Public finance is all about public expenditures and public revenue. It has to do with the mobilization of revenue from one sector to another. In terms of distribution, there are rules guiding the raising of funds. Some funds can be allocated for spending but are not released by the appropriate authorities.
Public finance can be defined as the art and science of raising and spending government funds. Both art and science guided by rules, principles, theories, establish process and methods of raising funds. It also talks about analysing how those activities are carried out. It also talks the objectives of management of funds for purpose of maximizing social welfare.
Public finance as a discipline is the study of the rules, regulations, procedures , principles, practices, methods and analysis of the mobilization of funds and collection of public revenue(raising of funds) and allocation and spending of public revenue and their implementation both positive and negative for social welfare. You must determine how you raise government revenue, spend them to see their impacts in society. Adopt a process, analysis and the procedures and its effect.
DIFFERENCES BETWEEN PUBLIC FINANCE AND PRIVATE BUSINESS FINANCE.
There are differences between public finance and private business finance. The areas of difference are,
The motivation for public finance is social welfare while that of private/business finance is profit.
The time period between public finance is longer while private finance may be for a year.
Another are of difference is the budgeting sequence. In public budgeting, it first determines how much will be spent in projects, I.e the expenditure and then map out startegies to match the estimated expenditures. It can be expansionary. In the private budgeting, they check what the business has before seek for funds outside.
In terms of borrowing, private finance depends on credit worthiness, but for public finance, government borrows looking at the potential of the economy to grow and not balance sheet. In public finance, government borrowing capacity is wider than that of the private finance.
The performance assessment is also one of them. Government performance assessment is political while business firma can be assess by looking at the balance sheet.
Government is self perpetrating in public finance.
In terms accounting, government acting is based on cash basis and when forms are collected, accounting takes place. It is when the money is spent that is when government finance recognize that the money has been spent but in private finance, money proposed for a project is agrees to have been spent. For instance, if a sale is effected and goods have not been received, it is recorded as received in public finance.
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