Question

Capital Expenditure is defined as government expenditure that:

Options

• leads to the creation of physical or financial assets or reduction in financial liabilities

• includes only subsidies and grants

• is incurred for purposes other than the creation of assets

• covers only the day-to-day running of the government

Answer 1

Capital Expenditure is government expenditure that leads to the creation of physical or financial assets or a reduction in financial liabilities. This is the exact opposite of Revenue Expenditure, which does neither.