Professional Documents
Culture Documents
Capital Receipts: Capital receipts are those receipts which do not recurred. They
are of an unusual in nature and not arising through normal activities of the
business. For example, amount received on account of issue of fresh share
capital, Debentures, amount of loans raised, proceeds on sale of fixed assets,
Deposits, premium on shares and debentures etc.
Revenue Receipts: Revenue receipts are those items of income which are received
or occurred in the ordinary course of business. For example, cash received on
account of sales, discount received, commission received, interest and dividend
on investments, transfer fees etc. Revenue receipts are credited to profit or loss
account where as the Capital receipts will affect the balance sheet.
PROBLEMS.
I. Classify them into capital, revenue or deferred revenue expenditure
1. Legal expenses incurred in connection with issue of equity share of the
company.
2. Cost of replacement of a defective part of the machinery.
3. Expenditure incurred in preparing a project report.
4. Expenditure for training employees for better running of the machinery.
5. Purchase of a machinery for sale.
6. Daily wages paid to an office peon.
7. Payment for purchase of goods.
8. Payment for purchase of stationery.
9. Payment for purchase of a car.
Omtex – Classes CAPITAL & REVENUE EXPENDITURE Omtex – Classes
10. Payment for heavy in augural expenses.
11. Partial refund of capital to a partner.
12. Payment of a loan taken earlier.
13. Payment of salaries.
14. Wages for erection of machinery.
15. Professional fees paid in connection with acquisition of a leasehold premises.
16. Cost of registration and documentation of a newly company.
17. Compensation paid to a retrenched employees for loss of employment.
18. Expenditure incurred on purchase of cloth for uniform of employees.
19. Payment of import duty on purchases of raw materials.
20. Stock of Rs. 25,000/-was destroyed by fire of which Rs. 15,000/- was received
from the insurance company.
21. The concern spent Rs. 1,00,000/- on heavy advertisement campaign to
introduce a new product in the market.
22. Cost of dismantling a plant from a particular locality & reinstalling the same
in another locality.
23. Cost of transporting newly purchased furniture.
24. Amount spent by a factory in overhauling its plant which was enhanced the
life of the plant by five years.
25. Traveling expenses for a trip abroad for purchase of capital goods.
26. Amount spent on replacement defective parts of an old plant.
27. Bank loan repaid.
28. Debentures issued.
30. Grant receives from government for purchase of computer.
31. Salary grant received by Omtex classes from Maharashtra Government.
32. Interest received on loans.
33. Brokerage paid in connection with issue of debenture repayable after 6 years.
34. Old machinery sold.
35. Introduces capital into the business.
36. Profit on sale of investment.
37. Goods destroyed by fire.
38. Repairs to furniture.
39. Expenditure incurred in over hauling machinery.
40. Taxed paid.
41. Wages paid to the workers for erection of a new machinery.
42. Amount brought by the proprietor as capital.