Question

Expenditure of the government for payment of government employees is expenditure on______ account.
(a) capital
(b) revenue
(c) development
ernment is equal to
(d) investment​

Answer 1

Answer:

capital

Explanation:

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.

Whereas, revenue expenditure refers to the estimated expenditure in a fiscal year which does not create assets for the government or reduction in liabilities. For example: wage bill of the government, interest payments, etc.

Payment of salaries to government employees is a revenue expenditure as it does not create any assets of the government.