1. Write the meaning of capital expenditure giving at least two examples.
Ans:-When the benefit of expenditure is available over a number of years, it is called capital expenditure. It is also called asset. Land and building, plant and machinery, goodwill, trademark etc. are the example of capital expenditure.
2. Write the meaning of revenue expenditure with suitable examples.
Ans:-When the benefit of expenditure is likely to be available for less than one year, it is called revenue expenditure. It is also called expense. Salary paid, rent paid, electricity charge, depreciation etc. are the examples of revenue expenditure.
3. State any three differences between capital expenditure and revenue expenditure.
Ans:-The following are the difference between capital expenditure and revenue expenditure.
| Basses of Difference | Capital expenditure | Revenue expenditure |
| Effect | Its effect is long-term. The benefits is received for a number of years in future. | Its effect is temporary. The benefit is received within the accounting year. |
| Physical existence | It has physical existence except intangible assets. | It has no physical existence. |
| Frequency | It is non-recurring and irregular. | It is recurring and regular as it occurs repeatedly. |
| Treatment | A portion of this expenditure is shown in income statement. | The whole amount of this expenditure is shown in income statement. |
4. Write the meaning of capital receipt with suitable example.
Ans:-The amount which is received in the form of capital contributed by the owner of the firm or the amount received from outsiders as loan or donation is called capital receipts. For example:
- Capital received from owner.
- Loan taken from others.
- Sale proceeds from fixed assets.
- Write the meaning of revenue receipt with suitable example.
5. Write the meaning of revenue receipts
Ans:-The amount received from regular operation of the business activities is called revenue receipts. It is of regular nature and affects the results of operation of the business firm. Some examples of it are given below:
- Amount received through sales of goods
- Amount received through rendering service
- Rent from tenants
6. State any three differences between capital and revenue receipts.
Ans:-Following are the differences between capital and revenue receipts:
| Bases of Difference | Capital Receipt | Revenue Receipt |
| Effect | It increases both assets and liabilities. | It increases assets and profit. |
| Nature | It is not recurring. | It is recurring in nature. |
| Presentation | It is shown in liability side of the balance sheet. | It is shown in credit side of trading and profit and loss account. |
