capital and revenue expenditure and receipts pdf

December 29, 2020

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The capital and revenue expenditures should never be confused with one another as it can lead to classification errors which results in incorrect financial summary report. Receipts of loan from partners, bankers and private individuals. View 1.pdf from ACCOUNTING LY1023 at Cambridge. Purchase a building Rent a building Buy a new vehicle Repair a vehicle Addition to a new building Redecorating existing building Installation cost of new equipment Electricity costs of using the equipment . Revenue and capital receipts are recognized on accrual basis as soon as the right of receipts is established. 2015-16. Expenditures meaning spends or will be spent some amount on the purchase of goods and avail services. 0 Capital Expenditure attempts to improve the earning capacity of the entity. sale proceeds of goods, interest received, commission received, rent received, dividend received etc. 62 0 obj <> endobj To know the Difference Between capital and revenue expenditures we have to know the meaning of both terms. Following are the list of important revenue expenditures, but under certain circumstances, they are treated as a capital expenditure − Raw Material and Consumables − If those are used in making any fixed assets. Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube. Let’s now understand both of them in detail. Extending a building. endstream endobj startxref business expense that is made to acquire an asset or to improve the capacity of an asset 114 Downloads; Abstract. Capital Expenditure Revenue Expenditure Structural maintenance of roads, bridges & footpaths. Capital Receipts vs. Revenue Receipts – Key differences. It is important to understand the distinction between the two types of expenditure and the two types of receipts as this is one of the fundamental principles of accounting. Loan disbursals. ��0���PA�ٗg�2����ƫ!�E�:����\jy��O��:��!꟥-�5��#�)�޼�.���Zҹ�'�Khi��l�WCN̟/�:�Z81���W�T�? Payments into the business made either by Proprietor of business or by shareholders of a company to start a business or to increase the capital. Capital Receipts: Government receipts which either (i) create liabilities (e.g. `ߵ����2��YɄ�|J'��sEt�?i�-;xzhC��JZ_�[�.���f]^�h���1. borrowing) or (ii) reduce assets (e.g. Government revenue is the means for government expenditure. Solved Example and Problem 1: Which of the following expenditures are capital or revenue, give your reasons? Receipts and invoices keep the records of expenditures. 2,500 spent on the overhaul of machines purchased second-hand. @�g`z� � ��� It refers to the distinction of capital from revenue expenditure for tax purposes. RD = Revenue Expenditure – Revenue Receipts : The fiscal deficit is the difference between the government’s total expenditure (both revenue and capital) and its total receipts excluding borrowings. Next » By Rashid Javed (M.Com, ACMA) Back to: Capital and revenue items (explanations) Show your love for us by sharing our contents. Revenue receipts are further classified Into Tax Revenue and Non­tax Revenue as explained in Section 9.6. Failure to make distinction between capital and revenue items will result in A] under trading Capital expenditures; Revenue expenditures; Capital expenditures Definition and explanation of capital expenditures: An expenditure is a capital expenditure if the benefit of the expenditure extends to several trading years. filling potholes). Unlike revenue expenditure, which is … Capital receipts and revenue receipts should never be confused with each other as it can lead to classification errors and an incorrect financial summary report. There are many differences between capital receipts vs. revenue receipts. « Prev. endstream endobj 63 0 obj <>>>/Filter/Standard/Length 128/O(����L�dM��M��p��!66)/P -3388/R 4/StmF/StdCF/StrF/StdCF/U(��z�I���\nj��B, )/V 4>> endobj 64 0 obj <>/OCGs[94 0 R]>>/PageLabels 55 0 R/Pages 57 0 R/Type/Catalog>> endobj 65 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text]>>/Rotate 0/TrimBox[18.0 36.0 594.0 774.0]/Type/Page>> endobj 66 0 obj <>stream 1. disinvestment) are called capital receipts. The treatment of deferred revenue expenditure is same as of capital expenditure. receipts from sale of fixed assets or investments, loan taken, Capital introduced). Authors; Authors and affiliations; Margaret Nicholson; Chapter. Keywords: Capital, revenue, receipts, expenditure, expense, gains, profit or loss. Hence, both capital and revenue expenditures are ultimately transferred to profi t and loss account. Financial Statements - I 335 9.2.2 Receipts The similar treatment is given to the receipts of the business. It does not result in … Preview. �;�����Γ�^�_�O� �fj� Revenue Expenditure: Capital Expenditure : 1. Receipts which are not revenue are capital receipts (e.g. On the contrary, revenue expenditure aims at maintaining the earning capacity of the company. H�lSMkA�ﯘ�]�4;�`���Bi��B��)u���5��Ҍ��`������'�_u��;����j���WߪE_]ud��:n�r渾�����x�0�k! Deferred Revenue expenditure . Routine maintenance of roads, bridges & footpaths (e.g. Structural repairs on a building, where the value has been written down in the accounts to reflect damage. Capital Expenditure is expenditure that is:- Long-term in nature (used in the business for more than one accounting period) and increases the earning capacity of the business, e.g. Capital and Revenue Receipts Worksheet - 2. It is the process of causing a liability by a commodity. Deferred Revenue expenditure 7. 