Borrowings and recovery of loans
Categorize the borrowings and recovery of loans into capital and revenue receipts of government budget. Give reason too.
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Answer: Borrowings are capital receipts since the government is beneath obligation to return the amount all along with interest therefore it creates liability for government. Recovery of loans is as well capital receipts since such decrease assets of the government.
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Why the repayment of loan is a capital expenditure? Answer: Repayment of loan is taken as a capital expenditure since it diminishes the liabilities of Government.
Analyze at least 3 possible regions for the industry which could lead to transaction costs, explaining each in detail.
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