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Government Budget: Receipts & Expenditure · Question 47 of 57

Question 47

MediumOriginal question

A government spends ₹500 crore on salaries, ₹300 crore on a new railway line, ₹200 crore on interest and ₹100 crore repaying a loan. Using the rule that capital expenditure creates assets or reduces liabilities, its capital expenditure is

Options for question 47

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. Capital expenditure creates assets or reduces liabilities: railway line 300 + loan repayment 100 = ₹400 crore.

  2. Salaries and interest (₹700 crore) are revenue expenditure.

Worth noting

₹300 crore forgets that repaying a loan reduces a liability, which also makes it capital expenditure.

Concept
Adding capital expenditure
Typical time
70 s
Your time
—
The rule this testsRevenue and capital expenditure
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Ten questions from Government Budget: Receipts & Expenditure, at your own pace.

Practise this chapter →

Ten questions from Government Budget: Receipts & Expenditure, at your own pace.

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