Consider the following statements about the two accounts of the government budget:
(A) Transactions that relate to the current financial year only are included in the revenue account.
(B) Transactions that concern the assets and liabilities of the government go into the capital account.
(C) The division into revenue and capital budget distinguishes between current financial needs and investment in the country’s capital stock.
(D) The capital account is also called the revenue budget.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (B) and (C) only
The budget has a revenue account for the current year and a capital account for assets and liabilities.
(A) Transactions that relate to the current financial year only are included in the revenue account. — Correct. The revenue account is also called the revenue budget.
(B) Transactions that concern the assets and liabilities of the government go into the capital account. — Correct. Loans and sale of assets go here.
(C) The division into revenue and capital budget distinguishes between current financial needs and investment in the country’s capital stock. — Correct. This is the purpose of the two accounts.
(D) The capital account is also called the revenue budget. — Incorrect. The capital account is the capital budget.
NCERT (2026-27): “5.1 Government Budget — Meaning and its Components … 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 accountsthose 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). …” “Summary … 3. The budget, which gives a statement of the receipts and expenditure of the government, is divided into the revenue budget and capital budget to distinguish between current financial needs and investment in the country’s capital stock.” |