What is the difference between revenue and expenditures in a budget?

• A. Revenue is income; expenditures are spending.
• B. Revenue is spending; expenditures are income.
• C. Revenue is money owed; expenditures are assets.
• D. Revenue is debt; expenditures are liabilities.

Answer: (A)

In budgeting, revenue and expenditures are two sides of managing funds. Revenue is the money coming in—income from taxes, fees, grants, or other sources—while expenditures are the money going out to pay for programs, services, salaries, and other costs. So the difference is that revenue increases resources, and expenditures use them to run the organization.

The statement that revenue is income and expenditures are spending captures this idea. The other descriptions mix up inflows and outflows or refer to debt and assets in ways that don’t fit how budgets track money. In practical terms, a balanced budget has revenue roughly equal to expenditures; a surplus occurs when revenue exceeds expenditures, and a deficit when expenditures exceed revenue.