Question

Giving reason, state whether the following is a Revenue Expenditure or a Capital Expenditure in a government budget:

(i) Expenditure on Scholarships.

(ii) Expenditure on building a bridge.

Answer 1

(i) Expenditure on Scholarships-It is a revenue expenditure because it neither creates any assets nor reduces liability.

(ii) Expenditure on building a bridge-It is a capital expenditure because it leads to creation of assets.