Why is distinction between capital and revenue important? Give examples to show how wrong classification can affect the ascertainment of profit
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1. Capital are the money invested by businessman.
Examples- mohan invested Capital of rs. 100, 000. And entry of this
Cash a/c. Dr. 100, 000/
To Capital a/c. 100, 000
Capital are the liability of the firm because we do accounting for firms point of view and this is the owed by firm.
2. Revenue are the income from sale of goods and services. These Revenue are earned from the Daily routine activities.
For example- sale of goods to ram for 2500.
And this increase the net profit
These are of two types -
Capital Revenue and Normal Revenue
2.
Examples- mohan invested Capital of rs. 100, 000. And entry of this
Cash a/c. Dr. 100, 000/
To Capital a/c. 100, 000
Capital are the liability of the firm because we do accounting for firms point of view and this is the owed by firm.
2. Revenue are the income from sale of goods and services. These Revenue are earned from the Daily routine activities.
For example- sale of goods to ram for 2500.
And this increase the net profit
These are of two types -
Capital Revenue and Normal Revenue
2.
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