Difference between Revenue and Capital Expenditure

Transcript

What are Capital Expenditure It refers to expenditure which result in Creation of Physical or Financial Assets or Reduction in Financial Liabilities Example Create Physical Assets Purchase of Building/Furniture by Government. Create Financial Assets Loan Given by Central Govt Purchase of Shares of PSU Reduce Financial Liabilities Repayment of Loan Taken by Central Govt What is Revenue Expenditure Expenditure which Do not create Physical or Financial Asset or Reduce liability Example Salary Payment Interest Payment These are Routine Expenses of Govt Different types of Expenditure in Budget Capital Expenditure Revenue Expenditure These expenditure which Create Asset or Reduce liability of Govt These expenditure do not Create Asset or Reduce liability of Govt Example Purchase of Building by Govt Loan given Loan taken Repaid by Govt Example Purchase of goods by Govt Grants given Interest Exp on loan taken Example of Different Revenue Expenses Expenses of Business Salary to Employees Office Expenses Interest on Loan Discount Given Purchase of Goods for sale Donation Given Expenses of Govt. Salary to Govt Employees Office Expenses Interest on Debt Subsidy to Customers Purchase of Weapons (Defense Exp) Grants Given (To State govt or others)