Question

Is the following revenue expenditure or capital expenditure in the context of govt. budget ? Give reason.
(i) Expenditure on collection of taxes
(ii) Expenditure on purchasing computers

Answer 1

(i) Expenditure on collection of taxes is a revenue expenditure since it neither creates assets nor reduces liability of the government.
(ii) Expenditure on purchasing computers is a capital expenditure because it creates assets for the government.