Practicing Success
Sale of a old machinery is a: |
Revenue receipt Capital receipt Revenue expenditure Capital expenditure |
Capital receipt |
The correct answer is option 2- Capital receipt. If the receipts imply an obligation to return the money, these are capital receipts. The example can be an additional capital brought in by the owner or a loan taken from the bank. Both receipts are leading to obligations, the first to the owner (called equity) and the other to the outsiders (called liabilities). Another example on a capital receipt can be the sale of a fixed asset like old machinery or furniture. |