Question

Classify the following statements as revenue receipts or capital receipts. Give valid reasons in support of your answer.

(a) Financial help from a multinational corporation for victims in a flood affected area. 

(b) Sale of shares of a Public sector Undertaking (PSU) to a private company, Y Ltd. 

(c) Dividends paid to the Government by the State Bank of India. 

(d) Borrowings from International Monetary Fund (IMF).

Answer 1

(a) Revenue receipt, it is a kind of transfer receipt. 

(b) Capital receipt, It is an example of Dis-investment. It reduced the assets of the government therefore, it is a Capital Receipts. 

(c) Revenue receipt, it neither creates liability nor reduced the assets for the government therefore it is Revenue Receipts. 

(d) Capital Receipts, it creates liability for the government therefore it is Capital Receipts