Advertisements
Advertisements
Question
______ involves creation of liability and is shown on the liabilities side of the balance sheet.
Options
Capital expenditure
Revenue expenditure
Capital receipts
Revenue receipts
Solution
Capital receipts involves creation of liability and is shown on the liabilities side of the balance sheet.
Explanation:
Capital receipts refer to the receipts of a non-recurring nature such as additional capital from owners, loans raised by the firm and money obtained from a sale of fixed assets. These receipts involve creation of a liability or reduction in the value of fixed assets. Capital receipts are shown on the liabilities side of the Balance Sheet.
APPEARS IN
RELATED QUESTIONS
Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure:
- Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.
- Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.
- Registration fees paid at the time of purchase of a building.
- Expenditure incurred in the maintenance of a tea garden which will produce tea after four years.
- Depreciation charged on a plant.
- The expenditure incurred in erecting a platform on which a machine will be fixed.
- Advertising expenditure, the benefits of which will last for four years.
Write any two differences between:
Capital and Revenue Receipts
Define Capital receipts.
Give two examples of Capital receipts.
Give three examples of Revenue receipts.
What do you understand by Turnover?
Amount received on sale of stock-in-trade is a ______ receipt.
A receipt is a capital receipt because ______.
A receipt in substitution of an income is revenue receipt.
Compensation received for the surrender of a right is a revenue receipt.
