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

Answer 1

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.