Capital and Revenue profit &Loss All Chapters Details

capital and Revenue profit
Capital Proft:
capital profit is a profit which is earned on the sale of a fixed asset or profit earned on raising capital for a company (by issuing shares at premium).This is not a regular profit of the business and is not earned in the ordinary trade of the buniness .For example if a machinary having book valu of Rs 50,000is sold for 60,000 the profit of the 10,000 will be a capital Profit . In the same way, A joint stock company issues shares of 2,00,000 at a premium of Rs .10.000 to raise capital .such premium of Rs 10.000 Will be a capital Profit.
REVENUE PROFIT:
this is a profit which is earned during the ordinary course of the business E.G profit on sale of goods rent received interest received etc.
CAPITAL AND REVENUE LOSSES
CAPITAL LOSS:
This is a loss suffered by a business on the sale of a fixed asset or it is incurred on raising capital of joint stock company.This is not a recurring loss and is not made in the ordinary course of the business.Forexample A machinary having book value of Rs 50.000 is sold for 45,000 the loss for Rs 5000 is a capital loss in the same way a company issued shares of Rs 1,00,000 At 10% discount the loss of the 10.000 is a capital loss.Capital loss is shown in the balance sheet on the asset side as a fictious asset which is gradually written off out of the profits every year.
REVENUE LOSS:
this is made in the ordinary course or day to day operation of a business such as loss on sale of goods etc.Revenue loss appears in the profit and loss account or income statement in the year in which it occurs.
CAPITAL AND REVENUE PAYMENTS
it may be noted that there is a difference between an expenditure and payment.Expenditure is the full amount spent by a business whether paid or yet to be paid while payment means the amount actully paid.For example A machinary is purchased for Rs 50.000 from saleem & co Rs 30.000 but the payment is Rs 30.000 Only.
CAPITAL PAYMENTS :
This is an amount which is actually paid on account of a capital expenditure.
REVENUE PAYMENTS:
This is an amount which is actully paid on account of some revenue expenditure .for example we purchase goods of Rs 30,000 this is a revenue expenditure of Rs 30,000 .we paid cash to the supplier only Rs 20,000 This is a revenue payment.if the whole amount is paid amount is paid in cash , then both the revenue expenditure as well as revenue payment will be Rs 30.000.