Capital and Revenue Receipts and Expenditure

Capital and Revenue Receipts and Expenditure 💰📊

11.7.1 Capital and Revenue Expenditure 🏦💵

Capital Expenditure and Revenue Expenditure are the two primary types of expenditures incurred by an organization or government.

Capital Expenditure	Revenue Expenditure
Long-term in nature providing benefits over a period of time. ⏳	Short-term in nature benefits are derived within the same fiscal year. 📅
Results in the acquisition of assets or improvements of existing assets. 🏗️	Incurred to maintain the daily operational activities. 🔧
Examples: Purchase of machinery, building, land, infrastructure development. 🏭🏠	Examples: Salaries, rent, utility bills, administrative expenses. 💼🏢

11.7.1.1 Capital Expenditure Items 🏗️

Capital expenditure refers to the money spent by an organization or government to acquire, maintain, or improve fixed assets such as land, buildings, and equipment.

Item	Description
Purchase of land and building	Buying land or constructing new buildings. 🏡
Machinery and equipment	Investment in machines, tools, or equipment. ⚙️
Infrastructure development	Development of roads, bridges, dams, etc. 🌉
Research and development	Long-term investment in innovation and technology. 💡
Investments in shares/bonds	Capital spent on purchasing financial instruments. 📈

11.7.1.2 Revenue Expenditure Items 💵

Revenue expenditure refers to the money spent on day-to-day operations or services. These do not result in the creation of new assets but are essential for maintaining the current assets or services.

Item	Description
Salaries and wages	Payment for services of employees. 👩‍💼👨‍💼
Rent and utilities	Payments for office rent, electricity, and water. 🏢💡💧
Maintenance costs	Costs for maintaining buildings, machinery, etc. 🔧🏗️
Administrative costs	General office supplies, expenses for smooth operations. 🗂️🖊️
Interest on loans	Payment of interest on borrowed funds. 💳

11.7.2 Capital and Revenue Receipts 💵💰

Capital Receipts and Revenue Receipts are the two main types of income a government or organization can receive.

Capital Receipts	Revenue Receipts
Non-recurring in nature, usually affecting the long-term financial position. 📉	Recurring in nature and forms part of the regular income. 🔄
Results in the creation of liabilities or reduction of assets. ⚖️	Does not result in creation of liabilities or reduction of assets. 🚫
Examples: Loans, sale of fixed assets, recovery of loans. 💵🏠	Examples: Tax revenues, interest on investments, dividends. 💰📈

11.7.2.1 Capital Receipts Items 💰

Capital receipts are funds that a government or organization receives through non-recurring transactions, typically related to the sale of assets or incurring new liabilities.

Item	Description
Borrowings/loans	Funds borrowed by the government from domestic or international sources. 🌍
Sale of fixed assets	Income from selling land, buildings, or other fixed assets. 🏢💰
Recoveries of loans	Repayment of loans previously given to others. 🔄💵
Foreign aid (capital nature)	Long-term international financial assistance or grants. 🌐🤝

11.7.2.2 Revenue Receipts Items 💵

Revenue receipts refer to the recurring income of the government from its regular operations, which does not create any liabilities or reduce assets.

Item	Description
Taxes (Direct and Indirect)	Income through taxes like income tax, sales tax, excise duty. 💸
Dividends	Income from government-owned companies. 📈🏢
Interest on loans	Revenue from interest on loans given to states or companies. 💵
Fees and fines	Government revenue from services, fines, and penalties. ⚖️💰

Summary Table 📊

Category	Capital	Revenue
Expenditure	Long-term investments (machinery, land) 🏗️	Day-to-day operations (salaries, rent) 💼
Receipts	Sale of assets, loans (non-recurring) 💰	Tax revenues, interest (recurring) 💵