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Question

Difficulty: MediumSources of Government Revenue

In public sector accounting, under which category of government revenue is the money derived from the outright sale of surplus government landed property classified?

  1. Capital receiptAnswer
  2. B
    Recurrent non-tax revenue
  3. C
    Recurrent tax revenue
  4. D
    Statutory revenue allocation

Answer

Capital receipt
The correct answer is capital receipt. In public sector accounting, proceeds from the disposal of government fixed assets (such as land, buildings, or state-owned enterprises) are non-recurring inflows categorized under capital receipts.

Step-by-Step Solution

1
Analyze the nature of the transaction
The transaction involves the outright sale of government landed property (a long-term fixed asset).
Government revenue classification depends on whether an inflow is recurring operational income or non-recurring capital inflow.
2
Classify the financial inflow based on public sector accounting rules
Funds generated from disposing of capital assets or raising loans are non-recurrent capital receipts.
Capital receipts are meant to fund capital expenditures and are credited to capital development funds rather than general recurrent revenue heads.

Key Concept

Classification of Government Revenue (Capital Receipts vs Recurrent Revenue)
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Topics

Sources of Government Revenue

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