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Difficulty: MediumStructure of Government Funds

Under the financial regulations governing public sector accounting in Nigeria, government revenues are categorized and credited to specific statutory funds based on their intended purpose. Which of the following receipts is credited directly to the Capital Development Fund rather than the Consolidated Revenue Fund?

  1. Proceeds from domestic and international loans raised specifically for capital projectsAnswer
  2. B
    Personal income taxes collected from residents of federal territories and military personnel
  3. C
    Statutory allocation share received directly from the Federation Account
  4. D
    Operating earnings, administrative fees, and court fines collected by government ministries

Answer

Proceeds from domestic and international loans raised specifically for capital projects
The Capital Development Fund (CDF) is maintained exclusively for capital project expenditure. Its direct receipts include proceeds from loans raised for capital works, capital grants, and statutory appropriations transferred from the Consolidated Revenue Fund. Therefore, proceeds from domestic and international loans raised specifically for capital projects are credited directly to the Capital Development Fund.

Step-by-Step Solution

1
Identify the primary purpose of the Capital Development Fund (CDF).
The Capital Development Fund is established to record and finance government capital expenditure, such as infrastructure development and acquisition of non-current assets.
Public sector accounting separates operational (recurrent) activities from capital investment activities.
2
Distinguish between sources of revenue for the Consolidated Revenue Fund (CRF) and the Capital Development Fund (CDF).
The Consolidated Revenue Fund receives all general recurrent revenues including taxes, statutory allocations, fees, and fines. In contrast, the Capital Development Fund receives capital receipts such as loan proceeds specifically raised for capital projects, capital grants, and contributions/transfers from the CRF surplus.
Section 80 of the 1999 Constitution of Nigeria and the Finance (Control and Management) Act govern statutory fund allocations.

Key Concept

Classification of government receipts between the Consolidated Revenue Fund and the Capital Development Fund
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Topics

Structure of Government Funds

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