Question

Purchase of shares by the government is classified as:

पर्याय

• Capital expenditure, because it creates financial assets

• Capital receipts, because it adds to government funds

• Revenue expenditure, because it does not reduce liabilities

• Revenue receipts, because it generates returns

Answer 1

Shares are financial assets, and their purchase creates financial assets for the government. Expenditure that creates physical or financial assets is capital expenditure.