What are Capital Receipts?

Capital receipts are those receipts that are received from the disposal or sale of an asset or received in form of additional capital introduced. It also includes the receipts in form of loans taken by a business organization. These are non-recurring in nature i.e. these are not frequently received. Capital receipts are shown on the Liabilities side of the Balance Sheet. When the assets of a firm are sold it decreases the fixed assets and when the loan is taken or additional capital is introduced it increases the liability. In both cases, the amount so received is regarded as capital receipts. From this discussion, it can be stated that capital receipts reduce the fixed assets and increase the liabilities of the business organization. Some of the examples of such receipts are the sale of a plant, a loan from a bank, etc.

Features of Capital Receipts

The given below are some of the features of capital receipts.

i. It is received from the sale of fixed assets.
ii. It also consists of the amount of loan taken and additional capital introduced.
iii. It is non-recurring in nature.
iv. It is shown on the Liabilities side of the Balance Sheet.

Also, Read

What is Capital Expenditure?

The capital expenditure results in an income or benefits for a longer period that extends for a period of more than a year. This expenditure is shown in the Balance Sheet

What is a Promissory Note?

A promissory note is an unconditional promise in writing given by the buyer (or creditor) to the seller (or debtor) to pay the amount of money specified therein to the seller or to the order of seller or to bearer.

What are Capital Reserves?

The reserves that are created out of the capital profits of a business are known as Capital reserves. Capital profits are the profits that are not earned in normal business activities.

What are Secret Reserves?

Secret reserves are those reserves that exist in the business to strengthen its financial position but are not disclosed in the Balance Sheet.

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