Q. Which of the following will increase the liability of the government?
1.Capital expenditure
2.Salaries of employees
3.Borrowings by PSUs
Select the correct answer from the codes given below:
Answer: C
Notes:
- Borrowings by PSUs would increase the liabilities of the government.
- Capital expenditure creates assets for the government and causes reduction in liabilities for the government.
- Unlike capital expenditure, revenue expenditure is one that neither creates assets nor reduces any liability of the government.
- Salaries of employees, interest payment on past debt, subsidies, pension, etc, fall under the category of revenue expenditure.
