CMA Foundation · Fundamentals of Financial and Cost Accounting · Capital and Revenue Transactions
Which of the following receipts is a capital receipt in the books of a trading firm?
Proceeds from selling old office furniture are a capital receipt because they arise from disposal of a fixed asset, not from regular trading. Interest, commission and discount received are revenue receipts credited to profit and loss.
- AInterest received on fixed deposit
- BCommission received from a supplier
- CProceeds from sale of old furniture used in the officeCorrect
- DDiscount received from creditors
Explanation
Sale of a fixed asset such as furniture is a non-trading receipt that reduces assets, so it is a capital receipt. Interest, commission and discount received are revenue items credited to the Profit and Loss Account.
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