Chapter 5: Provincial Share in Revenue Receipts 40-48 Chapter 6: Capital Receipts 49-58 I. Recoveries of Loans and Advances II. The term expenditure is a broad term and it is classified into capital expenditure, revenue expenditure and deferred revenue expenditure. Capital expenditure is not matched with the capital receipts. This test is Rated positive by 87% students preparing for CA Foundation.This MCQ test is related to CA Foundation syllabus, prepared by CA Foundation teachers. Capital and Revenue Expenditure and Receipts. ... A system of recording inventory balances after each receipt and issue. Amount spent on “Structural alteration” under pressure of law is a 6.1 Definitions: 6.2 Characteristics/Tests: 6.3 Disclosure In Final Accounts: 6.4 Examples: Revenue Expenditure Treated as Capital Expenditure. Revenue receipts appear on the credit side of the trading and profit & loss account. Ramamohan . Heavy advertisement expenses to introduce a new product is deferred revenue expenditure : Cost of construction of building including cost of temporary huts for storing building materials is capital expenditure: The cost of Rings and Pistons of an engine changed to increase its fuel efficiency is revenue expenditure capital and revenue expenditures & receipts The distinction of transactions between Capital and Revenue is done to place them in Profit & Loss A/c or Balance Sheet. CAPITAL AND REVENUE 1.1 TOPIC 1. (a) Capital expenditure (b) Deferred revenue expenditure (c) Revenue expenditure (d) Both (a) and (c) 12. capital receipts and revenue receipts, Preparation of Final Accounts - Case Analysis, Classification Of Items In The Balance Sheet, Balance Sheet, Form And Presentation Of A Balance Sheet. This can be a payment is cash or can also be the exchange of some valuable item in exchange for goods or services. Hello Friends, Check out our New Video On Capital vs Revenue vs Deferred Revenue Expenditure. The income is obtained from various sources and mainly differentiated as Capital Receipts and Revenue Receipts. Revenue Receipt. Its benefits accrue to the business for a future period, say for 3 to 5 years. Capital and Revenue Receipts: When the business receives money it is again of two sorts. Capital Receipts are described as the money brought to the business from non-operating sources like proceeds from the sale of long-term assets, capital brought by the proprietor, sum received as a loan or from debenture holders etc. Heavy advertisement expenditure 25. 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. Revenue expenses are incurred at a particular time period and are recurring in nature. Revenue receipt – earned in the ordinary course of business. This mock test of Test: Capital And Revenue Expenditures And Receipts - 2 for CA Foundation helps you for every CA Foundation entrance exam. 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 business concern are known as "Revenue receipts", e.g. Question 6. The revenue deficit happens when revenue receipts falls short of revenue expenditure. All incomes are not receipts and all receipts are not incomes. (c) Sale of investment ₹ 1,20,000. Nice. Ramamohan . <> Deferred revenue expenditure is a revenue expenditure by nature. Benefit period: Its benefits accrue for a long time to the business, say for 10 to 15 years. If a company deals in computers and opens a new branch at a different location for which it acquires a building. Thank you . Bharat company has incurred the following expenditure you are required to identify the capital, revenue and deferred revenue expenses. Classify the following receipts into capital and revenue. (d) Commission received ₹ 30,000. Both these receipts play the major role in the working of the business organization. It leads to an overall increase in the total revenue of the company.These funds are generated from a firm’s operating activities hence they are shown inside trading and profit and loss account and not in a balance sheet.. Usually, the effect of these transactions is only for a period of one year. Public Debt Chapter 7: Public Account Receipts 59-68 I. It will be easier to understand the meaning of deferred revenue expenditure if you know the word deferred, which means “Holding something back for a later time”, or “postpone”.. A capital receipt is received in exchange for the source of income. %PDF-1.5 Capital expenditure 8. Deferred Revenue Expenditure. Question 6. The benefits from capital expenditure accrue for a more extended period in the business for like 10 years or more. All incomes are not receipts and all receipts are not incomes. endobj Reply. On 1 January 2008 Mr. Plabon Voumik purchased a machinery for his business valued tk.40,000 and paid for its installation tk.5,000. An expense is a word very similar to expenditure but expense shows the deduction in the value of the asset while expenditure simply denotes the obtaining of as… (b) Loan borrowed from bank ₹ 2,50,000. Capital and revenue items. Capital receipts appear on the liabilities side of the balance sheet. Multiple choice questions (MCQs) Chhavi sharma . Capital expenditure 6. 2 0 obj Before we explore this part of accounting study material at Accounting-Daddy.com, let’s examine what Cambridge wants us to learn under this title at secondary education level: • An asset is acquired or the value of an existing asset is Revenue Expenditure Capital Expenditure 24. Deferred revenue, also known as unearned revenue, refers to advance payments a company receives … Revenue expenditure is a periodic investment of money that does not benefit the business nor leads to any loss in any way. Deferred Revenue expenditure 7. For example, under accrual or mercantile system of accounting even income earned but not received is treated as income. %���� Capital brought by a new partner is a capital receipt. Conversion into Cash: It can be converted into cash at any time as these are usually investments in assets. Capital and revenue items. 2. If a company deals in computers and opens a new branch at a different location for which it acquires a building. capital expenditure from revenue expenditure, Identify Dec 22,2020 - Test: Capital And Revenue Expenditures And Receipts - 1 | 30 Questions MCQ Test has questions of CA Foundation preparation. Classify the following receipts into capital and revenue. Similarly, receipts have two components; the capital receipt and the revenue receipt. For example, under accrual or mercantile system of accounting even income earned but not received is treated as income. Capital expenditure is incurred, which helps in the creation of the asset. This distinction between capital and revenue nature of the items is necessary in order to find out the correct profit or loss during the year and also to ascertain the true and fair position of the business. Such expenditure should be treated as capital revenues expenditure since … O�Z#/�lN�#�#���P��1+�FR��١q��w۠/)GZ!��!s������mUʢ��&���tu��Q4�r0K�A��,��#�aB�qB�-���B*}�? The questions are almost basic level, feels to have more standard questions….. anyway its good to have…Thanks you. Deferred Revenue Expenditure Deferred Revenue Expenditure is a revenue expenditure which has been incurred during one accounting year which is applicable either wholly or in part to further accounting years. Examples : 1.Heavy research expenditure 2. Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. endobj Capital Receipts and Revenue Receipts : Receipts which arise in course of normal business activities are revenue receipts. Deferred Revenue expenditure means essentially a revenue expenditure but the benefit of which is received over a period of more than one year. Accrued Expense: An Overview . Revenue Expenditure is that part of government expenditure that does not result in the creation of assets. Capital receipts appear on the liabilities side of the balance sheet.
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