Page 162 - ISCDEBK-XI

18.2 Double Entry Book Keeping—ISC XI

• Revenue Expenditure is the amount spent on running of the business. The benefit of revenue expenditure
expires within a financial year.

• Treatment of Revenue Expenditure Revenue Expenditure is shown on the debit side of Trading Account
or Profit & Loss Account.

• Capital Receipts are the receipts that are not received in the normal course of business activities. Examples:
Contribution towards capital, secured or unsecured loans, etc.
• Revenue Receipts are the receipts that are received out of the conduct of business. Examples: sales, fee
for services, etc.
• Capital Profit is the profit earned on the sale of fixed assets or on raising capital such as premium on issue
of shares.
• Revenue Profit is the profit earned out of the business activity.

• Capital Loss is the loss arising from sale of fixed assets or raising capital.
• Revenue Loss is the loss arising out of the business activity.
• Capital Income is the income earned by the business that is capital in nature.

• Revenue Income is the income earned by the business that is revenue in nature.
• Deferred Revenue Expenditure is expenditure in the nature of revenue expenditure, the benefit of which
extends beyond an accounting period. Example: Large expenditure incurred on advertisement, say to
introduce a new product.
• Treatment of Deferred Revenue Expenditure:
Deferred Revenue Expenditure is shown as:
(i) Amount to be written off in the Current Year is debited to the Profit & Loss Account, and
(ii) Unabsorbed or unwritten amount is shown on the assets side of the Balance Sheet.