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Redemption of Debentures

Profit from s...

Question

Profit from sale of assets is example for __________.

A

revenue profit

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B

capital profit

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C

loss

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D

none of the above

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Solution

The correct option is B capital profit
Profits generated from the normal trading activity is considered as revenue profits. Selling of fixed assets is an abnormal activity, not a business activity. hence profit arising out of sale of assets is a capital profit, This has to be recorded in profit & loss account as an exceptional item.

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