Question

_____are not available for distribution as profits while______can be utilized for creating reserve fund or for distribution as profits after deducting revenue exp.

• A. Revenue receipts, Capital receipt
• B. Capital receipt, Revenue receipts
• C. Capital receipt, Capital receipt
• D. Revenue receipts, Revenue receipts

Answer 1

Answer: (B)

Capital receipt, Revenue receipts

Capital Receipts. Receipts of a non-recurring nature and meant for some specific purpose are known as capital receipts. They are shown in the Balance Sheet. Capital receipts are in the form of contribution from owner, loans and proceeds from sale of fixed assets of the business. capital receipts are not available for distribution as profit.

Receipts which are recurring (received again and again) by nature and which are available for meeting all day to day expenses (revenue expenditure) of a business concern are known as Revenue receipts, e.g. sale proceeds of goods, interest received, commission received, rent received, dividend received etc. Revenue receipts are available for distribution as profits, meeting revenue expenses, or creating reserve funds.