Premium received on issue of shares is a __________.

Capital receipt

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Revenue receipt

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Deferred capital receipt

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Deferred Revenue Receipt

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Solution

The correct option is B Capital receipt
Any amount charged over and above the face value of the share is called a premium amount. Capital receipts are those receipts which are of non recurring nature and leads to creation of liability or decrease in assets. Premium amount is not received on regular basis and it creates liability for business. So, it is a capital receipt.

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Similar questions

List-I	List-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

List-I	List-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
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Receipts and Payments A/c is a summary of -

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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