Capital and revenue

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Capital and revenue

  1. 1. Capital and Revenue <ul><li>Profit = Receipts – Expenses </li></ul><ul><li>Periodicity concept </li></ul><ul><li>Matching concept </li></ul><ul><li>Accrual concept </li></ul><ul><li>while determining profit / loss made during a particular period, all incomes relating to that period (whether received or not) are to be compared with the expenditure relevant to such income (whether actually paid or not) </li></ul>
  2. 2. Income <ul><li>Capital income (gain) </li></ul><ul><li>Income which does not grow out of or pertain to the running of the business proper </li></ul><ul><li>2. Revenue Income (profit) </li></ul><ul><li> Income which arises out of and in the course of regular business </li></ul>
  3. 3. Expenditure <ul><li>Capital expenditure </li></ul><ul><li>Incurred for the purpose of obtaining a long term advantage for the business </li></ul><ul><li>2. Revenue expenditure </li></ul><ul><li> Expenses which arises out of and in the course of regular business </li></ul><ul><li>3. Deferred Revenue expenditure: </li></ul><ul><li>Revenue exp incurred during an accounting period but is applicable wholly or in part to future periods </li></ul>
  4. 4. Capital Vs Revenue <ul><li>Repairs </li></ul><ul><li>Wages </li></ul><ul><li>Legal charges </li></ul><ul><li>Transport charges </li></ul><ul><li>Interest on capital </li></ul><ul><li>Raw materials and stores </li></ul><ul><li>Development expenditure </li></ul><ul><li>Advertising </li></ul><ul><li>Preliminary expensus </li></ul>
  5. 5. Receipts <ul><li>Capital Receipt </li></ul><ul><li>Additional payments made to the business by the owner or receipts from the sale of business assets </li></ul><ul><li>2. Revenue Receipt </li></ul><ul><li>Any receipt which is not a capital receipt </li></ul>

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