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Financial management practices in government departments are different from financial management practices in industrial or commercial companies. Required: Citing five reasons, justify the above statement.

      

Financial management practices in government departments are different from financial management practices in industrial or commercial companies.
Required:
Citing five reasons, justify the above statement.

  

Answers


Kavungya
i. Financial management practices in government departments of providing public goods or services. The objective of financial management practices in industrial or commercial companies is to make a profit and maximize shareholders wealth
ii. Government departments are allocated funds by the government while commercial companies have to raise funds from the capital market at a cost
iii. Government departments may end up with surplus funds while commercial companies will always experience shortage of funds
iv. Commercial companies analyze various projects with an view to determine the projects to undertake while in government departments, the task to be undertaken is specified
v. Commercial companies have to pay dividends to the shareholders eventually while in government departments surplus funds are returned to the treasury.
Kavungya answered the question on May 6, 2022 at 06:10


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