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CMA Final · Corporate Financial Reporting · Government Accounting in India

In a State's Government accounts, the Government borrowed ₹800 crore through market loans, repaid ₹300 crore of earlier loans, and received ₹100 crore as repayment of loans it had earlier given to a public sector undertaking. It also advanced fresh loans of ₹150 crore to local bodies. Ignoring other transactions, what is the net effect on the Consolidated Fund's capital receipts and disbursements, expressed as net capital receipts (receipts less disbursements) from these items?

Capital receipts are market borrowings of ₹800 crore plus loan recoveries of ₹100 crore, totalling ₹900 crore. Capital disbursements are debt repayment of ₹300 crore plus fresh loans of ₹150 crore, totalling ₹450 crore. The net capital receipts therefore equal ₹450 crore.

  1. A₹450 croreCorrect
  2. B₹550 crore
  3. C₹350 crore
  4. D₹650 crore

Explanation

Capital receipts: borrowings 800 + loan recoveries 100 = 900 crore. Capital disbursements: repayment of debt 300 + loans advanced 150 = 450 crore. Net = 900 - 450 = 450 crore. Option B ignores the 100 recovery sign error (800-300+100-... ) mistakes; option C treats recovery as outflow: 800-300-150-100 = 250 is not offered, but 350 arises from omitting recovery and wrongly adding; correct is 450.

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