Question

Which of these expenditure of the government is not capital expenditure? 

Options

• Expenditure incurred in undertaking investment.

• Expenditure incurred on land and buildings.

• Purchase of shares

• Interest payment on market loan.

Answer 1

Interest payment on market loan.

Explanation:

• Interest payment on loans is a revenue expenditure because it does not create any assets. It is simply a payment for past borrowing.
• Thus, interest payment on the market loan is not capital expenditure.