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Badvac3x Assignment-2

Discussion on the government budget and borrowings.

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18 views2 pages

Badvac3x Assignment-2

Discussion on the government budget and borrowings.

Uploaded by

kmstlngrdrgz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NATIONAL UNIVERSITY – MANILA

BADVAC3X: ACCOUNTING FOR GOVERNMENT


AND NON FOR PROFIT ENTITIES
MIDTERM PERIOD

Name: Kim E. Rodriguez


Section: ACT221

ASSIGNMENT 2

1. What are purpose/s of a government budget? (5 points)

Government budget is essential in the regulation and function of the government. It is the
source of expenditures for national objectives, programs, and strategies. It is allocated to different
sectors of the economy such as education, healthcare, infrastructure, defense, and social welfare.
It also aims to reduce economic inequality through wealth redistribution using the progressive
taxation where wealthier individuals pay higher taxes that is the source of the government budget.
It acts as the fuel of the government in ensuring that services to public are efficient and social and
developmental goals are being achieved.

2. Why do governments resort to borrowings? (5 points)

Aside from taxation, the source of the government budget is borrowing, domestic or
foreign. The usual reason known to many is the lack of or budget deficit, but actually, there are
several reasons why the government resorts to borrowings. One of these is the local capital market
deepening objective to set benchmarks for borrowing undertaken by the private sector. Also, the
government resorts to borrowing whenever there’s a temporary imbalance between its income and
expenditures to have short-term liquidity used to maintain operations. Borrowing is also an option
for the government when there’s no collection of taxes yet at the time the funds are needed.
3. Distinguish zero based budgeting versus incremental approach in budgeting. (10 points)

The zero-based budgeting approach starts out in a clean state—a zero budget. The
government will base their budgeting on their proposed activities and goals while justifying it to a
clear requirement considering cost-efficient ways of planning and execution of their objectives.
This approach encourages efficiency and flexibility because of the need for justification and
rationale. Although it can be time-consuming and labor-intensive because of starting from nothing
and complexity and difficulty to understand. In contrast, the incremental budgeting approach
considers the previous budget as the basis, assuming that the previous budget will be kept and
incremental changes will be made only in areas where predictable changes happen. This approach
is easier to understand and relatively easy to carry out faster as it reflects the historical reality of
business. But also, it can encourage inefficiency and wasteful spending because of previous budget
assurance, not needing to look for improvement in processes.

4. If you were a legislator, which services or sector would be your top 3 priorities in the provision
of the national budget. Defend your answer. (15 points)

If I were a legislator, my top three sectors in the provision of the national budget would be
healthcare, education, and the environment because they contribute directly to the long-term
development and economic stability of the nation and the well-being of the citizens. Top priority
is healthcare because health is wealth. Everyone should not be deprived of access to healthcare
services and assurance regardless of economic and social status, most especially the poor, because
they deserve it. And if the population is healthy, it is more productive and contributes more to
economic growth. Next is education to ensure long-term economic growth and social mobility.
Investing in education promotes equality, reduces poverty, and can drive innovation, leading to
filling the labor market with skills and competence that are beneficial to the economy. And last but
not least is the environment. Failure to address issues regarding environmental issues may cause
the failure of all sectors because it can lead to several natural disasters and environmental
degradation, which will result in health problems and undermine economic growth and quality of
life.

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