Question

Read the following statements carefully and choose the correct alternatives given below:

Statement 1: Revenue Expenditure is expenditure incurred for purposes other than the creation of physical or financial assets of the central government.

Statement 2: Revenue Expenditure relates to those expenses incurred for the normal functioning of the government departments.

Options

• Both the statements are true.

• Both the statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Both the statements are true.

Explanation:

Revenue Expenditure is money spent on things other than the construction of physical or financial assets for the government. It refers to expenses incurred for the usual operation of government departments and services, as well as interest payments on the government's debt and grants to state governments and other parties, even if some of the grants are intended to create assets.