Thursday, July 3, 2014

Capital and Revenue Receipts

Capital and Revenue Receipts:

When the business receives money it is again of 2 types . It may be a long-term receipt, a contribution by the owner, either to start the business  or to incre, the funds available to it. It might be a mortgage Loan or which brings money into the business for a long-term, but in this case it is not the owner of the business, but some other investor who is supplying the money.
On the other hand, the receipt may be a short-term receipt, 1 which is truly a profit of the Org,. It may be commission received, rent received, or cash sale etc,.

Capital Receipt:

Receipts, which are non-recurring (not received again and again) by nature and whose benefit is enjoyed over a long period are known as "Capital Receipts", for instance loan from bank ,money brought into the business by the owner (capital invested), sale proceeds of fixed assets etc. Capital receipt, comes on the liabilities side of the Balance Sheet.

Revenue Receipt:

Receipts which are recurring (received again and again) by nature and which are available for meeting all day to day expenses (revenue expenditure) of a bussi, org, are called "Revenue receipts", for instance. interest received sale proceeds of goods, commission received, dividend received, rent received etc.

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