Match the following:
| 1. | Revenue receipts | A. | Receipts that create liability or reduce assets |
| 2. | Revenue expenditure | B. | Receipts which do not lead any claim on the government |
| 3. | Capital receipts | C. | Expenses which result in creation of asset or reduction in liability |
| 4. | Capital expenditure | D. | Expenses which neither create assets nor reduce liability |
Answer & explanation
Correct answer: option 4
The correct answer is Option 4: 1-B, 2-D, 3-A, 4-C
| 1. | Revenue receipts | B.Receipts which do not lead any claim on the government | |
| 2. | Revenue expenditure | D.Expenses which neither create assets nor reduce liability | |
| 3. | Capital receipts | A.Receipts that create liability or reduce assets | |
| 4. | Capital expenditure | C.Expenses which result in creation of asset or reduction in liability | |
- Revenue receipts are those receipts that do not lead to a claim on the government. They neither create liability nor reduces the assets of the government.
- Capital receipts refers to those receipts which either result in creation of liability or in reduction of assets. For example: sale of shares of SBI to HDFC bank will result in the reduction of assets of the government.
- Revenue expenditure are those expenses which neither creates assets nor result in reduction of liability. For example: salaries etc. paid by the government.
- Capital expenditure are those expenses which either results in the creation of assets or reduction in liability of the government. For example: Payment of loan, Purchase of shares.