What are Capital Receipts and Revenue Receipts?

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Capital Receipts and Revenue Receipts What are Receipts? It is the amount of money a business receive during a period Example 1 A businessman makes Sales of Rs 600000 during the year Out of this Rs 300000 was Received in Cash Rs 200000 was Received by Cheque Rs 100000 was not yet Received Total Sales = 600000 Total Amount Received (Receipts) = 300000 + 200000 = 500000 Difference between Sales and Receipts Sales Receipts It is the transaction It is the amount of involving exchange of money a business goods and services receive during for money a period Money may be received We consider in Same year or Next year only Money or Nor Received Received (in all cases, it will be in sales) Current year Example 2 Suppose my Company Sold goods to A for Rs 100000 A paid Rs 80000 Goods Rs 100000 My Company A Amount Receiced Rs 80000 What is Sales and Receipts? Sales 100000 (Transaction involving exchange of goods/service for money) Receipts 80000 (Amount of money a business receive during a period) Example 3 Suppose my Company Sold goods to A for Rs 100000 A did not pay anything. Goods Rs 100000 My Company A Amount Received 0 What is Sales and Receipts? Sales 100000 (Transaction involving exchange of goods/service for money) Receipts 0 (Amount of money a business receive during a period) Note It is not necessary that Sales and Receipts are in Same Month Example 4 Sales Made to A Jan 30000 (Money Received on 10 Feb) Feb 20000 (Money Received on 11 March) Total 50000 Also Rs 100000 was introduced by owner as a capital in march What is Sales and Receipt for Jan,Feb and March Jan Feb March Sales 30000 20000 0 Receipt 0 30000 20000 + 100000 120000 Note Receipt means Money Received It can be from any source (Not only sales) Different Types of Receipts Revenue Receipts It is the amount received in normal course of business Example Amount received on selling goods,providing service Capital Receipts Receipts whch are not Revenue Receipts are called Capital Receipts Example Money Received on Sale of Old Car (Fixed Assets) Money Received on Sale of shares Loan taken from Bank Capital Introduced Receipts Revenue Receipts Capital Receipts Amount received Other Types of in normal course Receipts of business It leads to Example Sale of goods Increase in Decrease in Providing of Service Liabilties Assets Sale of Scap Example Example Capital Sale of introduced Investment Loan taken Sale of shares