Examkin

Question

Difficulty: MediumSources of Government Revenue

In public sector accounting, interest earned on public investments and dividends received from state-owned enterprises are classified as recurrent non-tax revenue credited to the Consolidated Revenue Fund.

Answer: Answer

Answer

True
Interest earned on public financial holdings and dividends paid by state enterprises constitute regular operational income derived from government investments. In public sector accounting, these items are properly classified as recurrent non-tax revenue and are statutorily credited to the Consolidated Revenue Fund to fund recurring expenditure.

Step-by-Step Solution

1
Identify the nature of the government income sources (interest on investments and dividends from state enterprises).
Interest and dividends are regular, ongoing earnings generated from state assets.
Determining whether an income stream is recurring or capital-based is essential for proper classification in public sector accounts.
2
Classify the income sources into tax revenue, non-tax revenue, or capital receipts.
Since they are not compulsory levies on income or goods, they are non-tax revenues; since they recur periodically, they are recurrent non-tax revenues.
Non-tax revenue includes fees, fines, licenses, rents, interest, and dividends.
3
Determine the appropriate public fund into which recurrent non-tax revenue is deposited.
Recurrent non-tax revenues are credited to the Consolidated Revenue Fund (CRF).
The Consolidated Revenue Fund is the main statutory repository for all recurrent revenue of the government.

Key Concept

Classification of Recurrent Non-Tax Revenue and Fund Allocation
Rate this question

Topics

Sources of Government Revenue

More questions from this topic