Question

Identify the correctly matched pair of the items in Column A to those in Column B:

Column A	Column B
1. Revenue Expenditure	(a) Does not cause any reduction in government liability
2. Capital Expenditure	(b) Which creates corresponding liability for the government
3. Revenue Receipts	(c) Which causes a reduction in assets of the government
4. capital Receipts	(d) Causes reduction in government liability.

Options

• 1 - (a)

• 2 - (b)

• 3 - (c)

• 4 - (d)

Answer 1

1 - (a)

Explanation:

The government incurs no liability as a result of revenue expenditure. For example, unlike borrowings, taxes do not create liabilities for the government.