What is the primary purpose of governmental accounting?

The primary purpose of governmental accounting is to provide financial information that helps users assess accountability and performance of government entities. This is essential because government entities are funded by taxpayer dollars, and there is a strong expectation for these entities to operate transparently and accountably.

By focusing on accountability and performance, governmental accounting ensures that stakeholders, such as citizens, taxpayers, and government officials, can evaluate how effectively public resources are being managed. This includes assessing whether governmental entities are using their funds appropriately, delivering services efficiently, and meeting their operational goals.

In contrast to the other options, governmental accounting is not designed merely to measure profitability, as it is not a for-profit sector. Additionally, while tax collection is a necessary function of government, the primary objective is broader than just maintaining financial records. Promoting private sector investments is not a central purpose of governmental accounting; rather, the emphasis lies in transparency and accountability in public financial management.