Question

discuss the reason involved in classifying the receipts into capital and revenue??
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Answer 1

Answer:

ANSWER

Revenue receipts are those money receipts which do not create any corresponding liabilities or cause any reduction in the assets of the government. Example: tax and receipts of the government when it sells it shares of companies.

Capital receipts refers to those money receipts which either create a liability for the government or cause reduction in assets of the government.Thus, borrowings and other liabilities and recovery of loan are included in capital receipts.

Answer 2

Answer:

Capital receipts are those receipts which are not earned regularly in the business

eg by sale of fixed assets

Revenue receipts are of recurring nature

eg by sale of goods