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Question
Distinguish between Capital Receipts and Revenue Receipts.
Distinguish Between
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Solution
| Basis | Capital Receipts | Revenue Receipts |
| Meaning | Capital Receipts refer to the income that arises from financial activities and investments of the business. | Revenue Receipts refer to the income that arises from regular operating activities of a business. |
| Purpose | Increase in the long-term financial position of the organisation | Covering operational expenses and generating profits. |
| Nature | Transactions affecting the capital or net worth of the organisation. | Regular income is generated from day-to-day operations. |
| Source | Sale of assets, borrowings, equity investments, and grants for capital purposes. | Sale of goods/services, interest, dividends, fees, etc. |
| Examples | Proceeds from sale of land, long-term loans, issuance of shares and government grounds for capital government grounds for capital. | Sale revenue, interest income, rental income, dividends received and service fees. |
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Distinction Between Capital and Revenue Receipts
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