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Standard XII
Accountancy
Interest on Capital Exceeds Profits
Which of the ...
Question

Which of the following receipts is of revenue nature ?

A
Amount realized from sale of investments
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B
Divided received on investments
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C
Amount borrowed from a bank
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D
Compensation received from municipal corporation
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Solution

The correct option is D Divided received on investments

If the company has purchased shares for any other company, at the end of the year if profit is made, the firm would receive dividend. This dividend received would be revenue receipts since

  • It doesn’t reduce the assets of the company.
  • And it also doesn’t create any liability for the company.

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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.

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 which of the following is not a capital receipt?


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. From the following particulars, determine Trade Receivables Turnover Ratio:
₹
Revenue from Operations (Net Sales) 10,00,000
Credit Revenue from Operations (Credit Sales) 8,00,000
Trade Receivables 1,00,000
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