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Classify the following expenditures and receipts as capital or revenue:
Q.Interest on investments received from UTI.
- a)Capital receipt
- b)Revenue receipt
- c)Capital expenditures
- d)Revenue expenditures
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
Classify the following expenditures and receipts as capital or revenue...
Revenue receipt. No matter what case is interest received on investments is always revenue receipt.
Capital receipts would be large in nature in respect of amount as well as time like -
1. Issue of share capital
2. Issue of debt funds
3. Sale of fixed assets
4. Sale of long term investments
Most Upvoted Answer
Classify the following expenditures and receipts as capital or revenue...
Classification of Expenditures and Receipts as Capital or Revenue:
Interest on investments received from UTI is classified as a revenue receipt.
Explanation:
Revenue Receipts:
Revenue receipts are the receipts which are earned during the normal course of business operations. These receipts are recurring in nature and are used for meeting day-to-day expenses of the business. Interest on investments received from UTI is earned by the business during the normal course of business operations, thus it is classified as a revenue receipt.
Capital Receipts:
Capital receipts are the receipts which are not earned during the normal course of business operations. These receipts are non-recurring in nature and are used for meeting long-term expenses of the business. Examples of capital receipts are the sale of fixed assets, issuing of shares, etc.
Revenue Expenditures:
Revenue expenditures are the expenditures which are incurred during the normal course of business operations. These expenditures are recurring in nature and are used for meeting day-to-day expenses of the business. Examples of revenue expenditures are salaries, rent, electricity, etc.
Capital Expenditures:
Capital expenditures are the expenditures which are not incurred during the normal course of business operations. These expenditures are non-recurring in nature and are used for meeting long-term expenses of the business. Examples of capital expenditures are the purchase of fixed assets, payment of long-term loans, etc.
In conclusion, interest on investments received from UTI is classified as a revenue receipt as it is earned during the normal course of business operations.
Interest on investments received from UTI is classified as a revenue receipt.
Explanation:
Revenue Receipts:
Revenue receipts are the receipts which are earned during the normal course of business operations. These receipts are recurring in nature and are used for meeting day-to-day expenses of the business. Interest on investments received from UTI is earned by the business during the normal course of business operations, thus it is classified as a revenue receipt.
Capital Receipts:
Capital receipts are the receipts which are not earned during the normal course of business operations. These receipts are non-recurring in nature and are used for meeting long-term expenses of the business. Examples of capital receipts are the sale of fixed assets, issuing of shares, etc.
Revenue Expenditures:
Revenue expenditures are the expenditures which are incurred during the normal course of business operations. These expenditures are recurring in nature and are used for meeting day-to-day expenses of the business. Examples of revenue expenditures are salaries, rent, electricity, etc.
Capital Expenditures:
Capital expenditures are the expenditures which are not incurred during the normal course of business operations. These expenditures are non-recurring in nature and are used for meeting long-term expenses of the business. Examples of capital expenditures are the purchase of fixed assets, payment of long-term loans, etc.
In conclusion, interest on investments received from UTI is classified as a revenue receipt as it is earned during the normal course of business operations.
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Classify the following expenditures and receipts as capital or revenue:Q.Interest on investments received from UTI.a)Capital receiptb)Revenue receiptc)Capital expendituresd)Revenue expendituresCorrect answer is option 'B'. Can you explain this answer?
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