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Difficulty: HardSources of Government Revenue

In public sector accounting, receipts derived from the privatization or disposal of government fixed assets are credited to the Consolidated Revenue Fund as recurrent non-tax revenue.

Answer: Answer

Answer

The statement is False. Proceeds from the disposal of government capital assets are classified as capital receipts and paid into the Development Fund, not recurrent non-tax revenue in the Consolidated Revenue Fund.
The statement is false because revenue obtained from disposing of government capital assets represents a capital receipt. In public sector accounting, capital receipts are designated for the Development Fund to finance capital expenditure, whereas the Consolidated Revenue Fund is used to account for recurrent tax and non-tax revenues intended for ongoing administrative and operating costs.

Step-by-Step Solution

1
Classify the nature of revenue generated from asset disposal.
Money received from selling fixed assets is a capital receipt.
It represents a non-recurring transaction resulting from the liquidation of capital assets rather than regular operational activities.
2
Determine the statutory government fund destination for capital receipts.
Capital receipts are allocated to the Development Fund (Capital Development Fund).
The Consolidated Revenue Fund receives recurrent revenues (tax and non-tax) for recurrent expenditures, while the Development Fund receives capital receipts to fund capital development projects.

Key Concept

Classification of Government Revenue and Statutory Fund Allocation
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Topics

Sources of Government Revenue

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