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Question

Differentiate between revenue budget and capital budget.

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Solution

The main differences between the two are:
(i) Revenue budget comprises only revenue receipts and revenue expenditures of the government, while capital budget comprises of capital receipts and capital expenditures of the government.
(ii) Revenue budget include all such financial transactions which do not create any asset or liability for the government. On the other hand, transactions in capital budget do create assets or liabilities for the government.

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