Consider the following statements: I. Capital receipts create a liability or cause a reduction in the assets of the Government. II. Borrowings and disinvestment are capital receipts. III. Interest received on loans creates a liability of the Government. Which of the statements given above are…

Question

Consider the following statements: I. Capital receipts create a liability or cause a reduction in the assets of the Government. II. Borrowings and disinvestment are capital receipts. III. Interest received on loans creates a liability of the Government. Which of the statements given above are correct?

Aicharya · Accepted Answer

Capital receipts either create a liability (borrowings) or reduce assets (disinvestment) — I and II correct. Interest received on loans by the Government is a revenue receipt (it does not create a liability) — III incorrect.

Consider the following statements: I. Capital receipts create a liability or cause a reduction in the assets…

Solution