Skip to content

CA Foundation · Accounting · Final Accounts of Sole Proprietors

Which of the following is correctly classified as a revenue receipt of a sole proprietor's business?

Commission received for selling goods on behalf of another firm is a revenue receipt, because it arises from regular business operations and increases profit for the year. Capital introduced, long-term bank loans and sale proceeds of old furniture are capital receipts.

  1. ACapital introduced by the proprietor
  2. BLoan taken from a bank for 5 years
  3. CProceeds from sale of old furniture
  4. DCommission received for selling goods on behalf of another firmCorrect

Explanation

Commission earned from the normal activity of the business is a revenue receipt and is credited to profit and loss account. Capital introduced, a long-term loan and the sale of old furniture are capital receipts.

Did you get it right without looking?

One question tells you little. A timed set on Final Accounts of Sole Proprietors shows your real accuracy, how long you take and where you lose marks.

Practise Final Accounts of Sole ProprietorsFree diagnostic mock

More Final Accounts of Sole Proprietors questions