Question

Q. 5 State with reason whether the following statement is Capital, Revenue receipt (i) Rs 5,000 was received from a customer whose account was previously written off as bad. (ii) Rs. 26,000 received from sale of old furniture (iii) Rs. 5,00,000 is contributed by a partner as capital. (3)​

Answer 1

received from a customer whose accou

nt was previously written off as bad. (ii) Rs. 26,

000 received from sale of old furniture (iii) Rs. 5,00,000 is contributed by a pa

rtner as capital. (3)

Mulund.

3) Payee - Mrs. Sheela Ghalkar, Man

gal Yog. CIDCO, Aurangabad.

4) Amount - Rs. 17,575/-.

5) Period – 60 days.

Answer 2

Explanation:

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Taxmann in Account & AuditBlogOn April 2, 2021, 11:06 am

Capital and Revenue Expenditure and Receipts

Difference Between Capital Expenditure and Revenue Expenditure

Topics covered in this Article are as follows:

Capital and Revenue Expenditures and Receipts

1.1 Capital and Revenue Expenditure

1.1.1 Capital Expenditure

1.1.2 Revenue Expenditure

1.1.3 Deferred Revenue Expenditure

1.2 Capital and Revenue Receipts

2. Questions

1. Capital and Revenue Expenditures and Receipts

The main functions of accounting include the ascertainment of profit/loss for an accounting period and financial position as at the end of that period. The distinction between capital and revenue items is important both from the Income Statement (Profit and Loss Account) as well as the Position Statement (Balance Sheet) point of view. For example, if a depreciable asset is purchased, the depreciation on that asset is charged to the Profit and Loss Account, and the written down value of the asset (or original cost of the asset less accumulated depreciation) is shown in the Balance Sheet. If the purchase of a depreciable asset, which is a capital expenditure, is treated as revenue expenditure it will understate the profit of the current year and overstate the profits of the subsequent years. Similarly, the Balance Sheet will not give a true and fair view of the assets and equity of the enterprise till the useful life of the asset is over assuming that the asset is not sold earlier.

Capital and revenue item is divided into