Question

Why are capital receipts not directly recorded in profit and loss account?

Answer 1

Receipts which are non-recurring by nature and whose benefit is enjoyed over a long period are known as capital receipt e.g. sale proceeds of fixed assets etc. The benefit is enjoyed for many years in future. That's why it can not be shown in Profit and loss account. ... So it also can't be added to capital fund.

Answer 2

Receipts which are non-recurring by nature and whose benefit is enjoyed over a long period are known as capital receipt e.g. sale proceeds of fixed assets etc. The benefit is enjoyed for many years in future. That's why it can not be shown in Profit and loss account. ... So it also can't be added to capital fund.