Sources of Government Funds and Expenditure Estimates
Indentify sources of government funds and Expenditure Estimates
Government revenue refer to the income generated by the government through various income sources inside and outside the particular government, As to any other person one will be eager to know where government earn money to finance its activity as well as expenditure of the government. The following are the source of revenue of various government including united republic of Tanzania (URT) :-
- Taxation,
Like we have discussed in the previous tutorial that taxation is a
compulsory levy imposed by the government where by no direct benefit
citizen will receive from the government, The levy is usually payable by
citizen at different rate depending on the nature of economic activity
conducted by an individual or firm the obtained amount is
the revenue for the government and is used to meet various expenditure
causing taxation to be the first source of government revenue. - FEES,
These are payment made by users of public services on government cost
sharing in health and education, That is to say the payment made by user
of public services i.e health and education is not the actual cost that
they were required to pay rather than contribution on cost already
payable government. - FINES, Refer to the
penalties imposed by government against law breaches,i.e any person or
firm which ha been proved guilt by law must be exposed to specific fine
as the compensation for the destruction made by a person or firm and the
collected amount being the revenue for the government - GRANTS,
Refer to non-payable money provided by the government to another
government with the aim of helping such government either to improve or
to start a project which are of great importance.to the society of such
government. - FOREIGN INVESTMENT, Sometime
government may decide to invest beyond its boundary provided there is a
proof for sustainable and profitable cash flow, the obtained amount
after operation being the revenue for particular government.
Other sources are: revenue obtain from borrowing, grants, Divident etc
Distinguish between revenue and capital expenditure estimates
Difference between Revenue and Capital Expenditure Estimates
A capital expenditure
is an amount spent to acquire or improve a long-term asset such as
equipment or buildings. Usually the cost is recorded in an account
classified as Property, Plant and Equipment. The cost (except for the
cost of land) will then be charged to depreciation expense over the
useful life of the asset.
is an amount spent to acquire or improve a long-term asset such as
equipment or buildings. Usually the cost is recorded in an account
classified as Property, Plant and Equipment. The cost (except for the
cost of land) will then be charged to depreciation expense over the
useful life of the asset.
Revenue expenditure
is an amount that is expensed immediately—thereby being matched with
revenues of the current accounting period. Routine repairs are revenue
expenditures because they are charged directly to an account such as
Repairs and Maintenance Expense. Even significant repairs that do not
extend the life of the asset or do not improve the asset (the repairs
merely return the asset back to its previous condition) are revenue
expenditures.
is an amount that is expensed immediately—thereby being matched with
revenues of the current accounting period. Routine repairs are revenue
expenditures because they are charged directly to an account such as
Repairs and Maintenance Expense. Even significant repairs that do not
extend the life of the asset or do not improve the asset (the repairs
merely return the asset back to its previous condition) are revenue
expenditures.
Thus, the differences between these two types of expenditures are as follows:
- Timing.
Capital expenditures are charged to expense gradually via depreciation,
and over a long period of time. Revenue expenditures are charged to
expense in the current period, or shortly thereafter. - Consumption.
A capital expenditure is assumed to be consumed over the useful life of
the related fixed asset. Revenue expenditure is assumed to be consumed
within a very short period of time. - Size. A more
questionable difference is that capital expenditures tend to involve
larger monetary amounts than revenue expenditures. This is because
expenditure is only classified as a capital expenditure if it exceeds a
certain threshold value; if not, it is automatically designated as
revenue expenditure. However, certain quite large expenditures can still
be classified as revenue expenditures, as long they are directly
associated with sale transactions or are period costs.
