- The accounts of budget help to thoroughly understand the concept of budget.
- As per the rules of accounts, every budget has two sides. They are:
- The credit side and
- The debit side
(I) The credit side:
The revenues (i.e. incomes) of the government are recorded on this side.
There are two accounts on the credit side. They are:
1. Current ineome (revenue):
- The revenue income includes direct and indirect taxes, profits of public enterprises, fees and fines from public utilities, etc.
- Revenue income is also called current income because this section records receipts and expenditures transactions of the current period.
2. Capital income:
- The section of capital income records receipts of those transactions which have long term or continuous impacts on government funds.
- Income generated by the government in the form of borrowings from the market in own country and abroad, borrowing from central bank, income from disinvestment, etc. are recorded in this account.
(II) The debit side:
The expenditures of the government are recorded on this side.
There are two accounts on the debit side. They are:
1. Current (Revenue) expenditures:
Current expenditures include expenditure made in the current year on salaries of government employees, interest payment on loan taken by the government, pension, subsidies, grants, current expenses on defence, etc.
2. Capital expenditures:
- These are expenditures on those transactions which have long term or continuous impact on government funds.
- This account includes loans given by the government to other governments, repayment of previously taken loans, capital expenses on social and economic services, as well as capital expenses on defence, etc.
Conclusion:
Thus a budget has following two accounts:
(A) Current account which records current incomes and expenditures and
(B) Capital account which records capital incomes and expenditures