Examples of differences between Capital and Revenue expenditure . For example, the purchase of furniture for offic… Experts view that capital goods available for use as a factor of production. 114 Downloads; Abstract. Capital Receipts and Revenue Receipts : Receipts which arise in course of normal business activities are revenue receipts. Activity slide could be used as a Plenary!!! Chapter - Capital and Revenue Expenditures and Receipts. Income & expenditure a/c: It is prepared on an accrual basis and includes both cash and non-cash transactions. You can change your ad preferences anytime. a) CAPITAL EXPENDITURE is money spent to buy fixed assets. I Capital Authorised, 703. Capital and Revenue Expenditure All exp. We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. (a) Capital expenditure (b) Revenue receipts (c) Capital receipts (d) Revenue expenditure Answer: (a) Capital expenditure. TRINITY INSTITUTE OF PROFESSIONAL STUDIES Sector – 9, Dwarka Institutional Area, New Delhi-75 CLASSIFICATION OF CAPITAL AND REVENUE EXPENDITURE AND RECEIPTS • EXPENDITURE: • RECEIPTS: An expenditure is a payment in cash or barter credits, or the incurrence of a liability by an entity, in exchange for goods or services. Receipts and invoices keep the records of expenditures. Hendriksen opines, "expenses are the using or consuming of goods and services in the process of obtaining revenues". Wages paid to the motor vehicle driver. Revenue receipts are sales of merchandise, discounts, and commission that affect the operations of the business. 1. Cash and non-cash transactions. Capital and Revenue Expenditure and Receipts. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. are revenue expenses and expenses on purchase of machinery and its erection charges are capital exp. Capital Budget consists of capital receipts {like borrowing, disinvestment) and long period capital expenditure (creation of assets, investment). Introductory, 701. Capital Expenditure is a long term expenditure. Capital transactions are transactions that have a long-term effect on the business. The major dissimilarity by both is that the capital expenditure is for once an investment of cash while revenue expenditure takes place often. Budget Receipts Capital Receipts: - Capital Receipts refer to those receipts of the government which i) tend to create a liability or ii) Causes reduction in its assets. Clipping is a handy way to collect important slides you want to go back to later. Question: Entrance fee of $10,000 received by us Social Club. Both have benefits for business. Ill Capital raised by Loans debentures and debenture stock, 705. Capital receipts; Revenue receipts; Capital receipts Explanation: Capital receipts include the following: Receipts from the sale of fixed assets of a business. C. Indicate which of the following would be Capital expenditure, Capital receipt, Revenue expenditure and Revenue receipt. The receipts of business are of two kinds:-. Capital and revenue items. A D V E R T I S E M E N T. 4 Comments on . Receipts which are not revenue are capital receipts (e.g. In accounting and finance, they can be divided into two types – capital receipts and revenue receipts. Rent paid on premises. It means that the effect of these transactions extends to a period of more than one year. (a) Current year (b) Fiscal year (c) New year (d) None of these Answer: (b) Fiscal year. Revenue expenses are incurred at a particular time period and are recurring in nature. Capital Expenditure attempts to improve the earning capacity of the entity. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. Acquiring fixed assets and any other cost needed to get the fixed assets ready for use. The main difference between revenue receipts and capital receipts is that in the case of revenue receipts, government is under no future obligation to return the amount, i.e., they are non-redeemable. Capital versus Revenue expenditure . BY: NAMRATA YADAV. Activity slide could be used as a Plenary!!! REVENUE EXPENDITURE •Incurred in the course of regular business transactions. Business receipts are inflow of economic resources mostly in the form of cash and cash equivalents. Statement No. I think it is better to go through this MCQ’s. Question 22. is the year which begins on 1st April and ends on 31st March of the following year. Revenue Deficit: Revenue deficit refers to the excess of revenue expenditure of the government over its revenue receipts. In Union Budget 2018-19, Revenue Receipt was estimated to be at Rs 17.25 lakh crore and Revenue Expenditure was estimated to be at Rs 21 lakh crore which worked out to a Revenue … An expense is a word very similar to expenditure but expense shows the deduction in the value of the asset while expenditure simply denotes the obtaining of as… See our Privacy Policy and User Agreement for details. To Buy Complete Classes Visit - https://www.StudyAtHome.org or Call: 8737012345. Capital Receipts: Capital receipts are the income received by … If you continue browsing the site, you agree to the use of cookies on this website. Presented by - R.M.I. Rent received from sub-let of premises. •Cost of goods purchased for resale. Rent paid on premises. Budget receipts give its estimated money income that a government will receive from all its sources in a given financial year. Therefore we can conclude that it is the time factor, which is the main determinant for transferring the expenditure to profit and loss