Question
Distinguish between Capital Receipt and Revenue Receipt.
| S.No. | Basis | Capital Receipts | Revenue Receipts |
| 1. | Meaning | Capital Receipts refer to the income that arise from financial activities and investment of the business. | Revenue Receipts refer to the income that arises from regular operating activities of a business. |
| 2. | Purpose | Increase in the long-term financial position of the organization. | Covering operational expenses and generating profits. |
| 3. | Nature | Transactions affecting the capital or net worth of the organisation. | Regular income generated from day-to-day operations. |
| 4. | Source | Sale of assets, borrowings, equity investments, and grants for capital purposes. | Sale of goods/services, interest, divident, fees, etc. |
| 5. | Time frame | Typically occur infrequently and are non-recurring or irregular. | Occur regularly and are part of the engoing business operations. |
| 6. | Shown in | These receipts are shown in the Balance Sheet | These receipts are shown in the Profit and Loss account. |
| 7. | Examples | Proceeds from sale of land, long-term loans, issuance of shares and government grounds for capital projects | Sale revenue, interest income, rental income, dividend received and service fees. |
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| Debit (₹) | Credit (₹) | |
| Capital | 20,100 | |
| Drawings | 1,500 | |
| Cash in Hand and at Bank | 1,400 | |
| Petty Cash | 100 | |
| Cash Purchases and Sales | 10,000 | 20,000 |
| Credit Purchases and Sales | 12,000 | 25,000 |
| Returns | 2,000 | 1,000 |
| Discount | 400 | |
| Carriage Inwards | 500 | |
| Salaries | 6,000 | |
| Sundry and Petty Expenses | 1,200 | |
| Opening Stock | 5,000 | |
| Bad Debts | 600 | |
| Rent | 1,500 | |
| Machinery | 36,000 | |
| Furniture | 5,000 | |
| Debtors and Creditors | 5,000 | 10,000 |
| Stationary | 2,500 | |
| Commission | 200 | |
| Bank Loan | 14,400 | |
| 90,700 | 90,700 |