Capital & Revenue Receipts (Cambridge (CIE) IGCSE Accounting): Revision Note

Capital & revenue receipts

What are capital receipts?

• A capital receipt is money that is received from activity which is not part of a business' day-to-day trading

  • These are one-off receipts of money

• Capital receipts include:

  • Capital introduced to the business by the owner(s)

  • Money received from a loan

  • The proceeds from the sale of a non-current asset

• Capital receipts affect the statement of financial position 

  • They could affect the non-current assets

    • The sale of a non-current asset reduces the value of these assets

  • They could affect the current assets

    • Money in the bank could increase

  • They could affect the non-current liabilities

    • Taking out a bank loan increases the amount owed

  • They could affect the capital

    • If capital is introduced into the business, the value of capital increases

• Capital receipts are not included in the statement of profit or loss

What are revenue receipts?

• A revenue receipt is money that is received from the day-to-day trading of the business

  • These are regular receipts of money

• Revenue receipts include:

  • The sale of goods

  • Commission received

  • Rent received

  • Interest received

• Revenue receipts are included in the statement of profit or loss

  • They are not included in the statement of financial position

  • However, they will contribute to the profit or loss for the year, which is reported in the statement of financial position