Revenue profits are those profits that are earned in the conduct of ordinary and day-to-day business activities. The sale of goods and services at a price above their cost price results in revenue profits. These profits are received frequently in the normal course of business operations. Revenue profits are shown on the credit side of the Profit and Loss Account.
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
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.
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.
Secret reserves are those reserves that exist in the business to strengthen its financial position but are not disclosed in the Balance Sheet.