Explain Capital Receipts And Revenue Receipts?

1.	Explain Capital Receipts And Revenue Receipts?
Answer» Capital receipts, like capital expenditures do not affect PROFIT, and are either shown as a liability or more often as a reduction from the ASSETS. Any excess realization over the BOOK value of an asset may, however, be treated as a revenue RECEIPT and accounted for as such. It is, therefore, essential to know the distinction. Examples of Capital Receipts: Capital invested by the OWNERS of the business. Amount received from sales of fixed assets or investments. Conversion into Cash of any Asset except stock. Loans received. Capital receipts, like capital expenditures do not affect profit, and are either shown as a liability or more often as a reduction from the assets. Any excess realization over the book value of an asset may, however, be treated as a revenue receipt and accounted for as such. It is, therefore, essential to know the distinction. Examples of Capital Receipts:

Answer»

Capital receipts, like capital expenditures do not affect PROFIT, and are either shown as a liability or more often as a reduction from the ASSETS. Any excess realization over the BOOK value of an asset may, however, be treated as a revenue RECEIPT and accounted for as such. It is, therefore, essential to know the distinction.

Examples of Capital Receipts:

Capital invested by the OWNERS of the business.
Amount received from sales of fixed assets or investments.
Conversion into Cash of any Asset except stock.
Loans received.

Capital receipts, like capital expenditures do not affect profit, and are either shown as a liability or more often as a reduction from the assets. Any excess realization over the book value of an asset may, however, be treated as a revenue receipt and accounted for as such. It is, therefore, essential to know the distinction.

Examples of Capital Receipts:

Explain Capital Receipts And Revenue Receipts?

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