CA Foundation · Accounting · Theoretical Framework
Which of the following is correctly described as a revenue receipt of a trading business?
Commission received for services rendered in the ordinary course is a revenue receipt. It arises from regular business operations and is credited to profit and loss. Sale proceeds of old furniture, proprietor's capital and bank loans are capital receipts affecting the capital structure.
- AProceeds from sale of old furniture used in the office
- BCapital introduced by the proprietor
- CLoan received from a bank for expansion
- DCommission received for services rendered in the ordinary courseCorrect
Explanation
Commission earned from regular business activity is a revenue receipt and is credited to profit and loss account. Sale of old furniture, capital introduced and bank loan are capital receipts as they relate to assets, owner's funds or liabilities.
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