Examkin

Question

Difficulty: HardSources of Government Revenue

During a financial year, a state ministry recorded the following receipts:

• Mining and mineral royalties: ₦15,000,000
• Court fines and vehicle license fees: ₦5,000,000
• Proceeds from the disposal of surplus administrative buildings: ₦25,000,000
• External concessionary loans drawn for infrastructure development: ₦40,000,000

Based on public sector accounting principles, what is the total amount that should be categorized as Recurrent Non-Tax Revenue?

  1. ₦20,000,000Answer
  2. B
    ₦45,000,000
  3. C
    ₦60,000,000
  4. D
    ₦85,000,000

Answer

₦20,000,000
The correct calculation sums only the recurrent non-tax income streams: mining royalties (₦15,000,000) and fees/fines (₦5,000,000), which equals ₦20,000,000. Capital receipts such as fixed asset sales and loans are excluded.

Step-by-Step Solution

1
Identify items belonging to Recurrent Non-Tax Revenue
Mining royalties (₦15,000,000) and Court fines/license fees (₦5,000,000) are ongoing non-tax operating inflows.
Recurrent non-tax revenues are regular, non-compulsory or service-based charges collectible in the day-to-day operations of government.
2
Identify items belonging to Capital Receipts
Proceeds from disposal of buildings (₦25,000,000) and External concessionary loans (₦40,000,000) are Capital Receipts.
Disposal of fixed assets and long-term borrowing represent capital fund inflows meant for the Capital Development Fund, not recurrent revenue.
3
Sum the Recurrent Non-Tax Revenue components
₦15,000,000 + ₦5,000,000 = ₦20,000,000
Only mineral royalties and fines/fees qualify as recurrent non-tax income.

Key Concept

Classification of Government Receipts (Recurrent Non-Tax Revenue vs Capital Receipts)
Estimated Time:2m 0s
Rate this question

Topics

Sources of Government Revenue

More questions from this topic