Government grants are financial aids or resources given by government authorities to eligible entities, such as businesses, non-profits, or individuals, to assist them in undertaking a range of programs or activities. These grants often aim to promote innovation, community development, public health, education, infrastructure, and more.

For example, a business might apply for a government grant to fund the development of new environmentally friendly technology. Once the grant is approved, the recipient typically needs to comply with stringent guidelines and reporting requirements to ensure proper use of the funds. Government grants are usually non-repayable, but they often involve specific operational or completion criteria that must be met.

In financial reporting, government grants are accounted for in specific ways to ensure transparency and compliance with applicable accounting standards, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Recipients must disclose the nature and scope of the grants and how they were utilized.