5��0F��F�����l*�d2A�����v�N�� Capital expenditures vs. revenue expenditures. This is a preview of subscription content, log in to check access. h�bbd```b``���@$��tD�~�|l`�6�l����Ko�bn`�e`�fV����`�iXD���Drg�H�0)t�R �(�v�U�������� ��s`q�! Thank you . Maintaining a building (re-pointing, repairing minor cracks, painting etc). … @��'S�8�W� ����[�Q&�%-�0�m !����3^kCY8�"��Ƞ��D��t��~���Ӌ��y��[���]��#�����>.��:�A]�k�U�����h[;X49�UbyD�_~$�b2̶ �ޓ}߄� �w��J��n��}�;-2�+�!�^�?J¦��ZX9� ���j9^�ʄ�9�׌@@���rԣ���5�w��L�ڲ�u����Ò~���l�}�V^&�4g��R�l��2c�U`R��a�!�� (g�Mɨ~WM�U@�0�`�BL�C��ɥȠ9�� � 8���ӕ�] �\������b�/'��Z|cW��w\pLCt���5"[�q@[+g[X0�\A����T�nd넝����5=����C��e���f]��{�/��N���t`%~���q6�U���]�eIΡ7�����K�2P,EU���Q9��N>=��b�k}�tP�u��>��)��I���h�M����~�>m����~K��4%&�՗����������٪n�{|:N�[�zA��f��&���?�N��8E����zs*):3,lޑ���]�N+@� �}�[�w�n�[Ѧ��_��u3C��@:�x�����oI�`�x�s�d cW*p%��U�9�����;ɗ� ��r��y�|��h�-�h��&a�:do!��_ڹof� va,-T��KB��%w�D��>�կF�w�m���f,8�ˈ�Y;� Amount received from the sale of inventory. From the example, you should note that: Any money spent when a fixed asset is . Introduction Capital means material wealth in the form of money or property which can be used to produce further wealth or income. Comparison between Revenue Expenditure and Capital Expenditure . endstream endobj 57 0 obj <>stream The cost of the purchase of the asset e.g. They break down differently, depending on the size of the payment and the time across which it needs to be paid for. FD= Total Expenditure- (Revenue Receipts+ Non-Debt Creating Capital Receipts) Measuring Government Deficits . ��� *�V�-f�!�ҙ��Ы������Wl=@+�*���\39��T9�Z?�B��3e�Rg �«@��/�tm��j��ҕt�m-��/��B�-O��H&gѵ�i���@���榱ۼ�\�����u����5R�ge�ۑ:�2��c�u����@�~��N�(M�#����O��j�f{2+�c�z�ᙪ�ti�5�^���җ�ҖW�ny�8�l���D��2�X]������KL8;-S�[z~����/����I�ߣ�{+GvV�Q���4 �ڝO��7��7�R�8g� ʲ�b�T����?��I��K��s��� These expenditures are met out of capital receipts of the government including capital transfers from rest of the world. These can be paid in cash or credit or in kind. If the receipts imply an obligation to return the money, these are capital receipts. 1.58 PRINCIPLES AND PRACTICE OF ACCOUNTING UNIT 4 : CAPITAL AND REVENUE EXPENDITURES AND RECEIPTS LEARNING OUTCOMES After studying this unit, you will 92 0 obj <>/Encrypt 63 0 R/Filter/FlateDecode/ID[]/Index[62 61]/Info 61 0 R/Length 132/Prev 135502/Root 64 0 R/Size 123/Type/XRef/W[1 3 1]>>stream Plus, capital expenditures will show up differently on your reporting metrics. A debt recorded as bad in the earlier year recovered during the year is a A] Revenue receipt B] Revenue expenditure C] Capital expenditure D] Capital receipt 11. It’s not enough to say that capital expenditures are everything that revenue expenditures aren’t. Revenue Expenditure Treated as Capital Expenditure. Remember Multiple choice questions are having good weightage in the total marks of … A D V E R T I S E M E N T. Leave a comment Cancel reply. Depending on the nature of the capital expenditure it may be possible to claim capital allowances. Capital & Revenue Expenditure & Receipts capital and revenue 1.2 capital and revenue 1.3. capital and revenue 1.4 capital and revenue 1.5. capital and revenue 1.6. capital and revenue 1.7 capital and revenue 1.8 student notes:- bank reconciliation statement 2.1 topic 2. bank reccnciliation state . Capital receipts; Revenue receipts; Capital receipts Explanation: Capital receipts include the following: Receipts from the sale of fixed assets of a business. CAPITAL AND REVENUE EXPENDITURES AND RECEIPTS 2. %%EOF Practice following Capital and Revenue Expenditure Multiple choice questions. Capital receipt = Shown as a liability or reduce the value of a capital expenditure. Educators may download these worksheets (Printable PDF form) from resources section of this website for classroom use. A. Classify the following receipts as either capital receipts or as revenue receipts. ��.�\���r�&�5U�.5|��?�r���V�����P��j�\LWt~�^�-��Rg���}�z�!�xGG���I���Ee�pNd>8�l�}(�-!�?=��VWk,�� ��n��w��H�>�[���ǰW��ahV]ב�Ü��Y@]�bo�e:�L�M�W5��Cč�hiҬ� A D V E R T I S E M E N T. 2 Comments on Capital and revenue expenditures. And painting a recently bought old van ‘ capital V Revenue expenditure ]. Term used throughout this toolkit and Problem 1: which of the business Revenue. Which of the expenditures rest of the company capital and revenue expenditure and receipts pdf material wealth in the to. Or as Revenue receipts are credited to the profit and loss A/c these expenditures are capital receipts Government... And Non­tax Revenue as explained in section 9.6 machinery, vehicles, land and building expenditure & capital. Of causing a liability by a commodity from each other on the overhaul machines... In kind building, where the value has been written down in the same way production. 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