Difference Between Capital Receipts And Revenue Receipts
The main dissimilarities or difference between capital receipts and revenue receipts can be pointed out as follows:
The main dissimilarities or difference between capital receipts and revenue receipts can be pointed out as follows:
1. Meaning
Capital Receipts: It is the amount of money received from non-operational activities such as sale of assets, debenture, loans received etc.
Revenue Receipts: It is the amount received from operational activities such as sales, interest, discount, rent etc.
2. Nature
Capital Receipts: It is irregular or nonrecurring in nature.
Revenue Receipts: It is regular or recurring in nature.
3. Impact
Capital Receipts: It highly affects the financial position of the firm.
Revenue Receipt: It does not affect the financial position but affects the operating results (i.e profit or loss) of the firm.
4. Accounting Treatment
Capital Receipts: It is treated as liabilities and included on the balance sheet.
Revenue Receipt: It is recorded on trading account and profit and loss account (on the credit side).
5. Benefit
Capital Receipts: It provides long term benefit to the business firm.
Revenue Receipts: It provides short term benefit.
6. Profit Distribution
Capital Receipts: It cannot be distributed as profit.
Revenue Receipts: It can be distributed as profit.
Also Read:
Also Read:
7. Value Of Assets
Capital Receipts: It can increase or decrease the value of assets and liabilities.
Revenue Receipts: It does not affect the value of assets and liabilities.
8 Examples
Capital Receipts: Money generated from sale of assets, shares, debentures, loan received, investment made by new partner etc.
Revenue Receipts: Amount received from sales of goods, interest received, commission received, discount received, rental income, debt recovered etc.
Capital Receipts Vs Revenue Receipts (Comparison Chart)
I hope this post is helpful to understand the difference between capital receipts and revenue receipts and to make comparison between them.
Basis For Difference
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Capital Receipts
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Revenue Receipts
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Introduction
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Fund received from non-operational activities
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Money received from operational activities
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Nature
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Irregular
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Regular
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Impact On Financial Position Of The Firm
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Yes
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No
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Recording
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On the liabilities side of balance sheet
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On the credit side of trading and profit and loss account
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Benefit
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Long-term benefit
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Short-term benefit
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Can Be Distributed As Profit ?
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No
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Yes
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Effect On The Value Of Assets
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Either increase or decrease
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No effect
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Examples
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Money received from sale of shares, debentures, assets etc.
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Money received from sale of goods, interest received, debt recovered etc.
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I hope this post is helpful to understand the difference between capital receipts and revenue receipts and to make comparison between them.
