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Subsidy of Rs. 40,000 received from the government for working capital by a manufacturing concern is
- 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
Subsidy of Rs. 40,000 received from the government for working capital...
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.
Most Upvoted Answer
Subsidy of Rs. 40,000 received from the government for working capital...
Explanation:
The subsidy of Rs. 40,000 received from the government for working capital by a manufacturing concern is classified as a revenue receipt. This is because it is a receipt which does not affect the capital of the business and is earned in the normal course of business activities.
Revenue Receipts:
Revenue receipts are incomes received in the normal course of business activities. These are the receipts that do not affect the capital of the business. Some examples of revenue receipts are sales revenue, rent received, commission earned, interest received, etc.
Capital Receipts:
Capital receipts are the receipts that affect the capital of the business. These are the receipts that are not earned in the normal course of business activities. Some examples of capital receipts are the issue of shares, the sale of fixed assets, loans taken, etc.
Conclusion:
In conclusion, the subsidy of Rs. 40,000 received from the government for working capital by a manufacturing concern is a revenue receipt as it is earned in the normal course of business activities and does not affect the capital of the business.
The subsidy of Rs. 40,000 received from the government for working capital by a manufacturing concern is classified as a revenue receipt. This is because it is a receipt which does not affect the capital of the business and is earned in the normal course of business activities.
Revenue Receipts:
Revenue receipts are incomes received in the normal course of business activities. These are the receipts that do not affect the capital of the business. Some examples of revenue receipts are sales revenue, rent received, commission earned, interest received, etc.
Capital Receipts:
Capital receipts are the receipts that affect the capital of the business. These are the receipts that are not earned in the normal course of business activities. Some examples of capital receipts are the issue of shares, the sale of fixed assets, loans taken, etc.
Conclusion:
In conclusion, the subsidy of Rs. 40,000 received from the government for working capital by a manufacturing concern is a revenue receipt as it is earned in the normal course of business activities and does not affect the capital of the business.
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Subsidy of Rs. 40,000 received from the government for working capital by a manufacturing concern isa)Capital receiptb)Revenue receiptc)Capital expendituresd)Revenue expendituresCorrect answer is option 'B'. Can you explain this answer?
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