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
    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 the society of such
    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
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.
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
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.