Match the following:
| 1. | Direct tax | A. | Capital receipt |
| 2. | Recovery of loan | B. | Capital expenditure |
| 3. | Expenses incurred to collect income tax | C. | Revenue receipt |
| 4. | Loan granted to Kerala government | D. | Revenue expenditure |
Answer & explanation
Correct answer: option 1
The correct answer is Option 1: 1-C, 2-A, 3-D, 4-B
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Revenue receipts are of 2 types: Tax receipts (collections of taxes), Non tax receipts ( interest, dividends received etc.)
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Capital receipts refers to those receipts which either result in creation of liability or in reduction of assets. Recovery of loan will result in reduction of assets.
- Revenue expenditure includes expenses incurred on regular basis like expenses on collection of taxes.
- Capital expenditure results in reduction of liability or increase in assets. Loan granted to Kerala government will increase the assets of the government.