Classwork Series and Exercises {Financial Accounting – SS2}: Government Expenditure

Financial Accounting, SS 2, Week 5

Topic: Government Expenditure


Government spending or expenditure includes all government consumption, investment, and transfer payments. It also means what a government spends in order to achieve its planned budget or the overall public spending carried out by the government.

Classification of Government Expenditure

Expenditure of the government can be classified into

Capital expenditure: these are expenditures of capital nature. They are expenditure which add to the value of fixed asset. These include; purchase of vehicles, machinery, road constructions, hospital etc.

Recurrent expenditure: these are the cost of running the day-to-day activities of the government departments.e.g wages,servicing of cars etc.

Classification of Government Revenue

Government revenue estimate can be of two types

Recurrent revenue: this is the amount of money collected by the government from their regular sources of revenue,it is the day-to-day revenue expected by the government e.g taxes,rates,fines etc.

Capital receipt: this is the revenue that accrues to the government through loans and grants from local and foreign sources which are tied to certain projects


is the name given to a budget in public service is the proposal of government in terms of spending in a particular year.the estimate is divided into two;recurrent estimate and capital estimate.

Head and sub-head:head is the number given and restricted to each item of government revenue or expenditure for the purpose of allocation of revenue and control of expenditure.the head is the estimate in respect of the recurrent or capital expenditure and relates to a ministry or department in which it is approved.a head is a code. The “sub –head” is under the head or relates to each account sub allocated under each head e.g

Head                                                       item

25                                                          personal emoluments

Sub-head (Under the head)

01- basic salary

02- rent allowance

03- rent allowance

04- tax deduction

Vote: this is the term given to the allocation of money made to a head.if the vote is exhausted, money cannot be transferred from another head without going through a procedure known as virement. However,a new allocation can be made to increase the head vote.

Expenditure Authority

Warrant: This is the only authority through which money is expended in government. Government officials cannot withdraw money without authority.

The following are Expenditure Authority Warrant

  1. Provisional general warrant: This warrant authorizes the accountant general and the officer controlling expenditure to release funds for the payment of personal emolument and other services subject to the approval of budget. It will be in operation for 4 months or until the budget had been approved which ever is earlier.
  2. Virement Warrant: this is the authority to transfer funds from one vote head to another within the same economic head.
  3. Supplementary general warrant: This is the authority authorizing the account General  and the officer controlling expenditure to release fund as contained in the approved supplementary budget
  4. Contingencies warrant: This will be released in exceptional cases where virement is not possible

For more notes; see:

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