Question

Hi
Brainly user...

Tell me..

Q. Why are borrowings a capital receipt.? Explain

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Answer 1

Heya....

See here for your answer...

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As we know that capital receipts are those receipts which..

,, Create liability for the government
,, Cause reduction in assets of the government....

So,, borrowing taken by government to control it's deficit leads to receipts to government as money is coming with the government ....

But ...

The borrowings also have to return back and the returning to money cause reduction in assets...

So we consider ,, borrowings as capital receipts...

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Answer 2

Hlo there ..

Your answer

Govt borrowings are capital receipts because.

:::: They cause in inflow of money for the govt..

:::: Lead to reduction in govt assets ..

:::: Reduction in assets of govt..