Capital and Revenue Receipts: Capital receipts comprise of payments or contributions into the business by the proprietor, partners or companies towards the capital of the firm and also any sum received from debenture-holders, any loans and the proceeds of sale of any fixed assets of a business enterprise.
- Capital Receipts - Govt receipts which either create liability or reduce assets are called capital receipts. Liabilities means govt is borrowing from other sources and reducing assets means the govt is disinvesting to raise the funds. One example of capital receipts are recovery of loan by the government.
- Revenue Receipts - Govt receipts which neither create liability nor reduce assets are called as revenue receipts. Tax proceeds, cess, interest on govt investment and dividend and other different services that are provided by the govt consittute the revenue receipts.
Capital Receipts and Revenue Receipts
Just as a clear distinction between Capital and Revenue expenditure is necessary, in the same manner capital receipts must be distinguished from revenue receiptsDifference between Capital Receipts and Revenue Receipts
BASIS | CAPITAL RECEIPT | REVENUE RECEIPT |
---|---|---|
Meaning | Capital Receipts are the income generated from investment and financing activities of the business. | Revenue Receipts are the income generated from the operating activities of the business. |
Nature | Non-Recurring | Recurring |
Term | Long Term | Short Term |
Shown in | Balance Sheet | Income Statement |
Received in exchange of | Source of income | Income |
Value of asset or liability | Decreases the value of asset or increases the value of liability. | Increases or decreases the value of asset or liability. |