Tax burden cannot be shifted to another person. If it creates an asset or reduces a liability, it is categorised as capital expenditure. These are funds generated from non-operating activities of a business hence are not shown inside the income statement instead they are shown inside a balance sheet.. 7. All questions and answers from the Economics Solutions Book of Class 12 Commerce Economics Chapter 14 are provided here for you for free. 9 Legacy. NCERT Solutions for Class 12 Macro Economics Chapter-8 Government Budget and the Economy ... .is the difference between total receipts and total expenditure. (iv) This is capital receipt because disinvestment reduces government assets. What is a capital expenditure versus a revenue expenditure? | EduRev Commerce Question is disucussed on EduRev Study Group by 165 Commerce Students. Revenue Receipts: Amount received from sales of goods, interest received, commission received, discount received, rental income, debt recovered etc. Differences Between Current Account and Capital Account. ANSWERS 1 False. disinvestment of PSUs. Economics Project on Government Budget is specifically written for cbse students of class 12. (B) Repayment of loan to World Bank, foreign government, etc. Key Differences Between Capital and Revenue Expenditure. The main difference between revenue receipts and capital receipts is that revenue receipts are recurring in nature, which the government can expect to receive year after year, whereas capital receipts are a kind of one-time income. 10 Capital Receipt. (ii) Directly producing goods and services:If private sector does not take interest, government can directly undertake the production. Define tax. Basis of Difference. RBSE Class 12 Economics Chapter 23 Short Answer Type Questions (SA-I) Question 1. Classification of these transactions reflects in the final statements of the company. What is the difference between revenues and receipts? Tax Revenue: A fund raised through the various taxes is referred to as tax revenue. Allocation of resources is one of the important objectives of government budget. Revenue receipts and revenue payments. Revenue deficit b. The Constitution requires that the budget has to distinguish between receipts and expenditure on revenue account from other expenditure. It does not result in creation of assets. Question 1. These are proceeds of taxes, interest and dividends on government investments, cess and other receipts for services rendered by government. 6: Its balance can never be credit. Free PDF download of Important Questions with Answers for CBSE Class 12 Economics Chapter – Government Budget and the Economy prepared by expert Economics teachers from latest edition of CBSE(NCERT) books only by CoolGyan to score more marks in CBSE … ... • Difference between capital and revenue reserve ... Capital Receipts; Revenue and Capital Expenditure; After going through this Unit, the students will be able to: • state the meaning of financial statements the . Capital Receipts appears on the liabilities side of the Balance Sheet whereas Revenue Receipts appears on the credit side of the Profit and Loss Account as income for the financial year. In this way, revenue receipts affect the profit or loss of a business. Instead of this he enters into an agreement to get a sum of 36,000 in lump sum to serve for a period of t… 10:10 mins. Revenue Receipt - Tax Revenue. Examples: Union excise duties and custom duties, https://www.zigya.com/share/RUNFTjEyMDUxMDI1. It is generally a long-period expenditure. Available here are Chapter 1 - Accounting for Not-for-Profit Organisation Exercises Questions with Solutions and detail explanation for your practice before the examination On the other hand, fiscal deficit is the difference between the total expenditure and the total receipt of the government. The misrepresentation between capital expenditures and revenue expenditures will have a great impact on the soundness of the financial statements. Difference between Revenue Receipts and Capital Receipts. Any amount received by the business enterprise which […] Capital Receipts: 1. Hence borrowing in government budget is a fiscal deficit. ANSWER: a. (i) Revenue Expenditure. It is imposed on the income of a person based on the principle of ability to pay. For example, construction of hospital building is capital expenditure. Here, please note that Loan recovery is Capital Receipt but the interest received on these loans is revenue receipts. Capital Receipts are the income obtained from the capital assets of the organization. Non-Tax Revenue: Non-Tax revenue refers to receipts of the government from all sources other than those of tax receipts. Capital receipts are funds received by a business which are not revenue in nature & lead to an overall increase in the total capital of a company. Such expenditure is incurred on long period development programmes, real capital assets and financial assets. 5 True. You will also love the ad-free experience on Meritnation’s Economics Solutions Solutions. The main difference between revenue receipts and capital receipts is that in case of revenue receipts, government is under no future obligation to return the amount, i.e., they are non-redeemable. 4. Capital receipt is shown on the liabilities side of the Balance Sheet. Government revenue is the means for government expenditure in the same way as production is means for consumption. Capital Receipts are shown in the balance sheet and affect the balance sheet by either appearing on the credit side or by the reduction in the value of some asset. ... Differentiate between Revenue Receipts and Capital Receipts. (i) Revenue Receipts. The Fiscal deficit is the difference between the government’s total expenditure and total receipts excluding borrowings. Transactions—both capital and revenue-are recorded here. This type of expenditure adds to the capital stock of the economy and raises its capacity to produce more in future. 5: Only revenue transactions are recorded here. is also capital expenditure because it reduces liability. Tax revenue consists of proceeds of taxes and other duties levied by the Union government such as income tax, corporate tax, excise duty, customs […] Components (Sources) of Revenue Receipts: Revenue receipts of the government are divided into two groups, namely, (i) tax revenue and (ii) non-tax revenue. Revenue deficit = Revenue expenditures − Revenue receipts. The first and foremost difference between the two is, Capital expenditure generates future economic benefits, but the Revenue expenditure generates benefit for the current year only. 2. Distinguish between: Revenue receipts and capital receipts. Capital Expenditures Difference between revenue receipts and capital receipt Report ; Posted by Sidhant Negi 2 years, 9 months ago. To know about the capital expenditures and revenue expenditures, first of all, it is very important to know about the meaning of expenditure beforehand. Difference Between Capital Expenditure and Revenue Expenditure A business organisation incurs expenditures for various purposes during its existence. Whether subsidies on diesel is a revenue or capital expenditure. Non-Tax Revenue is the recurring income earned by the government from sources other than taxes. These are financed out of revenue receipts. Delhi - 110058. Here, please note that Loan recovery is Capital Receipt but the interest received on these loans is revenue receipts. If it creates an asset or reduces a liability, it is categorised as capital expenditure. 1) Tax Revenue: - A tax is a legal compulsory payment imposed by the government on the people. Capital Receipts are the income generated from the non-operating sources, which are having a long term effect. Thus recovery of loan by Central govt. And creates assets nor reduces a liability for the government can play through the budget influencing. Liability of returning loans get free ncert Solutions for Class 12 Commerce Economics are prepared by and... ( iii ) are revenue receipts can be divided into two types capital. Received which is received from non-operational activities i.e leads to a reduction in assets is called revenue are... Capital and revenue expenditure – revenue receipt does not lead to any creation of assets,,. 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