Which of the following is the basis of accounting in public service?

Public service (government) accounting is traditionally based on the cash basis: transactions are recorded only when cash is actually received or paid, not when the underlying obligation or entitlement arises.

This basis supports the primary purpose of public sector accounting, which is to demonstrate that government spending stayed within the cash actually released against budgeted appropriations, giving legislators and the public a clear, verifiable record of cash movements in and out of public funds.

Expenditure and profit describe categories or outcomes within accounting, not a basis of recognising transactions, so they do not answer the question of when a transaction is recorded. Accrual accounting, which recognises transactions when they are earned or incurred rather than when cash moves, is the alternative basis used in private-sector financial accounting and, increasingly, in some modern public financial management reforms, but it is not the traditional basis of public service accounting being described here.

Whenever a question asks about the timing basis used in traditional government accounting, cash basis is the concept being tested, in contrast with the accrual basis used by most businesses.