Professional Documents
Culture Documents
Capital and Revenue
Capital and Revenue
05/02/2009
Dr Sarbesh Mishra
Capital Profit
Cost of the Building 1,00,000/Selling Price of the Building 1,50,000/Capital Profit = 50,000/Which implies profit realised over and above
the cost of the fixed asset should be
considered as Capital Profit.
05/02/2009
Dr Sarbesh Mishra
Revenue Profit
Example:
Cost Price of Plant = 1,00,000/Book Price of Plant (After Depreciation)= 70,000/Selling Price = 1,20,000/Profit = 1,20,000 70,000 = 50,000/So here Profit has two components namely
Capital Profit + Revenue Profit = 20,000 + 30,000
05/02/2009
Dr Sarbesh Mishra
Revenue Profit
The profit realised over and above the
book value of the asset till it does not
exceed the original cost of the asset
should be taken as revenue profit.
05/02/2009
Dr Sarbesh Mishra
Revenue Income
Revenue Income means an
income which arises out of
and in the course of regular
business transactions of a
concern.
05/02/2009
Dr Sarbesh Mishra
Example
The profit made on sale of goods, income
received from letting out of business
property, dividends received. All such
incomes are revenue incomes.
From Accounting angle Revenue Profit &
Revenue Income gets the same treatment.
05/02/2009
Dr Sarbesh Mishra
Capital Expenditure
Expenditure expended for the purpose of
obtaining long term advantage for the
business.
Examples
Expenditure incurred in increasing the quality
of fixed assets e.g. Purchase of additional
furniture, Plant, Building for permanent use in
Business.
05/02/2009
Dr Sarbesh Mishra
Example (Contd.)
Dr Sarbesh Mishra
Revenue Expenditure
An expenditure that arises out of and in the
course of regular business transactions of a
concern is termed as revenue expenditure.
Example
Expenditure incurred in the normal course of
running the business e.g. expenses of
administration, cost incurred in manufacturing &
selling the products, repairs, Depreciation, Interest
on loan.
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Dr Sarbesh Mishra
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Example
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Contd.
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Contd..
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Contd
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Revenue Loss
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Receipts
Capital Receipts
Revenue Receipts
Capital Receipts consists of additional
payments made to the business either by
shareholders of the company or by the
proprietors of the business or receipts from
sale of fixed assets of a business.
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Revenue Receipts
Any receipt which is not a capital receipt is a
revenue receipt".
Most of the receipts are revenue receipts.
Revenue receipt is different from revenue
profit or revenue income. Receipt denotes
receiving of payment in cash. The entire
amount of receipt may or may not be a
revenue income.
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Dr Sarbesh Mishra
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Example :
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Dr Sarbesh Mishra
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