capital receipt and revenue receipt meaning
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CAPITAL RECEIPT
Receipts which are non-recurring (not received again and again) by nature and whose benefit is enjoyed over a long period are called "Capital Receipts", e.g. money brought into the business by the owner (capital invested), loan from bank, sale proceeds of fixed assets etc. Capital receipt is shown on the liabilities side of the Balance Sheet.
REVENUE RECEIPT
Receipts which are recurring (received again and again) by nature and which are available for meeting all day to day expenses (revenue expenditure) of a business concern are known as "Revenue receipts", e.g. sale proceeds of goods, interest received, commission received, rent received, dividend received etc.
DIFFERENCE
Revenue Receipt
1.It has short-term effect. The benefit is enjoyed within one accounting period.
2.It occurs repeatedly. It is recurring and regular.
3.It is shown in profit and loss account on the credit side.
4.It does not produce capital receipt.
5.This does not increase or decrease the value of asset or liability.
6.Sometimes, expenses of capital nature are to be incurred for revenue receipt, e.g. purchase of shares of a company is capital expenditure but dividend received on shares is a revenue receipt.
Capital Receipt
1.It has long-term effect. The benefit is enjoyed for many years in future.
2.It does not occur again and again. It is nonrecurring and irregular.
3.It is shown in the Balance Sheet on the liability side.
4.Capital receipt, when invested, produces revenue receipt e.g. when capital is invested by the owner, business gets revenue receipt (i.e. sale proceeds of goods etc.).
5.The capital receipt decreases the value of asset or increases the value of liability e.g. sale of a fixed asset, loan from bank etc.
6.Sometimes expenses of revenue nature are to be incurred for such receipt e.g. on obtaining loan (a capital receipt) interest is paid until its repayment.
Receipts which are non-recurring (not received again and again) by nature and whose benefit is enjoyed over a long period are called "Capital Receipts", e.g. money brought into the business by the owner (capital invested), loan from bank, sale proceeds of fixed assets etc. Capital receipt is shown on the liabilities side of the Balance Sheet.
REVENUE RECEIPT
Receipts which are recurring (received again and again) by nature and which are available for meeting all day to day expenses (revenue expenditure) of a business concern are known as "Revenue receipts", e.g. sale proceeds of goods, interest received, commission received, rent received, dividend received etc.
DIFFERENCE
Revenue Receipt
1.It has short-term effect. The benefit is enjoyed within one accounting period.
2.It occurs repeatedly. It is recurring and regular.
3.It is shown in profit and loss account on the credit side.
4.It does not produce capital receipt.
5.This does not increase or decrease the value of asset or liability.
6.Sometimes, expenses of capital nature are to be incurred for revenue receipt, e.g. purchase of shares of a company is capital expenditure but dividend received on shares is a revenue receipt.
Capital Receipt
1.It has long-term effect. The benefit is enjoyed for many years in future.
2.It does not occur again and again. It is nonrecurring and irregular.
3.It is shown in the Balance Sheet on the liability side.
4.Capital receipt, when invested, produces revenue receipt e.g. when capital is invested by the owner, business gets revenue receipt (i.e. sale proceeds of goods etc.).
5.The capital receipt decreases the value of asset or increases the value of liability e.g. sale of a fixed asset, loan from bank etc.
6.Sometimes expenses of revenue nature are to be incurred for such receipt e.g. on obtaining loan (a capital receipt) interest is paid until its repayment.
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