Learning Materials For Accounting, Management , Finance And Economics.

Wednesday, July 14, 2010

Concept And Meaning Of Capital Receipts And Revenue Receipts And Their Related Items

Capital Receipts

An amount received in the form of capital from the owner and as loan from outsiders is known as capital receipts. Besides, cash received by selling shares, debentures and permanent assets is also capital receipt. It is of non-recurring type of receipt. It is treated as obligation of the business and shown on liabilities side of the balance sheet.

Items relating to capital receipts

* Amount received from the owner as capital.
* Amount received through the sale of shares and debentures.
* Amount of loan received
* Amount received from the sale of old assets.
* Other receipts of non-recurring nature.

Revenue Receipts

Revenue receipt is an amount which is received from the regular transaction of a business. It is the amount received from the sale of goods and services. It is the main source of income. It is a regular type of income. It is shown on the credit side of the trading account and profit and loss account.

Items relating to revenue receipts

* Amount received from the sale of goods and services.
* Amount received by way of discount, commission, rent, interest and dividend.
* Amount received from the sale of waste paper and packing cases.