Question

The expenditure which does not create assets for the government is called

• A. Revenue expenditure
• B. Capital expenditure
• C. Both (A) and (B)
• D. None of these

Hint:

Revenue expenditure is for regular expenses that do not result in the creation of physical assets, such as salaries and operational costs.

Answer 1

The Correct Option is A

Step 1: Understanding Expenditures:
Government expenditures can be categorized into two main types: revenue expenditure and capital expenditure. Revenue expenditure refers to spending on goods and services that do not create long-term assets for the government. Capital expenditure refers to spending that creates assets, such as infrastructure, which can generate future benefits.
Step 2: Analyzing the Options:
- Option (A) Revenue expenditure: This is the correct answer. Revenue expenditure includes regular operating costs such as salaries, subsidies, and maintenance, which do not result in the creation of physical assets.
- Option (B) Capital expenditure: Capital expenditure involves the purchase of assets or investments that create long-term benefits, such as building infrastructure, and is not related to current spending.
- Option (C) Both (A) and (B): This is incorrect because capital expenditure, not revenue expenditure, creates assets for the government.
- Option (D) None of these: This is incorrect since revenue expenditure is the correct answer.
Step 3: Conclusion and Answer:
The correct answer is (A) because revenue expenditure is used for current operating costs and does not create long-term assets for the government.