Which of the following statements is correct regarding Classification of Expenditure of government? I. Revenue Expenditure is expenditure incurred for purposes other than the creation of physical or financial assets of the central government. II. Capital expenditure results in creation of physical or financial assets or reduction in financial liabilities.

Explanation

Government budgets universally classify primary spending into revenue expenditure (routine, recurring operational costs that build no assets) and capital expenditure (strategic investments explicitly creating assets or clearing structural liabilities).