capital and revenue

Chapter # 5                                                                   Capital and revenue

Define capital Transactions?

Transactions having long term effect are known as capital transactions. Like purchase of Building

What are revenue transactions?

Transactions having short term effect are known as revenue transactions. Like payment of Salaries

What do you mean by capital expenditures?

Expenditures incurred on acquiring fixed assets and having Long term effect are known as capital Expenditure. Like expenditure on purchase of Building, Land and Furniture

Describe the revenues expenditure

All the expenditures which are incurred in the day to day conduct and administration of a business and have short term effects Like, purchases of stationery, payment of salaries

Give any three examples of capital expenditures

• Addition or extension of assets
• Wages paid for the construction of building
• Premium given for lease

Give the three examples of revenue expenditures

• Wages paid to factory workers
• Bad debt
• Stationery

Describe the deferred revenue expenditures?

Revenue expenditure benefits of which is likely to more than one year but it is non recurring by nature are called deferred revenue expenditure

Give examples of deferred revenue expenditures?

• Preliminary expenses
• Heavy expenditures on advertisement for making the new product.

Define capitalized expenditures?

Some revenue expenditure are connected with fixed assets and are full added to cost of that assets whatever is the amount. Like repairs of newly purchased machinery

What are capital receipts?

Receipts which are non recurring by nature, received from Sale of fixed assets are known as capital Receipts. Like Receipts from sale of of Building, Land and Furniture

What are revenue receipts?

Receipts which are recurring by nature receive from the day to day conduct and administration of a business and have short term effects Like inertest received, Discount Received

What is capital payment?

Payments which are non recurring by nature, incurred on acquiring fixed assets and having Long term effect are known as capital Payment. Like Payment for purchases of Building, Land and Furniture

What is revenue payment?

 Payments which are recurring by nature which are incurred in the day to day conduct and administration of a business and have short term effects

What do you mean by capital profit?

Capital profit is a profit which is earned on the sale of a fixed asset for example a machinery worth of Rs. 10000 is sold for Rs. 15000. the profit is 5000/- is capital profit.

What do you mean by Revenue profit?

Revenue profit is a profit which is earned during the day to day course of business is called revenue profit is a regular Profit.

What is capital loss?

The loss suffered by a business on the sale of a fixed asset or it incurred or raising capital or a joint stock company. for example a machinery worth of Rs. 10000 is sold for Rs. 8000. the Loss is 2000/- is capital Loss.

What is revenue loss?

Revenue Loss is a Loss which is earned during the day to day course of business is called revenue loss