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Standard XII
Accountancy
Cash Flow from Operating Activities-Indirect Method
is/are exampl...
Question

_____________ is/are example(s) of revenue receipts.

A
Interest on fixed deposits held with the bank
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B
Capital Grant received from Central Government for setting up new Plant.
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C
Short term loan raised from PSU bank to augment working capital requirement
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D
Proceed of debentures issued
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Solution

The correct option is B Interest on fixed deposits held with the bank
b'Revenue receipts are the receipts which arise through core business activities. They occur again and again however their benefits can be enjoyed only in current accounting period. Capital Grant received from government does not arise from core business activities. Short term loan raised also does not occur again and again. These are capital receipts. Interest on fixed deposit arises every year. These are part of normal business operations. This is revenue receipt. '

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Q. Identify the following as revenue receipts and capital receipts. Give reasons.
(i) Loans recovered from Public sector enterprises.
(ii) License and court fees received by the Government in the year 2014-15.
(iii) Loan taken from USA for the infrastructural developments.
(iv) Sale of shares held by Government in a PSU.
(v) Financial help from Microsoft for the victims of flood affected areas.
(vi) Amount borrowed from Japan for construction of Metro.
(vii) Dividend received by Government from a company.
(viii) Funds raised from public in the form of National Saving Certificates.
(ix) Sale of 40% shares of a public sector undertaking to a private enterprise.
(x) Profits of LIC, a public enterprise.
Q.

Amount received from IDBI as a medium-term loan for augmenting working capital is _____.


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. 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.

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.

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