Capital and revenue receipts
Receipts are the amounts actually received. The receipts of business are of two kinds:-
- Capital receipts
- Revenue receipts
Capital receipts include the following:
- Receipts from the sale of fixed assets of a business.
- Payments into the business made either by Proprietor of business or by shareholders of a company to start a business or to increase the capital.
- Receipts of loan from partners, bankers and private individuals.
- Amount received on account of some capital profit.
- Sale of old machinery for $5,000.
- Sale of 1,000 shares of common stock
- Receipt of loan from a bank.
Revenue receipts include the following:-
- Receipts of cash from the sale of merchandise.
- Amount received on account of some revenue profit.
- Sale of goods to customers for $1,000
- receipt of fee amount to $2,000 earned from provision of service to a client.
Revenue receipts are shown as an income in the income statement in the year in which they occur and capital receipts are shown as liabilities in the balance sheet.