The revenue receipt of a company has an impact on its profits.Ĭapital receipt of an organisation has no or minimal impact on its profits. Revenue receipts come from core operational activities of the business.Ĭapital receipts are those that come from the financial activities of the business. The differences between capital and revenue receipts are as follows: Parameter Revenue receipts will either increase profits or lead to losses.ĭifferences between Revenue Receipts and Capital Receipts.Companies can accrue short-term benefits from revenue receipts.Companies may use part of revenue receipts to create reserve funds.All revenue receipts must be recorded on the credit side of Profit and Loss accounts.Revenue receipts are those that come from core business operations of the company or a profession.Here are some features of revenue receipts: These include both external and internal borrowers. Interest received on account of loans given to various borrowers.Dividends or profits received from investments.Fee or penalty received by the business.The non-tax revenue receipts include several kinds of payments that are earned without taxing the public. Examples of indirect taxes are goods and services tax, excise duties, customs, etc. On the other hand, a company pays indirect tax on revenue receipts through an intermediary. ![]() There is no intermediary in the case of direct tax. The direct taxes on tax revenue receipts are directly paid to the Central Government in the form of income tax, corporation tax, wealth tax, property tax, etc. The revenue receipts are further sub-classified into tax revenue and non-tax revenue.Īn organisation receives tax revenue receipts from the income generated from property, individuals of the company or the overall company. Receipts are classified under two heads – revenue and capital receipts. Dividends earned from shares held by the company.Discounts received from suppliers or creditors.Income earned for rendering services to customers.Income from the sale of inventory goods. ![]() On the other hand, a high revenue receipt indicates the sound financial health of the business. One can get an idea about the financial health of the business by looking at the revenue receipts.A lower or negative revenue receipt indicates weak core business operations of the company. ![]() They are a source of cash inflows for the company and lead to an increase in its total revenues. You can find revenue receipts in a company’s trading and profit and loss accounts. Revenue receipt does not create any liability for the business, nor does it lead to any company assets reduction. What can we understand from Revenue Receipts? This receipt is of a recurring nature and is used to meet the daily expenses of the business. These receipts directly influence the profit or loss of the entity as they come from core business activity. Differences between Revenue Receipts and Capital ReceiptsĪny income earned from the core business operation of a company or business is known as the revenue receipt.What can we understand from Revenue Receipts?.
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