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Question

Distinguish between capital receipts and revenue receipts.

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Solution

The differences between capital receipts and revenue receipts are :

Basis Capital Receipts Revenue ReceiptsMeaningThe amount received in form of capitalThe amount received mainly by selling of goods introduced, loans taken and sale proceeds ofand services is known as revenue receipts. the fixed assets is known as capital receipts. NatureCapital receipts are capital in nature.Revenue receipts are revenue (i.e., day-to-day activities) in nature.ShownCapital receipts are shown on the liabilitiesRevenue receipts are shown at the credit of side of balance sheet.either trading account or profit and loss account.ExamplesSale of fixed assets, capital contribution andProfit on sale of assets, sale of goods. interest loans taken, etc., are some example of capital receipts.received on loans (advanced), royalty, etc., are some examples of revenue receipts.


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