Question

Explain the basis of classifying government receipts into revenue receipts and capital receipts . Which type of these receipts are borrowings by government and why ?

Answer 1

Revenue Receipts-The receipts which neither create any liability nor lead to any reduction in assets are called Revenue Receipts. Capital Receipts-Capital receipts are receipts that either create liability or reduce assets. Borrowings by Government-It is a capital receipts as it creates liability