Government of Andhra Pradesh spent Rs 2 crore for construction of a bridge above the Godavari river. According to you, how will this transaction be treated?

Capital expenditure

As, the government is constructing a bridge, it means expenses have been incurred. So, it will be an expenditure and not a receipt. Now, the question is whether it will be capital expenditure or revenue expenditure. Revenue expenditure do not create any asset nor do they cause reduction in the liability whereas, capital expenditure either reduce a liability or create an asset. Here, an asset (bridge) is being made, thus, it will be included under capital expenditure of the government.