Abstract In government accounting, the two major classes of problems — classification and valuation — are not of the same relative importance as they are in the accounting for private industry. Emphasis swings heavily toward the former group. Reasons are readily perceived. In ascertaining the financial condition of a government, little significance is attributed to the value of its fixed assets, for rarely are they used to secure debt. Future taxing possibilities take their place as security. Furthermore, the operating statements are not concerned with reductions in value of fixed assets, through depreciation or otherwise, except for costing purposes. On the other hand, many restrictions placed on expenditures cause their classification to become more difficult. Hence, while valuation recedes into a minor role, classification moves forward into a peculiarly dominating position. This importance attached to classification is reflected upon the chart of income and expense accounts, the accounting framework used as a guide in classifying.
Arthur N. Lorig (Tue,) studied this question.