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Commercial / Business Accounting

Business accounting is the accounting system used by business organizations to record
all financial transactions relating to the business. The prime objective of commercial
accounting is profit and it is prepared on the basis of Generally Accepted Accounting
Principles (GAAP) and regulations of organization itself.
Differences between Government Accounting and Commercial/ Business Accounting

Government Accounting Commercial Accounting
Government accounting is maintained for the use Commercial accounting is maintained for the use
of government offices and general public. of business organizations and its owners.
The main purpose of government accounting is The main purpose of commercial accounting is to
to provide administrative and financial service to generate profit and prepare financial statement to
general public. know profit or loss and the financial position of
the business
Government accounting strictly follows the bud- Commercial accounting has its own budgeting and
geting system of government. estimation.
Government accounting is classified into two Commercial accounting does not have provision
levels i.e. central level accounting and operating of central and operating levels.
level accounting.
Office of Auditor General audits the book of ac- Independent and professional registered auditor
counts in government accounting. audits the books of account in commercial ac-
counting.
Government accounting is prepared on cash ba- Commercial accounting is prepared on accrual
sis. Credit transactions are not recorded in gov- basis. That implies cash as well as credit transac-
ernment accounting. tions, both are recorded in commercial accounting.

Historical development of accounting system in Nepal

Government accounting was first introduced in Nepal in the Lichchhawi period. To
record the revenue and expenditure of the government, the recording system came
into practice. During this period, the different sources of collecting government
revenues were trusts (Guthis), property taxes (Jinsikar), voluntary labour (Shramdan)
from general public. The revenue were utilized in war, construction of temples,
expenses of royal family, salary of government employees, performing of religious
rites (Puja/Yagya), etc. With the extension of trade link with Tibet, revenue from trade
and customs were also added to the list of sources of revenue during the Malla period.
After the unification of Nepal in 1825 B.S, Prithivi Narayan Shah tried to make
improvements in the accounting system. The milestone of that period in the field
of account was introduction of 'Laldhadda' to record revenues and administrative
expenses in 1871 B.S, and ‘Mothdhadda’ to record land and its revenue.

Establishment of Nijamati Kitab Khana in 1925 BS brought the system of recording
the history of employees and detail about salary of the government offices. This office
is functioning still today. In 1936 BS Khardar Gunwant, a government employee,
introduced 'Syaha Shrestha Pranali' accounting system to maintain government

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