BUDGET 2018- Capital And Revenue Receipts

When the business receives money it is again of two sorts. It my be a long-term receipt, a contribution by the owner, either to start the business off or to increase the funds available to it. It might be a mortgage or an which brings money into the business for a long-term, but in this case it is not the owner of the business but some other investor who is supplying the money.

On the other hand, the receipt may be a short-term receipt, one which is truly a profit of the business. It may be rent received, commission received or cash for sale of goods made that day, or at some previous time.

* Capital Receipt:

Receipts which are non-recurring (not received again and again) by nature and whose benefit is enjoyed over a long period are called "Capital Receipts", e.g. money brought into the business by the owner (capital invested), loan from bank, sale proceeds of fixed assets etc. Capital receipt is shown on the liabilities side of the Balance Sheet.

* Revenue Receipt:

Receipts which are recurring (received again and again) by nature and which are available for meeting all day to day expenses (revenue expenditure) of a business concern are known as "Revenue receipts", e.g. sale proceeds of goods, interest received, commission received, rent received, dividend received etc.