Difference Between Capital Profit And Revenue Profit

Difference Between Capital Profit And Revenue Profit

The main dissimilarities or difference between capital profit and revenue profit can be pointed out as follows:

1. Meaning

Capital Profit: Profit generated by a company by selling of fixed assets(different types of physical properties) or capital assets such as share, preference shares etc.

Revenue Profit: Profit made by a company by selling goods and services to the customers

2. What Is It?

Capital Profit: Selling of fixed assets at higher price than the book value and capital assets at higher price than the face value

Revenue Profit: Selling of company's products or services at higher price than the cost of production

3. Frequency

Capital Profit: It is gained less frequently

Revenue Profit: It is frequently gained

    Also Read: 

Difference Between Capital Loss And Revenue Loss

4. Dividend Purpose

Capital Profit: It cannot be used for the purpose of dividend payment

Revenue profit: It can be distribute as dividend to the shareholders

5. Accounting Treatment

Capital Profit: It is recorded on the liabilities side of balance sheet

Revenue Profit: It is recorded on the debit side of trading account and profit and loss account

6. Use

Capital Profit: It is used to fulfill capital loss of the business

Revenue Profit: It is used in creating fund, reserves and distributing dividend to the shareholders

Capital Profit Vs Revenue Profit (Comparison Chart)

Basis For Difference	Capital Profit	Revenue Profit
Introduction	Profit made by selling fixed assets	Profit made by selling products
It Is	Selling of fixed assets and capital assets at higher price	Selling of goods and services at higher price
Frequency	Less	More or regular
Used As Dividend ?	No	Yes
Recorded On	liabilities side of balance sheet	Debit side of trading account
Used To	Fulfill capital loss	Create reserve and distributing dividend

I hope this post is helpful to understand the difference between capital profit and revenue profit and make comparison between them.