Revenue Expenditure : Any expenditure by the Government that neither creates an asset nor reduces a liability is known as revenue expenditure.
Examples :
(i) Interest payments on loans
(ii) Expenditure on Defence
Capital Expenditure : Any expenditure by the Government that either creates an asset or reduces a liability is called capital expenditure.
Examples :
(i) Expenditure on the acquisition of land, building, machinery, equipment, etc.
(ii) Construction of school building.