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Amount received from IDBI as a medium term loan for augmenting working capital is
- a)Capital expenditures
- b)Revenue expenditures
- c)Capital receipt
- d)Revenue receipt
Correct answer is option 'C'. Can you explain this answer?
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Amount received from IDBI as a medium term loan for augmenting working...
IDBI Bank provides Working Capital facility to the industry to finance day-to-day requirement. The working capital funds are generally required for purchase of raw materials, stores, fuel, for payment of labour, power charges, for storing finished goods till they are sold out & for financing the sales by way of sundry debtors / receivables. Cash Credit facility is granted to the customers to bridge working capital gap.
Cash Credit (CC) is granted against hypothecation of stock such as raw materials, work-in-process, finished goods and stock-in-trade, including stores and spares.
CC is granted by way of a running account, drawings to be regulated within the drawing limit permissible which is arrived at on the basis of composition of current assets and current liability based on the declaration in the stock statement in the prescribed format submitted by the borrower.
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Amount received from IDBI as a medium term loan for augmenting working...
Explanation:
Medium term loan from IDBI is a form of borrowing from the bank, which is used to augment working capital. The amount received as a medium term loan is considered a capital receipt. This loan is not used for any capital expenditure or revenue expenditure, but rather it is used to increase the company's working capital.
Working capital is the amount of money that a company has available for day-to-day operations. It includes cash, accounts receivable, and inventory. The working capital is used to pay for the company's expenses, such as salaries, rent, and utilities. In order to increase the working capital, a company may need to borrow money from a bank, such as IDBI.
Capital Receipt:
Capital receipts are the money received by an individual or company from non-recurring transactions. These receipts are not a part of the company's normal business operations. Capital receipts are generally used for long-term investments, such as buying property, plant, or equipment. The amount received from IDBI as a medium term loan is considered a capital receipt as it is not a part of the company's normal business operations.
Conclusion:
In conclusion, the amount received from IDBI as a medium term loan for augmenting working capital is a capital receipt. It is not used for any capital expenditure or revenue expenditure, but rather it is used to increase the company's working capital. This loan is an important source of funding for companies to maintain their day-to-day operations.
Medium term loan from IDBI is a form of borrowing from the bank, which is used to augment working capital. The amount received as a medium term loan is considered a capital receipt. This loan is not used for any capital expenditure or revenue expenditure, but rather it is used to increase the company's working capital.
Working capital is the amount of money that a company has available for day-to-day operations. It includes cash, accounts receivable, and inventory. The working capital is used to pay for the company's expenses, such as salaries, rent, and utilities. In order to increase the working capital, a company may need to borrow money from a bank, such as IDBI.
Capital Receipt:
Capital receipts are the money received by an individual or company from non-recurring transactions. These receipts are not a part of the company's normal business operations. Capital receipts are generally used for long-term investments, such as buying property, plant, or equipment. The amount received from IDBI as a medium term loan is considered a capital receipt as it is not a part of the company's normal business operations.
Conclusion:
In conclusion, the amount received from IDBI as a medium term loan for augmenting working capital is a capital receipt. It is not used for any capital expenditure or revenue expenditure, but rather it is used to increase the company's working capital. This loan is an important source of funding for companies to maintain their day-to-day operations.
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Amount received from IDBI as a medium term loan for augmenting working capital isa)Capital expendituresb)Revenue expendituresc)Capital receiptd)Revenue receiptCorrect answer is option 'C'. Can you explain this answer?
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Amount received from IDBI as a medium term loan for augmenting working capital isa)Capital expendituresb)Revenue expendituresc)Capital receiptd)Revenue receiptCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Amount received from IDBI as a medium term loan for augmenting working capital isa)Capital expendituresb)Revenue expendituresc)Capital receiptd)Revenue receiptCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Amount received from IDBI as a medium term loan for augmenting working capital isa)Capital expendituresb)Revenue expendituresc)Capital receiptd)Revenue receiptCorrect answer is option 'C'. Can you explain this answer?.
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