In the public sector, the method of accounting that reports revenues and expenditures in the period in which they are received and paid is called?
Question 1 Report
In the public sector, the method of accounting that reports revenues and expenditures in the period in which they are received and paid is called?
Answer Details
In the public sector, the method of accounting that reports revenues and expenditures in the period in which they are received and paid is called cash accounting.
Cash accounting is a method of accounting that records revenues and expenses when they are actually received and paid, respectively. This means that revenue is recorded when cash is received, and expenses are recorded when cash is paid out.
The cash accounting method is commonly used by small businesses and in the public sector, especially for managing the cash flow and budgeting. It is straightforward and easy to understand, as it only tracks cash movements. However, it may not provide an accurate picture of a government's financial performance because it doesn't account for transactions that have been committed but not yet paid for, or those that have been earned but not yet received.
Therefore, the answer is cash accounting.
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