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Standard XII
Accountancy
Income and Expenditure Account
Amount receiv...
Question

Amount received from sale of capital asset or contribution made by proprietor towards the capital of the business are known as _________.

A
deferred revenue receipts
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B
revenue receipts
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C
capital receipts
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D
none of the above
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Solution

The correct option is D capital receipts

Capital receipts are business receipts which are not related to the day to day business activities of a company. They occur occasionally and provide benefit for a long period of time.

Capital receipts are normally presented in the balance sheet of a company when realized and generally occur as a result of the following events:

  1. Sale of fixed assets
  2. Issuance of capital in the form of shares
  3. Issuance of debt instruments

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Q. Match List-I(Items of expenditure and receipt) with List-II(Nature of expenditure and receipt) and select the correct answer using the codes given the lists.
List-IList-II
I. Premium paid for a lease hold property(a) Revenue expenditure
II. Insurance premium paid for risks against accidental losses of properties(fixed assets)(b) Capital receipt
III. Amount realised from the sale of securities(investment)\ purchased earlier(c) Deferred revenue expenditure
IV. Huge sales promotion expenses(d) Capital expenditure

Q. Match List-I(Item of expenditure/receipt) with List-II(Nature of expenditure/receipt) and select the correct answer using the codes given the lists.
List-IList-II
I. Carriage charges a new machine purchased for factory(a) Revenue receipt
II. Legal expenses incurred in defending a case of violation of a provision of Factories Act(b) Revenue expenditure
III. Grant-in-aid received from the Government for the construction of a building(c) Deferred revenue expenditure
IV. Amount received for a part of the office building sublet(d) Capital expenditure
(e) Capital receipt

Q. State with reasons whether the following receipts would be treated as Capital or Revenue:-
(a) ₹ 5,000 received from a customer whose account was previously written off as bad.
(b) ₹ 20,000 received from sale of old machine.
(c) ₹ 2,60,000 received from sale of stock-in-trade.
(d) ₹ 5,00,000 is contributed by a partner as capital.
(e) Took a loan of ₹ 10 Lac from Punjab National Bank.
(f) Received ₹ 4 Lac as subsidy from State Government.
(g) Received ₹ 8 Lac as grant from State Government for the construction of quarters for the staff.
Q.

Categorise the following government receipts into revenue and capital receipts. Give reasons for your answer.

(i) Receipt from sale of shares of a public sector undertaking.

(ii) Borrowing from public.

(iii) Profit of public sector undertakings.

(iv) Income tax received by government.

Q. Match List-I with List-II and select the correct answer using the codes given the lists.
List-IList-II
I. Heavy amount of premium on redemption of preference shares(a) Capital expenditure
II. Excess of sale proceeds fixed assets over their original cost(b) Deferred revenue expenditure
III. Cost of installation of an old machine(c) Capital gain
IV. Freight paid on purchase of raw material(d) Revenue of expenditure

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