what is treatment of capital receipt and revenue receipt in Profit & loss a/c and balance of the company.
what is treatment of capital receipt and revenue receipt in Profit & loss a/c and balance of the company.
Bindu
(CA Final Student)
(112 Points)
Replied 03 April 2012
The benefit of revenue receipt is enjoyed only during a particular year whereas that of a capital receipt would be capable of being enjoyed for many years.A revenue receipt pertaining to a relevant accounting year is always credited to P & L A/c as its benefits are restricted to that particular year and secondly it does not increase or decrease the value of assets and liabilites of the company. A capital receipt would never find an entry in the profit and loss account.It would directly hit t.he Balance Sheet because it has the effect of either increasing a liability or reducing an asset.
CA. Krishna Sagar. K
(Finance Manager )
(84 Points)
Replied 05 April 2012
Capital Receipt is in nature of receipt from Capital Items like sale of Fixed Assets.
Revenue Receipt is in the nature of receipt from revenue items like sale of goods.
CAclubindia
