Podcast
Questions and Answers
Capital receipts are receipts of 'long term' nature, such as money from a bank ______.
Capital receipts are receipts of 'long term' nature, such as money from a bank ______.
loan
Revenue income arises from the normal operations of a business from its ______.
Revenue income arises from the normal operations of a business from its ______.
investments
The cash received from a customer is classified as a ______ receipt.
The cash received from a customer is classified as a ______ receipt.
revenue
The purchase of a soft drinks vending machine for the canteen is considered ______ expenditure.
The purchase of a soft drinks vending machine for the canteen is considered ______ expenditure.
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Monthly electricity bill paid is classified as ______ expenditure.
Monthly electricity bill paid is classified as ______ expenditure.
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Wages paid by a building contractor to his own staff for construction of an office room is ______ expenditure.
Wages paid by a building contractor to his own staff for construction of an office room is ______ expenditure.
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Interest paid on a loan is categorized as ______ expenditure.
Interest paid on a loan is categorized as ______ expenditure.
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Cash paid to employees for their wages is an example of ______ expenditure.
Cash paid to employees for their wages is an example of ______ expenditure.
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Cost of alteration in an office van to increase carrying capacity is classified as ______ expenditure.
Cost of alteration in an office van to increase carrying capacity is classified as ______ expenditure.
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Carriage paid to bring machinery to the factory is a ______ expenditure.
Carriage paid to bring machinery to the factory is a ______ expenditure.
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Study Notes
Capital Receipts vs. Revenue Receipts
- Capital Receipts: Long-term nature transactions, such as funds from bank loans or new investments by business owners (capital).
- Revenue Receipts: Income generated from normal business operations, including sales revenue and interest earned.
Examples of Capital and Revenue Classifications
-
Revenue Expenditure:
- Repairing Vehicle A's engine.
- Paying interest on a bank loan.
- Paying employees’ wages.
- Monthly electricity bill for the business.
- Annual motor vehicle tax for existing and new vehicles.
- Purchasing stock of soft drinks for resale.
-
Capital Expenditure:
- Replacing Vehicle B's engine.
- Borrowing a loan from the bank for five years.
- Wages paid to contractors for office construction.
- Purchasing machinery for business use.
- Carriage costs to bring machinery to the factory.
- Buying a soft drinks vending machine for the canteen.
- Altering an office van to increase carrying capacity.
- Significant alterations to a manufacturing machine that boost output.
Key Classification Insights
- Distinguish between the nature and duration of income to effectively categorize as capital or revenue.
- Understanding the implications of each type of receipt or expenditure is crucial for financial reporting and analysis.
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Description
This quiz covers the basics of accounting as outlined in Chapter 1 of the PRC 4 curriculum. It includes key concepts such as capital receipts and revenue receipts, which are essential for understanding financial operations of a business. Test your knowledge on these important financial terms and principles.
