Question : Which of the following statements are true?
Statement-1 An expenditure is revenue expenditure, if it either creates an asset or reduces a liability.
Statement-2 An expenditure is a capital expenditure, if it neither creates an asset nor reduces any liability.
Option 1: Both are true.
Option 2: Both are false
Option 3: Statement 1 is true and statement 2 is false.
Option 4: Statement 2 is true and statement 1 is false.
Correct Answer: Both are false
Solution : An expenditure is capital expenditure, if it either creates an asset or reduces a liability. An expenditure is a revenue expenditure, if it neither creates an asset nor reduces any liability. Hence option B is correct.
Statement 1- Capital expenditure neither reduces a liability nor creates an asset.
Statement 2- Flyovers, purchase of machines are the part of capital expenditure.
Question : Which of the following statement are true?
Statement 1- Small savings are treated as revenue receipts.
Statement 2- Disinvestment is a part of the revenue expenditure
Statement 1- Payment of salaries, health services are the part of capital expenditure.
Statement 2- Revenue expenditure do not create any asset.
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