Read the case study given below and answer the question :
The Budget document relates to the receipts and expenditure of the government for a particular financial year, the impact of it will be there in subsequent years. There is a need therefore to have two accounts, those that relate to the current financial year only one included in the revenue account (also called revenue budget) and those that concern the assets and liabilities of the government into the capital account (also called capital budget).
Identify the incorrect statement :
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Government budget refers to the actual receipts and payments of the government
The government budget is a statement of the estimated receipts and expenditures of the government for a financial year. In India this year runs from 1 April to 31 March. It is presented before the year begins, so it shows planned figures.
Option (1) Government budget refers to the actual receipts and payments of the government — False. The budget gives the estimated receipts and payments for the coming year.
Option (2) Government budget has two components : Revenue Budget and Capital Budget — True. Items of the current year only go into the revenue budget. Items that concern the government’s assets and liabilities go into the capital budget.
Option (3) Capital budget records transaction relating to change in assets and liabilities of the government — True. For example, a new loan adds to the government’s liabilities, and building a road adds to its assets.
Option (4) Revenue budget has two components : Revenue Receipt and Revenue Expenditure — True. Revenue receipts are mainly taxes and non-tax income. Revenue expenditure is spending on the normal running of the government, such as salaries and interest.
NCERT (2026-27): “5.1 Government Budget — Meaning and its Components There is a constitutional requirement in India (Article 112) to present before the Parliament a statement of estimated receipts and expenditures of the government in respect of every financial year which runs from 1 April to 31 March. This ‘Annual Financial Statement’ constitutes the main budget document of the government. Although the budget document relates to the receipts and expenditure of the government for a particular financial year, the impact of it will be there in subsequent years. There is a need therefore to have two accounts- those that relate to the current financial year only are included in the revenue account (also called revenue budget) and those that concern the assets and liabilities of the government into the capital account (also called capital budget).…” |