account. Btl activations & process of videocon industries, No public clipboards found for this slide. Opening Stock (Value known) + Purchases during the year (known) – COGS (known) = Closing Stock (Balancing Figure) on obtaining loan (a capital receipt) interest is paid until its repayment. Revenue and capital Receipts and Revenue and Capital Expenditures - Free download as Powerpoint Presentation (.ppt /.pptx), PDF File (.pdf), Text File (.txt) or view presentation slides online. Form of Net Revenue Account: Component # 3. In preparing Final a/c.. CAPITAL EXPENDITURE REVENUE EXPENDITURE . Capital receipts appear on the liabilities side of the balance sheet. b) REVENUE EXPENDITURE is money spent on the daily running expenses of the business. The difference between Revenue Receipt and Revenue Expenditure is known as Revenue Deficit. Capital expenditure includes costs incurred on the acquisition of a fixed asset and any subsequent expenditure that increases the earning capacity of an existing fixed asset. Determining capital or revenue nature is undoubtedly very important in the field of accounting. FINANCIAL STATEMENTS Identify the difference between Capital Expenditure and Revenue Expenditure & Capital Receipts and Revenue Receipts. This distinction between capital and revenue nature of the items is necessary in order to find out the correct profit or loss during the year and also to ascertain the true and fair position of the business. Incurred •In the normal course of running the business. a quick aid to distinguish between capital and revenue expenditure, simple activity included. Statement No. Multiple choice questions (MCQs) Chhavi sharma . Capital receipts are receipts of the government which create liabilities or reduce financial assets, e.g., market borrowing, recovery of loan, etc. Capital and revenue expenditure and income in accounting, Capital and revenue_income_and_expenditure, No public clipboards found for this slide, Financial Statement- CLASSIFICATION OF CAPITAL AND REVENUE EXPENDITURE AND RECEIPTS. 27. expenditure and capital expenditure) over total budgetary receipts (both revenue receipt and capital receipt). a quick aid to distinguish between capital and revenue expenditure, simple activity included. Distinction between Capital Expenditure and Deferred Revenue Expenditure 1.Nature of expenditure -deferred revenue expenditure is a revenue in nature but it is incurred for > one accounting yr 2.Years of benefit: The deferred revenue expenditure benefits lesser number of years in comparison to capital expenditure. receipts from sale of fixed assets or investments, loan taken, Capital introduced). Similarly, receipts have two components; the capital receipt and the revenue receipt. Capital and Revenue expenditure. Syed alfaz . With a capital expenditure, a company purchases an … receipts from sale of fixed assets or investments, loan taken, Capital introduced). E.g. Authors; Authors and affiliations; Margaret Nicholson; Chapter. Plus, capital expenditures will show up differently on your reporting metrics. Back to: Capital and revenue items (quizzes) Show your love for us by sharing our contents. In accounting and finance, they can be divided into two types – capital receipts and revenue receipts. Capital versus Revenue expenditure . This mock test of Test: Capital And Revenue Expenditures And Receipts - 3 for CA Foundation helps you for every CA Foundation entrance exam. Statement No. CAPITAL AND REVENUE EXPENDITURES AND RECEIPTS . Authors; Authors and affiliations; Margaret Nicholson; Chapter. Capital and-revenue-expenditure-ppt 1. Suppose a car is bought for £10,000 and sold 5 years later for £2,000. Revenue receipts appear on the credit side of the trading and profit & loss account. Capital Expenditure and Revenue Expenditure Capital Receipts and Revenue Receipts. Capital and revenue expenditures are two different types of business expenditures that we often find in financial accounting and reporting. Petrol costs for the motor vehicle. IV Receipts and Expenditure on Capital Account, 706. Hello Friends, Check out our New Video On Capital vs Revenue vs Deferred Revenue Expenditure. Capital and Revenue eg. Budget Receipts Revenue receipts Capital receipts Tax revenue Non-tax revenue Recovery of loans Borrowing Other receipts 9. Definitions . Money spent by a firm on buying or adding value to a fixed asset. 1. Capital and Revenue Expenditure and Receipts. Business receipts are inflow of economic resources mostly in the form of cash and cash equivalents. Capital and Revenue Expenditure MMS A 2. Statement No. B.COM(H) 1. 2. The purpose of this account is to show the sources of total capital and the application of the same in different fixed assets. By Radhika Faculty Member J.H.Bhalodia Womens College. This contains 11 Multiple Choice Questions for CA Foundation Test: Capital And Revenue Expenditures And Receipts - … Revenue and capital receipts are recognized on accrual basis as soon as the right of receipts is established. 114 Downloads; Abstract. Sector – 9, Dwarka Institutional Area, New Delhi-75 Question: owners contribute to the capital of $50,000 Answer: because it creates an obligation on business to repay the amount as owner. Examples of differences between Capital and Revenue expenditure . Keywords: Capital, revenue, receipts, expenditure, expense, gains, profit or loss. About this resource. 