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Question
Premium received on issue of shares is a ______.
Options
Capital receipt
Revenue receipt
Deferred revenue receipt
None of these
Solution
Premium received on issue of shares is a Capital receipt.
Explanation:
Capital raised by an issue of shares and debentures.
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
A receipt is a capital receipt:
Define Capital receipts.
Give three examples of Revenue receipts.
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.
Any lump sum receipt is always a capital receipt.
Sale of securities by an investment company is a capital receipt.
