Expenditures and Revenues Matrix: Sources of Revenue in Public Budgeting (Coursework Sample)

Expenditures and Revenues MatrixBy NameCourseInstructorInstitutionDate
Expenditures and Revenues Matrix
State: Virginia
City or County: Lynchburg

Federal

State

Local

Expenditure Item 1

Defense

Public welfare

Education and libraries

Expenditure Item 2

Medicare

General expenditures

Utility expenditures

Expenditure Item 3

Social security

Highways

Capital outlay

Revenue Item 1

Individual income tax

Sales and gross receipt

Property tax

Revenue Item 2

Social insurance tax

Insurance trust

Charges and miscellaneous

Revenue Item 3

Custom duties

Intergovernmental revenue from federal government

Intergovernmental revenue from state government

Major Role

Defend the shores and protect individual rights.

Incubate special research, business and development i.e. small businesses, job training, unemployment insurance

Provides services such as schools, libraries and fire departments.

Sources of revenue in public budgeting
Public revenue is government income raised from all sources in order to meet public expenditure. Various sources of revenue in a public budget include property tax, income tax and custom duties. Property tax is the amount levied on both real and personal property (Lee, Johnson & Joyce, 2008). It is usually based on the property’s value. Under the laws of the state, each county is responsible for collecting and assessing tax. One receives the value assessment first which is determined by the local assessor’s office then the property tax bill later. Property tax is the largest tax source at state-local level. It provides the largest portion of revenue generated by the local government and is a more convenient source because of its definite location.
Governments tax income because it is broadly based on the ability to pay. Income tax is usually progressive: the higher the income the more to be taxed. The percentage of income to be paid increases as income rises. Tax is levied on income from many sources: wages, interest, dividends and gains from investment, self employment, property rental, royalties or other income such as gambling.
Custom duty is tax levied on imports (and sometimes on exports) by the custom authorities of a country to raise revenue. It is based generally on the value of goods or upon weight, dimensions, or some other criteria of the item. It forms a major chunk of the total taxes collected by the government. In the United States, duty is levied at the time of import and is payable to the importer of record (Oscar, George & Frazer, 1922).
Importance of informed financial decisions
Financial information provides invaluable statistics and evidence on which a manager makes informed decisions and plans. It is established that for successful operation, performance and long-term viability of any business is dependent on continuous sequence of sound decisions made individually or collectively by the management. Economic choices cause identifiable shifts in physical and financial resources in the business therefore relevant information needed.
Informed financial decisions help in making more accurate weights on cash benefits expected against the costs incurred. Some decisions are simple while others are complex and need careful evaluation on the net pattern of the resources to be committed either directly or indirectly. This is to ensure that the decision would profitably recover overtime through the changes in the revenue and expenses made by the commitment (Helfert, 2001).
Financial information is critical in making sound investment choices and implementing them successfully. In return, it results in value creation exhibited in the actual outcome exceeding the cost of capital. Share holder value creation depends on successful performance of existing and new investments. In summary, informed financial decisions are useful in reducing cost, devising ways of raising profitability and identification of best sources of finance and duration.
Financial analysis tools
Interpretation and analysis of financial statements is crucial in decision making process with regard to the business. The most common type of financial analysis tool is financial ratio. Financial ratio refers to the relationship between two or more accounting data. On the other hand, ratio analysis is a process through which comparative relation between two or more items of a financial statement are made. It presents variety information as obtained from the financial statements in a comparative manner and helps in analyzing the performance of the business (Sihler, Crawford & Davis, 2004).
The major ratio families are grouped by the type of information each provides which include profitability, liquidity, asset use and capitalization Profitability ratio measures profits related to revenue and investment. Asset utilization ratios are measures that show the volume of business that is being generated by the investment in assets. Liquidity ratios are measures that suggest the ability of the business to pay current bills. Capitalization ratio includes measures that show ho...