1.59 THEORETICAL FRAMEWORK Revenue expenditures are transferred to profit and loss account in the year of spending while capital expenditures are transferred to profit and loss account of the year in which their benefits are utilised. So, in addition to non-recurring, Capital receipts are those non-routine receipts which either becomes a load and responsibility or cause a vivid depletion in the assets of the government or any organization and business. E.g. Revenue expenditure is a periodic investment of money that does not benefit the business nor leads to any loss in any way. Capital expenditure and receipt ; Revenue expenditure and receipt ; Joint expenditure; 3 Capital expenditure. TRINITY INSTITUTE OF PROFESSIONAL STUDIES Let us take a brief look. Nice. ... A system of recording inventory balances after each receipt and issue. DEFFERED REVENUE EXPENDITURE •Class of revenue expenditure Both help the business earn profits in present in and in following years. The expenditure is classified into two components; the capital expenditure and the revenue expenditure. The main difference between revenue receipts and capital receipts is that in the case of revenue receipts, government is under no future obligation to return the amount, i.e., they are non-redeemable. Read the article provided to you, so as to understand the difference between capital receipt … Statement No. The primary difference between Capital Receipts vs Revenue Receipts is that Capital receipts are the receipts of non-recurring nature which either creates the liability of the company or reduces the company’s assets whereas revenue receipts are the receipts of recurring nature and are reported in the statement of income of the company. Money spent by a firm on buying or adding value to a fixed asset. 1. delivery costs). Capital and Revenue Account, 702. Sometimes expenses of revenue nature are to be incurred for such receipt e.g. It is important to understand the distinction between the two types of expenditure and the two types of receipts as this is one of the fundamental principles of accounting. If you continue browsing the site, you agree to the use of cookies on this website. ... ppt, 122 KB. Introduction Capital means material wealth in the form of money or property which can be used to produce further wealth or income. In Union Budget 2018-19, Revenue Receipt was estimated to be at Rs 17.25 lakh crore and Revenue Expenditure was estimated to be at Rs 21 lakh crore which worked out to a Revenue … Looks like you’ve clipped this slide to already. On the contrary, revenue expenditure aims at maintaining the earning capacity of the company. Capital & Revenue Expenditure & Receipts About this resource. Definitions . II Stock and Share Capital Created, 704. 4 Revenue Expenditure. Costs incurred to put extra headlights to a motor vehicle. It is the process of causing a liability by a commodity. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Info. Reply. •Can simply be termed as “expense”. Unit - 4. This consists of capital receipts and payments. b) REVENUE EXPENDITURE is money spent on the daily running expenses of the business. Capital and Revenue Expenditure and Receipts. Just Exam provide a platform to all students who want to make practice for various subject online. Receipts are the amounts actually received. Capital Account: It is also known as Receipts and Expenditure on Capital Account. Revenue expenditures and capital expenditures are both completely different things as a one. C. Indicate which of the following would be Capital expenditure, Capital receipt, Revenue expenditure and Revenue receipt. Now customize the name of a clipboard to store your clips. See our User Agreement and Privacy Policy. Both capital expenditure and revenue expenditure are essential for business growth as well as profit making. Determining Capital or Revenue Nature It’s not enough to say that capital expenditures are everything that revenue expenditures aren’t. Broadly speaking, expenditure which does not result in the creation of assets is treated as revenue expenditure. Costs incurred to put extra headlights to a motor vehicle. Report a problem. Purchase of motor vehicle. Deferred revenue expenditure is a revenue expenditure by nature. Petrol costs for the motor vehicle. Let us now understand Capital Receipts and Revenue Receipts. Purchase of motor vehicle. Example 3. 28. A brief explanation of both the types is given below: Capital receipts Capital receipts are business receipts which are not related to […] Capital expenditure is the expenditure that a business incurs on the purchase, alteration or the improvement of fixed assets. The £80,000 is capital expenditure and the £20,000 is revenue expenditure Capital & Revenue receipts When an item of capital expenditure is sold, the receipt is called a capital receipt. Distinguish between capital and revenue expenditure 2. What is the capital budget? This document is highly rated by CA Foundation students and has been viewed 1592 times. 6. We prepare this platform on the base of CBSE. and receipts of a business can broadly be divided into two groups, viz. The difference between Revenue Receipt and Revenue Expenditure is known as Revenue Deficit. Clipping is a handy way to collect important slides you want to go back to later. CAPITAL AND REVENUE 1.1 TOPIC 1. Example 2. Capital Receipts and Revenue Receipts : Receipts which arise in course of normal business activities are revenue receipts. 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