Revenue receipts are those receipts that are received in the conduct of ordinary and day-to-day business activities. The sale of goods and services is the main source of revenue receipts. These receipts or incomes are received frequently in the normal course of business operations. Revenue receipts are shown on the credit side of the Trading and Profit and Loss Account.
Features of Revenue Receipts
The given below are some features of revenue receipts.
i. It is received from the sale of goods and services.
ii. It is recurring in nature i.e. it is received on regular basis.
iii. It is shown on the Credit Side of the Trading and 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.