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Question
Distinguish between revenue expenditure and capital expenditure.
Solution
|
Basis |
Revenue expenditure |
Capital expenditure |
|
Creation of Assets |
It does not create assets for the government. |
It results in the creation of assets. |
|
Reduction of Liability |
These expenditures do not result in the reduction of liability. |
These expenditures cause a reduction of the liability of the government. |
|
Items |
(a) Aids given to states and others (b) Interest payments (c) Expenditure on defence |
(a) Purchase of shares (b) Expenditure on land, building, etc. (c) Grants by the central government to the state government |
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