Page 44 - DCOM101_FINANCIAL_ACCOUNTING_I

Financial Accounting-I

Notes Capital Receipts

The receipts which do not arise out of normal course of business are known as Capital Receipts.

Example: 1. Receipts from sale of fi xed assets.
2. Additional capital introduced by the Proprietor
3. Loans raised

Revenue Receipts

The receipts which arise out of normal course of a business are known as Revenue Receipts.

Example: 1. Income from sale of goods
2. Rent received form letting out the business property
3. Dividend received from shares
4. Interest received from investment

4.2 Summary

z The expenditure incurred for acquiring a fixed asset or which results in increasing the
earning capacity of the business is known as Capital Expenditure.
z An expenditure incurred in the course of regular business transactions of a concern is
availed during the same accounting year is known as Revenue Expenditure.

z The receipts which do not arise out of normal course of business are known as Capital
Receipts.
z The receipts which arise out of normal course of a business are known as Revenue
Receipts.

4.3 Keywords

Capital Expenditure: The expenditure incurred for acquiring a fixed asset or which results in
increasing the earning capacity of the business is known as Capital Expenditure.
Capital Receipts: The receipts which do not arise out of normal course of business are known as
Capital Receipts

Deferred Revenue Expenditure: Such expenditure whose benefit is enjoyed not in one year but
over a number of years is known as deferred revenue expenditure.
Revenue Expenditure: An expenditure incurred in the course of regular business transactions of a
concern is availed during the same accounting year is known as Revenue Expenditure.
Revenue Receipts: The receipts which arise out of normal course of a business are known as
Revenue Receipts.

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