[Commerce Class Notes] on Capital Receipt and Revenue Receipt Pdf for Exam

Both capital and revenue receipts are very important parts of accounts. There is a vivid difference between capital receipt and revenue receipt. Capital receipts are those that do not have a recurrent nature and do not have a tendency of occurring again and again. They only occur once in the final accounting year and are specifically mentioned in the liability corner on a balance sheet. Whereas, revenue receipts are a part of the common and normal operations of the businesses and so they occur continuously.

Capital Receipt

Capital receipt has a nature of occurring again and again in the balance sheet. The capital receipt is a cash-flow receipt and is situated in the liability portion of the balance sheet. It gradually leads to the formation of all the liabilities that can be useful in the future and can be curated well. The decrement of such assets eventually takes place in the future. 

Between capital and revenue receipts, the former is always free from taxation unless there is a provision related to it that leads to tax. The capital receipt is a non-routine receipt that eventually becomes load and causes vivid depletion related to the asset of the organization or business. All types of capital receipts are the cash that is received from the sale of a fixed asset.

Revenue Receipts Meaning

Revenue receipts are those receipts that are very important for any business or organization and without their presence, a business fails to survive for a longer period. All the incomes that are received from periodic and daily activities include certain operations that include cash in the business:

Hence, revenue receipts tell us that they have a long-lasting effect on the income of the company.

Difference between Revenue Receipt and Capital Receipt 

There is a possibility of two types of receipt occurring in a business or an organization. Both revenue and capital receipt differ from each other where the former is responsible for profit and loss in a company and the latter remains against the expenses.

Difference between Capital and Revenue Receipt 

Distinguish between capital receipt and revenue receipt is done based on the following factors:

Capital receipts are those receipts that are produced from the financing activities and the investment of a business. 

Revenue receipts are that income that is generated from operating activities of a business

The capital receipts are non-recurring.

The revenue receipts are recurring in nature.

Capital receipts are of long term

Revenue receipts are of short term

Non-Debt Capital Receipt 

These are the receipts that are received from the government so that a company can sell its old assets. They are not treated as liabilities.

Tips to Study Accountancy

Accountancy has been considered as the most difficult of the CBSE class 12 commerce curriculum’s key subjects. A thorough understanding of the topic is also required to become a chartered accountant, which most commerce students want to be. To prepare for your accountancy test, we’ll walk you through some clever study tips you can trust.

Prioritise the Topics: The question paper gives a 60% weighting to questions about company accounts, cash flow statements, and partnerships. While learning, pay special attention to these issues. Also, don’t forget the ratio analysis illustrations.

Refer to the Right Books: Your first requirement is the NCERT textbook for CBSE class 12 Accountancy. However, it is insufficient. Double Entry Book Keeping by TS Grewal or Accountancy for Class 12 by DK Goel are excellent selections for a more complete and full understanding.

Practice on a Regular Basis: This is a broad subject that takes a great deal of patience and practice. Don’t restrict yourself to the NCERT textbook’s exercises and your reference books. Set up enough time to answer as many questions as you can, including samples and previous year’s papers.

Pay Careful Attention to the Theory: The topics in the theory section of accounting test your knowledge of characteristics, benefits, and drawbacks. Don’t forget about them. This is the secret to getting a good theoretical score. However, memorising them is insufficient. Make a practice of writing them down. The theory is the score booster. If you learn properly, you can easily score good marks in your accountancy examination.

Pay Attention to the Formats: Along with the ideas, you must be aware of the formats of the Balance Sheet, Trial Balance, and Journal Ledger Accounts. It is important to present them in the proper manner in order to receive excellent grades in accountancy. So, at home, practise sketching formats to improve your speed and accuracy. Narrations are crucial as well. Don’t forget about them as they carry marks. Also, don’t forget to mention debit (dr.) and credit (cr.) on both sides. 

The best approach to learning formulas is to do it the proper way. Accounting students must memorise a large number of formulas. Make formulas cheat sheets for each chapter and go over them periodically. This is a good approach to remembering them. However, before memorizing the formulae, attempt to comprehend how and why they were created. Creating a summary of formulas from every chapter makes it easier for the students to revise at the last minute. 

Prepare Working Notes: This is a critical point. Working notes should be added to your responses as needed since they can help you get high grades. Make sure your notes are thorough and easy to comprehend. It gives clarity to teachers that the students are thorough with the concept, calculations.

Hope these tips help you score good marks. Keep these points in mind before appearing for the exam.

Best wishes!