Capital and Revenue Receipts and Difference between Capital and Revenue Receipts
Capital Receipts:- Capital receipts are those receipts which are obtained by an entity in other than normal course of business.
Examples:-
- Receipts from sale of fixed assets.
- Issue of fresh shares.
- Sale of Investment.
- Capital contribution etc.
Revenue Receipts:- Revenue receipts are those receipts which are obtained in normal course of business.
Examples:-
- Receipts from sale of goods and services.
- Interest/fees received in the normal course of business.
- Revenue earned by any waste or scrap material etc.
- Recovery from bad debts.
Difference between Capital and Revenue Receipts
| Basis | Capital Receipts | Revenue Receipts |
|---|---|---|
| Meaning | Receipts which are obtained in other than normal course of business. | Receipts which are obtained in normal course of business. |
| Nature | Non-recurring. | Recurring. |
| Recognition | Recognize as not income. | Recognize as income. |
| Affect the operating profit | No. | Yes. |
| Result | creates liability. | doesn’t create liability. |
| Course of business | Other than normal or regular | Normal or regular. |
| Reflection | In Balance Sheet. | Income Statement. |
| Examples | Receipts from sale of fixed assets, Issue of fresh shares, Sale of Investment. Capital contribution etc. | Receipts from sale of goods and services, Interest/fees received in the normal course of business, Revenue earned by any waste or scrap material etc. Recovery from bad debts. |