Question

Which one of the following is a part of capital expenditure?

• A. Salary paid to army officers
• B. Expenditure on construction of Metro
• C. Pension paid to retired government employees
• D. Interest paid on national debt

Answer 1

The correct option is B Expenditure on construction of Metro

Capital expenditure refers to the estimated expenditure in a fiscal year which creates assets for the government and causes reduction in liabilities for the government. For example: expenditure on lands and building, purchase of shares, expenditure on machinery and equipment. Thus, expenditure on construction of Metro is a part of capital expenditure.