enterprise accounting can only determine based on the accrual basis. Budget accounting usually uses the cash basis, and only institutions that have an operational business and implement internal fund accounting. Financial accounting can adopt the accrual basis of the determination.
(3) Differences in financial equations
The identities in budget accounting are. Assets equal liabilities plus net assets, and assets plus expenses equal liabilities plus net assets plus revenue. But the identity in business accounting is: assets equal liabilities plus owner’s equity. From these equations, it can find that the elements and objects of budget accounting and corporate accounting are different, and their equations will also be different. There is no owner’s equity in budget accounting.
(4) Differences in financial accounting information and methods
- Differences in accounting information; For example, in budget accounting, fixed assets correspond to fixed funds, and fixed assets are not depreciated; outward investment corresponds to investment funds; special funds are used for special purposes; usually, no fund accounting is performed, even if there is fund accounting. Internal fund accounting; there is no profit and profit allocation accounting, but there is no such content in corporate accounting, and fixed assets need to be depreciated, and there must be profit and profit allocation accounting.
- Differences in accounting methods; In budget accounting, fixed capital expenditures are listed in one lump sum without depreciation, and purchase funds are withdrawn according to the specific proportion of income; however, fixed capital in corporate accounting is depreciated, and depreciation is calculated according to Fixed assets are depreciated in installments over their usage time and included in cost expenses.
(5) The relationship between budget and accounting composition is clear and comprehensive
Because budget accounting is a key component of financial management, and the domestic state budget stands nationally centralized. Therefore, a national comprehensive and unified accounting system and control system with accounting capital. As the key content has emerged in domestic budget accounting. This kind of compositional relationship is not only comprehensive but also has a very clear organizational relationship.
The overall budget accounting of government finance can divide vertically into five levels from the central government to townships. Government finance at all levels has subsidiaries first, and second. Third-level administrative department accounting and statistical institution accounting from budget accounting. This kind of vertical leadership belongs to the situation of leaders being led. And the same level of finance and departments belongs to the state of horizontal guidance and acceptance of guidance.
The higher-level department not only calculates, but also reflects, and supervises the capital operation of its department. But also reflects and supervises the capital operation of the entire system including subordinate departments. This has almost no affiliation with the upper and lower levels of corporate accounting and has the characteristics of independence, just the opposite.
The difference between financial statements
(1) Differences in report types
Enterprise accounting statements also call financial statements. This mainly refers to the information provided by the enterprise, focusing on conventional financial accounting information. Reflecting the financial situation of the enterprise at a specified time. The operating results of a certain financial period, and the cash flow information. Its focus includes the balance sheet, profit statement, cash flow statement, etc. Financial statements in budget accounting write information reflecting the financial situation. Revenue and expenditure status of institutions, including capital and liability sheets, revenue and expenditure statements, capital construction expenditure statements, attached tables, notes to financial statements, and income and expenditure status instructions. It does not need to set up a cash flow statement. Which belongs to the difference between the two report categories.
(2) Differences in report structure
For example, the balance sheet of an enterprise stands set up based on the framework of assets plus liabilities, and owner’s equity. The end-of-period balance in the assets, liabilities, and owner’s equity items reflects the amount after carry-over. Which is static data. ; and the balance sheet in budget accounting stands set up according to the framework of “capital, expenditure plus liabilities, net capital, income”. Among them, the “end-of-period amount” reflected in the items of funds, liabilities, and net capital in budget accounting is the end-of-year amount. This is also static data, but the final amount of the expenditure and income subjects at the end of the previous period reflects the “cumulative amount of this year”, which is dynamic data.
(3) Differences in financial subject system design
The fundamental purpose of domestic budget accounting is to provide services for social development. Seek to maximize social benefits, and ensure that the country fulfills its functions. Therefore, the design of its financial subject system is based on the financial subjects created by focusing on income and expenditure. However, the purpose of corporate accounting is to maximize economic benefits, increase asset value and increase reproduction, improve economic strength, and be profitable and economically beneficial. Therefore, the design of its financial subject system is based on accounting. subject.
For example, corporate accounting has established a “profit” subject, and profit generates by subtracting the company’s income and cost funds this year, reflecting the capital’s remuneration status. This subject can reflect the investment and operation level of the company. Budget accounting The “profit” subject does not establish, and the “balance” subject stands set up to reflect the balance of capital. This balance is the difference after subtracting various expenses from various incomes. But there is no concept of capital remuneration, it just reflects income and expenditure. The comparative situation is the final financial situation after breaking even for the whole year.
(4) Differences in accounting entities
Budget accounting mainly uses currency as the key unit of measurement, and conducts comprehensive, unified, and continuous accounting and supervision of a professional financial system for the implementation of central and regional government budgets and administrative agency revenue and expenditure budgets. It includes general budget finance, administrative agency accounting, and public institution accounting. Therefore, its accounting subjects are financial units, administrative agencies, and public institutions. Enterprise accounting mainly refers to special finance that reflects its financial situation, operating results, and cash flow. Supervises the use of business and financial revenue and expenditure of the enterprise. Therefore, its accounting subject is a specific unit and organization with a lot of financial information.
Conclusion
To sum up, budget accounting appeared alongside enterprise accounting and has many similarities. It is quite different from enterprise accounting in many aspects. Such as accounting methods, verification basis, fund accounting, and subject design. Therefore, in During the study, it is necessary to fully understand the differences in their main performance. To master their differences in fund accounting, subject involvement, etc. So that they can be easily and quickly distinguished, and better grasp the accounting of budget accounting. handling skills.
