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Question
______ involves creation of liability and is shown on the liabilities side of the balance sheet.
Options
Capital expenditure
Revenue expenditure
Capital receipts
Revenue receipts
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Solution
Capital receipts involves creation of liability and is shown on the liabilities side of the balance sheet.
Explanation:
Capital receipts refer to the receipts of a non-recurring nature such as additional capital from owners, loans raised by the firm and money obtained from a sale of fixed assets. These receipts involve creation of a liability or reduction in the value of fixed assets. Capital receipts are shown on the liabilities side of the Balance Sheet.
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