Discussion
Which of the following is a revenue expenditure?
(a) Expenditure on law and order
(b) Expenditure on old age pension
(c) Expenditure on construction of roads and highways
Answer: A
Expenditure on law and order and expenditure on old age pensions are revenue expenditure, since they are spent on running the government and do not create assets or reduce liabilities. So statements a and b are correct.
Expenditure on the construction of roads and highways creates assets that last, so it is capital expenditure. The options that include c are therefore wrong, and only a and b together are revenue expenditure.
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