expenses, commission etc. Revenue Receipts: Revenue Receipts received from operations of business, which is generated from sale of goods and services. It is written on credit side of Trading and P&L Account. For example sales, interest on investment, interest on fixed deposits, received profit, commission, fees, discount, rent, royalties, dividend etc. Difference between Capital Expenses and Revenue Expenses: S.No Basis Capital Expenses Revenue Expenses 1 Nature of In this we consider expenses on The expenses on purchase on expenses purchase of fixed assets like rent, current assets are called Revenue carriage expenses, installation Expenses. 2 Objective Purchasing of fixed assets for This is for operations of business. business. 3 Capacity Increase earning capacity of the They are spent for earning of profit. business. 4 Duration This expense is for more than one This is only for receiving current year accounting year profit. 5 Presentation Shown in Balance Sheet Shown in Trading and P&L Account. 6 Nature of They are assets of organisation They are expenses of business Account Difference between Capital Receipts and Revenue Receipts: S.No Basis Capital Receipts Revenue Receipts 1 Nature of Received from capital and loan, Received from sale of goods and receipt sale of fixed assets. services. 2 Presentation Presented in Balance Sheet. Presented in Trading and P&L Account 3 Business regulation Continuity or non continuity It is not generated from operations of business. It is not continued for every year, It is generated from operations of business. It is received every year. 4 b22 Example 02: From the following transactions, classify Capital Receipts/Expenses and Revenue Receipts/Expenses with reason. i. Expenses on Advertisement for launching a new product in the market? 10 Lakh ii. Paid wages for installation of new Machinery 10,000. iii. Paid Insurance Premium of Motor Car 7,000. iv. Paid custom duty on import of New Machine 50,000. v. Expense on A.C. in manager's office 1,00,000. vi. Donation for Flood Relief Fund 50,000. vii. Paid Life Insurance Premium of Trader 5,000. viii. Paidon carriage to transfer production facilities and stock at safer place 1,00,000 ix. Paid on License to open new Cinema 75,000 and distribute 5,000 free tickets 150 in the First Week of opening