Question

Distinguish between capital receipts and revenue receipts.

Answer 1

The differences between capital receipts and revenue receipts are :

$\begin{array}{ccc}\text{Basis}& \text{Capital Receipts}& \text{Revenue Receipts}\\ \text{Meaning}& \text{The amount received in form of capital}& \text{The amount received mainly by selling of goods}\\ & \text{introduced, loans taken and sale proceeds of}& \text{and services is known as revenue receipts.}\\ & \text{the fixed assets is known as capital receipts.}& \\ \text{Nature}& \text{Capital receipts are capital in nature.}& \text{Revenue receipts are revenue (i.e., day-to-day activities) in nature.}\\ \text{Shown}& \text{Capital receipts are shown on the liabilities}& \text{Revenue receipts are shown at the credit of}\\ & \text{side of balance sheet.}& \text{either trading account or profit and loss account.}\\ \text{Examples}& \text{Sale of fixed assets, capital contribution and}& \text{Profit on sale of assets, sale of goods. interest}\\ & \text{loans taken, etc., are some example of capital receipts.}& \text{received on loans (advanced), royalty, etc.,}\\ & & \text{are some examples of revenue receipts.}\end{array}$