Question

Differentiate between revenue and capital expenditure. (Three points)

Distinguish between revenue expenditure and capital expenditure.

Answer 1

Following are the three differences between Revenue and Capital Expenditure:

	Revenue Expenditure	Capital Expenditure
1.	Revenue expenditure does not affect the asset-liability status of the government.	Capital expenditure affects the asset-liability status of the government.
2.	Revenue expenditure is of recurring nature.	Capital expenditure is of non-recurring nature.
3.	Revenue expenditure is incurred within the given productive capacity of the country.	Capital expenditure is incurred to augment the productive capacity of the country.
4.	It is of recurring type. It is incurred regularly.	It is a non-recurring type of expenditure.
5.	This is called non-developmental expenditure.	This is called developmental expenditure.