Categorise the following government receipts into revenue and capital receipts. Give reasons for your answer.
(i) Receipt from sale of shares of a public sector undertaking.
(ii) Borrowing from public.
(iii) Profit of public sector undertakings.
(iv) Income tax received by government.
Categorise the following government receipts into revenue and capital receipts. Give reasons for your answer.
(i) Receipt from sale of shares of a public sector undertaking.
(ii) Borrowing from public.
(iii) Profit of public sector undertakings.
(iv) Income tax received by government.
(i) Receipt from sale of shares of a public sector undertaking is a capital receipt, as it causes reduction in assets of the government
(ii) Borrowing from public is a capital receipt, as it creates liability for the government.
(iii) Profit of public sector undertakings is a revenue receipt, because it neither creates liability nor leads to reduction in assets of the government.
(iv) Income tax received by government is a revenue receipt, because it neither creates liability nor leads to reduction in assets of the government.
(i) Receipt from sale of shares of a public sector undertaking is a capital receipt, as it causes reduction in assets of the government
(ii) Borrowing from public is a capital receipt, as it creates liability for the government.
(iii) Profit of public sector undertakings is a revenue receipt, because it neither creates liability nor leads to reduction in assets of the government.
(iv) Income tax received by government is a revenue receipt, because it neither creates liability nor leads to reduction in assets of the government.
