Ch. # 8 CAPITAL AND REVENUE

Chapter # 8	CAPITAL AND  REVENUE
Q.1:	Define capital expenditure and give its two examples?
Ans:	An outflow of funds to acquire an asset that will benefit the business more than once accounting period is called capital expenditure.
Q.2:	What do you mean by revenue expenditures and give its two examples?
Ans:	An outflow of funds to meet running expenses of a business that will benefit the business for the current period only are called revenue extenuates.
Q.3:	What are capital receipts and give its some examples?
Ans:	The receipts which are of non – recurring nature and benefits of which are available for a long period of time are called capital receipts.Examples: i)       Additional capital introduced by the owner. ii)    Receipts from sale of fixed assets iii)  Receipts on account of capital profit. iv)   Long term loans.
Q.4:	Define revenue receipts and give its two examples?
Ans:	All those receipts which are of recurring nature ad which are usually of small amounts for meeting day to day expenses are called revenue receipts.Examples: i)       Receipts from sale of goods. ii)    Receipts on account of other income.
Q.5:	What is capital profit and give its two examples?
Ans:	A profit on sale of asset or on the raising capital funds is called capital profit.Examples: i)       Profit on sale of fixed assets. ii)    Premium on issue of shares.
Q.6:	Define capital loss and give its two examples?
Ans:	A loss which is incurred on the sale of fixed assets or through raising the capital funds of the business is called capital loss.Examples: i)       Loss on sale of fixed assets. ii)    Discount on issue of shre.
Q.7:	Define revenue loss and give its any one example?
Ans:	A loss which is incurred during the regular activities of business is called revenue loss.
Q.8:	Define deferred revenue expenditures and give its any one example?
Ans:	An expenditure the impact of which is likely to last for more than one accounting periods are called deferred revenue expenditures.Example: i)       Heave expenditures incurred on advertisement.
Q.9:	Define revenue profit and give it two examples?
Ans:	A profit which is earned during ordinary activities of the business is called revenue profit.Examples: i)       Profit on sale of goods ii)    Dividend received.
Q.10:	Define capital payment and give its two examples?
Ans:	An amount which is paid on behalf of capital expenditures is called capital payment.Examples: i)       Payment made for purchase of machinery. ii)    Installation charges paid on machinery.
Q.11:	Define revenue payment and give its two examples?
Ans:	An amount which is paid on behalf of revenue expenditure is called revenue payment.Examples: i)       Payment made for purchase of merchandise. ii)    Wages paid to factory workers.
Q.12:	Differentiate between revenue expenditures and capital expenditures?
Ans:	Revenue Expenditures Capital Expenditures They effect only one accounting period. They effect more than one accounting periods. They are normally recurring nature. They are normally non – recurring nature.
Q.13:	Differentiate between revenue expenditures and deferred reve3nue expenditures?
Ans:	Revenue Expenditures Deferred revenue expenditures They effect only one accounting period. They effect more than one accounting periods. They normally consist on small amount. They must be in heavy amounts.
Q.14:	Differentiate between deferred revenue expenditures and capital expenditures?
Ans:	Deferred revenue expenditure Capital expenditures. They must be in heavy amounts. They may be in little amount. They represent fictitious assets. They represent real assets.
Q.15:	Differentiate between capital receipts and revenue receipts?
Ans:	They represent irregular activities of business. They represent regular activities of business. They effect more than one accounting periods. They effect only current period.