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Classify the following expenditures and receipts as capital or revenue:
Q.Entrance fee of Rs. 2,000 received by Ram and Shyam Social Club.
- a)Capital receipt
- b)Revenue receipt
- c)Capital expenditures
- d)Revenue expenditures
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
Classify the following expenditures and receipts as capital or revenue...
Entrance fee of Rs. 2000 received by social club is an example of capital receipt. This is the income flow from one of the following sources.
1. Cash from the sale of fixed assets
2. Cash from the sale of shares in the business
3. Cash from the issuance of a debt instrument which includes loans and bonds.
This should result either the reduction in government assets (sale of share, disinvestment) or increase in some liability (government borrowings).
Most Upvoted Answer
Classify the following expenditures and receipts as capital or revenue...
Explanation:
The given transaction of the entrance fee of Rs. 2,000 received by Ram and Shyam Social Club is a capital receipt. This is because the entrance fee is a one-time receipt and does not arise from the regular activities of the club. It is a non-recurring receipt and does not affect the profits of the club. Therefore, the correct option is (a) Capital receipt.
- Capital receipt: It refers to the receipts which are not of a recurring nature and which do not arise from the regular activities of the business. Capital receipts are non-recurring in nature and do not affect the profits of the business. Examples of capital receipts are the issue of shares, debentures, loans, sale of fixed assets, etc.
- Revenue receipt: It refers to the receipts which are of a recurring nature and which arise from the regular activities of the business. Revenue receipts are recurring in nature and affect the profits of the business. Examples of revenue receipts are sales, services rendered, commission received, rent received, etc.
The given transaction of the entrance fee of Rs. 2,000 received by Ram and Shyam Social Club is a capital receipt. This is because the entrance fee is a one-time receipt and does not arise from the regular activities of the club. It is a non-recurring receipt and does not affect the profits of the club. Therefore, the correct option is (a) Capital receipt.
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Community Answer
Classify the following expenditures and receipts as capital or revenue...
Clubs normally charge two kind of fee. Entrance fee and yearly contribution.
Entrance fee is part of capital receipt and yearly contribution is revenue receipt.
Entrance fee is part of capital receipt and yearly contribution is revenue receipt.
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Classify the following expenditures and receipts as capital or revenue:Q.Entrance fee of Rs. 2,000 received by Ram and Shyam Social Club.a)Capital receiptb)Revenue receiptc)Capital expendituresd)Revenue expendituresCorrect answer is option 'A'. Can you explain this answer?
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