Professional Documents
Culture Documents
BY
Saranya E
Roshni Gopalakrishnan
Before we move on
To understand the concept of revenue deficit, we need to
quickly understand the following two terms:
Revenue Expenditure:
Revenue expense is incurred to earn income for a particular
accounting period. The benefits arising out of revenue
expenditure expires in the same accounting period. (Short
Term) Revenue Expense relates to an accounting period.
Revenue Expenses are shown in the Profit & Loss Account.
Revenue Expenditures are transferred to profit and loss
account in the year of spending.
Revenue Receipts :
Receipts which arise in course of normal business activities are
revenue receipts.
REVENUE DEFICIT
Revenue deficit is concerned with the revenue expenditures
and revenue receipts of the government. It refers to
excess of revenue expenditure over revenue receipts
during the given fiscal year.
Revenue Deficit = Revenue Expenditure Revenue Receipts
Importance
Since it is largely related with the recurring expenditure.
Therefore, high revenue deficit gives a warning to the
government either to cut expenditure or to increase revenue
receipts. It also implies requirement burden in future .